Four new Parliamentary inquiries show Australian trade policy failing in the Pacific

“Australian government ministers have initiated four separate Parliamentary Inquiries into Australia’s diplomatic, defence and trade relationships with the Pacific Islands. This shows that the government is worried by the deterioration in its relationships with the Pacific, which is symbolised by the fact that Fiji and PNG have not signed the PACER Plus trade agreement with Australia and New Zealand since it was completed in 2018 and that only three Pacific Island countries have so far ratified it,” Dr Patricia Ranald said today.

“Fiji and PNG make up over 80% of Pacific island output. They have not signed PACER Plus because they say the deal is lopsided and does not meet their development needs. They already have tariff free access to Australia. PACER Plus mainly advantages Australia and New Zealand through reducing Pacific island tariffs on imports and less controls on foreign investment,” said Dr Ranald.

“During the nine years of negotiations, Pacific island governments said consistently that their priority was addressing the climate change crisis, not trade agreements. The Australian government has failed to address climate change issues in a way that is meaningful for the Pacific, which has damaged the relationship. This has created the context for China and others to compete for influence, which now appears to be the Australian government’s main concern,” said Dr Ranald.

“In 2018 an unusually critical Parliamentary Committee Inquiry Report with a majority of Australian government members noted the absence of any independent study of PACER Plus economic impacts.  The report acknowledged potential negative impacts on small and vulnerable Pacific Island economies,” said Dr Ranald.

“Most Pacific Islands are still local farming and fishing economies, with dispersed populations and high transport costs, and are dependent on import tariffs which make up 10 to 20 percent of government revenue. The World Bank has said these factors can prevent these economies from developing new industries and employment to offset the impacts of increased import competition. The Report warned that loss of government tariff revenue could also result in cuts to essential government services in areas like health and education,” said Dr Ranald.

“The Report also noted that development assistance funds for implementation of the agreement were not additional funds but were coming from the existing aid budget, and concluded that it is not clear how this is likely to provide a greater benefit to Pacific Island countries. The report recommended that some of these funds be used to monitor the potentially negative impacts on revenue, public health, and gender equity,” said Dr Ranald.

“But the government has not so far acknowledged these flaws in the deal. Trade Minister Birmingham has still been pressuring more Pacific Island governments to sign and ratify PACER Plus. We can only hope that the multiple parliamentary inquiries will provide an opportunity for the government to actually listen and understand the real needs and priorities of the Pacific. AFTINET will be making a submission to the trade inquiry,” said Dr Ranald.