Third Informal Meeting of Officials on PACER Plus, Adelaide, 16 February 2009
Enhancing prosperity in the Pacific
I am delighted to welcome you to Adelaide and it is my great pleasure to open this third informal PACER Plus meeting of Forum officials.
I would like to use the opportunity today to have an open and frank discussion with you about how we can work together in building greater prosperity and development in our region.
While Australia may be the most populous country in the region, our economic growth and prosperity has been derived by engaging with the global community through international trade. We are a trading nation.
Our population and level of industrial development is not sufficient to generate the standard of living we enjoy. It is only through accessing larger global markets that we can sustain our way of life.
Engaging with the global economy presents challenges, but it also presents enormous opportunities to generate greater prosperity in our region. But such engagement will require a commitment from all of us that we are prepared to work together in pursuit of our mutual interests.
This two track process will require a commitment at the political level – Leaders and Ministers – and at your level – the technical level – where much of the work will need to be done.
Without this collective commitment we will not get past first base. Indeed, without genuine commitment to the process from the start there may be little point in going any further down this path.
Today I’d like to set out for you the Australian Government’s broad approach to engagement with the Pacific region and the Government’s views on the PACER Plus agreement – or as I like to think of it, enhancing prosperity in the Pacific.
The Rudd Government since assuming office has shown our strong commitment to our Pacific region, and it is from this position of friendship that I want to respond clearly to some of the negative perceptions floating around the region about the motivations Australia has in pursuing PACER Plus.
Partners in Prosperity: Australia and our region
Australia knows better than most that our prosperity today has been built on the foundations of trade and engagement with the global economy.
Over the past fifty years, world trade has grown at three times the rate of world output growth. But in the past five years it’s only grown twice as fast.
Part of the reason it hasn’t is that we have not been able to conclude the Doha Round of WTO trade negotiations. Each successful round of trade liberalisation has fuelled world growth.
And in times of economic uncertainty like those we face now, a successful round would be a tremendous boost to the confidence of the world economy. Trade matters because it provides a stimulus to economic growth.
That’s why a number of your countries have joined or are seeking to join the World Trade Organization: it is a rules-based system which provides nations with greater certainty and opportunity to build prosperity.
The WTO is an organisation that doesn’t discriminate – every country has to follow the rules, regardless of its size – and every country has to abide by the commitments. The system however recognises different levels of development – a common but differentiated approach.
This leads to fairness of opportunity in world trade, which is really the goal we are all seeking: a fair playing field for everyone.
PACER Plus
An important element of enhancing prosperity in the Pacific is greater economic integration. PACER Plus as an agreement is but a start to what will be an architecture of trade and development that will sustain not only individual countries in the Pacific and our peoples, but also our region more broadly.
Our collective efforts can provide the basis of greater unity and purpose in overcoming some of the most challenging environments for trade in the world.
The PACER Plus agreement should not be seen by anyone in our region as a threat. Rather it should be seen for what it is – an opportunity. An opportunity to unite and strengthen our shared economic future as a region of free trade. An opportunity to provide our children and grandchildren with not only a future, but also choices which were not available or only limitedly available to their forefathers. PACER Plus at the end of the day is simply one of a number of processes that will get us there.
For Australia, our future and interests are tied and will always be tied to the mutual interests of the Pacific. We are historically, geographically, politically and economically part of this region and proud to be so.
Our aim with PACER Plus is simply this: we want to work with you, our neighbours, to build your capacity to engage more deeply with the regional and the global economy. We want to work with you to help each country in our region to take full advantage of the opportunities of greater market access, and therefore help you build more prosperous countries for your citizens.
This requires engagement right across the community: at the political level, with officials, and with civil society organisations in the Pacific, to ensure that all views are taken into account in an appropriate and effective way as PACER Plus proceeds.
Putting the Plus into PACER
Australia has made it clear that PACER Plus will have capacity-building assistance as a central tenet of the agreement.
I see it as the region’s long term goal to establish genuine regional economic integration in the Pacific. But from Australia’s perspective we are determined that PACER Plus will take account of the individual circumstances of Pacific Island countries and have a strong development focus: a truly ‘trade-plus’ agreement.
Our fundamental view is that, the more the Pacific nations are integrated with the wider global community, and the freer the flow of goods, services and investments within the Pacific, the better the prospect of genuine, stable and long-term economic growth in Pacific communities.
We believe that the kind of regional agreement that Forum Leaders collectively envisaged under PACER Plus will serve to catalyse and underpin that crucial economic stability and growth.
We can already see some of the advantages that trade and economic liberalisation brings – with the deregulation of the aviation and telecommunications sectors having beneficial effects on competition and bringing better services to communities in the region.
Australia shares the challenges of isolation and long distances for many of our people and communities– our difference is that we are separated mostly by land and not sea. We have benefited as a nation from structural adjustment and deregulation – and our efforts to improve the efficiency and competitiveness of our economy continues now.
PACER Plus offers further opportunities to enhance economic prosperity. An AusAID-commissioned study on the Benefits, Challenges and Way Forward on PACER Plus has predicted a significant increase in trade volumes (of up to 30%) from the elimination of regional trade barriers and improved efficiencies.
While committed to the success of this endeavour, I do not want to diminish or understate the challenge of ensuring PACER Plus is very carefully designed to take account of individual circumstances and maximize island country trading opportunities.
There is no denying that the reforms needed to allow individual economies to benefit from trade liberalisation will impose some costs.
I was personally involved in the reform process undertaken by the Hawke and Keating Governments in the 80s and 90s, and I understand the difficulty of making decisions that pit your leadership and reputations against vested interests and mounting political pressures.
We know, too, that trade liberalisation by itself is not enough to drive economic development.
A key challenge is to help the states of the Pacific to build capacity through reform, to allow them to better reap the benefits of international trade.
We will have to take into account the island economies’ wide diversity, with respect to size, shape and characteristics. I’m ready to listen to where your priorities lie.
We are working with Forum island countries on a package of trade capacity and trade development assistance, aimed at securing new opportunities for island countries and helping them respond positively to the challenges of an increasingly globalised economy.
We have clearly demonstrated a commitment to deliver substantial trade and development capacity assistance in the PACER Plus context by commencing the Australian Leadership Award Pacific Trade Fellowships program and Trade Research Initiative.
The Trade Fellowships program held last week was designed to provide training to Forum island country officials to increase trade negotiating capacity and to support preparations for PACER Plus negotiations.
Forum island countries have also been encouraged to take full advantage of the Trade Research Initiative, which provides A$65,000 to each country to commission independent research on trade priorities and needs.
There are also ongoing discussions between Australia, New Zealand and Forum island countries on a Forum Secretariat proposal to establish an Office of the Chief Trade Adviser (OCTA). From Australia’s perspective, it is important for the OCTA to assist national efforts – not to negotiate on behalf of Forum Island countries.
Such a role if agreed to must not stand in the way of progressing outcomes that are in all of our shared interests, but rather act as a facilitator and honest broker in the process of our greater economic integration and the spirit of an initiative that will deliver greater prosperity to all of the region. We believe this approach is consistent with the 2008 Leaders’ mandate and in the best interests of Forum Island countries.
Australia understands that labour mobility remains an important priority for the Pacific, and we welcome the arrival today of 50 workers from Tonga under the Pacific Seasonal Worker Pilot Scheme who will work on Victoria’s almond harvest.
We believe that through the delivery of practical education and training programs, Australia can make a positive contribution to building the capacity of our neighbours and promoting growth and prosperity.
In this regard, Australia also continues to fund the Australia-Pacific Technical College—which furnishes Pacific Islanders with skills that will enable greater regional labour mobility—and provides scholarships to study at Australian education institutions.
As part of the Australian Government’s broad and deep re-engagement with the Pacific, Australia very much looks forward to hosting a successful Pacific Islands Forum in 2009.
Working together to build prosperity
I wanted to use this opportunity of our discussions today to ask you what the priorities are for your individual nations as we seek to identify the roadmap ahead.
Our fundamental objective with this agreement is increasing the prosperity of the region and to build the capacity of individual island economies.
Greater economic integration within the Pacific and between the Pacific and the global economy will lead to increased prosperity.
But it is inherent in maximising trade activities that the principle of reciprocity is involved.
As you know, we do have the SPARTECA agreement in place, which provides duty-free access on all goods from the Pacific to Australia and New Zealand. But there is no reciprocity in SPARTECA.
Quite frankly from the point of view of trade, Australia is not primarily pursuing the PACER Plus agreement from the perspective of its commercial benefit. Australia’s primary objective with PACER Plus is a more sustainable and prosperous Pacific – an aspiration that we all share.
This objective is borne out of all of the evidence that demonstrates that prosperity can be secured by countries engaging effectively with trade. We see trade as an opportunity, not as a threat.
But engagement with trade isn’t just about opening markets – it’s about ensuring that nations are competitive enough and productive enough to take advantage of liberalisation.
Your nations already have access to the markets of Australia and New Zealand through SPARTECA. But it is structural adjustments and domestic reforms that will really enable the Pacific to take greater advantage of this market access, and that is where we envisage the development assistance element of PACER Plus will be able to provide real gains.
Australia knows that there has been some acrimony felt in the Pacific during the negotiations with the EU. We should all commit in advancing our work on PACER Plus to ensure this situation is not repeated.
We genuinely want to use the decision taken by Forum Leaders as a collective group to move forward on PACER Plus to forge a deeper relationship with our region where we build your capacity to better develop and promote sustainable economic growth to secure a stronger future.
I know that this won’t happen overnight. But this is something that if we are to seriously progress, won’t happen if we keep putting off dealing properly with issues.
And what worries us about progress to date is that it doesn’t meet the call of our Leaders in Niue. And the question I ask is why? And how is that going to be explained to our Leaders in Cairns at the Pacific Islands Forum Meeting later this year?
Let us use today face up to the challenges as you see them.
Two-way trade with Australia and New Zealand is good for the region – and those who trade more derive the greatest benefits: PNG, Fiji and Samoa have the most significant trade flows with Australia and each runs a trade surplus with us.
But I know that there is more to do.
I appreciate that Australia's rigorous quarantine regime may be seen as an obstacle to trade with our nation - but it is in Australia's vital interest to maintain these important measures to keep out pests and diseases that could potentially destroy our national economy.
That said, we want to explore ways to make it easier for Pacific exports to fully meet Australian quarantine requirements and ensure that products reach the market.
I want to know what would make a difference to the businesses which drive your economy and in the structures which govern your country. I hope during the questions that will follow my brief remarks that you will feel free to nominate some suggestions for the way forward.
The two track approach
Australia is determined bring a new, revitalised approach to our relations with our Pacific neighbours. We are part of the Pacific and we want to see the region prosper and grow. Developing a comprehensive, region-wide, free trade and economic integration agreement is a big part of our shared vision.
Forum Leaders agreed that PACER Plus provides a mechanism to enable trade and regional economic integration to underpin the gradual and progressive integration of the Pacific island states into the global economy.
As I said earlier, I see this as a two track process: dialogue at the technical level, and high level engagement at the political level.
At the technical level – you will be heavily involved in the discussions and negotiations on the shape, substance and timeframe of PACER Plus.
In our discussions, Australia has made it clear that PACER Plus will be a trade-plus agreement that will include trade-related capacity assistance as a focal element. We understand that we need to assist with bolstering capacity so that you can meaningfully engage in the technical negotiations.
Building technical capacity is an important component of our assistance, and we have clearly demonstrated our ongoing commitment to practical education and training programs such as this course in Adelaide.
But the fact of the matter is that PACER Plus will not just be resolved at the technical level – we need an injection of political will as well if we are to live up to the expectations our Leaders have of us all.
And I will be directly discussing the importance of high level political engagement with my counterparts in your nations over the coming months.
I am hoping to visit the region in April to hear firsthand the views of Pacific Governments about PACER Plus and am really looking forward to those discussions.
If we are to drive an ambitious outcome with PACER Plus that will result in tangible outcomes for the region and achieve sustainable economic growth, there must be political leadership shown and I am confident that by working together we can do it.
But one track cannot wait for the other – these efforts at the political and technical levels should and must take place simultaneously if we are to reach a successful outcome.
I am personally committed to ensuring that we achieve a good outcome with PACER Plus, for the benefit of our entire Pacific region – and I look forward to working with all of you and your nations in order to achieve that end.
In wishing you every success for these important informal discussions, I want to stress that Australia is committed to being a responsible and committed partner as we work with Forum countries to build a better future for the Pacific.
I look forward now to hearing your views on how we can take the process forward. Please do not hesitate to outline what you believe are the key issues we need to work on together to achieve a more prosperous Pacific community.
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