Pacific Institute of Public Policy » Kaliopate Tavola http://pacificpolicy.org Thinking for ourselves Thu, 27 Aug 2015 05:48:31 +0000 en-GB hourly 1 http://wordpress.org/?v=4.3 WTO: Where are we heading? http://pacificpolicy.org/2015/08/wto-where-are-we-heading/?&owa_medium=feed&owa_sid= http://pacificpolicy.org/2015/08/wto-where-are-we-heading/#comments Thu, 27 Aug 2015 05:02:35 +0000 http://pacificpolicy.org/?p=8467 Indonesia’s deputy Permanent Representative to the World Trade Organization (WTO), Ambassador Iman Pambagyo, penned an op-ed in the Jakarta Post on 27 May 2015, entitled “WTO: Where are we heading?” The question posed was essentially rhetorical. The Ambassador did not need an answer. He in fact provided the answer to his own question in the body of the article. The question was therefore posed for maximum effect. As a former WTO Permanent Representative, I can sense much frustration written in the question. Moreover, I also sense the desperation of one who continuously finds no solace in this multilateral organization despite all overtures at reforming it. In my humble view, WTO may be beyond repair.

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.

In any FTA negotiations, trading power, if not moderated with a sense of justice and compassion, will continue to corrupt.

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

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Island geostrategy http://pacificpolicy.org/2015/08/anz-geo-strategic-priority/?&owa_medium=feed&owa_sid= http://pacificpolicy.org/2015/08/anz-geo-strategic-priority/#comments Tue, 18 Aug 2015 06:16:41 +0000 http://pacificpolicy.org/?p=8431 In my previous blog: ‘New regional architecture can draw lessons from PARTA’, I referred to Wesley Morgan’s paper: ‘Negotiating powers: Contemporary Pacific Trade Diplomacy’. In that paper, Morgan had characterized how Australia and New Zealand (ANZ) had felt when they could not join PARTA. He said: “Officials in both countries had long viewed a stable regional order in the south Pacific as a pre-eminent geostrategic priority”. The statement has both geostrategic and geopolitical significance – geostrategy being a subfield of geopolitics.

It is geostrategic, for instance, since it points to a specific geographical location: the south Pacific in this case, to which ANZ’s specific foreign policy and relevant and commensurate resources are being directed. That can be explained by way of regionality and all its integration impetus, history, migration and resulting diasporic influences. It is geopolitical for the reason that the south Pacifics’ geographical area borders the ANZ countries. Some may even say that ANZ are geographically part of the south Pacific. As such, ‘a stable regional order’ in the area: stability in the broadest sense of security – defense and economic/financial – is critical for peace and stability. Peace and stability in the wider region forms a natural buffer for peace and stability at home. Relevant national, regional and international policies inevitably need to be formulated and resourced.

The region has experienced instability since 1971. The formation of the South Pacific Forum (SPF) in that year was an outcome of instability itself when independent Pacific island countries broke away from the SPC council to form their own forum. ANZ were invited subsequently to join the new forum. Since then the SPF, which later in 2000 became the Pacific Islands Forum (PIF) has had to address instability in its member states over the years, resulting in various declarations and activities such as: (i) the Aitutaki Declaration on Regional Security Cooperation (1997); (ii) the Biketawa Declaration (2000); (iii) the Nasonini Declaration on Regional Security (2002); (iv) the RAMSI (2003); (v) the execution of Australia’s ‘Pacific Solution’ for refugees which is raising security concerns in PNG and Nauru; and (vi) Fiji’s case for a reconfiguration of the regional diplomacy architecture to reposition ANZ in the regional structure. There have been other security incidents in Bougainville and Timor Leste in the wider Pacific region. Furthermore, the geopolitical interests of the larger global powers in the region, and the Pacific at large, and the sensitivities and sense of vulnerability and reassessments of political alignments they bring to bear, also provide a constant backdrop to Pacific security and stability.

In the context of all this, can it be said that ‘a stable regional order’, envisioned by ANZ is being achieved? At the outset, it has to be said that a stable regional order is essentially a collective responsibility of all PIF members. For ANZ, however, it is additionally a stated geopolitical interest and as such, their individual or collective efforts aimed at this objective are inevitably subject to greater scrutiny, not only by other PIF members, but also by outside observers. Furthermore, any determination of stability or instability in the region can be realistically graduated in relative terms – relative to security situations in other parts of the world. In this context, one is likely to conclude that the unstable situations in the south Pacific region are only of minor concern by global standards. In any case, the record of PIF as regards its various declarations and other interventions over the years is indicative of the organization’s clear efforts in wanting to be in control of its security situations. ANZ can certainly take some credit for this.

The perception of security is currently fluid – undergoing reconceptualization.

Be that as it may, security continues to be a focus in the region. The history of instability that has dominated the region since inception is instructive. Furthermore, the perception of security is currently fluid – undergoing reconceptualization, as discussed here. Professor Steven Ratuva at the University of Canterbury wrote recently: “The notion of security has undergone transformation over the years as a result of the introduction of new conceptual frameworks such as human security, securitization, gendered security and subaltern security, amongst others, which seek to expand the boundaries of security beyond the traditional notion of ‘hard’ security or emphasize significant dimensions in security thinking.” As such, there is a constant need for monitoring and evaluation of security issues in order to formulate consequential policies and measures for stability to effectively prevail.

Considering all that has been said above, it can be concluded that whilst no direct blame can be directed at ANZ specifically for the instability that has characterized the region, they would necessarily be somewhat alarmed at what has happened over the years, given the efforts and resources expended in addressing the instability; and also given the fact that their best endeavors at ensuring ‘a stable regional order’ have often been frustrated.

The latter is likely to be constantly nagging the minds of the planners both in Canberra and Wellington. The most recent incident of Fiji wanting to reconfigure the regional diplomacy architecture and to reposition ANZ’s position in the regional structure is one that is loudly ringing alarm bells in both capitals. It may not force the issue onto the table where it can be passionately and forcefully debated. This is evident from the outcome of the Sydney meeting last month when the issue of the regional architecture was dropped from the meeting that had been initially convened to address the issue. However, the substance of the matter is such that due consideration should be given it; otherwise it will keep recurring in future.

Notwithstanding any procrastination for a lively discourse on the latest incident to test the region’s stability, the writer believes that this incident is imperative as an urgent prompting for ANZ to return to the drawing board and to reassess this pre-eminent geostrategic priority.

Australia does, for instance, use the opportunity of its White Paper to re-examine its geostrategic and geopolitical interests. Recently, the government of the day has had to reassess its traditional (security) alignment with the US with a balancing of its (economic) interests with China. It has also made a declaration on the significance of India and Indonesia as far as the Pacific region is concerned. I am sure that New Zealand has gone through a similar process. This, suitably, provides the backdrop to the south Pacific’s stability.

What is critical for both ANZ is a specific and analytical focus on the south Pacific region – a ‘repair and maintenance’ approach to their traditional methodology and modality of partnership, particularly on PIF, and to establish a more equal relationship, even to the point of being preferential in order to be equal; a more inclusive, a more compassionate partnership.

Caption: Australian and Fijian troops at a checkpoint during the South Pacific Peacekeeping Force (SPPKF) operation in Bougainville in 1994. Here they screen delegates attending a peace conference to end the war on Bougainville. Photo: Ben Bohane / wakaphotos.com

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New regional architecture can draw lessons from PARTA http://pacificpolicy.org/2015/07/new-regional-architecture-can-draw-lessons-from-parta/?&owa_medium=feed&owa_sid= http://pacificpolicy.org/2015/07/new-regional-architecture-can-draw-lessons-from-parta/#comments Wed, 15 Jul 2015 04:49:26 +0000 http://pacificpolicy.org/?p=8185 The Pacific Regional Trade Agreement (PARTA) was conceived in 1997 as a Free Trade Area (FTA) agreement for Pacific Island Countries (PICs), excluding Australia and New Zealand (ANZ). All were then members of the South Pacific Forum (SPF) which became the Pacific Islands Forum (PIF) in 2000. PIC trade officials were united on this radical shift in trade policy in the interest of closer economic integration amongst the PICs themselves. PIFS management was strongly supportive in that support came from then Secretary General Noel Levi and Multilateral Trade Policy Advisor at that time, Roman Grynberg.

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.

The decision to prolong the status quo is going to be costly.

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

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PACER Plus can work if ANZ change tack http://pacificpolicy.org/2015/04/pacer-plus-can-work-if-anz-change-tack/?&owa_medium=feed&owa_sid= http://pacificpolicy.org/2015/04/pacer-plus-can-work-if-anz-change-tack/#comments Wed, 22 Apr 2015 01:32:05 +0000 http://pacificpolicy.org/?p=7539 Respected regional journalist Nic Maclellan discussed the status of the PACER Plus negotiations in his recent Islands Business article. He concluded with the question: “Will Australia and New Zealand (ANZ) guarantee legally binding access to their labour markets and appropriate levels of development assistance, in return for greater access for overseas service providers into island economies?”

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.

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.

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?

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Who should be part of the regional architecture? http://pacificpolicy.org/2015/04/who-should-be-part-of-the-regional-architecture/?&owa_medium=feed&owa_sid= http://pacificpolicy.org/2015/04/who-should-be-part-of-the-regional-architecture/#comments Thu, 16 Apr 2015 06:09:16 +0000 http://pacificpolicy.org/?p=7492 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.

The stunted performance of Pacific regionalism to date is reflective of its political economy.

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.

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Can the Commonwealth breathe new life into its relationship with developing countries? http://pacificpolicy.org/2015/04/can-the-commonwealth-breathe-new-life-into-its-relationship-with-developing-countries/?&owa_medium=feed&owa_sid= http://pacificpolicy.org/2015/04/can-the-commonwealth-breathe-new-life-into-its-relationship-with-developing-countries/#comments Fri, 10 Apr 2015 03:49:39 +0000 http://pacificpolicy.org/?p=7450 I got animated when I read the latest offering from the Commonwealth Expert Group on Trade (CEGT) meeting in Malta on 25-26 March 2015. The headline read: “Trade experts steer new course for developing Commonwealth countries”. The new course comprises: (i) mobilizing more aid for trade (AfT); (ii) exploring opportunities for value-added exportables to improve the trading position of small states; and (iii) promoting inclusive negotiations at the WTO to ensure capacity-constrained countries are included. My enthusiasm waned however by the familiarity of these measures and with the realization that they hardly constitute a new course. Be that as it may, I remain hopeful that the meeting has identified concrete steps on how to proceed differently on these issues and thus ensuring that they make a difference and greater impact this time around.

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.

Should we be directing our resources at regionalism and plurilateralism? Or even South-South coalitions?

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”.

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Nothing new from the World Bank http://pacificpolicy.org/2015/04/nothing-new-from-the-world-bank/?&owa_medium=feed&owa_sid= http://pacificpolicy.org/2015/04/nothing-new-from-the-world-bank/#comments Thu, 02 Apr 2015 00:07:53 +0000 http://pacificpolicy.org/?p=7380 The op-ed, titled ‘Pacific connected: a Regional approach to development challenges facing island nations’, was a going-away present from Mr. Axel van Trotsenburg, World Bank East Asia and Pacific Regional Vice President.

Mr. Trotsenburg was visiting the region at the end of last month. Three solutions for his Pacific approach can be gleaned from the article. The first is that the World Bank needs to work ‘alongside global partners…to do more with Pacific island governments on unified approaches to development needs that promote a common destiny for such a vast and geographically fragmented region.’ The second is the regional approach to ‘provide the opportunities for Pacific island countries to benefit from economies of scale and shared knowledge’. The third is the ‘need to keep the momentum up and to do more, so people in Pacific island countries can see the benefits of these investments.’ The investments that Mr. Trotsenburg referred to are projects already jointly launched to help island countries mitigate impacts of climate change and adapt to the new realities they face.

The first solution rings familiar. The sentiment of course echoes the raison d’ȇtre of existing multilateral agreements, viz: The Paris Declaration on Aid Effectiveness, the Accra Agenda for Action and the Busan Partnership for Effective Development Cooperation. Thus, Mr. Trotsenburg’s declaration of working alongside global partners is stating the obvious. It is the commitment made under these multilateral declarations. He did say in his op-ed that the World Bank ‘has worked hard with Pacific Island countries to create an expanding partnership that has grown from a modest engagement a decade ago’. It is hoped of course that the expanding partnership is measured in increased utility and inclusive development and growth in the communities concerned and not in just dollar terms, the quantum of the loans extended.

For when it comes to climate change and climate change adaptations, it is evident that all our efforts in the Pacific will be nullified without the firm commitment of the major powers and global economy in reducing carbon emissions.

Mr. Trotsenburg’s second point is essentially a re-enforcement of the regional approach as a means of benefitting from economies of scale and shared knowledge. But we have been doing this since 1971 and encountering intractable constraints in the process. It would have been nice to hear from the World Bank Vice President the lessons from other regional economic communities that can help Pacific regionalism overcome some of these deep-seated hurdles. How can we overcome the diseconomies of isolation, resulting from our fragmented geography, that negate our efforts at regional cooperation and even the gains from economies of scale? How can we attract especially concessionary funding for our regional projects given that the costs of regionalism in the region is naturally and peculiarly too expensive? How can we sort out the obstacles contributed by the political economy aspects of regionalism, for without a solution to these, all our collective efforts are in vain? It would have been nice to hear some pearls of wisdom.

Vice President Trotsenburg’s last point is to keep the momentum up and to do more so that Pacific island countries can see the benefits of these investments – i.e those aimed at mitigating impacts of climate change and adapting to the new realities the Pacific island countries face. This is more of a plea than a declaration of intent. It is akin to deflated optimism. For when it comes to climate change and climate change adaptations, it is evident that all our efforts in the Pacific will be nullified without the firm commitment of the major powers and global economy in reducing carbon emissions.

In a paper I had submitted to the Fiji Institute of Accountants 2014 Congress on ‘Today’s Vision: Tomorrow’s Reality: a Blue-Green Economy’, I have concluded: ‘In the absence of global commitment, this paper submits that it may only be a false sense of reality that will evolve. The paper further proffers that, in this context, and despite all our commendable efforts and noble intentions, the evidence of climate change and its associated global warming, environmental degradation, alarming poverty and escalating global disparities and resultant inequality and inequity will continue to be ‘an inconvenient truth’ that will not cease pricking the collective conscience of the global community in decades and generations to come.’

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MSG can direct Pacific regionalism to greater heights http://pacificpolicy.org/2015/03/msgs-opportunity-to-direct-pacific-regionalism-to-greater-heights-2/?&owa_medium=feed&owa_sid= http://pacificpolicy.org/2015/03/msgs-opportunity-to-direct-pacific-regionalism-to-greater-heights-2/#comments Tue, 03 Mar 2015 00:45:04 +0000 http://pacificpolicy.org/?p=7129 I had intended to write my next blog on an article reported in PacTrade on 9 February 2015 attributed to PIFS Secretary General: ‘Dame Meg calls for greater regionalism‘. But I changed course advisedly when asked to give some thoughts on the sub-regional architecture (internal relations amongst members states in MSG) in view of new leadership at PIFS: thus the heading.

The optimism implied in the heading is based on objective criteria rather than on flimsy cogitation. The MSG has just launched its 2038 ‘Prosperity for All’ Plan. The Plan takes cognition of the strengths and competences derived from the MSG’s first 25 years of existence. It frames all these with the Group’s renewed determination and vision for the same period into the future, akin to what some have termed as its renaissance. The Group clearly sees itself as a sub-region within wider Pacific regionalism. Given the relative strengths of its economies, land masses, natural resources and population, it is difficult to fault its optimism.

Apart from taking full advantage to develop optimally its own economies, the MSG’s plan proposes to collaborate and form solidarity with other sub-regional groupings in the Pacific, with the CROP agencies and also to reach out to other PSIDS (Pacific small island developing states) by way of joint development initiatives, e.g. in climate change and fisheries, and to also share with fellow PSIDS burdened with scarcity of resources, the surpluses of its development and economic growth.

The Group has gone beyond just cogitation. Its MSG Trade Area agreement has reduced to zero an increasing number of import tariffs; investment capital, skill and unskilled labour are beginning to flow across national borders; a new commercial arm for the Group will be established soon, and PNG is re-writing the ODA handbook by becoming a donor herself and thereby starting to make good strides as regards the Group’s objectives under its new plan.

In pursuing the sub-regional role under Pacific regionalism, the Group is adamant in providing the leadership that is needed in the region to move developments to new heights. Such pursuit is driven by a firm belief that if the Group is strong and effective at the sub-regional level – on its own, or in solidarity with other sub-regions or with CROP agencies, this will strengthen the larger group in due course. No time is better than the present to exercise such leadership; and PNG is ideally placed to take up this challenge, on behalf of the Group.

PNG will be the next Chair of the Forum and its political head. Dame Meg Taylor is the principal captain of the regional ship of states, the Forum Secretariat; and fellow PNG citizen, Molean Kilepak is the Deputy Director General of the MSG’s Secretariat. The powers that be in Port Moresby have a great opportunity to make a difference in the region by bringing about coordination and collaboration of these regional, sub-regional and national stakeholders and thus achieving augmentation and complementarity of issues in the greater interests of the region. MSG’s Director General, Peter Forau, former Secretary General of the Forum Secretariat, is a force behind the scenes, offering solid advice that had been tested and molded through years of experience as a top regional civil servant.

Pacific regionalism is in dire need for such coordinated leadership now. The new Framework for Pacific Regionalism has been launched and a number of activities recommended under the Framework have yet to be implemented. Further, a new regional architecture is going to be discussed soon by the Leaders in a meeting to be convened by Australia. The latter can bring about new changes and demands that will bring greater focus on the role of the sub-regions, as building blocks, for Pacific regionalism, whatever the new regional architecture is going to be. MSG, again, can and will be in the limelight to respond to this role. It is conceivable that MSG, given its relative strengths, resources and capacity for innovation, may see itself as a guinea pig for the larger group to trial certain issues/features in order to determine their workability and optimum modality before they are introduced at the larger regional level. Such trialing is essential as a means of securing tested experiences and competences on traditionally problematic issues before introduction as firm regional policies.

The opportunity for MSG’s leadership to drive Pacific regionalism across the board is being presented. It needs to be effectively coordinated. Moreover, the opportunity needs to be converted to benefits to be utilitarian. PNG’s principal stakeholders have this opportunity to exercise the leadership needed. MSG is on a roll, PNG likewise; and all PNG has to do is to continue its leadership to ‘run with the ball’ at the sub-regional level; and from its vantage point, coordinate with the activities at the regional level, and through its political leadership of the Forum, as the incoming-Chair (2015-2016), seek the fullest cooperation from national leaders, fellow decision makers and leaders at the region level.

There are challenges of course – firstly at the sub-regional level. MSG leadership, for example, was found wanting when Fiji and Solomon Islands had a dispute arising from aviation rights between the two countries and their respective airlines. This seems to have sorted itself out. However, a new aviation partnership announced on 12 February amongst Solomon Islands, PNG and Vanuatu left Fiji out of the equation. Perhaps there is more to follow.

In anthropology, the concept of a ‘Big Man’ refers to an individual who is highly influential. He may not have formal tribal authority, but he can maintain recognition through skilled persuasion and wisdom. PNG is one ‘Big Man’, not only in the sub-region but also in the wider region as a whole. The opportunity of leadership it faces today can be equated to having come to the crossroads where the baton of leadership awaits. PNG needs to cross its rubicon and commit itself anew to MSG sub-regionalism and Pacific regionalism. Then the ‘Big Man’ of the region can take the rest of us to unprecedented new heights.

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Raising a new flag http://pacificpolicy.org/2015/02/raising-a-new-flag/?&owa_medium=feed&owa_sid= http://pacificpolicy.org/2015/02/raising-a-new-flag/#comments Mon, 16 Feb 2015 04:25:02 +0000 http://pacificpolicy.org/?p=6784 The Fiji government is seeking to change the national flag and wants all Fijians to participate in a national competition to design a new one. At the outset, it can be said that the government does have the authority to engage in this project, with the population at large, in a quest for a symbol of national unity. This was further anchored by H.E. The President’s assent, notwithstanding the divide it has caused, in the newest constitution of The Republic of Fiji.

As would be expected, the nation is divided on this matter. Part of the division arises of course from the adversarial nature of national politics. Statements from the Opposition in Parliament are querying the merit of such a project when the costs that will be incurred can be directed at more justifiable government development projects benefitting the wider population. There is also the need for a referendum for such an important project, echoes the Opposition. In the local media, the views expressed are mixed – some emotive. Others question the timing. This however raises the rhetorical question: when is the best time for such a project? The views can vary widely.

The division evident is not a good start to the project. Any national flag serves not only as a means of identity but also as a symbol for a country’s history and ideals – to engender unity, pride and service. The government must take note of the division that is emerging and take relevant actions that will bridge the divide and bring national unity in this important project, critical for nation building.

The task at hand is not only challenging. It is also exciting. The people’s sense of creativity and foresight are being solicited. The government has advanced its own criteria for the task: the Union Jack and the Coat of Arms (sic) are to be dropped. The latter should really refer to the escutcheon or the shield from the Coat of Arms. The full Coat of Arms is not depicted on the existing flag.

‘Any national flag serves not only as a means of identity but also as a symbol for a country’s history and ideals – to engender unity, pride and service.’

Dropping the Union Jack and the escutcheon implies that Fiji’s colonial history is not to be featured in the new flag. It is to be noted that the escutcheon contains the Cross of St. George with a gold lion on top: the latter is typically a British heraldic device. It follows also that iTaukei history cannot be reflected in the new flag. Removing the escutcheon from the new design also removes the ‘dove volant holding in the beak a branch of olive.’ The dove was taken from the flag of the Kingdom of Fiji (1871-74) under Ratu Cakobau, declared King of Fiji at the time. As such, it would be a safe bet that no history of Indian origin or of others would be acceptable in the new design. As per s.5.1 of the Constitution, all citizens of Fiji are now known as Fijians.

Removing the escutcheon also removes depiction of our natural resources and industries in the new flag. The ‘noble banner blue’ of the existing flag is also steeped in iTaukei history. It was the principal colour of the flag of the Kingdom of Fiji. It, too, has to be dropped. So essentially, dropping all those features will render the existing flag feature-less and colour-less. This means that designing a new flag is to start from scratch. It also means that we cannot ‘stand united under noble banner blue.’ The implication is that the national anthem needs changing as well.

What should be our modus operandi? We cannot look back to the past, at our history. That is declared a no-go-zone. Focusing at the present has its own challenges as well. Its transience only renders impermanency to any of our hankering of the moment, including of the utility we derive from our natural resources. The future is what we have to turn our attention to; to identify an ideal, an icon, an image that will serve the purpose to unify the nation and engender nationalistic fervor.

However, any future icon will still run the risk of transience if it is devoid of meaning, fascination and ownership. It is critical therefore that much thought and care should be directed at this national project. What is the ideal icon for Fiji? Sports have been unifying in the past. However, many people in Fiji do not play or are engaged in sports. In any case, it is doubtful whether such passion will continue if Fijian sports men and women stop getting into their winning ways. In the interest of constancy and fixity, we may have to resort to aspects of our geography or relevant cosmological features for an icon that will engender the unity, pride and willingness to serve that we all seek in our flag.

There is however a caveat. In the Pacific, our neighbors have gone through the process we are now undertaking. Should we be looking to capture an icon akin to our archipelagic and oceanic features, then we should at least be aware of what the iKiribati have on their blue/red/yellow/white flag, depicting the ocean and a rising sun. Should we be hankering for characteristic cosmological icons, then take note that the Southern Cross, including stylized forms, already appear on six flags of our neighbors; and various forms of stars appear on five others. This national project does indeed call for great imagination and creativity.

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