Beyond preferential
p. 56 · Read in the full issue
agreements
The Pacific Island countries have been talking seriously about ways and means of promoting trade, investment and development in the region for a while now.
South Pacific Forum leaders confirmed in Madang in 1995 and Majuro last year their commitment to measures needed for sus tained economic growth in the increasingly competitive global economy. Their directives led to economic ministers adopting an action plan for wide-ranging reform when they met at Caims in July.
Forum leaders reviewed the plan in Rarotonga in September against the backdrop of a number of regional and multilateral trade issues that pose increasing challenges.
There is no better illustration of the urgency of the situation facing the Forum countries than New Zealand’s merchandise trade figures for the fiscal year to June 30. They paint a pretty dismal picture for the Pacific and should be a matter of serious concern.
Total exports to New Zealand from 21 island states and territo ries during the 12 months totalled just over $130.3 million. This was a drop of 11 per cent on the previous year’s figure which was itself 38 per cent below the bumper year before that, when mas sive sales of fuel oil from Papua New Guinea boosted exports to a record $238.5 million.
More than three-quarters of last year’s $130.3 million total came from just two countries - Papua New Guinea and Fiji. And both of these, along with most other states in the region, reported a drop in sales on the previous year. Only Tonga, New Caledonia, French Polynesia and the Northern Mariana Islands showed any increase over the year. Tonga’s exports rose nearly 10 per cent to $2.2 million, but were still below the figures reached in the early 90s.
New Caledonia recorded a 16 per cent rise, but its sales were still only worth $378,000, far behind the $1.3 million it posted in 1993-94. Exports from the Northern Marianas were tiny at $35,000.
Interestingly, the most impressive performance was by French Polynesia, which lifted its sales 8 per cent to a record $1.4 mil lion. This maintained a run of substantial annual increases that have seen exports to New Zealand quadruple over the last four years.
So they must be doing something right in Papeete and if they have any sense leaders and trade ministers in other parts of the
Pacific will be trying to find out what it is.
The 11 per cent fall in imports of goods from the Pacific con trasts with a fractional drop of only 0.13 per cent in New Zealand’s worldwide imports in the last June year.
Measured another way, the Pacific states and territories are los ing their share of sales in what is for many their closest market.
Back in 1970, they had a 1.8 per cent share of New Zealand's total import bill. In 1990, they still held 1.3 per cent and only two years ago 1.1 per cent, but on the latest figures this has dwindled to 0.6 per cent. Such is the situation 16 years after the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) came into operation and nine years after New Zealand allowed duty-free and unrestricted access for all Forum country goods. Clearly, SPARTECA, signed with such hope at Tarawa in 1980 and containing provisions for development assis tance aimed at enhancing the export capabilities of the Forum island countries, is no longer working.
For if they cannot sell to New Zealand on such favourable access terms, who will they be able to sell to in the increasingly challenging global trading environment?
The fact is the island states are losing the trade preferences they enjoyed under SPARTECA as New Zealand (and Australia, if more cautiously) move in the global free trade direction and reduce their tariffs to all suppliers.
On top of this, the European Union, which gives the Pacific states more aid on a per capita basis than other developing nations in Africa and the Caribbean under the Lome Convention, is reviewing its future commitments when current programmes expire in the year 2000.
Both situations underline the developing multilateral trading environment and the pace with which the World Trade Organisation and the Asia Pacific Economic Cooperation group ing are moving to embrace free trade principles. Forum economic ministers appeared to acknowledge the implications of this when they met at Cairns. “We recognise that countries in the region need to adapt their policies to meet the challenges of this chang ing environment,” they said in their action plan statement.
As far as New Zealand is concerned, the 26-paragraph action plan is seen as an important step in the process of encouraging countries of the region to tackle key issues of economic policy and financial management.
It implicitly recognises that high tariffs, import protection, bloated public services and government-dominated economic development policies that have been features of Pacific island state economies all belong to a bygone age.
It accepts that the Pacific can no longer remain isolated from worldwide trends of economic reform. The real work has yet to be done and it will be painful, as states like the Cook Islands, Niue and Western Samoa have already learned.
But a start has been made as the Forum countries begin to focus on the need for open, liberal and transparent investment policies, tariff cuts, regional collaboration on customs and quar antine regulations and other measures designed to increase trade opportunities.
It will take time to improve those trade figures but at least the process has begun. ■ • We regret that Debbie Singh’s regular column from theSPC could not be included this month.
David Barber