The pacific Institute of Public Policy (PiPP) has released a briefing paper PACER Plus: the art of negotiation in an attempt to focus discussion to address the fundamental question: What should a Pacific Agreement on Closer Economic Relations between the Pacific island countries, Australia and New Zealand entail?
Mr Derek Brien, Deputy Executive Director of PiPP says “PACER Plus is essentially a blank canvas waiting to be painted jointly by the parties”. He adds “as with any painting, first the artist needs to have an idea of what they want to paint, then sketch it out, often many times, and finally, start applying the paint to canvas. Essentially, Australia and New Zealand want to start painting now. The Pacific island countries are in some cases still formulating ideas, and in others going through the process of sketching out these ideas”.
The Pacific islands have called for a “phased approach” to negotiations, and this is understood to include national consultations and further research to determine national interests. This may come as a surprise to many, including Australian and New Zealand officials, having assumed these tasks would have been completed during the EPA negotiations with Europe. 

It is not yet clear what a PACER Plus version of Pacific economic integration will look like, but two issues look set to dominate discussions: first, labour mobility; and second, how much, if at all, governments will be compensated for import tariff revenue losses. Whilst the establishment of new job opportunities under PACER Plus presents an opportunity – albeit a slim one – many island governments worry about the costs of the agreement. 
The negotiating capacity of Pacific island governments is so limited that they will probably succumb to the demands of their bigger neighbours on tariffs. This is unlikely to be catastrophic. The islands will maintain market access to Australia and New Zealand, even if this is increasingly worthless owing to preference erosion. Further, any tariff cuts by the island governments are likely to be gradual and may be back-loaded by up to 10 years.  
Other than people, the islands have very little to export, meaning that the upside is limited. After more than a decade of trade liberalisation, resulting in broad-ranging goods market access, most regional countries continue to run trade deficits, as they have since independence. Poor infrastructure, unreliable transport, limited access to credit, and growing social inequalities all restrict the development of productive capacity in both goods and services. In this woefully under-developed environment, new foreign competition will do little to generate growth. 
Freer trade is not a panacea and PACER Plus needs to be considered as more than just a free trade agreement. 
Auckland and Canberra should at the very least formalise access to jobs in their own countries, invest in infrastructure, fund financial institutions, enact measures to combat inequality, and deliver more effective aid programmes in line with the Paris Declaration and Accra Forum. 

For their part, Pacific governments need to look beyond the massive imbalances of today and yesteryear to best position their countries in the ever shifting global political and economic landscapes. Nation building requires political foresight to guide the government officials charged with the task of delivering the services and environment to improve the standard of living of the population. Against the backdrop of protecting the national interest, the fundamental challenge for Pacific governments will be how, and over what time frame, to introduce the necessary economic and structural adjustments to maximise future opportunities.

In looking beyond just a free trade agreement, PiPP Board Member Mr Kaliopate Tavola  suggests “the challenge for PACER negotiators is really to put meat into this concept with the aim of producing an agreement that is unique, visionary and enterprising that the region can be proud of”.

It will take time, hard work and creative thinking, but through the fine art of negotiation, PACER Plus offers all parties an opportunity to turn a blank canvas into a collective regional masterpiece.

<ENDS>

The recent G20 leaders’ summit in London was an historic event, heralding a new economic world order. What do these new rules of global engagement mean for the Pacific’s own group of nations the ‘P14′?

Prime Minister Gordon Brown  declared the old Washington consensus is over. President Obama stressed the need to move beyond the one-size-fits-all approach to economic growth, trade liberalisation and market (de)regulation. The leaders of the world’s biggest economies agreed to a US$1.1 trillion package to counter the challenges facing the world economy. So what do these new rules of global engagement mean for the Pacific’s own group of nations the ‘P14′ group of island member states of the Pacific Islands Forum?
Foremost on most minds is the renewed focus on secretive offshore financial centres. In the lead up to the London meeting a number of ‘tax haven’ countries scrambled to sign up to international information sharing treaties, including the previously unthinkable end to secret Swiss bank accounts.  Reports accompanying the G20 announcement include staggering estimates of up to US$11 trillion dollars passing through the global offshore financial services industry. Little wonder governments want to get hold of the estimated US$250 billion in taxable income.
The Pacific is home to six of the world’s 38 financial centres that have committed to the internationally agreed tax standard, but have not yet substantially implemented that is have not signed up to any bilateral tax treaties. This makes up the OECD’s so-called ‘grey’ list not to  be confused to the much feared black list that only includes Costa Rica, Malaysia (Labuan) and Philippines. In fact it is worth emphasising the point that the G20 communique does not seek to punish tax havens only non-cooperative jurisdictions – that is those countries on the black list. Blacklisted jurisdictions face the loss of multilateral financial support. Those on the ‘grey’ list will be monitored and could face sanctions for failing to substantially implement the tax standard.
As most countries have already signed up to the international standards on information disclosure we can expect some pressure to now forge ahead with double tax treaties  or information exchange agreements. It is likely that the Pacific tax havens will be relatively low on the agenda of most countries except Australia. In order to ‘substantially comply’ with the international tax standard (and join the US, UK and others in the top category) a country would need to sign a minimum of 12 bilateral agreements on sharing tax information.
Mr Nikunj Soni, Executive Director of the Pacific Institute of Public Policy, suggests the news from London does not necessarily spell the end of offshore financial centres or low or zero personal tax rates, but that the Pacific will likely come under further pressure for more exchange of financial information. He says this sector is not new to the spotlight – following the attacks on the World Trade Centre in 2001 it was put on notice to become more transparent and accountable.it is in the industry’s interest to become more open about its activities The Bush administration succumbed to intense industry lobbying and eased up on the tax haven clamp down. But the new global power brokers don’t appear to be as susceptible to industry rhetoric. Mr Soni says it is in the industry’s interest to become more open about its activities.
Global integration requires government and industry leaders to be fully conversant of the rules of engagement and to move strategically. There will be calls for more openness and a commitment to bilateral tax treaties that could effectively erode the client base of the Pacific offshore industry. If the industry is to get Pacific governments to support its cause on the international stage, it will need to demonstrate the contributions to economic growth, which in turn will require a degree of openness and trust.
… the paradigm has shifted and it is up to the P14 leaders to position themselves in the emerging new world order… Governments also need to consider the longer term development goals, and it is important to note that the push for further exchange of tax information was just one bullet point of the G20 communique. Other significant measures aimed at stemming the fallout from the global financial meltdown include.

• $250 billion boost for global trade
• Capital injection of $500 billion plus a further $250 billion overdraft facility for the IMF to enable  members  facing economic problems can resort to these additional resources, including the Pacific economies.
• $100 billion injection for multilateral bank lending (ADB, World Bank, IMF) to developing countries strengthening financial supervision and regulations
• strengthening global financial institutions
• renewed commitment to achieving the Millennium Development Goals.

The paradigm has shifted and it is up to the P14 leaders to position themselves in the emerging new world order. Mr Soni notes of the paradigm shift we need to be more innovative in managing our economies to ensure continuing economic growth and sustainable development.
If it truly is the end of the one-size-fits-all Washington Consensus, there has never been a better time for Pacific leaders to engage in constructive dialogue on the way forward that benefits the particular needs of the small island states.

Last week’s G20 leaders’ summit in London was an historic event, heralding a new economic world order. What do these new rules of global engagement mean for the Pacific’s own group of nations the ‘P14′?

Last week’s G20 leaders’ summit in London was an historic event, heralding a new economic world order. Prime Minister Gordon Brown declared the old Washington consensus is over. President Obama stressed the need to move beyond the one-size-fits-all approach to economic growth, trade liberalisation and market (de)regulation. The leaders of the world’s biggest economies agreed to a US$1.1 trillion package to counter the challenges facing the world economy. So what do these new rules of global engagement mean for the Pacific’s own group of nations the ‘P14′ group of island member states of the Pacific Islands Forum?
Foremost on most minds is the renewed focus on secretive offshore financial centres. In the lead up to the London meeting a number of ‘tax haven’ countries scrambled to sign up to international information sharing treaties, including the previously unthinkable end to secret Swiss bank accounts.Reports accompanying the G20 announcement include staggering estimates of up to US$11 trillion dollars passing through the global offshore financial services industry. Little wonder governments want to get hold of the estimated US$250 billion in taxable income.
The Pacific is home to six of the world’s 38 financial centres that have committed to the internationally agreed tax standard, but have not yet substantially implemented that is have not signed up to any bilateral tax treaties. This makes up the OECD’s so-called ‘grey’ list not to be confused to the much feared black list that only includes Costa Rica, Malaysia (Labuan) and Philippines. In fact it is worth emphasising the point that the G20 communique does not seek to punish tax havens only non-cooperative jurisdictions – that is those countries on the black list. Blacklisted jurisdictions face the loss of multilateral financial support. Those on the ‘grey’ list will be monitored and could face sanctions for failing to substantially implement the tax standard.
As most countries have already signed up to the international standards on information disclosure we can expect some pressure to now forge ahead with double tax treaties or information exchange agreements. It is likely that the Pacific tax havens will be relatively low on the agenda of most countries except Australia. In order to ‘substantially comply’ with the international tax standard (and join the US, UK and others in the top category) a country would need to sign a minimum of 12 bilateral agreements on sharing tax information.
Mr Nikunj Soni, Executive Director of the Pacific Institute of Public Policy, suggests the news from London does not necessarily spell the end of offshore financial centres or low or zero personal tax rates, but that the Pacific will likely come under further pressure for more exchange of financial information. He says this sector is not new to the spotlight – following the attacks on the World Trade Centre in 2001 it was put on notice to become more transparent and accountable. The Bush administration succumbed to intense industry lobbying and eased up on the tax haven clamp down. But the new global power brokers don’t appear to be as susceptible to industry rhetoric. Mr Soni says it is in the industry’s interest to become more open about its activities.
Global integration requires government and industry leaders to be fully conversant of the rules of engagement and to move strategically. There will be calls for more openness and a commitment to bilateral tax treaties that could effectively erode the client base of the Pacific offshore industry. If the industry is to get Pacific governments to support its cause on the international stage, it will need to demonstrate the contributions to economic growth, which in turn will require a degree of openness and trust. Governments also need to consider the longer term development goals, and it is important to note that the push for further exchange of tax information was just one bullet point of the G20 communique. Other significant measures aimed at stemming the fallout from the global financial meltdown include:

• $250 billion boost for global trade
• Capital injection of $500 billion plus a further $250 billion overdraft facility for the IMF to enable members facing economic problems can resort to these additional resources, including the Pacific economies.
• $100 billion injection for multilateral bank lending (ADB, World Bank, IMF) to developing countries strengthening financial supervision and regulations
• strengthening global financial institutions
• renewed commitment to achieving the Millennium Development Goals.

The paradigm has shifted and it is up to the P14 leaders to position themselves in the emerging new world order. Mr Soni notes of the paradigm shift we need to be more innovative in managing our economies to ensure continuing economic growth and sustainable development.
If it truly is the end of the one-size-fits-all Washington Consensus, there has never been a better time for Pacific leaders to engage in constructive dialogue on the way forward that benefits the particular needs of the small island states.
The Pacific Institute of Public Policy is an independent, non-partisan and not-for-profit think tank based in Port Vila, Vanuatu and exists to stimulate and support policy debate in the Pacific.

<ENDS>

For more information contact:
Derek Brien
Pacific Institute of Public Policy
Tel: +678 29842
Email: dbrien@pacificpolicy.org

The recent G20 leaders’ summit in London was an historic event, heralding a new economic world order. What do these new rules of global engagement mean for the Pacific’s own group of nations the ‘P14′?

Prime Minister Gordon Brown  declared the old Washington consensus is over. President Obama stressed the need to move beyond the one-size-fits-all approach to economic growth, trade liberalisation and market (de)regulation. The leaders of the world’s biggest economies agreed to a US$1.1 trillion package to counter the challenges facing the world economy. So what do these new rules of global engagement mean for the Pacific’s own group of nations the ‘P14′ group of island member states of the Pacific Islands Forum?
Foremost on most minds is the renewed focus on secretive offshore financial centres. In the lead up to the London meeting a number of ‘tax haven’ countries scrambled to sign up to international information sharing treaties, including the previously unthinkable end to secret Swiss bank accounts.  Reports accompanying the G20 announcement include staggering estimates of up to US$11 trillion dollars passing through the global offshore financial services industry. Little wonder governments want to get hold of the estimated US$250 billion in taxable income.
The Pacific is home to six of the world’s 38 financial centres that have committed to the internationally agreed tax standard, but have not yet substantially implemented that is have not signed up to any bilateral tax treaties. This makes up the OECD’s so-called ‘grey’ list not to  be confused to the much feared black list that only includes Costa Rica, Malaysia (Labuan) and Philippines. In fact it is worth emphasising the point that the G20 communique does not seek to punish tax havens only non-cooperative jurisdictions – that is those countries on the black list. Blacklisted jurisdictions face the loss of multilateral financial support. Those on the ‘grey’ list will be monitored and could face sanctions for failing to substantially implement the tax standard.
As most countries have already signed up to the international standards on information disclosure we can expect some pressure to now forge ahead with double tax treaties  or information exchange agreements. It is likely that the Pacific tax havens will be relatively low on the agenda of most countries except Australia. In order to ‘substantially comply’ with the international tax standard (and join the US, UK and others in the top category) a country would need to sign a minimum of 12 bilateral agreements on sharing tax information.
Mr Nikunj Soni, Executive Director of the Pacific Institute of Public Policy, suggests the news from London does not necessarily spell the end of offshore financial centres or low or zero personal tax rates, but that the Pacific will likely come under further pressure for more exchange of financial information. He says this sector is not new to the spotlight – following the attacks on the World Trade Centre in 2001 it was put on notice to become more transparent and accountable.it is in the industry’s interest to become more open about its activities The Bush administration succumbed to intense industry lobbying and eased up on the tax haven clamp down. But the new global power brokers don’t appear to be as susceptible to industry rhetoric. Mr Soni says it is in the industry’s interest to become more open about its activities.
Global integration requires government and industry leaders to be fully conversant of the rules of engagement and to move strategically. There will be calls for more openness and a commitment to bilateral tax treaties that could effectively erode the client base of the Pacific offshore industry. If the industry is to get Pacific governments to support its cause on the international stage, it will need to demonstrate the contributions to economic growth, which in turn will require a degree of openness and trust.
… the paradigm has shifted and it is up to the P14 leaders to position themselves in the emerging new world order… Governments also need to consider the longer term development goals, and it is important to note that the push for further exchange of tax information was just one bullet point of the G20 communique. Other significant measures aimed at stemming the fallout from the global financial meltdown include.

• $250 billion boost for global trade
• Capital injection of $500 billion plus a further $250 billion overdraft facility for the IMF to enable  members  facing economic problems can resort to these additional resources, including the Pacific economies.
• $100 billion injection for multilateral bank lending (ADB, World Bank, IMF) to developing countries strengthening financial supervision and regulations
• strengthening global financial institutions
• renewed commitment to achieving the Millennium Development Goals.

The paradigm has shifted and it is up to the P14 leaders to position themselves in the emerging new world order. Mr Soni notes of the paradigm shift we need to be more innovative in managing our economies to ensure continuing economic growth and sustainable development.
If it truly is the end of the one-size-fits-all Washington Consensus, there has never been a better time for Pacific leaders to engage in constructive dialogue on the way forward that benefits the particular needs of the small island states.

Last week’s G20 leaders’ summit in London was an historic event, heralding a new economic world order. What do these new rules of global engagement mean for the Pacific’s own group of nations the ‘P14′?

Last week’s G20 leaders’ summit in London was an historic event, heralding a new economic world order. Prime Minister Gordon Brown declared the old Washington consensus is over. President Obama stressed the need to move beyond the one-size-fits-all approach to economic growth, trade liberalisation and market (de)regulation. The leaders of the world’s biggest economies agreed to a US$1.1 trillion package to counter the challenges facing the world economy. So what do these new rules of global engagement mean for the Pacific’s own group of nations “ the ‘P14′ group of island member states of the Pacific Islands Forum?
Foremost on most minds is the renewed focus on secretive offshore financial centres. In the lead up to the London meeting a number of ‘tax haven’ countries scrambled to sign up to international information sharing treaties, including the previously unthinkable end to secret Swiss bank accounts. Reports accompanying the G20 announcement include staggering estimates of up to US$11 trillion dollars passing through the global offshore financial services industry. Little wonder governments want to get hold of the estimated US$250 billion in taxable income.
The Pacific is home to six of the world’s 38 financial centres that have committed to the internationally agreed tax standard, but have not yet substantially implemented “ that is have not signed up to any bilateral tax treaties. This makes up the OECD’s so-called ‘grey’ list “ not to be confused to the much feared black list that only includes Costa Rica, Malaysia (Labuan) and Philippines. In fact it is worth emphasising the point that the G20 communique does not seek to punish tax havens “ only non-cooperative jurisdictions – that is those countries on the black list. Blacklisted jurisdictions face the loss of multilateral financial support. Those on the ‘grey’ list will be monitored and could face sanctions for failing to substantially implement the tax standard.
As most countries have already signed up to the international standards on information disclosure we can expect some pressure to now forge ahead with double tax treaties or information exchange agreements. It is likely that the Pacific tax havens will be relatively low on the agenda of most countries except Australia. In order to ‘substantially comply’ with the international tax standard (and join the US, UK and others in the top category) a country would need to sign a minimum of 12 bilateral agreements on sharing tax information.
Mr Nikunj Soni, Executive Director of the Pacific Institute of Public Policy, suggests the news from London does not necessarily spell the end of offshore financial centres or low or zero personal tax rates, but that the Pacific will likely come under further pressure for more exchange of financial information. He says this sector is not new to the spotlight – following the attacks on the World Trade Centre in 2001 it was put on notice to become more transparent and accountable. The Bush administration succumbed to intense industry lobbying and eased up on the tax haven clamp down. But the new global power brokers don’t appear to be as susceptible to industry rhetoric. Mr Soni says it is in the industry’s interest to become more open about its activities.
Global integration requires government and industry leaders to be fully conversant of the rules of engagement and to move strategically. There will be calls for more openness and a commitment to bilateral tax treaties that could effectively erode the client base of the Pacific offshore industry. If the industry is to get Pacific governments to support its cause on the international stage, it will need to demonstrate the contributions to economic growth, which in turn will require a degree of openness and trust. Governments also need to consider the longer term development goals, and it is important to note that the push for further exchange of tax information was just one bullet point of the G20 communique.

Other significant measures aimed at stemming the fallout from the global financial meltdown include:
$250 billion boost for global trade
Capital injection of $500 billion plus a further $250 billion overdraft facility for the IMF to enable members facing economic problems can resort to these additional resources, including the Pacific economies.
$100 billion injection for multilateral bank lending (ADB, World Bank, IMF) to developing countries strengthening financial supervision and regulations
strengthening global financial institutions
renewed commitment to achieving the Millennium Development Goals.

The paradigm has shifted and it is up to the P14 leaders to position themselves in the emerging new world order. Mr Soni notes of the paradigm shift we need to be more innovative in managing our economies to ensure continuing economic growth and sustainable development.
If it truly is the end of the one-size-fits-all Washington Consensus, there has never been a better time for Pacific leaders to engage in constructive dialogue on the way forward that benefits the particular needs of the small island states.
The Pacific Institute of Public Policy is an independent, non-partisan and not-for-profit think tank based in Port Vila, Vanuatu and exists to stimulate and support policy debate in the Pacific.

<ENDS>

For more information contact:
Derek Brien
Pacific Institute of Public Policy
Tel: +678 29842
Email: dbrien@pacificpolicy.org