By Adam Wolfenden

Australia is on a mission. Come August when it hosts the Pacific Islands Forum it's looking to announce another feather in its free trade cap, that of the Pacific.

Today in Apia, Samoa, Trade Minister Simon Crean will be meeting with his counterparts from the Pacific and New Zealand to discuss the Pacific Agreement on Closer Economic Relations (dubbed PACER-Plus). PACER is a framework for a free trade agreement, the "Plus" is supposed to be the

development aspect but it seems to be more about getting Australian and New Zealand services to invest in the Pacific.

With August two months away, this is the last chance for Australia to get agreement from the Pacific on starting negotiations. With Australia the biggest aid donor to the Pacific the threat of cutting the funding looms over the Island government heads. Things could get ugly.

One has to ask, what's the hurry? The Pacific, whilst cautious about any negotiations hasn't explicitly said no to them. Rather, they're asking for more time and the capacity to actually evaluate the potential impacts. They want the time to consult with their populations, run studies to see what the impacts would be, explore whether or not the broader benefits

will outweigh the broader costs. One would think that's sensible, not Australia.

Despite the Australian government declaring in its election platform that it would evaluate the social, environmental, regional, cultural and regulatory impacts of any trade agreement before proceeding with negotiations, it's full steam ahead. Not only is the government breaking its own election promise but it's pushing an agenda that means other countries have to follow a similar unevaluated process. We don't want to overload the agenda with these concerns, this is about economics, and according to the theory, free trade works, just ask Simon Crean.

For the past few months Mr Crean has been very publicly flaunting the AusAid funded study that says PACER-Plus will increase trade flows by 30 per cent. Trade flows increased by 30 per cent, how could anyone say no! The study however doesn't say which way the trade will flow and that's the

pickle. The Pacific already has duty free access to Australian markets. If PACER-Plus is about removing ...‘barriers' to trade, it's about reducing Pacific import taxes.

For the Pacific, these import taxes are a key source of raising government revenue. A study by the Pacific Islands Forum Secretariat revealed that Pacific governments stand to lose $10 million in government revenue which equates to 17 per cent of government coffers for Vanuatu and Tonga. Whilst

Australia has suggested that this can be replaced by value added taxes like a GST, the International Monetary Fund has recognised that such taxes only ever recover about 30 per cent of revenue previously gained through import taxes.

What this means for the provision of essential services is one thing that Pacific Governments are still wanting to find out. The Vanuatu Internal Affairs Minister Patrick Crowby told media last month; "how will the government fund its essential public services if we lose out on vital revenue? Depend on aid donor money? I don't think so. These are issues that Pacific Island countries need to seriously think about".

It doesn't end there. Reduced taxes mean that imports from large scale producers like Australia and New Zealand are cheaper, undermining local manufacturing. Professor Waden Narsey from the University of the South Pacific has predicted that under PACER 80 per cent of Pacific manufacturing will be forced to close down, costing thousands of jobs. With only preliminary research already suggesting such major impacts and unemployment rising all around and a fragile global economy you could understand why there is an air of caution.

What the Pacific lacks in research they also lack in capacity. Whilst there are very capable officials in the Pacific, they are stretched to the limit. The Pacific is currently negotiating agreements with the European Union as well as internally with talks of expanding an Islands only agreement to include services as well as goods.

In response to this the Pacific has asked that prior to any negotiations starting with Australia and New Zealand, an Office of Chief Trade Advisor be established to support Pacific countries to identifying shared objectives and act as the point of contact for negotiations. This would alleviate some of the capacity constraints that already disadvantage the Pacific. Of the $11 million requested, Australia and New Zealand have offered $3 million and objected to the Pacific gaining outside funding. The Pacific cannot make responsible decisions without having the time and capacity to assess the impacts first.

With so much still unknown, why would the Pacific say yes to starting negotiations this year? Already we're seeing the politics come out. Tonga and Papua New Guinea have both come out recently saying the Pacific should enter into negotiations. Whilst they may actually believe that is the best

thing to do, I'm sure there's no harm in very publicly coming out in favour of what the regions biggest aid donor thinks just before the meeting. Pacific countries are very wary of biting a hand that feeds.

If the development interest of the Pacific is at the heart of the intentions of Australia and New Zealand, like they continually say it is, why must it look like a free trade agreement? The global economic crisis as well as others like the food and climate crisis have shown the failure of the free market. The Pacific so far has been somewhat slow to embrace the neo-liberal ideology and given the global crises it would seem like the time to start exploring other options.

The idea that the only way to develop a country is by lowering tariffs has been thoroughly disproved. If Australia and New Zealand are serious about supporting the Pacific to develop they will stop insisting that undercutting Pacific production by cheaper imports from the bigger neighbours will help. The Pacific already enjoys duty free exports to Australia and New Zealand, what's needed is not reciprocity but a genuine process of consultation and discussion around what future the Pacific wants and how Australia and New Zealand can support that on the terms that the Pacific sets.

Adam Wolfenden is the Trade Justice Campaigner for the Australian Fair Trade and Investment Network (AFTINET), a network of over 70 organisations concerned about trade and investment policy. AFTINET, 12/06/09.