PACER-Plus — boon or bane for Pacific island states?

Australia works with different regional bodies to increase knowledge about the potential of Pacific markets and to connect entrepreneurs with export markets. Photo by: Pacific Islands Trade and Invest / DFAT / CC BY

Small island nations in the Pacific are concerned about the future of their development progress as negotiations for the Pacific Agreement on Closer Economic Relations — better known as PACER-Plus — inch closer to completion.

Aid and trade watchdogs consulted by Devex fear the scheme will not bring equal benefits to stakeholders.

Following five years of long talks, a final agreement on PACER-Plus seems now close,  despite a recent “closed-door meeting” in Adelaide saw several Pacific island governments cry foul over some provisions that would reportedly only benefit their regional big brothers, Australia and New Zealand.

Australia is “aggressively pursuing” the conclusion of the agreement by the end of the year, Thulsi Narayanasamy, director of the Canberra-based AID/WATCH advocacy group, told Devex.

“No agreement has been struck. The significant pushback from the Pacific island countries who feel that areas [labor mobility and aid] where they can see any benefit may not be included,” Narayanasamy explained. “[These nations] believe that the agreement is not benefiting them and can see ways in which it can directly detrimental to them.”

PACER-Plus officially seeks to promote “sustainable economic growth in the Pacific” and address the “poverty of opportunity” that continually plagues the region. But is it actually a boon or a bane for the Pacific’s development progress?

For another expert, the trade negotiations are a blatant attempt to extend Australia’s highly scrutinized aid for trade approach and New Zealand’s intent to expand economic reach — something that could be disadvantageous to insular nations which, arguably, have the shorter end of the negotiation stick.

“When you have small economies … it isn't going to help them very much to have free trade agreements especially if it's in an imbalanced relationship,” Patricia Ranald, convenor of the Australian Fair Trade & Investment Network, told Devex. “We believe that Australia's relations to the Pacific should focus on what kind of assistance needed … rather than a trade agreement which will be good for Australia in a sense that more Australian investors will have more access to the local markets. But the benefits may not trickle down to the whole population.”

Narayanasamy added that the logic with aid for trade as a development policy is still far from convincing, with little evidence demonstrating how liberalization can have a direct positive effect on the Pacific island countries, which lack sufficient trade infrastructures that could lead them vulnerable in the long run.

Several local and international NGOs have earlier expressed their concern about the Abbott government’s aid for trade approach saying that trade alone cannot end poverty.

“The best thing [these nations] can do is to ensure that this agreement doesn’t go ahead,” Narayanasamy concluded. “[They] need to think good and hard about what this will mean for their people. They have been strong thus far in stalling this agreement and clearly stating that they are not benefitting.”

Do you think PACER-Plus benefit the development of Pacific island states — or rather the economic interests of Australia and New Zealand? Please share your thoughts by sending an email to news@devex.com or leaving a comment below.

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About the author

  • Lean 2

    Lean Alfred Santos

    Lean Alfred Santos is a former Devex development reporter focusing on the development community in Asia-Pacific, including major players such as the Asian Development Bank and the Asian Infrastructure Investment Bank. He previously covered Philippine and international business and economic news, sports and politics.