Who should be part of the regional architecture?
Publisher Kalafi Moala blogged “Regionalism debate becoming contentious” recently. On the same day, Professor Greg Fry of USP provided four scenarios in addressing the related question posed above in his DevPolicy blog, Development Policy Centre, at the ANU.
His third scenario was that of doing nothing and maintaining the status quo. From his analysis of that scenario, he drew the following conclusions, viz: (i) Fiji will not resume PIF membership; (ii) Fiji will continue promotion of PIDF, PSIDS and the MSG; (iii) the region will see the entrenchment of two competing Pacific regional systems with overlapping membership; and (iv) regional unity will be hampered and scarce human and financial resources will spread thinly and inefficiently.
My blog further explores this same scenario. It subscribes to the conclusions arrived at by Professor Fry and identifies more of that ilk. All in all, this scenario will drastically set Pacific regionalism backward and all FICs will be worse off.
The stunted performance of Pacific regionalism to date is reflective of its political economy aspects. Political economy analysis of any society in general investigates how political and economic processes interact and support or impede the ability to solve development problems that require collective action.
For PIF, the relative privileged position of Australia and New Zealand (ANZ) vis-à-vis the FICs is the fundamental ingredient of the political economy of PIF and has played a major role in its conduct. ANZ are developed countries, members of the OECD that are well-resourced and affluent; they are fully integrated into the global economy. They have their own bilateral ANZCER agreement. They are signatories to the WTO and as such are determined, similar to the other big global traders, to push for free trade and the Washington Consensus. They are generally opposed to preferential trade on which the FICs still pivot their economic development strategies with the aim of integrating into the global economy. ANZ are part of Western Europe in the UN grouping of nations, whereas the FICs/PSIDS are categorized together with Asia. In geo-political and geo-strategic terms, ANZ interests vary in nuance and sensitivity vis-à-vis those of the FICs. Furthermore, ANZ are major donors and development partners to the FICs with whom they share PIF’s membership.
As developed country members of the PIF, ANZ pay the lion’s share of the PIF Secretariat budget. In addition, they often times subsidize the additional cost of regional meetings – part and parcel of regional cooperation and integration processes. Given the need to be accountable to their taxpayers, ANZ naturally seek a return on their investment. This has led them in the past to assert undue influence on management and political decisions in order to win concessions, thus breaching good governance practices and trust. The FICs, being recipients of ANZ’s ODA, have tended to turn a deaf ear to such indiscretion and not to rock the boat for fear of losing their national share of the ODA. This situation has given free rein to ANZ’s unrestrained expressions on issues. Such a scenario has proven costly for the FICs when ANZ’s undue influence had undermined FIC positions on issues of critical importance to them, for example, climate change, trade and migration.
As principal markets for FIC trade, ANZ pressed the FICs to start the negotiations on PACER Plus even though the FICs have not been able to secure any gains nor strategic advantages from the EPA and PICTA negotiations as leverage for trade talks with ANZ . Both negotiations have yet to conclude. The PACER Plus negotiations, on the other hand, appear to be faltering on two issues to which ANZ are not giving concessions. On development resources, their quantum and modality of disbursement are proving divisive. On labour mobility, ANZ are not in favour of incorporating this issue in any Free Trade Area agreement. Such incorporation would bind the two developed countries to the provisions of the agreement. Instead, they prefer to retain unilateralism in decisions on this scheme on which FICs clearly enjoy comparative advantage.
The PACER Plus is intended as a developmental agreement, like the EPA and the Doha Round before it. The ‘Plus’ sub-joinder was intended for this purpose. ANZ and FIC politicians were equally enthused on this matter. However, ANZ trade officials remain adamant about full compliance with WTO principles on trade negotiations as per Article XXIV of GATT. Their trained eyes only see the single linear pathway going forward. Flexibilities on the basis of Special and Differential Treatments and derogations from general provisions for the alternative pathways are not the language they understand. Should the PACER Plus negotiations proceed to conclusion without incorporating developmental aspects into the text of the agreement, it is clear that net gains from this agreement will accrue to ANZ and not FICs. Earlier feasibility study by Professor Wadan Narsey had reached this conclusion. In any case, any market access gained from the negotiations may be negated by the imposition of non-tariff barriers.
ANZ are keen to conclude the PACER Plus negotiations so that the agreement can replace SPARTECA, which, according to the ANZ officials, has outlived its usefulness – SPARTECA being a preferential and non-reciprocal trade agreement – an antithesis to free trade.
The various situations depicted above will tend to continue unabated under Professor Fry’s third scenario. Furthermore, the state of Pacific regionalism will be worse off without Fiji back in the fold. It can be envisaged that without Fiji’s participation in PICTA and in PACER Plus, regional trade, especially intra-FIC trade, will be missing an essential ingredient. Any possible growth, if any, in economic activities between and amongst FICs will be piecemeal and lack the needed augmentation and singularity of purpose that a united region would generate. In Fiji’s absence from PIF, the region will also lack a maverick to prick our collective consciences on occasions when we lose sight of our regional diplomatic aspirations.
