The audience and esteemed panel of adjudicators were impressed by the high standard of debate, especially considering participants only had one day to prepare for the grand final topic. Jonathan Guyant of Vanuatu was particularly persuasive, putting a personal face to the topic and what it means to be ‘successful’ in Melanesia. He was awarded Best Speaker for the grand final debate.

Below is the transcript of his presentation.

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The affirmative team quote Kofi Annan, and praise the effects globalisation may have on countries all around the world.

Now I could say I disagree – but don’t take my humble student word for this. Take this quote from the Nobel prize winning economist – yes an economist, we are talking about the economy here – and he states that ‘globalisation as it is, is not a force for good. People should govern markets – markets should not govern people. Globalisation and its drawbacks have led us to cross roads and it’s high time we changed direction’.

Distinguished guests, adjudicators, chairman, members of the opposing team, dear audience, a very good morning to you all. We would firstly like to thank PiPP for organising this debate competition. The motion for today’s final is that Melanesia must globalise to succeed.

My team and I find fault in this. We believe the Melanesian countries do not necessarily need to globalise in order to succeed.

do you wish to preserve the identity of your beloved Melanesia? Or do you want to be just another random face on the ever-expanding international body of this globalised world?

My name is Jonathan. I will define the key terms in the motion, introduce our team and the points we have come up with. I will also present our first point, concerning the economic setbacks that globalisation could bring to our Melanesian nations. Kali, our second speaker, will offer a rebuttal on the points given by the opposing side. She will look into the environmental impacts that accompany globalisation and will elaborate upon the fact that globalisation will be a threat to Melanesian culture and it’s custom. Aleesha, our third and final speaker will be the one to summarise all the points raised by our team and conclude our argumentation.

Jonathan Guyant presents his statement at the Grand Final of the 2015 Melanesian School Debate

Now let us take a closer look at the key terms in our motion. We feel that the affirmative team has overlooked these key terms in the motion; must, globalise and succeed. So starting with must. Must has a number of definitions, but the one that seems the most relevant to the motion, and most pertinent to us was the one stating that must describes an imperative need or duty that you are commanded to carry out. This would imply that globalisation is an imperative need or duty for Melanesia. But is it really?

Let us all reflect on Melanesia’s current status in different fields. Starting with the economy. We may refer to Melanesia’s economy as a ‘traditional economy’. This means that our countries suffer little from global financial crises’ that conversely greatly affect the wealthier globalised nations. Here in Vanuatu, 80% of the population live in rural areas. In the Solomon Islands, 78% live in rural areas. In Papua New Guinea the number goes up to 87%. And finally Fiji – yes Fiji – still has 47% of its population living in rural areas.

Ladies and gentlemen, this means that over half the population in Melanesia live in rural areas and rely on this traditional economy.

The next term is globalisation. The Financial Times define this as a process by which national and regional economies, societies and cultures have become integrated through the global network of trade, communication, immigration and transportation. This signifies that all of those things are facilitated though the opening of borders between countries. At first glance, one might think that it holds the answers to many of the worlds needs. But we would just like to clarify that the way you phrase a sentence can have different meaning and influence any given person’s opinion. What I mean by that is, opinions vary form one person to another, sometimes very drastically. It all depends on your perspective.

For instance, if you look at globalisation from the eyes of a money-crazed giant, trampling the forest beneath its feet, searching for ways to enrich itself at the expense of poorer countries, all the while totally disregarding their local culture and customs. Then of course you’ll jump on the globalisation bandwagon. What could the consequences possibly be? If you’re the giant that is.

What I’m trying to say is – globalisation is located in the giant superpowers of this world. The US, Western Europe and increasing emerging countries like China who are all main actors in this race to the bottom.

Consider what huge economic setbacks globalisation could bring to Melanesia. One of them is free trade. It’s supposed to eliminate unfair bias to newcomers and raise the economy in both developed and developing countries. But does it really do so?

Maybe for rich countries, just maybe. But not for us. Let us instead consider fair trade. When we open up markets without regulations our own key industries and businesses may suffer, for example sugar cane, copra or garment industries. Our livelihoods will suffer at the profit of a multi billion-dollar corporation. Also this lack of regulation leads to substandard working conditions and low pay. People, this happens when you cut costs at the expense of human rights.

The recent Trans-Pacific Trade Agreement and PACER-Plus are suppose to offer an opportunity to help Pacific countries benefit from enhanced regional trade and economic integration. But do they do this for Melanesia? They encourage competitiveness yes, but do not create a level playing field for the countries that are involved. These economic policies can also lead to labor migration. When there are fewer employment opportunities at home, people will move away in search of jobs. This decreases the labor force and can also lead to a brain drain of our young educated and talented people.

The third and final term that I will define is success. Once again, success can be defined in many ways. But success cannot be measured – you cannot rate success in any way shape or form. This term is defined by the Merriam Webster online dictionary as the correct or desired result of an attempt. Now see we disagree. Others may say that success is the absence of failure. Again we disagree. Today, my team and I want to win. If we loose will we have failed? I don’t know yet, because success is a feeling. Success is the love that you see in your family and friends eyes, and the love that you give back. Success is the smile on your lips as you shrug off the defeat. Success my dear friends is anything you want it to be, and is discarding Melanesian ways, customs and traditions the path to success? Do you think that in the future you will be able to buy success at the next KFC or Adidas store they open in town? Do you really want to sacrifice your Melanesian identify just for the sake of globalisation.

To conclude my team and I believe that Melanesia must not resort to globalisation. But ladies and gentleman, what do you think? Do you wish to preserve the identity of your beloved Melanesia? Or do you want to be just another random face on the ever-expanding international body of this globalised world.

Photo credit: National Geographic

The first part of this blog was published last week. The following is part two:

However, the report fell short of proposing a mechanism to protect the rights of the informal economy participants. Subsequently, there is no mention of the need to properly organize informal economy participants and their activities into groups for the purpose of dialogue and consultation. Section 3(1) of the Informal Sector Development & Control Act 2004 provides for the administering authority to consult (if they wish to) with relevant ward committees, the police force and relevant government agencies responsible for health, physical planning and building, when declaring areas on which informal economy businesses could be conducted. However, experiences thus far have indicated that this has not been the case.

Even if this exists in some provinces there is little evidence to suggest that the administering authorities sought views from informal economy operators or vendors because informal economy, both its activities and operators, are disorganised. Furthermore, given the complexity and cross-cutting nature of the informal economy, provinces need to have special informal economy committees comprising of key stakeholders to deal with these issues. For instance, border provinces such as Vanimo see massive influx of cheap Indonesian goods into Vanimo town and the villages along the highway leading to Batas. These imported goods (with questionable content and quality) make up a large portion of the informal economy in Vanimo and the neighbouring villages. To protect consumers and ensure fair play, the provincial government or the Vanimo Town Authority will have to work with the Border Development Authority, customs, police, NAQIA and others. Therefore, the absence of such a mechanism will do little to change the status quo of the situation.

The report also did not highlight the need for a proper restorative justice mechanism to be in place to deal with cases of harassment and abuse inflicted by enforcers on informal economy participants. The Informal Sector law in its current form is silent on this matter. Section 3(6) of the law only goes as far as saying that “an operator (informal economy vendor/participant) aggrieved by the decision of the Administering Authority under section (4) and (5) may appeal to the District Court”. Yet for most informal economy operators or vendors the Village Court is the most affordable, reliable, reachable and dependable arm of the justice system since it addresses individual and community’s legal concerns through a typically PNG way. The District Courts can be utilized by an interest group or an entity representing the interest of informal economy vendors/operators. Therefore, the report fails to recognize that the infringements done by the informal economy participants (apart from the sale of drugs, counterfeit products and homebrew) are ‘economic crimes’ and not criminal offences that would require the ‘heavy arm of the law’. Thus section 4(2) of the Informal Sector law should be reworded or amended to ensure that the members of the police force are excluded from being appointed as inspectors to police the informal economy.

The NCDC buai ban law demonstrated that administering authorities armed with additional powers can abuse it and in the absence of a voice and an appropriate restorative justice mechanism for the informal economy participants, the informal economy will be suppressed to a point where lives could be lost. Deaths relating to the buai ban have been well-documented in the media. Such actions would thereby defeat the whole purpose of the law. In saying that the law does provide sufficient space as captured under section 3, where the administering authority is required to “adequately notify and welcome feedback from the informal economy operators of its attempt to make changes/determination to the law”. The operator(s) on their part should respond within a set time frame or take the matter to the district court if not satisfied with the authority’s feedback. In addition, inspectors appointed by the administering authority as per section 5(2) should properly notify the informal economy operator/vendor of its decision or actions. However as alluded to earlier, with most of the operators/vendors lacking basic literacy skills and resources (funds) they would need someone to do this for them, or better still an entity like an informal economy market vendor association to represent their common interests and amplify their concerns in order to get the attention of the authorities or policy makers.

Increasing penalty fees and repealing section 18 of the Act, which has a list of laws and their clauses that were excluded, means that informal economy participants will be forced to comply with standards that may be too high for them, especially when most of these participants have very poor literacy skills and lack formal employment to supplement their meager incomes. While the intention is to put forth a progressive and rosy image of the city and urban areas, this should not come at the expense of people’s livelihoods. PNG is now a country that is already experiencing a widening gap between the rich and the poor amidst its most prosperous period in its 40 years of nationhood. Early indications are that the PNG LNG will not be as transformative as it was predicted to be. On the contrary, the emergence of the PNG LNG project has created more problems than solutions for this nation. The cost of basic household goods and services have dramatically increased while the government is being forced to make deals that could possibly cost this country a great deal. At a difficult time when this nation is heading into uncharted waters, the wisest thing to do for the PNG government is to lean on its strengths. The informal economy with almost 80-85% of its population engaged in myriad of activities is its strength. Through the good and bad times, it has helped this nation to ride out crisis after crisis. Giving it its long overdue consideration in the national agenda may well be a game changer for PNG.

Caption: Village men in the Trobriand islands (PNG) work on their carvings. Many informal sector participants are innovators and skilled survivalists. Photo by Ben Bohane – wakaphotos.com

He gave a speech affirming the achievements of the Millennium Development Goals (MDGs) over the past 15 years and also called for commitments and cooperation in the adopting and implementation of the post-2015 Sustainable Development Goals (SDGs).

“We should take it as a new starting point to work out a course of equitable, open, all-round and innovation-driven development in the interest of common development of all countries,” he said.

President Xi’s call for the international community to focus on implementation was clear and uncompromising.

He said: “The post-2015 development agenda is a high standard list of deliverables that carries with it our solemn commitment. It is often said that the worth of any plan is in its implementation. I therefore call on the international community to redouble their collective efforts for the joint implementation of the post-2015 development agenda in the interest of cooperation.”

Toward the end of his speech, President Xi stated that China is ready to work with “relevant parties to move forward” the implementation of the ‘Belt and Road’ initiative.

President Xi reiterated that China has basically realized the MDGs by lifting 439 million people out of poverty and making remarkable progress in areas of education, health and women’s welfare.

“China’s development has not only improved the well-being of the 1.3 billion-plus Chinese people, but also given a strong boost to the global cause of development,” President Xi said.

Since his speech at the United Nations, President Xi has gone on an official visit of the United Kingdom, not only engaging in trade and investment talks with the British government but also warmly welcomed by the pomp and ceremony of British royalty.

The media heralded President Xi as the most significant and most powerful Chinese leader since Deng Xiaoping.

The Belt and Road initiative

China has released a vision for peaceful cooperative development based on a two thousand year old trade route known as the Silk Road in which there were social and cultural exchanges linking the major civilizations of Asia, Europe, and Africa.

But what is different about the Belt and Road initiative and activities from that of the creation of another regional trade block with China as leader?

In early October, the Chinese Communist Party hosted in Beijing over 60 political party leaders and representatives from the Asia-Africa-European region, accompanied also by a media forum of journalists and media practitioners from the region.

The summit was called the Asian Political Parties’ Special Conference on the Silk Road. The theme of the summit was the Silk Road trade and development co-operation concept.

The Belt and Road initiative proposed in Beijing 2015 was endorsed and adopted by the political leaders of the countries that met and consulted together in Beijing.

The Silk Road was a trade route that linked China and its immediate neighbors with the countries of Asia, Africa, and Europe. It is China’s pro-active attempt to build a Eurasian economic belt, and extend the Silk Road to the rest of the world, over land and sea.

But ‘Belt and Road’ is not just a proposal for cooperative economic partnership and development. China is already engaged in building infrastructure, creating a ‘Belt and Road’ fund and investment bank, creating many development projects, and more importantly establishing a consensus among the countries of Asia, Africa, and Europe, that Belt and Road is the pathway to the future.

With over 60 countries with political parties endorsing and adopting the Belt and Road Beijing initiative, the maritime ‘road’ that links to the Pacific islands is very much a part of this massive global plan for economic and social cooperative development.

The Belt and Road initiative is not confined to economic cooperative development but extends also to the social and cultural exchanges that would advance peace in a new world order.

Speaking in support of China’s efforts, Yong Rui, famed host of CCTV’s English Dialogue Program remarked in Beijing: “China is not just a major economic power. It is also a major civilization.”

The point is, economic development does not happen in a vacuum, but also allows parties to work together for the common good of their respective societies in every area of development ranging from sports and entertainment, cultural exchanges, as well as the advancing of common values that are part of social development.

Trade in the past two millennia was in silk, spices, porcelain, paper, noodles, and other things. But the Chinese have taken this concept and framed it into the Belt and Road initiative which will link not only the former regions of the Silk Road but all the countries of the world through the 21st century Maritime Silk Road linkages.

And even though the Chinese economy has slowed down from double-digit figures to a stable 6.5% growth, it is still the fastest growing economy, and is just behind the United States as the second largest economy in the world.

The Chinese still speak optimistically about this slowdown as a “cooling off” period to allow its economy to consolidate.

The Chinese insist that the Belt and Road initiative is not just another Chinese project but rather a peaceful cooperative development effort with other countries, working at a ‘win-win’ outcome.

As for what the Pacific region offers, we bring into the Belt and Road vision and partnership the world’s largest ocean, the world’s biggest tuna stocks, multi-billion dollar reserves of oil, gas and sea-bed minerals. And that is before we start to speak of tourism in one of the most beautiful and relaxing destinations in the world.

China and its larger development partners are also very aware of the fact there is marine wealth in the Pacific as well as something that money cannot buy – the relatively peaceful co-existence and relationships that are ever present in the Pacific region.

Each Pacific island nation will need to determine what and how to participate in the partnership, but there is also the need for collective dialogue and cooperation with China.

There is a lot that could be done to achieve a favorable outcome and due to the geopolitical power shifts taking place in our world today, our future may end up being defined by our partnership with China.

Caption: “Build friendship”: a Chinese naval ship displays a friendly banner during a port call in Port Vila, Vanuatu 2010. Photo by Ben Bohane/wakaphotos.com

Furthermore, if provided with the right environment, it could unleash entrepreneurialism and innovation that is abundant among many Papua New Guineans but lethargic due to lack of support. One should only take a bus ride to the infamous Gordon Market or travel up into the Kakaruk (chicken) Market in Goroka or elsewhere to witness the vibe of energy and salesmanship at play. This is what the law aims to nurture but in compliance with appropriate minimum standards to protect consumer welfare and generally minimize its negativity.

Yet the challenge will once again fall on the shoulders of the government to ensure that the intention of the law is realized. Already the government is urged in the report to step up and provide leadership in administering the law as well as providing essential public goods and services to encourage the development of the informal economy in PNG. So far the government has failed miserably in this area although it has introduced a policy and a law to address issues affecting the informal economy. This reinforces the sad reality that implementation and enforcement have always been a challenge for the PNG Government. Most Local Level Governments are struggling to function effectively in most areas of the country due to lack of support both in terms of resources and limited understanding of their functions and responsibilities. The report alluded to the fact that most LLGs that were consulted had no idea about the existence of the law although it is a national law.

At the national agency level the report found that no oversight was provided making way for administering authorities to make laws without alignment to the Informal Sector Development & Control Act 2004. In most cases administering authorities simply turned a blind eye on the law. For instance, in 2012 the courts making reference to the Informal Sector Development & Control Act 2004 restrained the Lae City Council from implementing its decision to close down informal markets in the city. In the case of National Capital District Commission (NCDC), buai producers and political leaders in Central Province issued threats challenging the legality of the buai ban law although this has not come to pass. If the ban was contested in the courts with reference made to the Informal Sector Development & Control Act 2004, the outcome could have changed the dynamics of the informal economy in PNG.

This is where the Constitutional Law Reform Commission’s (CLRC) foresight in introducing a ‘modal law’ is important as it bypasses the difficulties that could have eventuated if a national law superimposes itself with no regard to the administrative set up of certain provinces like NCDC. By allowing provinces to have the freedom to make necessary amendments to the modal law to suit their unique situation, it is hoped that they will effectively control negative aspects and promote the positive side of their informal economy. By having the Department of Community Development & Religion as the lead agency providing oversight on the law, it is envisaged that the amendments will be made with due respect to the spirit/intention of the national law as well as in alignment with the national informal economy policy.

The department to its credit has already embarked on a restructure (with no progress as yet) that will see a new section dedicated to coordinating the implementation of the policy and the law. Yet questions are being asked if this arrangement will yield any tangible results. The department itself is still reeling from the leadership tussle which transpired two years ago which has seen the department fragmented into factions as staff took sides. The aftermath of this battle can still be seen today with most of its offices half empty and manned by only few dedicated officers. In this environment there is no guarantee that the law will hit the ground running once it is passed by the government. This is where the department with the aid of CLRC should explore options that will lead to the effective implementation and administration of the policy and the law. One option would be for the department to quickly work towards establishing a stand alone mechanism, like an office within its structure. Such a set up, apart from speeding things up, would allow the department to effectively reach out (going beyond its traditional role as a social welfare department) to other stakeholders whose mandate or policies are related to aspects of the informal economy policy and Act.

On the other hand the informal economy participants for their part, misunderstood the law the first time it was passed by parliament, subsequently giving rise to the proliferation of diverse sets of informal economic activities, some of which posed serious health and safety risks. This meant that balance needed to be found in the law to ensure that the growth of the informal economy is controlled to minimize its harmful effects. The informal sector law in its current form in fact advocates for this. This is contrary to the views that it ‘gave fire’ to the widespread chaos that is unfortunately the hallmark of PNG’s informal economy. The draft report to the credit of the CLRC, has reinforced this idea with penalties raised depending on the severity of the offence, which is determined by taking into consideration an informal economic business activity’s impact on the environment, hygiene, health, safety and the nature of the items sold such as whether it is addictive and other factors. Furthermore, it has inserted a provision to deal with betelnut-related issues which now imposes a much tougher penalty for irresponsible chewers.

(To be continued next week…)

Caption: Fresh produce at the local food markets in Port Moresby, PNG – John Conroy

All sounds great. However, a report from the Overseas Development Institute (ODI) had this to say about the proposals: “Developing countries stand to lose out from trade reforms that are pushing the EU towards more protectionist policies which will hamper the global economy and damage developing countries.”

The ODI assessment is, evidently, a generalization. The impact of these proposals would differ for each developing country or groups of developing countries. This is so since developing countries are treated differently under the various market access schemes offered by the EU especially those offered on a unilateral basis, e.g. GSP, GSP+ and Everything But Arms (EBA). This blog assesses the impact of these proposals on the PACP (Pacific ACP) states that are still in the throes of negotiations on a comprehensive EPA (cEPA).

The connection between the GSP reform and the EPA is one proposal that is attracting a lot of controversy. The EU proposes that, under the GSP, more trade barriers will be imposed on a range of products for countries that have no EPA with the EU. This implies that a country has to negotiate an EPA to avoid increased trade barriers under the GSP. But such an argument lacks lucidity: for if a country is able to negotiate an EPA, there is greater rationale for that country to opt for the trade concessions under the EPA thus cancelling out the need for GSP. This validates the views reflected in the ODI report that this proposal by the EU is essentially to apply pressures on ACP states that have not concluded their EPA negotiations to do so.

Currently, twelve PACP states have no EPA to speak of; only Fiji and PNG have signed onto the iEPA (Interim Economic Partnership Agreement). Assuming that there is no progress on the cEPA, then those PACP states, also beneficiaries of the GSP scheme, will face increased trade barriers, e.g. in the form of increased tariffs. Furthermore, the ODI report pointed out that non-tariff trade barriers (NTB) can also be imposed if, for instance, any of the PACP states excludes European firms from its government procurement system.

Currently, the prospect of concluding a cEPA is in doubt. The EU has imposed a three-year suspension of the negotiations. Clearly, the argument above that the GSP reform is to apply pressure on the PACP states to conclude their EPA expeditiously seems groundless as far as the region is concerned. This can only mean that the suspension imposed is grounded on more serious and substantive issues.

The EU argued that this is done to allow the PACP states to formulate measures for the effective conservation of their fisheries resources. The PACP states, on the other hand, consider such an intervention as unnecessary procrastination and have been calling the EU back to the negotiations. PACP Leaders have now proposed a meeting at the margin of COP21 in Paris later this year when a clear roadmap to the conclusion of the negotiations can be agreed.

The tactic by the EU has generated much speculation – not only on the motive behind the tactic, but also whether a cEPA is still a serious contender to be pursued. From the beginning of the EPA negotiations, it was always understood that if an EPA cannot be concluded then a PACP state, or an ACP state for that matter, can opt for any of the alternative trade arrangements (ATA) on offer including the GSP or the GSP+ for those qualified or the EBA for the LDCs. But the GSP option has just been made difficult by the reform. For those PACP states that have no other option apart from the GSP, they will be worse off. This would represent a breach of trust. Furthermore, the increased tariff and other trade barriers imposed will render the EU market less competitive, especially if EU prices are going to be further depressed by production subsidies that are not curbed under the reform. PACP exports will thus seek alternative destinations.

Doubt on concluding a cEPA has been fueled by pressures being applied on PACP states to sign onto the iEPA and join Fiji and PNG. The reluctance to pursue a cEPA by the EU, implied in such a move, can be considered strategic. By not pursuing a cEPA, the EU thus avoids having to consider the extension of the rules of origin on global sourcing to also include chilled and frozen fisheries products. Such an extension is a principal stance by the PACP states in pursuing a cEPA. The EU and especially their fisheries industry stakeholders, however, have consistently regarded this issue as a red line in the negotiations.

With PNG’s withdrawal from the cEPA negotiations, the country’s choice for the iEPA is clear. This raises many problematic questions. Is there any merit in pursuing a cEPA given the prospect of having two versions of EPA existing side by side in future? Such prospect may not even be negotiable from the EU perspective. From the PACP perspective, the situation is not likely to be conducive for regional integration processes. As such, the EU may use PNG’s withdrawal as a platform to push for either signing onto the iEPA or opting for any of the ATA on offer.

PACP states will have to go back to the drawing board to work out the relative gains of the options they face. Clearly, opting for the iEPA will mean having to shelve plans to develop the countries’ fresh and frozen fisheries industry. Given the importance of fisheries in PACP states, this represents an opportunity foregone. Some PACP states may still sign onto the iEPA for the market access opportunities it offers and especially as an avenue to avoid increased trade barriers proposed under the GSP reform. Some least developed PACP states may opt for the EBA. Those facing increased trade barriers under the reformed GSP may just go back to the drawing board once more.

Image: Workers in a tuna processing plant in Madang (PNG)/ Nancy Sullivan

WTO has always prided itself as a member-driven organization. It created its ‘Green Room’ as a means of getting representative views on all issues including its membership. It got to a point, however, where the majority of members: essentially from the developing countries, the least developed countries and small vulnerable states who were the small and marginal global traders, felt that the Green Room was being dominated by the large trading nations. Those being dominated have to await invitations, where logistically possible and convenient, to enter this hallowed ground. Pragmatism has thus been abused for sectional interests.

According to Ambassador Pambagyo, this malpractice continues in Geneva and has worsened. The Green Room has been reduced to the ‘so-called G5-Plus countries’ – comprising the US, the EU, China, India, Brazil, Australia and Japan. The Director-General chairs the restricted meetings. This aberration is further tainted by the fact that the meetings underway in Geneva are convened behind closed doors. The rest of the membership is not allowed in. There is no transparency. Their representatives in Geneva do not even share in any media releases from the closed meetings. They have to get their news through outside means, e.g. through the Washington Trade Daily or the Third World Network’s journal SUNS.

But there is more shenanigan going on in the privacy of the G5-Plus surrounding. According to Ambassador Pambagyo, the developed G5 members are placing increased pressure on the two emerging global traders: China and India, to lower their ambition on market-liberalization of agricultural and industrial goods. For if this can be lowered, then the flexibility being sought by developing countries can then be commensurately aligned at a lower level. This, the G5 members reckon, would still afford policy space for them to continue their domestic subsidization and exportation of subsidized agricultural products. These subsidized exports invariably play havoc to the production and marketing efforts of developing countries that are still trying to develop their primary industries to their full potential in order to integrate fully into the global economy. The ever-resourceful developed country negotiators are justifying their actions as the need for a ‘recalibrated’ approach (the US) or for a ‘simplified’ approach (the EU). All this is done in the name of concluding the Doha Round of trade talks (DDA) that were originally aimed at creating an even playing field for the majority of WTO members – the developing and least developed countries including the small vulnerable economies.

What is happening however, is abuse of trading power by the large trading nations; or the exercise of ‘power politics of negotiations’, as Professor Jane Kelsey puts it in her book: “Serving Whose Interests?” It is nothing new in the context of the WTO. These large global traders are corrupting the multilateral trading system and the WTO specifically. And that is not surprising. “Power corrupts”, as US statesman, Adlai E Stevenson stated in 1963.

And where is the WTO heading? A corrupted system will not survive. The ‘death of multilateralism’ has already been coined. This directly relates to the convolution surrounding the DDA and WTO’s seemingly inability to conclude these talks. From another perspective, Gordon Wong, wrote in ‘The Beginning of World Trade Disorganization’ in January this year. He put this down to the relative decline of US power and its reducing influence and ability in underwriting this multilateral system.

In the light of what is happening in the WTO, greater clarity is now emerging as to the true motives of some of the big players and of the respective slogans they love to bamboozle the general membership of the organization and the world at large with. Before Wong’s paper, Dr Jason Hickel had written in ‘Free Trade and the Death of Democracy’ that “It turns out that ‘free trade’ has very little to do with meaningful human freedom, and rather a lot to do with corporate freedom – the freedom of corporations to extract and exploit without hindrance.”

With the death of multilateralism, observers are seeing an increased growth in plurilateralism and regionalism, e.g. TTIP, TPP, TISA, RCEP etc. This is being touted as a natural response in this process of fracture. However, the ‘power politics of negotiations’ still pervades. As such, we see new expressions of trading power politics. The latest which is creating a buzz around the globe is the Investor-State Dispute Settlement (ISDS), under which corporations can take governments to court for any government action that leads to reduction in the profitability of any commodity being marketed by these corporations. Closer to home, PACER Plus may not see the likes of the ISDS provision, however, there is every likelihood that there will be telltales of ‘power politics of negotiations’ in the final legal text (including omissions from the text); a constant reminder that in any FTA negotiations, trading powers, if not moderated with a sense of justice and compassion, will continue to corrupt.

Whether it is disorganization or the death of democracy, the WTO is fracturing; and this is being internally-driven. To attribute what is happening here to the law of entropy may be far-fetched, however, it is the nearest to explaining the disorganization that Wong wrote about and the disorder that is emerging when power politics is exercised for the reaffirmation of the power divide that exists amongst the membership. Furthermore, such reaffirmation acts only as a license for those who wield power to arrogantly derogate from approved principles – in the area of domestic subsidies, for example, whilst disallowing this same opportunity to those without power but who desperately need these subsidies for their livelihood and for sustainable development.

Photo: ABC

This radical shift, however, rang alarm bells in Canberra and Wellington. According to Wesley Morgan (‘Negotiating powers: Contemporary Pacific Trade Diplomacy’): “Officials in both countries had long viewed a stable regional order in the South Pacific as a pre-eminent geostrategic priority. Australia provided funding for regional cooperation, at least in part, as a means of maintaining ‘a favourable strategic posture in the region’ (Fry 1981:480). Morgan adds: “Crucially, both countries aimed to be ‘considered by the Pacific states to be part of the region, and not part of the “outside” (ibid). If the island countries were to negotiate a trade agreement among themselves, particularly through the auspices of the SPF, this could be seen as undermining a carefully cultivated perception that they were legitimate ‘insiders’’.

In this divided scenario, ANZ pressed hard to be included in the PARTA. PICs, on the other hand, put their collective foot down to deflect the pressure from ANZ, even to the extent of rejecting an ANZ-drafted legal text. It was acknowledged at the time that what was driving ANZ was geostrategic concern rather than commercial interests; or as Myrburgh and Scollay put it in 2004: as being ‘driven by political rather than economic considerations’. This is contrasted with the PICs’ purely economic interests.

As it turned out, a compromise was struck: PARTA became PICTA for PICs only and PACER was conceived as the economic framework agreement between the two parties. PACER later gave form to PACER Plus (still under negotiation) as the FTA between ANZ and PICs. The two-tier outcome can be seen therefore as the jointly-agreed verdict whereby the PICs’ economic interests were confronted by the geostrategic (political) interests of ANZ.

Fast forward to 2015, we see a slightly different situation where the political interests of both parties are now thrust forward, and the question of ANZ’s perception of being legitimate insiders has come to the fore once again. Political interests are thus at loggerheads even though Fiji stands alone in proposing a reconfiguration of the regional architecture essentially for political reasons. Alarm bells again have been ringing for sometime especially in Canberra, again for the same political reasons that had prevailed way back in 2000.

Prima facie, it may be asked: why should ANZ bother? The PICs are not united this time around. Fiji stands in splendid isolation from the rest as the odd person out. Whilst two PIC leaders have spoken unsupportively of the Fiji’s initiative, others have not spoken one way or the other. It can also be envisaged that a majority decision can always override any recalcitrant in any case. However, the pursuit of this matter at a high level and the ardour with which it is treated is evident enough that there are considerations of prospective regional and collective risks involved in any exercise of majority decision; and the alternative of persevering towards a more acceptable resolution in the interest of regional solidarity is by far the best way to proceed.

However, to proceed as envisaged above is still without challenges. It can be seen, for instance, that purely on the strength of lack of unity on the part of the PICs, and on the precedent of 2000, it can be said that this proposition by Fiji is unlikely to see the light of day.

However, we are dealing here with weighty political issues at loggerheads, as perceived by both parties and which have great and critical implications on the coherence, utility and sustainability of the region and on regionalism. As such, the precedent arising from the PICs defiance of 2000, whilst instructive, may not necessarily be prescriptive. Being instructive merely lends itself to being an option amongst many. It follows therefore that a possible outcome from the current situation is far from certain.

One possible outcome of course is that the Fiji initiative is rejected; and the status quo prevails. That decision was not taken in the Sydney meeting last week since other issues besides the reconfiguration of the regional architecture were discussed. The decision may be taken at the PIF Leaders’ meeting in Port Moresby in early September. The decision to prolong the status quo, from the perspective of Pacific regionalism, is going to be costly for the region. That decision may indeed bring to a close Fiji’s insurgence in remapping the regional architecture. However, it will only be the beginning of further regional woes, unprecedented to some extent, to constrain our regional efforts.

For all intents and purposes, it can be envisaged that the two-tier structure, representing PICTA and PACER, which can be reflected in a new regional configuration comprising a forum for PICs only, on one hand, and another forum for PICs-ANZ, on the other hand, still presents itself as an option available. If it gets the nod, it might go some way in meeting Fiji’s requirements; and Fiji could consider completing its return to the regional grouping that has already lifted its (Fiji’s) suspension.

In any case, this option is reflective of the structure that existed way back in 1971 at the start of the SPF when two caucuses existed – the island countries caucus and that of ANZ. Professor Fry had already identified this as a possible option for the regional reconfiguration exercise in an earlier DevPolicy blog. However, this two-caucus structure only lasted a year. They both came together the following year and the single caucus has prevailed since. By way of precedents alone, this fact suggests it may be a stillborn idea. However, it should be noted that immense changes have taken place in the PICs since the early 1970s, how the region is perceived by the global community and in return, how the PICs project themselves and their issues in global arenas. Parameters for assessing and evaluating ideas and norms have undergone irreversible transition. No doubt the discourse around including Australia and New Zealand in Pacific regional architecture continues for now and may come to a head during the upcoming PIF meeting.

Caption: Foreign ministers Rimbink Pato of Papua New Guinea, Julie Bishop of Australia and Fiji’s Inoke Kubuabola during the PIF Foreign Ministers Meeting held from July 9 to 10 in Sydney, Australia. Photo by: Julie Bishop

The question posed is instructive. It reflects the mood of the negotiations now entering the ‘horse trading’ phase: negotiators begin to bargain on critical issues and resort to ‘fallback positions’ to avoid the risk of crossing ‘red lines’. It also reflects a degree of frustration about the negotiations that have become somewhat protracted. But more importantly, it reflects the stage when arguments on the basis of objective criteria are beginning to meet increasing resistance and thus requiring political solutions.

What is also instructive is the nature of the issues that are frustrating the negotiations. The issues are those that are characteristically divisive in the context of an inter-regional FTA agreement between a group of developed countries on one hand and a group of developing and least developed countries on the other. They are in fact reminiscent of the issues, for instance, under the EPA negotiations between the ACP Group and the EU and even under the multilateral trading system (MTS) where the contrasting styles and interests of diametrically opposed groups go head to head.

I raised the issues of developmental resources and labour mobility in my most recent blog ‘Who should be part of the regional architecture?’ The issues being put up for direct horse trading here are those that relate to the extent of relative protection and preferential treatment of foreign service providers vis-à-vis those of the FICs and vice-versa. The infant industry provision, for example, is “strongly opposed” by ANZ, says Maclellan. This may be so because the provision is essentially protectionist in nature. Arguments for its developmental rationale are often drowned out in a concerted push for free trade and for the removal of any discriminatory measures.

The MFN provision remains unresolved. The problem is likely to be that ANZ will want all concessions negotiated by the FICs from other regional economic communities (RECs), or with a big trading partner, to also apply to them, regardless of the membership of those RECs – whether they are developed countries or developing countries. The FICs are likely to restrict such application, again for developmental reasons.

Pre-establishment provisions which deal with the making of new investments, including the participation in existing enterprises by foreign or non-resident investors, is likely to be traded against the FICs’ “positive list’ approach: a list of sectors that can be accessed and how. Developing countries tend to be reluctant to make offers relating to pre-establishment due to their national policy to reserve some sectors for local investors for the development of domestic entrepreneurship and domestic industrialization. Developed countries on the other hand tend to demand the same national treatment accorded to domestic investors.

Division on the other unresolved issues is along this same political economy line which only highlights our differences. As a matter of fact, the ANZ stance on these issues are predictable. They reflect their WTO stances. Their commitment to the WTO principles forms the basis of their proposals for the negotiations. However, the WTO is undergoing changes. It has changed from GATT to WTO and further changes are now evident. Some have even predicted its demise – the dismal state of the Doha Development Agenda representing the ‘death of multilateralism’. Gordon Wong, a London-based researcher in international relations wrote last January of ‘The Beginning of World Trade Disorganization’. Before that Dr Jason Hickel wrote of ‘Free trade and the death of democracy’, noting the real interests at play behind the concept of free trade.

WTO is a product of the post-Cold War era when the US reigned supreme in a uni-polar world and dominated through the Washington Consensus. The WTO as an organization and its principles became a tool of that period with stronger dispute settlement provisions and the acceptance of the single undertaking provision. In contrast, the relatively weak trade regime of the GATT before that in the context of a bi-polar world at the time, had its soft provisions relating to the Special and Differential Treatment (SDT) and a softer approach to preferential trade.

Now, however, with a multi-polar world and in the aftermath of the global financial crisis, the WTO and the MTS are undergoing further changes. Regionalism is growing. The BRICS, especially India, are threatening the powers that be in the Organization. The US’s underwriting of the Organization is coming under increasing pressure. A Beijing Consensus is on the rise.

Where is the WTO heading? Wong anticipates a way out: Capitalism with a Human Face, i.e. to transform the “social purpose” of the WTO in a return to the GATT’s ‘welfare state’ model. This comprises a compromise between laissez-faire capitalism and social welfare, genuine application of the SDTs, and greater appeal to flexibility and pragmatism in condoning protectionist behavior.

I suggest therefore that ANZ take all these changes to heart and re-visit all their proposals that are proving divisive under the PACER Plus negotiations. Why can’t they, for instance, be a lot more creative and generous as regards FICs’ proposal on ‘infant industry’ provision and negotiate offsetting measures under a ‘post-establishment’ phase under National Treatment and/or under Modes 1- 4 of service delivery under the Trade in Services agreement? Such an approach builds complementarity and maximizes value adding. Furthermore, it removes any fear of unbalanced negotiations and firmly re-enforces a win-win situation for both sides. In any case, aren’t we supposed to be essentially unitary in our approach since we belong to the same regional economic community?

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.

As regards AfT, Forum Island Countries (FICs), for instance, have been discussing this matter, on and off, since 2005 when it was launched. They have even agreed on the various governance structures to put in place in readiness for the surge in AfT funds. Admittedly, some AfT funds have trickled in. Some are still locked up in protracted trade negotiations like the Economic Partnership Agreement (EPA) and PACER Plus. However, Messrs Joseph Stiglitz and Andrew Charlton have reviewed AfT and their verdict is that it has “failed to live up to its promise of additional, predictable and effective finance to support developing countries’ integration into the global economy”. It is interesting to note that these two gentlemen had co-authored ‘Fair Trade for All – How Trade can Promote Development’ in 2005 and which explored how poorer countries of the world could be helped to help themselves through freer, fairer trade. Furthermore, Stiglitz himself is the former Chief Economist at the World Bank and a Nobel Laureate in Economics in 2001. He published ‘Globalization and its Discontents’ in 2002.

Emily Jones, Deputy Director of the Global Economic Governance Program, University of Oxford, wrote in 2013: “Having raised deep concerns about the failure of AfT, Stiglitz and Charlton make ambitious proposals for rebalancing the global trading system. The first pillar of their proposal is to enshrine and enforce a ‘right to trade’ and a ‘right to development’ through the WTO’s dispute settlement mechanism”. I hope that that these proposals fall on fertile ground as far as CEGT is concerned.

The second aspect of CEGT’s new course has in fact made a lot of progress in the Pacific. The EU, through Facilitating Agricultural Commodity Trade (FACT) in 2008 from the 9th European Development Fund (EDF), followed by Increasing Agricultural Commodity Trade (IACT) in 2011 from the 10th EDF, have had a head start in supporting commercial ventures and producer groups in becoming export oriented, market driven enterprises that will consistently supply overseas markets with competitive agricultural and forestry products. Appropriate value adding and with relevant certification have taken full advantage of the niche markets in developed countries offering premium pricing. The Pacific Horticultural and Agricultural Market Access (PHAMA) Program, now jointly funded by Australia and New Zealand, has added additional resources for the same general purpose and thus widening the number of beneficiaries.

There are prospective gains in value adding in other products in the region to which the Commonwealth can direct its attention. Apart from that, the Commonwealth can also address the non-tariff barriers whose imposition tends to grow with increasing market access negotiated under various trade agreements. The Commonwealth can first of all research and learn from the case of the fresh Fiji ginger exports to Australia in order to establish guidelines to follow when sanitary and phyto-sanitary requirements have been strictly complied with and yet there were still sectorial resistance existing in the import market.

The third element in the new course by the CEGT is perhaps the weakest of the three. Promoting inclusive negotiations at the WTO is not going to change the attitude of the large traders, the large developed country members. They will continue to preach free trade at the multilateral level and thence turn around to pour substantial resources for domestic subsidies. They will continue to determine who gets the nod to go into the Green Room for critical trade talks. Lessons from the past are instructive. Have the Small and Vulnerable Economies (SVE) achieved much as a special category of members? Have the applications of the Special and Differential Treatments (SDT) made much difference to the interests of the developing and least developed country members? The status of the Doha Round trade talks, intended to be developmental – but still inconclusive and in disarray – speaks volume as to who is running the show in Geneva.

If the ‘death of multilateralism’, in referring to the stalling of the Doha Round is of any substance, what is the merit in promoting inclusive negotiations at the WTO? Should we be directing our resources at regionalism and plurilateralism? Or even South-South coalitions?

The Commonwealth CEGT should take serious note. Group members should also take note of Dr Jason Hickel’s “Free trade and the death of democracy”. In this publication, Dr Hickel states that free trade is not about freedom at all. The term, he says, “is a trap – a brilliant framing device that neatly neutralizes opposition. If you take a stand against free trade you appear to be taking a stand against freedom itself, which is clearly not a tenable position”. He adds: “It turns out that it has very little to do with meaningful human freedom, and rather a lot to do with corporate freedom – the freedom of corporations to extract and exploit without hindrance”.