The long-awaited Pacific Agreement on Closer Economic Relations (PACER) Plus trade agreement is expected to be signed in early June, after the Pacific Forum countries concluded their talks in Brisbane last week. But Papua New Guinea and Fiji have said they will not participate. Business Advantage PNG asks the Pacific’s Chief Trade Adviser, Edwini Kessie, what PNG is missing out on.

Pacific Trade Adviser, Ed Kessie.

BAPNG: What was PNG’s position in the negotiations?

Edwini Kessie (EK):  PNG participated in almost all the negotiations on the legal texts but did not participate in the market access negotiations.

From the press reports, PNG has given a number of reasons, including the loss of its manufacturing industry and the wish to conclude a separate comprehensive bilateral trade agreement with Australia and New Zealand.

BAPNG: Do you think there any provisions in the PACER Plus Agreement to watch out for?

EK: The Agreement contains a number of special and differential treatment provisions in favour of the Forum Island Countries (FICs). Under the agreed tariff modalities, PNG and other FICs are not expected to completely remove all their tariffs. Thus, PNG would have had the ability to maintain tariffs on its most sensitive products or sectors.

‘There is a range of measures at the disposal of FICs to protect their domestic industries.’

Secondly, the FICs were given between 25 and 35 years to eliminate their tariffs. During the intervening period, they could introduce tax reforms to recoup any losses that might have from tariff liberalisation.

Thirdly, the FICs have access to an infant industry clause, which they can impose for 10 years. Should the industry still need assistance, they could permanently modify their tariff concessions upon the payment of compensation to countries with an interest in those products.

Lastly, the FICs can also impose global and transitional safeguard measures, should there be a surge of imports from a PACER Plus Party, to protect domestic producers.

It can therefore be seen that there is a range of measures at the disposal of FICs to protect their domestic industries. In the area of services and investment, a positive list approach was adopted, which gave the FICs broad flexibility to exclude sensitive sectors/subsectors and place limitations on those sectors/subsectors about which they had undertaken commitments.

BAPNG: Could PNG and Fiji join at a future stage?

EK: Yes, they can join whenever they deem appropriate. The Agreement contains special provisions for countries which participated in the negotiations but were unable to accede to it.

BAPNG: Fiji’s Trade Minister, Faiyaz Koya has said Australia and New Zealand were being ‘inflexible’ with regards to industry development and most favoured nation (MFN) clauses. Has Fiji’s concern been resolved?

EK: In October 2016 in Nadi, Fiji, the FICs, including Fiji, made a number of collective demands relating to the MFN principle and industry development. Australia and New Zealand conceded to the FIC demands on 12 April 2017. Thus, it could be said that all the issues referred to by Minister Koya have been resolved satisfactorily.

BAPNG: What will be the first action that Pacific Islanders will see, once the agreement is signed?

EK: The Pacific Islanders will see a number of Aid for Trade projects intended to strengthen the productive capacity of their countries to increase and diversify their exports. They will also see assistance being provided to enable them to take full advantage of the seasonal work programs of Australia and New Zealand. They should have access to a wide variety of quality products at affordable prices.