The Coalition Government, through the Ministry of Trade, is holding national consultations with industries and the business community as it re-evaluates its position on the Pacific Agreement on Closer Economic Relations (PACER) Plus.

PACER Plus is an international treaty creating a free trade agreement between Australia, New Zealand and the Forum Island Countries (FICs) that entered into force in December 2020.
Australia, Cook Islands, Kiribati, New Zealand, Niue, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu are parties; Nauru has signed but not ratified; and Fiji, PNG, FSM, Palau and RMI participated in negotiations but did not sign.

Stakeholders are urged to actively and thoughtfully contribute to the consultations, and explore the benefits of this agreement to Fiji, costs involved, and what Fiji stands to gain and lose.

Below is part of Deputy Prime Minister and Minister for Trade Manoa Kamikamica’s address at the consultation in Suva at the Civic Auditorium on Monday.

DPM Kamikamica:
“Firstly, I’d like to say that with the various representatives that are here today, Fiji’s trade interest is in good hands.

This (PACER Plus) is a regional trade agreement negotiated by Australia, New Zealand and several Pacific island nations. Primary goal was to address the distinct challenges faced by Pacific island economies, providing a framework-enhanced trade and economic co-operations.

Fiji, while actively participating in the PACER Plus, ultimately decided not to sign the agreement based on various considerations.

Since change in government, the people’s Coalition Government made an announcement early last year to explore the possibility of joining the agreement.

Last year, the Ministry was, of course, focused on the Indo-Pacific Economic Framework for Prosperity or IPEF and committed to looking to PACER when the time was ready, which is round about now.

Hence, this week’s consultations have been organised to re-evaluate our stance on PACER Plus and come up with some common positions. The insights and perspectives you share today will enable us to carefully evaluate whether joining PACER Plus aligns with our national interests and development goals.

We will not join if it does not make sense for Fiji.

Fiji’s involvement in the negotiations of PACER Plus was driven by our commitment to fostering regional co-operation and ensuring that trade agreements truly serve as instruments of development.

The Pacific island economies are small and vulnerable. We face unique challenges that require a tailored economic approach to growth and development.

Our reality is that our vulnerability are magnified by factors such as our geographical isolation, limited market size and exposure to natural disasters. Therefore, any trade agreement we get into must account for these challenges and provide us with the means to overcome them.

The PACER Plus proposal proposed, it was famed as a mechanism to aid in the development of our region using trade as a mechanism to achieve sustainable growth.

Australia and New Zealand had significant trade flows into their island economies and there was a need to boost trade of the Pacific island countries to New Zealand and Australia. This is an area we need to explore very closely.

By doing so, PACER Plus promised to create jobs, boost economic growth and improve the livelihood of our people by enhancing market access and using trade values.

Just the finalisation of the agreement, which marked Fiji’s non-involvement in PACER Plus about four years ago, a lot of time has passed and the economic landscape has changed both domestically and internationally.

Careful analysis of the agreement is needed, whether its current form is fully aligned to our development goals, and can it sufficiently address the structural changes needed by the Fijian economy.

This includes diversification and expansion of our narrow export base, resilience in our supply chains and balance in our trade deficit, including the deficit with Australia and New Zealand.

I don’t need to remind you all that collectively, we have more than $1billion worth of trade deficit with Australia and New Zealand, and that is significant.

It could be said the trade at the moment is unbalanced, this indicates several risks.

Australia and New Zealand are our largest trading partners, so the question we should ask is how PACER Plus will impact Fiji’s trade with Australia and New Zealand.

If PACER Plus increases trade, who’s trade will it increase, will it be Fiji’s exports, and will the subsequent deficit become lower and more manageable, or will the exports of Australia and New Zealand goods and products increase and thereby increase the trade deficit even more.

With significant trade amongst us, Australia, NZ and Fiji – another important question arises, what happens to the tariff revenue when we do liberalise trade with Australia and NZ.

Will we be able to afford the foregoing of revenue in this type of fiscal situation.

The Ministry of Finance recently suggested that the loss of tariffs revenue could be as high as $F300million for both Australia and NZ combined. This figure, of course, will vary on the number of tariffs from the imports of Australia and well as future consumptions factors on these products.

PACER Plus has other Pacific island country members also. One of the specific points maybe that the agreement would strengthen our trade between Pacific island neighbours and this needs evaluation.

We already had some trade agreement with our Pacific island brothers and sisters so what value does PACER Plus bring to the table during this arrangement.

As your government, it is our responsibility to ensure that any trade agreement we do must be fair, equitable, development oriented and beneficial to our country.

We have a responsibility to protect our national interest and ensure the benefits for any agreement are tangible for our people.

Embarking on PACER PLUS must be in the interest of Fiji.

Given the shift in the global trade landscape, particularly following the COVID-19 pandemic and other emerging trade-related issues, it is crucial to reassess whether our initial decision to stay outside PACER PLUS remains in the best interest of Fiji.

Today’s consultation provides an opportunity for us to engage with you to hear your views and concerns and aspirations regarding PACER Plus. We must work together to determine whether PACER PLUS as it stands can be a beacon for sustainable development that it is intended to be.

We are particularly interested in your understanding on how PACER PLUS can contribute to our long-term development goals, how can it help diversify our economy, enhance our industrial bases, create employment opportunities and facilitate our products internationally. How can PACER PLUS support our effort to being resilient against climate change and other external short calls?

These are some of the questions we must answer together.”