Pacific Cooperation Forum welcomes trade agreement
The Chairman of the Pacific Cooperation Foundation (P.C.F.), Fiso John Fiso, has welcomed the region’s newest free trade deal, saying it will pave the way for more private investment in Samoa.
The P.C.F. is a New Zealand based non-Government organisation which is dedicated to promoting initiatives to develop the economies and cultures of Pacific nations.
Fiso told the Samoa Observer the Pacific Agreement on Closer Economic Relations (P.A.C.E.R.) Plus, which goes into force on 13 December, would decrease the region’s dependency on imports.
The free trade deal took effect after the Cook Islands became the eighth signatory to formally ratify the trade deal earlier this month, bringing to eight the number of nations that have ratified the agreement.
(A total of eleven countries have signed the agreement: Australia, Cook Islands, Kiribati, Nauru, New Zealand, Niue, Samoa, Solomon Islands, Tonga, Tuvalu, Vanuatu. But the Cook Islands’ ratification means it will take effect across all signatory countries this year).
Fiso, who is also the P.C.F.’s acting Chief Executive Officer, says there are a number of reasons to support the agreement.
His support comes despite voices of caution from critics such as economist and President of the Tautua Samoa Party Luagalau Dr. Afualo Wood Salele. The regional trade watchdog Pacific Network on Globalisation (P.A.N.G.) and the University of Sydney’s Dr Patricia Ranald have also spoken out against the agreement.
But the current model of aid-based economies in the Pacific, Fiso says, doesn’t provide recipient countries economic returns on investments.
“The reality is there needs to be some change to the whole regional trade environment; otherwise it will continue to be dependent on imports. P.A.C.E.R. Plus allows private investment into the Pacific, which allows greater opportunity to strengthen both local and regional economies,” he said in an email.
“The current aid model, besides having clear social returns, doesn’t necessarily give recipient countries economic returns on investment. The current allocation of 20 per cent of aid from New Zealand’s contribution into trade should demonstratively provide sustainable, long-term economic returns to the Pacific region.”
Pacific countries have several economic challenges that can only be helped by trade and building strategic alliances, Fiso said.
“The Pacific must recognise it has a number of challenges, whether it’s climate change or isolation, and that much like New Zealand – which also has an interdependent economy – it needs to grow strong and strategic trade alliances,” he said.
“For smaller countries, it will be harder to survive the effects of COVID-19 and also tap in to trade opportunities without the larger infrastructure and support that P.A.C.E.R. Plus provides.”
Under the agreement, some Australian exports will have the tariffs reduced or removed including medication, gold coin and offal to Samoa. While Australian tariffs on a range of imported products from Pacific states will be lowered or eliminated.
The trade agreement will allow for Samoa’s small and medium enterprises like koko Samoa growers, taro planters and even fashion designers better access to markets, said Fiso.
“P.A.C.E.R. Plus will be key to benefiting the [small and medium enterprises] examples you have given, and other [enterprise] in the Pacific, as it will provide them better access to markets, and lower compliance costs such as tariffs,” he said.
“Also investors will be able to invest more directly into specific industries and [ small and medium enterprises].”
Samoa, he notes, is one of the largest economies in the Pacific and it has had a stable and growing economy.
As the first P.A.C.E.R. Plus, signatory, it has led the way.
Last week, the Government of Samoa announced that they won the bid to construct the P.A.C.E.R. Plus administrative office, which will be based in Samoa.
Samoa was one of four countries to submit a proposal to construct the office.
The Office of Prime Minister and Cabinet has not responded to questions from the Observer seeking details on the project, which was announced in the state-owned newspaper the Savali.
Fiso said Samoa is known as a safe, secure, stable and democratic country and larger entities prefer basing their dealings here.
“Samoa is one of the largest economies in the Pacific and has a reasonably stable and growing economy and as the first country to ratify the agreement, Samoa led the way. In that respect, it’s understandable that Samoa has been made the host country. It’s a natural fit,” he told the Samoa Observer.
“It also is in line with a repositioning that is taking place with larger entities preferring to base their dealings, business, operations in Samoa because it is known as a safe, secure, stable and democratic country within the Pacific.”
In a press statement, the Government last week welcomed the P.A.C.E.R. Plus’ coming into force.
Australia and New Zealand have committed to jointly fund the AUD$25.5 million Development and Economic Cooperation Work Programme (D.E.C.W.P.) from entry into force of the P.A.C.E.R. Plus, said M.F.A.T.
Last month, P.A.N.G. Campaigner Adam Wolfenden said P.A.C.E.R. Plus offers no new market access or development funding for Samoa and further claims that the trade deal is being used by the region’s largest economies to reduce competition within the island economies.
Economist Luagalau warned the deal could expose Samoa to an uneven playing field dominated by the region’s richest countries.
The Samoa Chamber of Commerce has not responded to inquiries about their stance on the trade deal.
Fiji and Papua New Guinea have refused to sign the trade deal.