THE relationship between Australia and some of our Pacific Island neighbours has become controversial in recent time, largely focussed on differing views on Australia’s climate change policies.

Understandably, the Pacific Islands take the view that they will be among the most affected by climate change and believe that Australia’s ongoing reliance on fossil fuels and apparent reticence to embrace the full range of climate change policies will be a major cause of those adverse effects in the region.

However, the relationship extends beyond those issues and the trade relationship seems to generally be in a good state with some of our regional counterparts, evidenced by the partial commencement of the Pacific Agreement on Closer Economic Relations Plus (PACER Plus) for several countries on 13 December 2020.

The DFAT website provides more detail on the origins and terms of PACER Plus.

Negotiations began way back in 2009 and concluded in April 2017. Since then, there has been a long delay while awaiting adoption of the agreement by the required number of countries for entry into force of PACER Plus.

While the agreement has been signed by Australia, New Zealand and nine Pacific Island countries it has only been ratified by Australia, New Zealand and six Pacific Island countries which meant that it came into effect on 13 December 2020 for New Zealand, Australia, Samoa, Kiribati, Tonga, Solomon Islands, Niue and the Cook Islands.

PACER Plus is still open or ratification by Nauru, Tuvalu and Vanuatu. Unfortunately, Fiji and Papua New Guinea have not entered into the agreement but it is still open for those countries to enter into the agreement.

According to DFAT:

PACER Plus is an important part of Australia’s engagement in the Pacific and provides an avenue to help foster a secure, stable and prosperous region. PACER Plus will provide commercial opportunities for Australian exporters and investors in a range of sectors. These opportunities will increase over time as the provisions of the Agreement lead to more open and transparent policies, and as wider relationships are built regionally and beyond.

A media release from agriculture minister David Littleproud on 13 December 2020 provided additional commentary including the following:

The agreement covers a variety of measures including biosecurity, investment and trade in goods and services.

The agreement will help our Pacific Island neighbours by supporting them to become more active partners in regional and global trade.

For Australian farmers, PACER Plus will open up market access, albeit to small markets, for our meat, dairy, grains, oilseeds, sugar, animal feed and processed food exports once fully implemented.

Tariff reductions will also create more opportunities such as beef and dairy exports to Samoa and wheat, animal feed and dairy to Solomon Islands.

Another key outcome of the PACER Plus negotiations, but separate to the agreement, was the non-binding Labour Mobility Arrangement agreed by Australia, New Zealand and the Pacific Island countries.

The arrangement establishes a regional framework to enhance and promote labour mobility cooperation, including mobility for unskilled and semi-skilled labour, and enhances the potential benefits for both Pacific Island countries and Australian businesses.

The agreement also includes a Development Assistance Package known as the PACER Plus Readiness Package which includes the following five work elements:

  • Legislative drafting
  • Customs modernisation, harmonisation, implementation of up to date tariff codes and transposition of schedules
  • Training on notification requirements under the Agreement
  • Public outreach and stakeholder engagement
  • Revenue planning and mitigation.

Both Australia and New Zealand have provided funding to assist with the Readiness Package and will also provide further funding to assist a Joint Committee overseeing the Agreement to administer and implement the Agreement.

In addition, Australia also provides significant “aid for trade” to the region, which funding has increased over recent time as part of the aim to counter increased Chinese investment and influence in the region.

I have already provided a briefing to IFCBAA members on the terms of PACER PLUS and the associated Australian legislation implementing the Agreement including relevant rules of origin, documentary evidence required to claim preference and the means of claiming preference in import declarations as well as all associated requirements for retention of documents and audit of claims by the ABF.

While the raw figures of trade and size of the markets affected by PACER Plus may be relatively small compared to our other Free Trade Agreements, the Agreement has its own considerable significance in the aims to enhance relations in the region, improve trade facilitation and integration and improve expertise in trade processes in the region.

Recognising those important current benefits and the potential for future enhanced benefits we can only hope that other parties join and implement PACER Plus so that the full range of aims of the Agreement can be achieved.