A COLUMN WRITTEN BY KALIOPATE TAVOLA, PUBLISHED IN ISLANDS BUSINESS, JAN 2019
Eleven days after the Nauru PIF Leaders’ Meeting last September, the Premier of Niue, Sir Toke Talagi, said on Radio New Zealand that “the Pacific Islands Forum is stuck in limbo and making little progress.” Considering Sir Toke’s standing in the region, having been in various leadership roles for his country and in the region since 2002 and the timing of the statement after the Forum’s premier annual gathering, it can be said that such an utterance was made with much thought. As such, it should not be taken lightly. However, it can be subjected to close analysis to get to the nub of the issue; which can help to re-direct our compass to re-set Pacific regionalism; and to the realization of our collective aspirations.
Purely from a pedantic linguistic perspective, Sir Toke’s statement is oxymoronic. To be ‘stuck in limbo’ implies that one or something is unable to move from one position to another. It follows therefore that one or something cannot make any progress when ‘stuck in limbo’. However, Sir Toke clarified that the Forum was making progress, albeit, little. He substantiated his comment by his lack of success in trying to increase funding for climate change activities and by his dissatisfaction with the fisheries license systems not doing enough to combat illegal fishing. He also implied the lack of capacity building in Niue and, as such, he is considering appointing youth ambassadors to be posted out to various Forum countries to learn about these issues.
It can be envisaged therefore that the situation depicted by the Premier is best characterized by the Forum being ‘in limbo’ rather than ‘stuck in limbo.’ Being ‘in limbo’ carries the meaning that whilst the Forum may depict conditions of neglect and oblivion – specifically or generally, these do not rule out moving from one position to another. This article assumes such an analytical lens to assess one aspect of Pacific regionalism, aimed essentially at securing learnings to direct our way forward.
In 1971, the inaugural meeting of the then South Pacific Forum was a joint one that followed separate meetings of two caucuses – one for the founding five independent Pacific Island Countries and the other for Australia and New Zealand (ANZ). In a 2015 report to Fiji’s Ministry of Foreign Affairs and International Cooperation, I listed 14 issues identified by the 1971 Joint Communique (the only one to date) for regionalism. Those that were aimed at regional economic integration included ‘the possibility of establishing an economic union’.
An economic union is a type of trade bloc which is composed of a common market with a customs union. A common market is an economic association of nations created to: (i) abolish barriers to free trade among members, and (ii) to adopt common market import duties on goods from other countries. A customs union is an association of independent nations or tariff areas created to remove customs barriers between them and to adopt a uniform tariff policy toward non-member nations – a common external tariff (CET). Economic union is established through trade pact.
Members of an economic union, therefore, have common policies on product regulation, freedom of movement of goods, services, capital and labour. The Forum, given the various restrictions that still apply today, is yet to achieve this situation.
The Forum is thus short of its target, even though it has taken steps to start its journey. Wesley Morgan, writing in 2014 had said: “Over the four decades since, a political commitment to regional integration has waxed and waned.” The Forum, given the time that this concept has been in gestation, is in limbo.
The Forum’s first trade pact was established in 1981. ANZ, in response to a proposal by the then five Forum Island Countries (FICs), created the South Pacific Regional Trade and Economic Agreement (SPARTECA). This was a preferential, non-reciprocal trade agreement. ANZ offered market access to the FICs under specific Rules of Origin (ROO). The results were mixed. For example, the 1984 Leaders’ Communique reported that whilst total trade had increased during its three years of operation, the exports from some smaller island countries (SIS) had decreased. It was apparent that the principal requirements of the SIS – those directed at alleviating supply constraints, could not be met by SPARTECA. For Fiji’s garment industry, however, SPARTECA was critical for its growth especially when its ROO was subsequently amended to address specific industry needs.
Fiji had noted specifically the problems of the SIS and was motivated in 1993 to propose its own non-reciprocal trading arrangement. The offer, however, was not considered by Forum members.
The Pacific Regional Trade Agreement (PARTA) then entered the scene. This was intended to be an intra-regional Free Trade Agreement (FTA). However, it never saw the light of day. After realizing how costly PARTA was going to be in terms of their commitments relative to those of ANZ, the FICs flatly refused to sign. In its place, Pacific Area Closer Economic Relations (PACER) and Pacific Island Countries Trade Agreement (PICTA) were quickly put together. The former is an economic framework agreement between the FICs and ANZ, whilst the latter is an Intra-FIC FTA only. Both were signed in 2001.
PACER, which came into force in 2003, gave rise to PACER Plus – an Intra-regional FTA, including ANZ. But it also provides for trade facilitation for the FICs under its Article 9 and Annex 1. Article 9(4), for example, directs the two parties to the mode of financing required for the trade facilitation programme to be formulated. This proved problematic. Whilst FICs wanted ANZ to provide the lion’s share of funding, given their understanding of the provisions of Article 9(4), ANZ however also sought contributions from the European Development Fund (EDF) under the ACP-EU agreement at the time. The consequent delay constrained the development of trade facilitation essential for regional economic integration.
The Trade in Goods agreement under PICTA came into force in 2006. The negotiations for PICTA’s Trade in Services were launched in 2004 and work on this, including that on Temporary Movement of Natural Persons, is still underway. Not all 14 FICs have ratified the agreement. At the last count, only six countries have indicated readiness to implement it.
Clearly, PICTA’s impact on regional economic integration amongst the FICs is essentially rudimentary.
As far as PACER Plus is concerned, this is still undergoing the signature and ratification process. In the meantime, Fiji and Papua New Guinea have withdrawn from the agreement in its current form. At the same time, the Pacific Network on Globalization (PANG) has released its analysis of the agreement that underlines its alleged weaknesses. The absence of the two large FIC traders and economies from the agreement and the constraints imposed by the application of the alleged weaknesses identified by PANG, should they come into play, could undermine the Forum’s efforts at achieving an economic union.
Economic union will come in due course when we deepen regional integration, specifically regional economic integration. Some structures that will bring this about have been created through our efforts at regional cooperation via the establishments of committees of trade officials, trade, economic and financial ministers; and of the private sector through the Pacific Islands Private Sector Organization.
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