Tonga needs to act fast in creating a plan to take advantage of the Pacific Agreement on Closer Economic Relations PACER Plus, between 12 Pacific Island Countries, plus Australia and New Zealand, said ‘Anisi Kulu Bloomfield, the Acting Chief Executive Officer of Tonga’s Ministry of Labour, Commerce and Trade.

The PACER Plus agreement is scheduled to be signed in Nuku’alofa next month, 19 June.

While ‘Anisi believes that PACER Plus is the answer to Tonga’s economic problems and that it offers opportunities to attract foreign investors to build industries, offer employment and boost exports, he acknowledges that there remains a longstanding concern over Tonga's trade deficit with other countries. The new free trade agreement will allow the importation of goods duty free from New Zealand and Australia, while very little is currently exported from Tonga.

The government’s revenue has been coming from Excise Duty and Sales Tax.

'Anisi stressed that government has to act fast, and present a master plan of how Tonga is going to take advantage of what he sees as an opportunity to trade more freely.

 “What is our solution to our growing unemployment figures and our very low export figures?"

Tonga’s total exports in 2014 were worth $35 million while our imports were valued at $404.1 million.

Additional inflows were received from annual remittances of $30 million from Tongan seasonal workers in Australia and New Zealand.

One-sided

Opposition to the PACER Plus agreement has highlighted that trading between Australia and New Zealand, and the Pacific Islands is one-sided. Critics of the agreeement claimed that export from Australia and New Zealand to the Pacific Islands in 2014 was USD$3.4 billion, compared to a very small export of fish and agricultural products from the Pacific Islands.

The four big foreign exporters of goods to Tonga are New Zealand, Singapore, Australia and Fiji.

‘Anisi pointed out that with Fiji out of PACER Plus it opens up opportunities for other Pacific Island countries to take over what Fiji had been doing by taking semi-finished goods produced in other countries and finishing them for export to other islands.

Fuel

In the case of fuel, which Tonga imports from Singapore, under PACER Plus we may be able to get it cheaper from either Australia or New Zealand.

There was a strong push for Labour Mobility to become a component of the PACER Plus agreement.

However, ‘Anisi said that Australia and New Zealand wanted to leave Labour Mobility out of the PACER Plus Agreement. They argued that if Labour Mobility was to be a component of PACER Plus, then Australia and New Zealand would have to offer the same to Most Favourable Nations that they also have Trade Agreements with such as China, Thailand and others. These countries are also members of the World Trade Organization WTO.

 ‘Ainisi emphasized that PACER Plus is not just a Free Trade Agreement. “It is a Free Trade Agreement and Development. The inclusion of Development in the agreement, introduced other components to the FTA that New Zealand and Australia don’t have in their FTAs with other countries.”

He gave an example that New Zealand has set aside AUD$7.7 million for Pacific Island Countries to prepare for when they ratify PACER Plus.

This money will go toward the amending of legislation, public consultations, education programs and awareness programs.

There is another AUD$25 million for whatever is needed by the Pacific Islands Countries to get the Free Trade Agreement rolling.

Apart from this financial assistance ‘Anisi said that Australia and New Zealand had also given AUD$200 million to the WTO for the construction of warehouses, refrigeration facilities, and other trade related infrastructure projects.