A one day national consultation on the Pacific Agreement on Closer Economic Relations (PACER) Plus this week has highlighted key challenges and potential benefits facing the Solomon Islands.
The consultation brings together stakeholders from the government, private sector and representatives from the informal sector.
The Minister of Foreign Affairs and External Trade, Hon. Clay Forau Soalaoi said that out of all the regional and sub-regional trading agreements we have signed up to or currently negotiating, a PACER-Plus trade agreement with Australia and New Zealand will probably have the greatest impact because most of the imports of Forum Island Countries come from Australia and New Zealand.
Minister Forau noted that there will be a lot at stake, as negotiations for a new trade agreement with Australia and New Zealand are likely to result in a binding international agreement that will eclipse all previous regional initiatives in the Pacific, in terms of its scope and impact.
“For Solomon Islands and other Pacific Island Countries, our isolation resulting in high transportation costs mean that our potential exporters face considerable constraints – such as distance from markets, expensive or infrequent inputs, small economies of scale etc,” Minister Forau said.
This will result in Solomon Islands exporters not becoming competitive and therefore not being able to trade.
Some of the challenges that must be address include substantial loss in government revenue due to liberalization, higher taxes for the poor and opening our markets to large well established corporations in Australia and NZ who do not operate within these constraints may not necessarily make Pacific businesses more efficient – it may instead wipe them out as well as undermining indigenous rights to land.
Minister Forau specially noted that indigenous peoples across the Pacific have a distinctive physical and spiritual relationship with their land based on the concept of custodianship and free trade agreements can have implications for indigenous rights and land tenure, particularly if they contain provisions to allow foreign ownership of land.
Minister Forau, however, indicated that there are also opportunities PACER Plus has to offer with Labor mobility schemes in Australia and New Zealand providing employment opportunities for Solomon Islanders.
Temporary labor mobility schemes for low and semi skilled workers to Australia and New Zealand are very important to the Solomon Islands. They represent the largest source of untapped gains for economic development for the Solomon Islands and for the region.
Minister Forau also highlighted that other potential benefits will included Infrastructure Development – particularly on shipping and upgrading of port facilities, Fisheries development – Fishing licenses and processed fish is the other major revenue earner for Solomon Islands and Capacity Building – particularly to the private sector, which is the countries engine for economic growth, to ensure we can take advantage of the market access opportunities PACER Plus has to offer.
“I am comforted by the fact that both Australia and New Zealand have assured us that development will be at the core of PACER-Plus. It has to be sensitive to the different stages of development of the parties. And more importantly, there is no commitment to liberalize trade. We are only obliged to negotiate a reciprocal free trade agreement with Australia and New Zealand,” Mr Forau said.
Since the launch of the PACER-Plus negotiations in August 2009, Solomon Islands has been negotiating on a series of ‘common priority issues’ Forum Trade Ministers have identified namely labor mobility, rules of origin, development assistance, customs procedures, sanitary measures and technical barriers to trade.
Minister Forau said PACER Plus will be an instrument that will form the foundation of a long-term, evolving partnership based on economic and trade cooperation between ANZ and the Pacific Island Countries.
“It will therefore be the most important economic negotiations that Solomon Islands and other Forum Island Countries will undertake this decade. And it’s impact will be huge. So huge and far-reaching that it will simply dwarf any other regional initiatives,” Minister Forau said.
Source: Press Release, Government Communications Unit, Honiara