Business
Stand by for free trade in a country near you
But Australia isn't talking about the secret report about guest workers
Regional trade officials are close to agreeing on the terms for the launching next January of a free trade area of 14 Pacific Islands countries that will exclude Australia and New Zealand.
But the two giants of the region are being offered a so-called "umbrella" deal. This would allow their goods into the islands--which are important markets for them--to keep flowing to them on terms equal to concessions given to European and other exporters.
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The technicalities of the agreement are likely to be wrapped up at another round of talks in April. The draft will then go to a Pacific Islands Forum trade ministers meeting to be held in June and then for final approval by Pacific Islands Forum heads of government at their annual summit, due to be held this year in Nauru in August. Melanesian countries, in particular, are anxious to stave off full Australian and New Zealand membership of the free trade area. They are afraid of having their fledgling manufacturing industries wrecked by the full blast of competition from far larger and more sophisticated Australian and New Zealand manufacturers. Polynesian countries don't have the same worry. Their small land areas and limited resources make them importers, not exporters, and likely to remain so.
The issue of Australian and New Zealand membership has been a controversial one, according to some sources. The islands didn't want to expose their weak economies to becoming influenced by trade policies dictated from Canberra and Wellington any more than these are now. Australia's Pacific Islands market is worth well over $A1500 million a year ($US750 million) to it and is fast growing.
Canberra was alarmed by the prospect of having Australian goods exposed to competition from European goods admitted by the islands at lower or no rates of import taxation. The European Union wants a free trade deal with Pacific Islands countries in reciprocity for the aid and trade preferences it allows them.
At a round of negotiations last August the Australians are reported to have put the heat on Pacific Islands countries by threatening to cut aid in retaliation for lost Australian trade advantages.
Pacific Islands countries delegations have been intrigued to learn of a secret report. In it a consultant engaged by the Australian government says that Australia should allow full free access for Pacific Islands workers in return for unrestricted access to the islands for its goods. Pacific Magazine was told that the report is not something the Australians want to discuss because of the delicacy of the labour access idea at a time when Australian immigration policies are under attack. Labour access would change the entire face of the region's weak island economies and, according to some sources, is a proposition that can't be ruled out. As with other parts of the Western world, Australia will have to face up to the aging of its population and growing dependency on imported labour to meet its future manpower needs.
The umbrella agreement proposition accepted at talks last February would let Pacific Islands countries launch their free trade area and allow the Australians and New Zealanders to be party to it while obeying the World Trade Organisation rules.
"If we enter a free trade agreement with Europe (as Pacific Islands countries expect to do so to safeguard the flow of European Union aid they get) we will enter one with them (Australia/New Zealand)," one source explained.
The agreement planned to begin operating next January is expected to contain safeguards for alcohol and tobacco. For example, the protection of small breweries from dominance by the Australian-controlled Carlton breweries in Fiji and Samoa.
Another complication is a proposition for a Pacific Islands single aviation market. Islands civil aviation ministers are about to look at a draft agreement to allow airlines to operate far more freely to and through island countries than they can do now.
Air Nauru and Fiji's Air Pacific are said to be keen on such a development. But not so airlines such as those of Vanuatu, Tonga and the Solomon Islands. Those insist that since they are expected to operate unprofitable but nationally important services they are entitled to full protection from competition on their few profitable routes.
The free trade area will be phased in over eight years by more larger, richer island countries and over 10 years by smaller, poorer countries.
