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SG's speech - Fiji/Australia Business Council Forum
FIJI-AUSTRALIA BUSINESS COUNCIL FORUM 2007
Radisson Resort, Denarau Island
2 – 4 December 2007
Theme: “Business: Driving the Way Forward”

PRESENTATION BY MR GREG URWIN
SECRETARY GENERAL
PACIFIC ISLANDS FORUM SECRETARIAT
ON
REGIONAL TRADE AGREEMENTS AND THE PACIFIC PLAN


Ladies and Gentlemen: Thank you for the invitation to participate in this year’s Fiji-Australia Business Council Forum. In my remarks, I would like to address this Forum’s theme from the perspective of three key regional trade agreements, of the Pacific Plan and say something about what it may mean for Fiji.
2. By way of background, may I begin by recalling that trade and economic development have long been on the regional agenda. In fact, at the very first meeting of the Pacific Islands Forum, held in 1971, Pacific Leaders agreed that a primary focus of the Forum should be on promoting regional trade and economic cooperation. Although the scope of work undertaken by the South Pacific Bureau for Economic Cooperation, and its successor, today’s Pacific Islands Forum Secretariat, has broadened over the years to include politics, governance, and security and a range of social policy issues, trade and economic cooperation still remain as the core of the work undertaken by the Secretariat. An important part of that work has been cooperation with and support for the private sector.

SPARTECA
3. As those of us here today with long memories will recall, the first truly regional trade treaty was the 1981 South Pacific Regional Trade and Economic Cooperation Agreement, SPARTECA, which is still in force. SPARTECA is a non-reciprocal trade agreement in which Australia and New Zealand offer duty-free and quota-free access into their markets for a wide range of goods from Forum Island Countries, the FICs, including Fiji.
4. A major beneficiary of SPARTECA under the preferential arrangement has been the Textiles, Clothing and Footwear (TCF) sector of Fiji. The future of the TCF industry vis-à-vis the Australian market has been the subject of discussion for about as long as I can remember and over the years, some adjustments have been made to the SPARTECA regime to address some of the issues thrown up by this. And in the last year, some derogation to the SPARTECA rules of origin for the TCF sector was negotiated and agreed between Australia and Fiji that has been, as I understand it, of benefit to the industries concerned.
5. On the whole, however, and looked at region-wide, despite the preferences and its objectives of promoting FIC exports into Australia and New Zealand and diversifying FIC economies, SPARTECA has not been as successful as had initially been hoped. This has been, primarily, for two reasons. First, the nature of the rules of origin has, for one reason or another, made it difficult for goods processed or manufactured in the islands to qualify for SPARTECA preferences. There is, of course, a counter-view to that proposition which James may put. The second reason has been the erosion of the value of those preferences to the FICs resulting from policy changes in Australia and New Zealand and the conclusion by Australia and New Zealand of free trade agreements with other countries, especially those in Asia which are major competitors of Fiji and other FICs in the Australian and New Zealand markets.

6. That situation has been recognised by Forum members for some time. Views vary about the general future of SPARTECA; some see its time as essentially past; some continue to see it as having continuing value. At all events, at the July 2007 Forum Trade Ministers Meeting, Ministers agreed that more consultations on SPARTECA rules of origin will need to be undertaken with the private sector. Forum Trade officials will then consider the outcomes of those consultations, including during an informal meeting of Forum officials to be held early next year. From that consideration will emanate recommendations to Forum Trade Ministers on an appropriate way forward. This presents an opportunity for private sector interests to consult with their governments over the coming months with a view to realising improved rules of origin.
PICTA
7. A decade passed – as they tend to do - between the birth of the Forum and the realisation of SPARTECA. It took another decade for the next major developments in regional trade --the adoption by Forum Members in 2001 of the Pacific Island Countries Trade Agreement, PICTA, and the Pacific Agreement on Closer Economic Relations, PACER.
8. PICTA creates a free trade area for goods among all 14 FICs, including Fiji. Four FICs have thus far announced their readiness to trade under PICTA. One of those, I am please to note, is Fiji - which was one of the first FICs to show its solid commitment and support for the building of regional integration through trade. In that regard, I would like to acknowledge the role of Fiji’s private sector in supporting the efforts of its policy makers to promote regional trade between Fiji and its Pacific Island neighbours.
9. By establishing a free trade area among the FICs, PICTA will encourage specialisation and greater efficiency in the economies involved. FICs can increase their exports to other FICs of products in which they can be competitive, and, in turn, increase their imports of goods that are being produced competitively by other FICs. The resulting increase in trade will reflect enhanced efficiency and improved consumer welfare in the FIC economies, and will hopefully contribute to the overall creation of jobs.
10. The creation of a regional market should also encourage increased investment in FICs. As you are no doubt aware, many FICs currently struggle to attract investment, mainly because of the size of their domestic markets. However, the opportunity for goods manufactured in the FICs to reach the regional market of 7 million people, tariff- and quota-free, may attract more investors, including from Australia, who hitherto may have been hesitant to engage with Fiji and other FICs. There have been those who, because the total market we are talking about is, by global standards, small, have tended to denigrate PICTA as not being worth the trouble. I must say this is a view I definitely don’t share, first because it does ignore the practical opportunities which exist in inter-island country trade, opportunities which should not be sneezed at and in which Fiji is placed to play a prominent role and secondly because PICTA represents a necessary basic building block for the arrangements we are embarked upon with trading partners further afield.
11. At the last meeting of FIC Trade Ministers, it was agreed to enter negotiations with a view to broadening PICTA to include trade in services. The benefits of extending regional trade beyond goods alone have been widely recognised at the national level. In the recent budget speech by Fiji’s Interim Finance Minister, the potential benefits of PICTA were emphasised and specifically, the inclusion of a services dimension.

PACER
12. Agreed at the same time as PICTA was PACER, an economic and trade cooperation agreement between Australia, New Zealand and the FICs. PACER provides for financial and technical assistance to the FICs from Australia and New Zealand in areas of trade facilitation, trade promotion and economic adjustment, with the eventual aim of extending free trade among Australia and New Zealand on the one hand, and the Forum Island Countries on the other.
13. As global tariffs continue to fall, major costs of actually engaging in trade are increasingly those incurred in satisfying customs, quarantine and standards and conformance requirements and procedures. To address such issues, one of the main features of PACER is the Regional Trade Facilitation Programme, the RTFP. Implemented by the Pacific Islands Forum Secretariat, together with the Oceania Customs Organisation, the Secretariat of the Pacific Community and the World Health Organisation, the latter in relation to food standards, the Programme aims to assist the FICs to modernise and harmonise their laws, systems, procedures and processes, improvements which will, it is hoped, ultimately provide an environment for enhanced and improved business efficiency in the region.
14. May I take this opportunity to extend my gratitude and appreciation to Australia and New Zealand for their continued support and assistance to FICs through the RTFP.
15. While PACER does not itself establish a free trade area among Forum Members, the Agreement does provide for negotiations with a view to establishing reciprocal free trade arrangements between the FICs and Australia and New Zealand by 2011, and even earlier if the FICs enter into such arrangements with other developed countries. This has important implications for future relations between Australia and the FICs, including Fiji.
Pacific Plan
16. Recent years have witnessed not only the conclusion of the regional trade agreements to which I just referred but also increased activity aimed at enhancing regional cooperation and integration generally. Most noteworthy in this respect was the decision of Forum Leaders taken in Auckland in 2004. In the Vision for the region that they endorsed at that time, Leaders, inter alia, undertook on behalf of their countries to seek partnerships with their neighbours and beyond to develop their knowledge, to improve their communications and to ensure a sustainable economic existence for all.
17. To give effect to that Vision, Pacific Leaders adopted the Pacific Plan in 2005, the goal of which is to enhance and stimulate economic growth, sustainable development, good governance and security for Pacific countries through regionalism. To meet that goal, the strategic objectives of the Pacific Plan include increased sustainable trade (including services) and investment; improved efficiency and effectiveness of infrastructure development and associated services delivery; and increased private sector participation in, and contribution to, development.
18. To achieve those objectives, the Pacific Plan identified a number of key trade-related priorities for implementation between 2006 and 2008. These included, in particular:
• expansion of markets for trade in goods under SPARTECA, PICTA, PACER and with non-Forum trading partners;
• integration of trade in services, including temporary movement of labour into PICTA and the Economic Partnership Agreement being negotiated between the FICs and the EU;
• timely and effective implementation of the RTFP;
• investigation of the potential impacts under PACER of a move towards a comprehensive framework for trade (including services) and economic cooperation between Australia, New Zealand and the FICs; and
• support of private sector mechanisms including through the Pacific Islands Private Sector Organisation (PIPSO).
19. As I indicated earlier, detailed work is now under way in relation to SPARTECA rules of origin. Forum Secretariat officials are working with those remaining FICs not yet in a position to engage in trade under PICTA to enable them to do so as soon as possible. Preliminary work is also underway to explore possible new trading arrangements with China and Korea. The RTFP has been under full implementation for some time and will be reviewed early next year with a view to enhancing its effectiveness. And moves have also been made to broaden PICTA to include services, while services are also being negotiated as part of an Economic Partnership Agreement with the EU [that will be addressed by another speaker at this Forum].
20. In the time available to me, I would like to comment a little more on just two of the priorities identified in the Pacific Plan. The first involves the possible deepening of relations between Fiji and other FICs and Australia and New Zealand. This is currently being approached from two complementary perspectives. First, as I noted earlier, there is a legal commitment relating to all Parties to PACER, including Fiji and Australia, to enter into negotiations with a view to establishing reciprocal free trade arrangements between them. And secondly, of course, is the political decision taken by Pacific Leaders in 2005, to which I just referred, to investigate the potential impacts of deepening economic and trade cooperation among all Forum Members. These two approaches to the same general objective are increasingly being considered together under the general heading of ‘PACER Plus’.
21. In keeping with the Pacific Leaders’ 2005 decision, a Joint Baseline Study and Gap Analysis has been undertaken on a possible comprehensive framework for trade and economic cooperation between the FICs and Australia and New Zealand. When the Leaders met in Tonga in October, they stressed the importance of building on the results of the study and analysis and recognised the need for thorough consultations among all relevant national and regional stakeholders on the issues involved. They agreed that regional officials should meet informally in early 2008 in New Zealand to discuss issues relating to a possible way forward under PACER. Discussions are now underway at the national level in the region with a view to preparing for that meeting. I hope this will present an opportunity for business interests, both in the island countries and in Australia and New Zealand, to liaise with their respective governments on the range of issues relating to the possible development of a comprehensive framework for future trade and economic cooperation in the region. It is a potentially complex proposition which will require a great deal of working out, but depending on the shape it finally takes, it could have a very considerable impact on the way our region looks and works in the future.
22. As you may be aware, the Pacific Islands Private Sector Organisation, PIPSO, was mandated at the 2004 Forum Economic Ministers Meeting as the regional organisation to represent and promote the interests of private enterprise both regionally and internationally. PIPSO is now up and running, and is currently housed at the Secretariat. The primary objectives of PIPSO are to implement business plans and work programmes in support of PIPSO members, identify and provide assistance to PIPSO members, promote and facilitate greater cooperation and strengthen capacity among PIPSO members, promote transparency and effectiveness in public/private dialogue and advocate the interests of PIPSO members. Members of PIPSO include the National Private Sector Organisations (NPSOs) of the FICs. At present, Fiji does not have an NPSO. The Secretariat is doing what it can to encourage the establishment of such a body. Where NPSOs are yet to be created, contact points within the respective FICs have been established by PIPSO.
23. Last month PIPSO announced the launching of its official website - www.pipso.org – another step towards bringing members of the region’s business community, government agents, institutions and concerned stakeholders together and sharing important information. The PIPSO website is funded by the UNDP Pacific Centre.
24. It would be remiss of me not to mention the valuable work being undertaken by overseas trade offices. Given the importance of Fiji’s trade with Australia, Fiji has, of course, had its own trade commission in Sydney for some years. The Pacific Islands Trade and Investment Commission (PITIC) in Australia, formerly known as South Pacific Trade Commission was developed from an initiative of the Australian Government at the 1978 South Pacific Forum in Niue to foster trade and investment opportunities between Australia and the Pacific Island Countries including the French Territories. Since its establishment, Australia has continued to fully fund the operations of the Commission. It is managed by the Pacific Islands Forum Secretariat (PIFS).

25. Fiji’s strong trade links with Australia mean that PITIC Sydney works closely with the Fiji Consulate General as well as the Fiji Trade Mission and Fiji Tourism in Australia to promote and foster trade and investment between the two countries. Most recently PITIC supported Quarantine Seminars in Fiji jointly with the Fiji Trade Commission in Sydney. The seminars involved raising awareness of AQIS regulations, standards and expectations, presented directly to exporters and growers. PITIC’s work includes supporting individual companies expand trade and investment between Fiji and Australia in a range of sectors, from grass roots operations such as Foundation for Rural Integrated Enterprises N Development (FRIEND), SME’s such as Better Boats and Rotomould as well as the promotion of large tourism developments to the Australian investment community.

Business – Driving the Way Forward
26. In the last few minutes I have briefly highlighted developments relating to three of the main regional trade agreements of importance to Fiji, Australia and other Forum Members. I have also mentioned several trade-related initiatives being undertaken under the Pacific Plan which may be relevant to your deliberations today. An important consideration to bear in mind in that regard is that trade agreements and other trade-related initiatives such as those to which I just referred are not ends in themselves. Rather, they are more in the nature of purpose-designed tools to carry out specific functions to achieve specific goals. And that is where businesses have an important role to play in – to quote the theme of this Forum – driving the way forward.
27. As I have observed, Fiji has long been in the forefront of promoting and benefiting from regional and sub-regional trade initiatives, taking advantage not only of its favourable geographical position and natural resource endowments but also the industriousness of its people. Australia, for its part, has long been a valued member of the region and a major trading partner for Fiji and other FICs. However, the potential opportunities available through new initiatives under SPARTECA, PICTA, the RTFP and PACER Plus can only be realised if businesses work closely with their respective Governments in identifying their interests and priorities in terms of bilateral and regional trade so that they can be appropriately reflected in trading arrangements to be negotiated over the coming months and years. Of course, they have to be permitted to do this and that doesn’t always happen – cooperation is needed on both sides at the national and regional levels.
28. Governments can only go so far in identifying national needs and priorities in the trade area; they need inputs from the business communities in each country to ensure that the resultant ‘tools’ are designed and utilised to best advantage. In Fiji’s case, the consultations between Government and businesses have, certainly by regional standards, been considerable, although those more directly involved will be better placed to say whether they might be further enhanced.
29. The Forum Secretariat provides Fiji and other FIC governments with technical advice and assistance on not only a wide range of issues relating to regional trade agreements and initiatives, but also on the formation and operation of national Trade Policy Advisory Committees and other aspects of trade policy capacity-building involving both public and private sectors. In line with the Pacific Plan and the other evolving arrangements I’ve mentioned, that role seems bound to intensify in the future as trade assumes an even greater prominence on the regional agenda, promoting as it does so the Vision set by our Pacific Leaders in 2004.
30. Thank you for your time and attention.