Jane Kelsey: Pacific economies suffer from too-hard bargains

Opinion

Helen Hughes' repeated tirades against "failed" Pacific Island states conveniently ignore the legacy of colonial rule and the continued power plays of Australia, New Zealand and Europe as they promote their own economic and foreign policy interests.

As one New Zealand representative told me earlier this year: "When it comes to trade, there is no special relationship with the Pacific."

That was obvious from the Pacific Agreement on Closer Economic Relations (Pacer) signed in 2002. What was conceived in 1998 as a free-trade agreement among the Pacific Islands (Picta) ended up three years later with a promise to include Australia and New Zealand by 2011, or earlier if the islands began negotiations with another developed country such as the European Union.

Those involved in the negotiations say Australian officials bullied the islands' representatives and advisers who opposed their demands. They gatecrashed meetings and refused to leave. Australian and New Zealand ambassadors and politicians went directly to the islands' ministers to undercut their negotiators, sometimes in the middle of a meeting.

All this compounded the gross inequality in legal expertise, specialists and support systems to deal with a constant stream of proposals.

Consultants hired by the Pacific Forum secretariat were prime targets. One told me: "The whole experience was stressful and demoralising for me, let alone for the Pacific Islands negotiators. There were times that I felt ashamed to be a NewZealander; I was just pleased that I was not an Australian."

There was a less obvious cultural dimension. The Australasians' aggressive style was met by a silence that signalled disagreement, but was interpreted as consent. Some negotiators who were prepared to speak out say they censored themselves so as not to reflect badly on their country.

Trade Minister Jim Sutton dismissed these allegations, published in my April 2004 report entitled Big Brothers Behaving Badly, as a beat-up by anti-globalisation campaigners. In fact, these stories were collected from officials, ministers, diplomats and consultants who wanted the situation exposed.

Since then, Pacific Islands politicians have publicly denied that they were bullied, with varying degrees of conviction. Yet similar stories continue to flow from within their ranks.

Pacer was round one. Round two is about to begin. The European Union has insisted that the African, Pacific and Caribbean countries convert their existing preferential trade agreements into a reciprocal deal through regional negotiations. The Pacific negotiations began in September last and are to be completed by December 2007.

There are serious doubts about the sustainability of the islands' sugar and canned tuna exports to Europe if their historical preferences disappear. However, the effects of duty-free imports from Europe on revenue and local producers will be minimal because the quantity is small.

The problem is that Australia and New Zealand will want the same, and they are the islands' major source of imports. This would mean a huge loss of tariff revenues for the islands.

Bigger manufacturers are predicted to relocate to Australia and New Zealand and export tariff-free to the islands. Local farmers and small businesses risk being swamped by cheaper imports, with few prospects that new enterprises will rise their place. Unemployment will grow. Economic, social and political instability is almost bound to intensify.

One of the dubious benefits will be cheaper imports. But do the islands really need more mutton flaps? A World Health Organisation report in 2001 has directly linked diet-related disease in Tonga to trade liberalisation and dependence on imported foods, especially mutton flaps. It said people were making conscious decisions to eat less-healthy foods because they were cheap and available.

It seems truly perverse that New Zealand's trade policy promotes these potentially lethal exports while its aid policy aims to neutralise their effects.

In addition, the removal of tariffs would mean a significant loss of revenue from imports of such products which have to be replaced from domestic taxes, such as GST, in countries in which a majority of the people live by subsistence and whose cash income comes largely from remittances.

This is not about increasing trade. Australia and New Zealand already have vast trade imbalances with the Pacific Islands and face very few barriers.

There are some corporate interests to promote and defend. But this is really about remaining the dominant fish in our pond, especially if the EU threatens to steal a march in the region, and imposing a free trade vision for the world in the one place where Australia and New Zealand can assert control. In other words, it is neo-colonialism.

Ordinary citizens in the Pacific Islands, Australia and New Zealand know almost nothing about all this. Like all trade negotiations, these are held in secret. There is no genuine social impact assessment and no informed democratic debate. So much for good governance and democracy in the Pacific.

Helen Hughes is right that the media have a responsibility to promote informed understanding of such issues. Let's start with some home truths about what our Governments are really up to in the South Pacific.

* Professor Jane Kelsey, of the Auckland University law faculty, has written a series of reports lately on trade negotiations in the South Pacific.