Regional activitists caution about PACER Plus
Updated
With Pacific island nations currently in discussions on a proposed free trade deal, PACER Plus, and both Australia and New Zealand having launched temporary guest workers schemes for Pacific islanders, globalisation is a hot topic. Joining Bruce Hill to discuss these issues are two activists from the region. Maureen Penjueli from Fiji is co-ordinator of the Pacific Network on Globalisation (PANG), which links regional community, church and women's organisations to raise awareness about the impacts of PACER-Plus. And John Salong from Vanuatu is director of the Vanuatu Women's Development Scheme, a non-government microfinance group, which provides disadvantaged women with access to credit and income earning opportunities. John has been active in the debate about remittances, seasonal labour mobility and development options for rural communities in Vanuatu. They're in Australia sponsored by the aid NGO Aidwatch, and will be meeting with government, union and community groups to talk about labour mobility and development issues.
Presenter: Bruce Hill
Speakers: John Salong, director of the Vanuatu Women's Development Scheme, and Maureen Penjueli from Fiji is co-ordinator of the Pacific Network on Globalisation
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PENJUELI: PACER-Plus is a free trade agreement that's currently being negotiated between Australia and New Zealand and the 14 Pacific Island countries. Its main objectives are to achieve sustainable development, eradicate poverty in the Pacific, and help with integrating into the global community. It was launched at the Cairns Pacific Island Leaders Forum meeting in August this year, and the key things that should be mentioned here and that's specifically that the way it's structured will have great implications, whether it's a very positive thing or a very negative thing.
HILL: Because the objectives do sound fantastic, it sounds like a wonderful thing, is it just the way it's being implemented that's the problem as far as you're concerned?
PENJUELI: Absolutely I think if it's negotiated as a reciprocal WTO free trade agreement then there will be a lot of concerns. If it's negotiated as an economic development agreement, that's quite different because you're looking to recognise some of the special vulnerabilities that Pacific Island countries have. And so it's really the framing of this particular agreement between the Pacific and Australia and New Zealand.
HILL: Well free trade is about people in different countries selling things to each other without any particular trade barriers and protectionism. Everyone likes free trade in the abstract but they usually come up with ways of saying well it shouldn't apply to me because I'm special, I need extra protection. Is it the same in the Pacific Islands that Pacific Island countries and people feel well look, because we're small, because we're a long way away we're actually more vulnerable to free trade, it could actually be a problem for us?
PENJUELI: I think we need to flip that question around a little bit and I think you need to ask the question of Australia and New Zealand, the US or Europe for that matter whether they developed to the level that they are today through the free trade model? And the answer is simply no. You've got to have some level of protection to allow industries to develop to a certain level before you open them up to competition. And I think that's the argument is that the Pacific is asking for time and flexibility to develop to a stage before we can open up our markets.
HILL: Do you think that the Pacific can develop to the stage where it can compete on a more equitable level or will there always be this massive disparity, that there just isn't the land area, there isn't the population base, the distance is never going to get any smaller, these problems are pretty much permanent aren't they?
SALONG: There are some strategic advantages for certain economies in the Pacific I think and it is possible to find areas where we do have the ability to trade. The whole question you raised earlier in terms of free trade is it really reciprocal? Like for example Vanuatu, let's take Vanuatu as an example, it's open for business. There's services from Australia that are training there like banks, like the airlines, the problem sometimes is that there is a need to go and lock in certain things that make it difficult to change policies later on. So I think it is possible to have fair trade and that is good, but the way that free trade agreements generally are structured is disadvantageous to people who are yet to develop their ability to compete.
HILL: So I guess the fear is that if there's free trade between Australia and New Zealand on one side and the Pacific Islands on the other, then the Westpac Bank will be the local bank and you'll get your petrol station from a Shell station and in return the Pacific Islands what would they be able to do in return, so it looks like it might be a bit one-way?
PENJUELI: It is and I think it's a recognition that it's not an even playing field when you look at it, and I think that countries when you look at what we have we have natural resources, governments have aspirations to add value to their natural resources, whether they're timber or fisheries products, they'd like to add value to that. And one of the key things about free trade agreements is that they would restrict the way governments can use the types of policies that Australia for example have used in the past. They would restrict the ability to add value. And in many ways it would make Pacific Islanders simply just be selling raw materials, and that's not the type of vision that we have for the Pacific.
HILL: Well at the moment say for example the Solomon Islands a lot of companies come in, many from Southeast Asia, Malaysia, and they'll chop down trees and they'll simply, the country will export the raw logs. When in fact they'd make a lot more money if you actually had a sawmill and actually mill them into timber or even perhaps even further process turn them into timber. The more stages you add, the more value you add. Is there anything about free trade that would prevent countries doing that though?
PENJUELI: There would because it's really looking at the types of policies that you can use, so we know from our experiences under the economic partnership agreement that things like export taxes, which the Solomon Islands government levy to develop, to add value to logs, that was not acceptable under the economic partnership agreement negotiations. So there are several types of reasons governments can offer support for local industries to add value that would not be allowed under a free trade agreement. So export taxes, subsidies, because the assumption is that you can't treat national companies any differently to foreign companies coming in. There is a level playing field. So a lot of the policy flexibilities would have to go under PACER-Plus.
HILL: Well John Salong you're from Vanuatu, if we can come to you perhaps, there is another side to this economic relationship between the two metropolitan countries and the Pacific Islands, and that's of course labour mobility. Both countries now have temporary guest worker schemes, under which number of Pacific Islanders come to Australia and New Zealand to work largely in horticulture, the idea being that they can work, they can bring money back home and of course there's always remittances from Pacific Islanders who are citizens of Australia and New Zealand who send a lot of money back home. So the relationship is not just a single, you can't just look at it and say, it's Australia and New Zealand exploiting the Pacific, it goes in two different directions doesn't it?
SALONG: Yes the original recognised seasonal employment scheme in New Zealand has been working really well and it's given opportunities for people who would have otherwise had no access to income in Vanuatu for example to be able to earn income. In the last season two-thousand workers came from Vanuatu into New Zealand, and they brought back the equivalent of three-million US dollars right into the communities of Vanuatu, and those funds were invested into good outcomes, like education, improved housing and continue to build up the social fabric that keeps our society going. Those are good initiatives. The difficulty with Australia is that it looks as if the government of Australia has been holding onto the process, because only 56 workers have come from the Pacific into Australia so far, and unless the governments proceed with PACER-Plus their seasonal workers program will not really go on, because it was announced in May of last year and we still have to see any results.
HILL: So the seasonal worker program's being used as a bargaining chip with PACER-Plus?
SALONG: That seems to be the question whether or not it's being used as a carrot to entice governments to give up certain policy flexibilities that Maureen would have referred to earlier.
HILL: What is it that you fear from PACER-Plus, if it's implemented what would the effect be on an ordinary person living in Suva or Honiara or Raratonga?
PENJUELI: I suppose the first thing is that there are a lot of concerns about PACER-Plus that's shared by not just civil society but governments in the Pacific. And there's a whole raft of concerns that people have, and they include things like loss of government revenue, which has implications for delivery of services. So for example a report was put out that governments stand to lose between one and 30 per cent of revenues from tariffs, that they collect from tariffs. If you put that into the context of services such as health and education, that's almost the size of health and education. So you could see a decrease in quality in health and education provided by government. If you move from a tariff based system to a GST or VAT type system, you transfer taxes from luxury products to basic items, food items.
HILL: Which increases their price?
PENJUELI: Absolutely, and so then you transfer that to the poor. That's just the key one on revenue. Then you have things such as job losses, some of the top economists in the Pacific, Professor Wadenasy has warned that at least 80 per cent of the manufacturing sector in the Pacific could go.
