Trade expert says PACER PLUS holds little benefit

Transcript

An independent trade expert from Geneva says PACER Plus trade negotiations are too rushed and hold little benefit for Pacific Island countries.

The regional trade negotiations resume this week in Melbourne with the Trade in Goods Tax chapter to be the main focus of the next few days.

The South Centre's trade for development expert Peter Lunenborg is in Melbourne supporting Pacific Island countries in the negotiations.

Mr Lunenborg told Koroi Hawkins he sighted the Trade in Goods chapter which will be discussed this week and says he is not impressed.

PETER LUNENBORG: If you really look at it the current tax as it is has various downside risks for the Pacific, are actually tilted against Pacific interests. If you make some analysis on that. And besides that even if you look at the provisions themselves and you compare them like for other regional trade agreements between the North and the South for example the EU and West Africa, they are really not that favourable.

KOROI HAWKINS: So you are saying that it is not a fair playing field?

PL: Well you know, it is basically, there seems to be a lack of a very grounded analysis and really questioning what is being proposed on the table right now. Also things seem to be rushing through, if you look at what is happening this week. I mean there are so many items on the agenda. And what would, normally in these kind of negotiations you focus on like one or two issues. Like in the TPP they have been negotiating one thing like dairy market access. Or rule of origins of automotives right and they were having discussions on them for one week. Here in one week we will have discussions on development, on this trade in goods. But as I understood from yesterdays meeting there will also be discussions also on the schedules of services, so basically on the meat of the service negotiations as well as the market access negotiations, so basically which goods are you going to liberalise when. But you know the main focus of the discussions should probably be more on the frame work for liberalisation not the trade in goods chapter itself with all these different clauses. And once you have that laid out you can move onto the next stages. But now they try to compress everything into like two or three days.

KH: And you said you would give some examples of imbalance that  you saw in the trade in goods document what were those examples?

PL:  So first of all in any trade documents you have to look at the cost and benefits right. So if I just start with the benefits to start off positively, I really, they are quite small and in any case it is not directly obvious what are the direct benefits. Because how can Pacific Island countries actually increase exports to Australia and New Zealand maybe they can have better rules for sanitary and phytosanitary rules. But if you look at what is on the table like the chapter on sanitary and phytosanitary rules they don't really offer Pacific facilitation for products that are exported by Pacific countries. So really, and also most of the exports are already duty free that are exported by the Pacific so actually the additional benefits are actually very small. Now then on the cost side, first of all there is of course, many Pacific islands are relatively dependent on government, on trade taxes. That is income from tariffs income from licenses, income from fees, income from charges and so forth. Now if you just do, I did some analysis and if you look at tariff revenue loss that will amount to around 205 million dollars a year based on some of the assumptions for Fiji, PNG, Samoa, Solomon, Tonga and Vanuatu. So that is quite a bit and it is actually higher than previous studies indicated. I think in one previous studies that is well known in this field is 110 million but I come to 205 million which is quite a lot for small Pacific Island countries. Now besides that of course there are also some risks for Pacific domestic industries. Trade liberalisation will take away a lot of protections but on the other hand safe guards are very weak. So there is for example no permanent and easily evocable safe guard for agricultural products. There is a standstill clause that freezes all the tariffs, even if you do not liberalise it freezes the maximum tariffs that Pacific countries can have. A country like Papua New Guinea cannot have export subsidies for their industries. Now like in many small countries that want to have export processing zones or whatever, they have used this and a country like PNG is a country that has this kind of resource. And so I can go on and on but there are some examples out there.

KH: So based on your capacity as a person who would be advising Pacific island countries what is your view on the overall, weighing up the benefit of Pacer Plus for the region or its lack thereof?

PL: Any country needs to make their own cost benefit analysis, it is a sovereign choice. So what I can do in my capacity is saying okay so these are the benefits and these are the costs. This is what you could do to augment the benefits for example it would suggest that for example you need to maybe have better rules on sanitary and phytosanitary measures which is by the way a chapter that has already been officially closed in the negotiations. So that is some advice on augmenting the benefits and also trying to understand some of these costs for the Pacific. And then it is up to the countries to make their own decisions.