Australia has duty to ensure fair PACER deal for Pacific island nations

Published on Wed 22 August 2018 1:26pm

These kinds of agreements do need to be looked at carefully. They need to be looked at through the lens of our broad responsibility to our Pacific island neighbours. We don’t stand on an equal footing when we negotiate these kinds of agreements. There is a vast disparity in economic power and capacity between Australia and New Zealand on the one hand and Pacific island nations on the other.

Mr Wilson (1:26pm) — I’m glad for the opportunity to speak on these two bills, the Customs Amendment (Pacific Agreement on Closer Economic Relations Plus Implementation) Bill 2018 and the Customs Tariff Amendment (Pacific Agreement on Closer Economic Relations Plus Implementation) Bill 2018. They put in place some relatively minor changes that nevertheless facilitate the implementation of the Pacific Agreement on Closer Economic Relations, also known as PACER or PACER Plus. What I’m going to say is really about PACER Plus because that’s the foundation on which these two bills are brought before us.

PACER Plus is a trade and investment agreement between Australia and New Zealand and a number of Pacific island nations. As the former speaker mentioned, those Pacific island nations are important to us. They’re our regional neighbours, they’re our brothers and sisters in the Pacific, and we have a special relationship with those nations. It’s not a relationship that ought to be governed just by economic interests and certainly not by Australia’s economic self-interest; it’s a relationship that should always take into account the imbalance between Australia and those nations and our responsibility to the people who live in the Pacific and the small Pacific islands. We do have a historic and contemporary responsibility for their wellbeing. I’m not sure exactly how much the PACER Plus agreement has focused on that responsibility. I will outline some thoughts on that.

It’s important to notice that, in addition to the standard focus on the tariff reduction within PACER Plus, it does include two less-than-treaty-status agreements on an implementing arrangement for development and economic cooperation and a labour mobility arrangement. It’s the labour mobility arrangement that really represents the part of the whole package that the Pacific island nations have a strong interest in. I will come to that a bit later.

In relation to tariffs, PACER Plus will eliminate tariffs on 91.5 per cent of export lines from Australia and New Zealand—what become imports into Pacific island nations. That means that 88.5 per cent of Australian exports will be tariff free into those nations. That’s a pretty significant change. On the tariff front, vis-a-vis the Pacific island nations, there’s not much change. The Pacific island nations trade amongst themselves on a tariff-free basis, and we don’t apply tariffs to their goods. On the tariff front, there’s no doubt that this agreement is all about tariff reduction for Australia and certainly not for Pacific island nations.

Mr Wilson (4:23pm) — As I was saying earlier, it’s important to see these bills in the context of the trade agreement that they enable, the PACER Plus agreement. As we do that, it’s worth asking, particularly when you consider the relationship between Australia and New Zealand, and the Pacific Island nations that form this agreement with us, exactly what the benefit to the Pacific Island nations will be. And I would begin on that point by noting that Papua New Guinea and Fiji chose to stay out of PACER Plus. Together, those countries represent 80 per cent of the combined GDP of Pacific Island nations. To give you a sense of that disparity or the proportion of trade that PNG and Fiji represent, Australian exports to Papua New Guinea and Fiji are $2.8 billion. Our exports to other Pacific nations, as I understand it, are only $84 million. There was evidence before the Joint Standing Committee on Treaties when it looked at the PACER agreement, which is the foundation of the bills we are discussing here, that Papua New Guinea and Fiji chose not to be part of PACER Plus because, in their analysis and from their judgement, it was heavily skewed towards Australia and New Zealand. So as we discuss these bills it’s important that we consider some of those related issues.

As I’ve already said, there is a fundamental imbalance between Australia and New Zealand and the Pacific island nations, and it appears that that imbalance did shape this agreement. I think that is a matter of some concern. I want to look at some particular aspects of PACER Plus that I think are concerning and where those concerns haven’t really been resolved by the material that’s been available, either in relation to these bills or in relation to the agreement as a whole. Concerns were raised in a number of areas through the JSCOT process that I referred to, and I’ll mention three of them. Firstly, there was the reduction in tariff revenue for Pacific island nations; secondly, there were the health impacts of the agreement; and, finally, there was the particular impact on women.

As I said when I began my contribution to this debate, this doesn’t remove tariffs that affect goods coming into Australia, it affects exports from Australia. Effectively, it removes tariffs that exist in Pacific island nations on goods that we export. So it costs them tariff revenue, effectively. The analysis that was provided in the consideration of PACER Plus showed that it would cost the larger nations in the Pacific at least $10 million annually, and in relation to the smaller nations it would cost as much as 10 per cent of their government revenue as a whole, which is really quite considerable.

Understandably, if you want to talk about health impacts, when you see that kind of reduction in revenue and that kind of reduction in government capacity you’ll see a corresponding reduction in the ability to invest in health services and health infrastructure. The second health impact, which the Public Health Association of Australia highlighted, was in relation to the kinds of products that are likely to flow into the Pacific as a result of tariff reductions. The PHAA was particularly concerned about the increased availability of and lower prices for unhealthy products such as ultraprocessed food, alcohol and tobacco. I will just quote from the material that they provided as part of their submission to the JSCOT:

There is a substantial body of evidence indicating that reduction of tariffs and other ‘barriers to trade’ in food products can lead to increased availability and lower prices of unhealthy foods, and can affect household food security … The PACER Plus tariff schedules indicate that some Pacific island countries have made commitments to reduce or eliminate tariffs on tobacco products, alcoholic beverages and a variety of processed foods.

So that is one of the possible deleterious impacts of the PACER Plus agreement.

Finally, there was evidence that pointed to the impact of these agreements on women in the Pacific. Again, if you reduce government revenue and the capacity to deliver social services, that does tend to affect women and children disproportionately. And if you have the health impacts that I’ve just mentioned, they also affect women and children disproportionately. But there are some specific impacts on women that have been identified, particularly by ActionAid Australia, who make the point that women who do paid work in the Pacific islands are concentrated in industries that are likely to be impacted by PACER Plus. Those include agricultural production, clothing, manufacturing and retail. In their submission, they made the following point:

ActionAid is concerned that in its current form, the PACER plus agreement poses a significant risk to women’s rights and economic empowerment in the Pacific, and as such is inconsistent with the Australian Government’s commitment to gender equality. In particular, PACER plus is anticipated to lead to an erosion of public services, loss of sustainable livelihoods, and adverse health impacts in Pacific Island countries, all of which will disproportionately affect women, and their social and economic empowerment.

What the Pacific islands were particularly interested in when PACER was being considered were the provisions that went to the question of labour mobility. Pacific island nations would obviously like to have the opportunity for their citizens to find work in the region, including in Australia. Remittances from that work is an important source of revenue for Pacific island nations. Unfortunately, the labour mobility piece, if you like, is not included in PACER Plus as a whole but is consigned to a less-than-treaty-status agreement. There were concerns expressed that those kinds of provisions and commitments were far less certain and far less valuable than the tariff reductions and other things that were made plain in PACER Plus.

There’s no doubt that, while we make the changes that these two bills, the customs amendment bills, put in place, they are relatively minor in their impact. They really just take care of some sort of technical customs niceties from our side of the arrangement. The PACER Plus agreement as a whole is a relatively significant agreement. The tariffs phase in over a relatively long time. That’s probably something to be grateful for. It does leave open, though, the question of just how genuinely beneficial PACER will be to our Pacific islands brothers and sisters. I note that we have allocated official development assistance funds, foreign aid effectively, to help Pacific island nations implement PACER Plus. That puts this agreement squarely in the aid-for-trade—or vice versa—frame, if you like, and I think there are question marks over that approach. There is some irony in providing aid funding to countries to implement trade agreements where the vast proportion of the benefits of those agreements come to the donor country.

The reason it’s hard to be sure about PACER Plus is that Australia didn’t commission a thorough and independent economic impact analysis. The shadow minister spoke earlier about that failing and our current approach to trade agreements generally. There have been numerous committee reports over the last five years—more than the last five years, actually—during the course of this government and the previous government that have recommended that all trade agreements be accompanied by an independent economic analysis. That has been recommended twice in the course of this parliament in the majority reports of the Joint Standing Committee on Treaties; yet we go without the benefit of that kind of analysis.

It was interesting to hear in the JSCOT hearings on the PACER Plus agreement that departmental staff advised that funding had been provided to Pacific island nations for the purpose of undertaking their own economic analysis but that the results of that analysis were not required to be provided to Australia. So one can only assume that the analysis that Fiji and Papua New Guinea undertook showed them that there wasn’t any great benefit in PACER Plus and that that informed their decision to not be part of it.

As I said earlier, the interest the Pacific island nations had was overwhelmingly in relation to labour mobility. On that point I will just point out that Matthew Dornan, the deputy director of the Development Policy Centre at the Australian National University noted that the Pacific island countries were unhappy with the outcome in PACER Plus because the agreement didn’t include a binding commitment in relation to labour mobility.

I’ll finish by saying, in general terms, that these kinds of agreements do need to be looked at carefully. They need to be looked at through the lens of our broad responsibility to our Pacific island neighbours. We don’t stand on an equal footing when we negotiate these kinds of agreements. There is a vast disparity in economic power and capacity between Australia and New Zealand on the one hand and Pacific island nations on the other. I think there are elements of PACER Plus that give great cause for concern because of the fact that they essentially bring tariff benefits to Australian companies but there are no corresponding benefits for Pacific island nations. It’s clear that they will receive less tariff revenue as a result and it’s also likely that they will see impacts in terms of health and on women and children.

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