A COLUMN WRITTEN BY KALIOPATE TAVOLA, PUBLISHED IN ISLANDS BUSINESS, JUL 2022

My article published in this magazine in June 2021 was entitled ‘EDF can fast-track PICTA’. This was a reference to the Pacific Island Countries Trade Agreement, a Free Trade Agreement (FTA) intended for the Pacific Island Countries (PICs) and Territories (PICTs) in the region – least developed and developing country and territory members of the Pacific Islands Forum (PIF). I had suggested various ways and means whereby the required ratification and implementation of the FTA could be speeded up to initiate the regional economic integration greatly desired by members.

At the time, only seven out of 14 FTA members were implementing the agreement. Twelve months later, the situation has only changed minimally. The PIF Secretariat’s website states that only “eight countries trade under PICTA: The Cook Islands, Fiji, Kiribati, Niue, Samoa, Solomon Islands, Tuvalu and Vanuatu. Nauru, Papua New Guinea (PNG) and Tonga are yet to utilize the agreement. Federated States of Micronesia (FSM), Palau and the Republic of the Marshall Islands (RMI) are yet to become parties, whilst New Caledonia and French Polynesia are able to accede as per Article 27 of the Agreement.”

Clearly, PICTA has hardly been fast-tracked in the way I had envisaged. If it has, the result has been dispiriting. It can only be concluded that PICTA, signed in 2001 – 21 years ago, is only ambling in the slowest of lanes. Its Services Agreement, furthermore, has yet to be ratified.

This article reflects on the likely reasons which might have contributed to this stalemate.

The sorry state of PICTA reflects the equally sorry state of regional economic integration amongst PICTs. From a developmental perspective, it can be envisaged that regional trade under an FTA, for example, can bring about regional economic integration. The latter then becomes an incentive for the wider regional integration when members begin to share costs and benefits of regional economic structures initially before the establishment of social, cultural and political structures to serve the region as a whole. This, by design, will advance the region from purely economic integration to what can be referred to as ‘Pacific integration’ – integration to proceed beyond structures and institutions; the countries themselves are being integrated.

Pacific integration was envisaged way back in 1971 when the founding Forum members discussed the prospect of an economic union, for example. However, the move towards it was tentative. Instead of an FTA to kickstart economic integration, the Forum opted for a preferential and non-reciprocal SPARTECA – South Pacific Regional Trade and Economic Cooperation Agreement, signed in 1981.

PICs in particular were not happy with the provisions of SPARTECA that did not cater for measures or resources aimed at facilitating the production end of their exports to take advantage of the duty-free access to Australian and New Zealand (ANZ) markets under the agreement.

In subsequent discussions aimed at improving the trading situation of the PICs, Forum members did not envisage an FTA at that early stage. They were still focussed on preferential and non-reciprocal trading agreements. So much so that Fiji considered offering an agreement which could be interpreted as SPARTECA II. In the late 1980s, Fiji did make an offer. But discussions were not conclusive.

What was happening at the regional economic front mirrored the general direction the Forum was taking then. A change in the direction was being pursued. Dr. Greg Fry discussed this in his ‘Framing the Islands’, 2019. Essentially, the Forum had opted, whether by design or not, to veer away from what can only be termed as the ‘Pacific integration’ approach, similar to the ‘European integration’ approach of the European Union (EU). The Forum leaders continued with their own brand of regionalism and were incentivized to do so since they were continuing to see ‘political relevance’ in what they were doing on a collective basis. This continued through the 1980s and 1990s.

Clearly, regional economic integration had, by this time, taken a back seat. It certainly was not a consensual issue. The FTA, Pacific Regional Trade Agreement (PARTA) was negotiated about this time for all Forum members including ANZ. However, at the point of signing the agreement, the PICs protested. The altercation resulted in a division of the parties who quickly negotiated the FTA, PICTA for PICs only at the time and the Pacific Agreement on Closer Economic Relations (PACER) – an economic framework agreement between PICs and ANZ. PACER gave rise to another FTA, PACER Plus. But that is another story.

What of the future? The signals are mixed. The days of preferential and non-reciprocal trade agreements are over, according to ANZ. That became categorically clear when PICs were contemplating renegotiating SPARTECA’s Rules of Origin (ROO) as a prospective option under PACER Plus. Their joint view is that SPARTECA has outlived its usefulness. On the other hand, the EU still offers the preferential Everything But Arms (EBA) and the Generalized System of Preferences (GSPs).

The status of PICTA is instructive. One can draw the conclusion that notwithstanding the benefits derived from it, PICTA signatories have not been able to assess it with affirmation and efficacy to render it ‘political significance.’ Thus, PICTA’s pedestrian ambling in the slow lane.

Moreover, its future and utility are now one of pessimism given the fractured nature of the Forum.  The withdrawal of five Micronesian states from the Forum, and the absence of any likely solution to the rift, would mean that any perceived meaningful benefit arising from PICTA, going forward, both nationally and regionally, is questionable. This is likely to give rise to a deficit of ‘political significance’. In the regional context, which is hardly ammunition for forward movement in regional economic integration and/or Pacific integration – as a whole.

Recent Forum history has not been kind to Pacific integration either. In the early 2000s, leading up to the formulation of the Pacific Plan, there was a lot of preparatory work, involving the Asian Development Bank, on expediting regional integration. Priority sectors and regional services were identified under four areas of initiatives, viz: Good governance, Economic growth, Sustainable development and Security. Fourteen initiatives were identified altogether. Their scope and reach obviously contributed to the framing of the Pacific Plan. These amounted to nought when the Pacific Plan was reviewed and replaced with ‘The Framework for Pacific Regionalism’ in 2014.

From the above, and given the state of Pacific regionalism to date, it can be concluded that regional economic integration specifically and advanced regional integration in general have not found favour with PIF leaders over the years. Essentially, leaders have not found sufficient ‘political significance’ in them to necessitate their systematic patronage.  

The above can be indicative of a deeper conundrum in Pacific regionalism. Dr Fry has discussed the leaders’ pursuit of ‘political significance’ to justify their own brand of regionalism. That choice of action underpinned essentially a systematic change in direction in Pacific regionalism. As noted earlier, the direction established by the Forum founding members towards a deeper regional integration toward an economic union was thwarted by, inter alia, the Forum’s tentative venture into preferential and non-reciprocal trade.

A number of regional commentators have written about the voluntary nature of Pacific regionalism. It can be argued that the choices made above have necessarily led Pacific regionalism to this voluntary pathway. Seeking ‘political significance’ as justification for regional actions does not necessarily necessitate delegation of sovereignty from the capitals to the centre – to the region, to be utilitarian.

The status of PICTA, how it got to where it is today and the prospects of its arbitrary future utility have generated discussions on the direction that Pacific regionalism, as a whole, has been taking to date and how it will proceed going forward. We are all pinning our hopes that ‘The 2050 Strategy’, yet to be finalized, will show the way.

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