A COLUMN WRITTEN BY KALIOPATE TAVOLA, PUBLISHED IN ISLANDS BUSINESS, OCT 2020

Post-COVID-19 propositions for various sectors of the economy currently abound. Credit to those who are churning out these fine ideas for public consumption. One in particular, by Dr. Transform Aqorau: ‘Imagining a new post-COVID-19 international economic order (NIEO) for the Pacific Islands’ is essentially regional in essence and in application. Dr. Aqorau refers to it as ‘a single custom and development union’ (SCDU), or alternatively, ‘a single economic and development union’ (SEDU).

His article goes on to describe this NIEO for the Pacific Islands. In the lexicon of regionalism, Aqorau’s NIEO is essentially regional economic integration, with a degree of specificity on extractive industries, structured on the basis of a free trade agreement, for example, and which has progressed to a customs union, common market and economic union. But it goes beyond that to include advanced regional integration measures to coordinate policies beyond economic including the coordination of institutions through a regional parliament, for example.

Professor Biman Chand Prasad had earlier suggested something similar: a ‘Pacific community and Pacific Parliament.’ It is this regional architecture that is the face of regionalism (Pacific regionalism) and necessarily the counterpart to the rest of the world. This thus earns its ‘NIEO’ lexicon in Aqorau’s perspectives.

But all this rings a loud bell. The regional leaders, way back in 1971 at the first ever meeting of the then South Pacific Forum (SPF), were also deeply immersed in imagining the various solutions to the challenges they faced. Then, the unprecedented challenges for the five Pacific Island Countries (PICs) related to their newly independent state. A solution, they imagined, was ‘the possibility of establishing an economic union for the area.’

‘The area’ in this specific instance can be deduced from the formulation of the leaders’ decision as trading between and amongst the five PICs, ‘whose senior officials were to meet within three months’ to progress the establishment of an economic union; and officials from Australia and New Zealand (ANZ)  were to join this task by way of promoting ‘trade and economic cooperation in the region.’

The sense of creativity and adventure that characterized the decision-making above is worthy of notice. It all came about notwithstanding the two-caucus approach to conferencing that existed then. This two-caucus approach, however, disappeared the following year in 1972 on Australia’s initiative. It remains to be seen whether this structural re-organization to merge the two unequal groups was responsible for the dilution of the natural impulse to bridge the socio-economic gaps and inequality that existed then and has continued to frustrate PIF’s membership and its inherent unity.

Dr. Aqorau is correct in that the idea behind a SCDU/SEDU is not new. “What might be novel,’ he says, “is the idea of integrating our economies to have a SCDU…….” The latter is so because Pacific regionalism has not faithfully committed itself to progressing the idea. Many factors have come into play.

The question to be asked, therefore, is what has happened to this bullish concept of an economic union that was envisaged some 49 years ago. The events of Pacific regionalism over the decades are revealing and instructive and from which we can learn to better strategize to avoid the mistakes of the past.

It took nine long years for the SPF to make the first move towards an economic union. In 1980, the SPF opted for a preferential, non-reciprocal trade arrangement to establish the foundation for an economic union. Such a preferential arrangement was considered with greater compliancy at the time by the global trading system. The dichotomy of SPF membership, resulting from ANZ’s privileged position as developed countries vis-à-vis others, played a pivotal role as well.

The idea of a Free Trade Agreement (FTA) amongst the PICS as basis for an economic union was still over a decade away.

ANZ thus agreed to establish the preferential South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA). This was signed in 1980 and came into force in 1981.

SPARTECA was unidirectional. PICs’ exports were provided market access in ANZ. Rules of Origin (ROO) were devised for the conduct of trade. The agreement however lacked provisions and resources to support and promote the supply side of the PICs’ export trade. Thus in 1984, SPF noted the decline in PICs’ exports under the agreement. In the following year, SPF queried about the relevance of SPARTECA. Later in 1988, SPF noted PICs’ problems of production capacity and the inadequacy of the agreement’s ROO.

Fiji was factoring all these issues in its approach to regionalism. So much so that Fiji’s delegation to the 1993 Leaders’ meeting opted to propose a SPARTECA-look-alike agreement to the rest of the PICs. This, however, did not see the light of day. Had that progressed, it would have been interesting to note its formative impact on economic union at the time.

Fiji, furthermore, took advantage of its close bilateralism with ANZ to negotiate changes in the SPARTECA ROO. This consequently boosted the development of Fiji’s garment industry at the time.

Sometime later, however, further negotiations to expand to capitalize on the same ROO proved negative. The global trade scenario had changed somewhat. The catchphrase of ‘free trade’ prevailed over preferential trade. ANZ were thus prevailed upon to advise PICs that SPARTECA (and its ROO), had outlived its time.

In the late 1990s, it was back to basics in considering a basis for an economic union. SPF members negotiated an FTA: Pacific Regional Trade Agreement (PARTA). This was to be an intra-regional trade agreement, however, including ANZ.  The idea for a FTA just for PICs as the basis for the development of an economic union did not get the nod at the time. It was to come later, however, when PARTA was discarded. Did political economy considerations of SPF’s dichotomous and differentiated membership get in the way? Did geopolitical considerations cloud rationality in this instance?

When it came to signing PARTA, the PICs rebelled and refused to sign it. The reason for the rebellion was that PICs were not happy with their treatment under the agreement. Provisions lacked the trade and trade rules concessions that would persuade PICs’ Trade Ministers to readily commit to the agreement.

This predicament was resolved when SPF discarded PARTA and quickly negotiated the Pacific Island Countries Trade Agreement (PICTA) – an FTA for PICs only, and the Pacific Agreement on Closer Economic Relations (PACER) – an economic framework agreement between the PICs and ANZ.  PACER then gave rise to PACER Plus, a FTA between twelve PICs and ANZ. This is yet to come into force. But its 16 years of negotiations diverted much energy and intellectual competencies from the task of properly establishing the economic union envisaged for PICs in 1971.

In the meantime, PICTA came into force after it was signed in 2001. However, by 2020, only seven members (50 per cent of membership) are implementing the agreement). The envisaged economic union remains a dream.  Dr. Aqorau’s advanced regional integration scenario of a regional parliament will remain on the ‘To Do’ list for the time being. Much however was discussed on these advanced regional integration projects in the early 2000s during the formulation of the Pacific Plan. However, little or no progress eventuated due to claims of being ill-conceived and lack of buy-in.

Yes, it is time for new normal. Post-COVID-19 demands all that. But history still has a role to play. Pacific regionalism is best advised to occasionally cast its eyes back at its own history and re-evaluate events, and itself, from the perspectives of especially political economy and geopolitics. The Blue Pacific should not become a cliché. It should learn from George Orwell: “Who controls the past controls the future. Who controls the present controls the past.”

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© Kaliopate Tavola and kaidravuni.com, 2024. Excerpts and links may be used, provided that full and clear credit is given to Kaliopate Tavola, kaidravuni.com and Islands Business with appropriate and specific direction to the original content.