Commentators warn on 'down side' over Pacific free trade

“The neoliberal approaches that are currently in meltdown remain the paradigm that New Zealand and Australia are foisting on Pacific countries.” - Professor Jane Kelsey

By Krista Ferguson: Pacific Media Centre

New Zealand and Australia may be considering a softer approach to free trade negotiations after recent Pacific discussions in Auckland and Vanuatu amid criticisms of being rushed into an agreement and “bullying”.

Informal meetings of trade ministers and officials discussed key issues around extending the Pacific Agreement on Closer Economic Relations (PACER) to a regional trade agreement (PACER-Plus).

The coordinator of the Pacific Network on Globalisation (PANG), Maureen Penjueli, says there are concerns over developed countries negotiating with developing countries around free trade.

“There’s significant loss of government revenue from tariffs, a loss of jobs, and a loss of policy space,” she says.

“It will remove the key policy instruments like export taxes. It also removes the protection for local industries.”

On the investment side, restrictions such as the requirement for foreign investors to partner with local industries are lost, she says.

“A lot would be forfeited.”

Research commissioned by Pacific governments confirmed these potential problems, she says.

She pointed out a gap analysis undertaken for Pacific Island Forum trade ministers by Nathan Associates.

Executive director of Oxfam Barry Coates says the aid agency is hoping for a follow through on stated commitment from officials of Australia and New Zealand that the trade discussion will benefit the Pacific.

“We’re looking for reality of negotiations to echo this stated aim.”

Unequal relationship
There is an unequal relationship in capacity for negotiations, says Coates.

“Attention needs to be paid for Pacific nations to have the right people and time to research.”

The proposal from New Zealand and Australia to start formal negotiations in August is too early, he says.

The chairman of the New Zealand Pacific Business Council, Gilbert Ullrich, also says more time is needed as there are many questions still to answer.

“Vanuatu’s income comes from the tariffs on their imports. This funds government operations. What will replace this if tariffs are reduced?”

According to a PANG newsletter, Vanuatu stands to lose around 17 percent of its government revenue if tariffs are removed.

Ullrich points out that he is a great believer in free trade but says this is about fair trade with multi-lateral dimensions.

“We need to address some issues first including the exclusion of Fiji and the development of common standards across islands. The money should go into food, health and safety.

“Is PACER going to produce any jobs for the young educated people leaving school?”

The Ministry of Foreign Affairs and Trade does not consult with the New Zealand Pacific Business Council, he says.

“The free trade discussions are all theory to keep a lot of bureaucrats busy.

“They haven’t demonstrated how free trade can work properly.”

Neo-colonial behaviour
Dr Jane Kelsey, an Auckland University professor of law, says New Zealand and Australia have displayed neo-colonial behaviour all along.

“New Zealand and Australia will continue to bully their way around and are likely to employ a divide and rule strategy,” she says.

Dr Kelsey says there needs to be a rethink of the model.

“The neoliberal approaches that are currently in meltdown remain the paradigm that New Zealand and Australia are foisting on Pacific countries.”

Pacific countries will remain under enormous pressure, she says.

Dr Kelsey says some Pacific countries are choosing to deflect this by negotiating with other nations, notably China.

Penjueli says PANG is extremely concerned by the interpretation of the Pacific position by Australia and New Zealand to date.

“The region is clear that they are not ready [to begin formal negotiations]. They want an Office of Chief Trade Advisor. They want to have the opportunity to undertake national consultations.”

But Penjueli also says that New Zealand and Australia are starting to show some appreciation of the issues.

No directives were given at the recent Auckland informal meeting, according to information provided to PANG by officials. Penjueli sees this as a very positive sign.

Funding support
Coates says a proposal for a Pacific negotiating office with a chief trade adviser based in Vanuatu has been put forward with a request for funding support.

New Zealand in principal agrees but they have offered insufficient funds to support this, he says.

Penjueli says the role of chief trade adviser is a critical issue.

“There’s a concern that because of the fast tracking of PACER-Plus that the technical skills for negotiation aren’t there.”

The Pacific Islands Forum (PIF) secretariat has provided the technical expertise to date during trade discussions at the request of Pacific Trade Ministers.

New Zealand and Australia are members of PIF along with 14 other Pacific nations.

“There’s a clear tension there and this is a critical issue to resolve.”

Fiji excluded
At the moment, Fiji is excluded from the trade discussions.

Coates says: “It is hard to imagine a Pacific free trade agreement without Fiji.

“The country plays a crucial role as a trade route and as an exporter to other Pacific Islands. There needs to be some careful thinking around this.”

The situation in Fiji is changing rapidly so this is another reason to delay the start of formal negotiations, he says.

Ullrich also asks how Fiji will be dealt with.

“They are the largest manufacturer in the Pacific. Fiji is the hub, the centre of trade. There has been a 50 percent increase in trade between Fiji and China in January alone.”

Penjueli says that a change of thinking is beginning to emerge from New Zealand and Australia on how to engage Fiji in the trade discussions. She believes trade discussions with Fiji will be an exception to the current exclusions.

Dr Kelsey says it is typical hypocrisy that in areas where New Zealand and Australia do have interests they turn a blind eye to their positions on exclusion of Fiji.

Aid and trade
Dr Kelsey says the recent announcement from Foreign Minister Murray McCully about NZAid gives an indication that New Zealand’s aid spending would be aligned with foreign policy and that this would be geared to economic development.

New Zealand is likely to become more intransigent and use aid as leverage in trade discussions, says Dr Kelsey.

Coates says there is a fine line between development aid to facilitate trade and trade discussions.

“There should be no use of aid to sweeten a bad deal. Everyone recognises this.

“But there is a need to provide financial support for Pacific nations to aid development of their export capacity.

“There’s a fine line. Pacific nations will be looking for reassurance on this.”

Road map
Penjueli says a road map proposal developed by PIF members describes a pathway to trade through a phased approach and includes clear criteria for how to proceed.

The recent meeting in Vanuatu sought to refine this document along with the proposal for the chief trade adviser.

The road map identifies 2013 as the preferred date for formal negotiations to begin.

The next formal meeting of trade ministers will be held in Samoa in June. Following this there is a Pacific Trade Forum meeting in Cairns in August.

Krista Ferguson is a Graduate Diploma in Journalism student on the AUT Asia-Pacific Journalism course.

Pictured: Dr Jane Kelsey ... criticisms of bullying by Australia and New Zealand.

Big Brothers Behaving Badly
Aid increases as NZAID changes focus

Solomon Islands launches 'commission of hope'

A legacy of bitterness still troubles the Weathercoast (south coast of Guadalcanal) and parts of Malaita in the Solomon Islands. It has been five years since the conflict and now hopes are pinned on a new commission to consolidate peace.

By Krista Ferguson: Pacific Media Centre

High hopes for a long lasting peace are resting on the South Pacific’s first Truth and Reconciliation Commission, launched by Archbishop Desmond Tutu in the Solomon Islands late last month.

The commission has been mandated to promote national unity and reconciliation by investigating human rights violations and abuses which occurred between 1998 and 2003.

General secretary of the Anglican Church of Melanesia, George Kiriau, is personally hopeful that the reconciliation process will be successful.

“There is a lot of expectation given the high note of the presence of the archbishop.

“With this launch we should see better understanding of how the conflict came about.

“I’m personally very hopeful and optimistic.”

However, Kiriau acknowledges that there are people who might not share this optimism.

“There are those who are hurt and traumatised, who had relatives who were killed. They may have different views of the process.”

But healing is important says Kiriau.

“We need to forgive.”

Little consultation
Dolores Devesi, Pacific programme manager for Oxfam, says her organisation supports the request by the national government for reconciliation.

But Devesi, who was born in the Solomon Islands and came to New Zealand in October last year, says her personal view is that this is the same as every other time.

The problem, according to Devesi, is that young people in the community are not consulted and engaged in the process.

“It’s usually the chiefs and elders, but it is actually the young people who need to be involved.

Devesi says there are some sceptics who say this is a high-level publicity exercise that will cost a lot of money.

There have been attempts to establish peace in the past, such as the Townsville Peace Agreement in 2000.

Devesi attended a reconciliation event last year and was not impressed.

“It was superficial. There was one woman and no young people. The elders attended and presented gifts to each other.”

Devesi says that there is always hope at the beginning of each process. But there is also a feeling of “here we go again”.

“We’ve had too many that haven’t worked. There’s always hope at first, but as the days and months drag on, hope disappears.

“It will take a long time to heal. There is a lot of hatred.”

Sorting out
For Kiriau, the people involved in the process are also the key.

“You can have the good reforms, but if the people inside are not sorted out then you can’t make much progress. People will find a way around the system.”

Kiriau says the commission has people of integrity and this will help people be more forthcoming.

The team includes three national commissioners: Rev Sam Ata, George Kejoa and Caroline Laore and two others - Ratu Joni Madraiwiwi from Fiji and Sofia Macher from Peru.

There is a lot of bad feeling still, says Kiriau.

“It is still a fragile law and order situation. The leaders will need to be careful.”

The Regional Assistance Mission to Solomon Island (RAMSI) will help to underpin law and order during this process, says Kiriau.

Simplistic label
The conflict in the Solomon Islands is often labelled as ethnic-based, but Kiriau says this is too simple.

“It is to do with development and economic opportunities.”

The government is struggling to provide basic services. There is a high population growth and many people are dropping out or leaving education and not finding jobs, says Kiriau.

Devesi also says that the underlying issues need to be addressed.

The biggest problem is the land issue, she says.

“The government needs to be proactive to prevent another blowout especially in the temporary land settlements outside Honiara.”

Urban migration and economic pressures are also a problem, she says.

“How do we retain people in the villages?

“The cost of food is extremely high. You can’t save any money.”

Devesi says she monitored her budget in 2007 and 99 percent of it went on basic food items even though she was on an above average salary.

Sweeping term
Dr Jon Fraenkel, a Melanesian programme senior research fellow at the Australian National University (ANU), says ethnicity is a very sweeping term, but at certain times in history, island-wide groups have emerged that were deeply antagonistic.

He named the Isatabu Freedom Movement (IFM) formed by Guales and the Malaita Eagle Force (MEF), formed by Malaitans (two different provinces), as examples.

“The conflicts started in 1998 with a speech by Ezekiel Alebua in Western Guadalcanal. He demanded compensation for the killing of 25 Guales and for establishing the capital in Guadalcanal.

“The IFM chased Malaitan settlers out of rural parts of Guadalcanal. They pushed them back into the capital Honiara.”

The Malaitans didn’t think their rights to the land were secure, he says, so they moved without strong dissent at first.

However, there was increasing discontent until 1999 when Malaitans confronted the then Prime Minister Bartholomew Ulufa’alu and demanded compensation for lost property.

Ulufa’alu said no and soon after the MEF was formed.

“It was steadily downhill after then,” says Dr Fraenkel.

Court evidence
Amnesty International has urged the Solomon Islands government to integrate the work of the truth commission with other justice work.

According to a statement on April 29, the Truth and Reconciliation Act may prevent information presented before the commission being used in court proceedings.

Kiriau says the government has been clear that the statements made before the commission cannot be used as court evidence.

However, he says that this is about sharing experiences and helping the government to prevent this unrest in future.

Dr Fraenkel says the community is still deeply divided by the conflict.

“There are terribly bitter wounds on the Weathercoast (south coast of Guadalcanal), but also parts of Malaita.”

Dr Fraenkel says that it has been five years since the conflict and most - but not all - of the militants have been arrested.

“The major issue is not finding more militants to prosecute. It’s allowing the country to move onwards.”

However, he does say there are some of the MEF leadership with questions to answer.

“It’s important to get the politics right to enable the emergence of a domestic leadership to deal with issues and get some economic development going.”

Devesi says nobody should be above the laws.

“Everyone would like to see prosecutions.”

Compensation culture
Dr Fraenkel says that the conflicts were fuelled by the compensation culture through which rival militia groups bankrupted the state.

He describes this in his 2004 book The Manipulation of Custom; From Uprising to Intervention in the Solomon Islands.

Traditionally compensation payments were made with pigs, cans of tuna, rice or shell money, says Dr Fraenkel. However, during the 1998–2003 conflicts many aggrieved groups demanded compensation from the state.

Devesi agrees with Fraenkel that money has been part of the problem.

“In our tradition you give pigs or shell money," she says.

“Reconciliation in the past has been sponsored by donor agencies [involving
money]. Reconciliation will only happen if the community gives from their
heart.”

Krista Ferguson is a Graduate Diploma in Journalism on the AUT Asia-Pacific Journalism course. Photo of Dolores Devesi: Oxfam.

Amnesty International statement

Money transfer website seeks savings for Pacific families

By Krista Ferguson: Pacific Media Centre

Pacific peoples will get a boost in financial literacy and save some money thanks to a new website-based programme with handy remittances advice.

Pacific Island Affairs Minister Georgina te Heuheu launched www.sendmoneypacific.org at the Otara Markets at the weekend.

“Pacific families in New Zealand are entitled to a fair go,” says Te Heuheu.

Transparency, fairness and speed of remittances are important – the cost is a burden on low income families.

“If $25 is lost for every $100, this is a loss to both the family in New Zealand and the family in the Pacific,” she says.

A joint NZAid and AusAID-funded project, the website provides a comparison of the fees charged by money transfer operators to send money from New Zealand to other Pacific countries.

It also compares the time it takes for the money to arrive.

Client manager for the website developer, Developing Markets Associates (DMA) Ltd, Jonathan Capal says it is a joint initiative that followed on from World Bank studies that looked at remittance costs for transferring money from one country to another.

“This region has the highest remittance costs in the world,” he says.

“In the UK it costs less than 5 percent to transfer money to India. In New Zealand there is a cost of up to 30 percent, including fees and foreign exchange, to send money to the Pacific.”

Heavy loss
Remittances to the Pacific region amount to more than USD$425 million a year, according to a media release by the minister.

Ministry project manager for the Pacific Remittance Project, Kim Hailwood, says it is estimated that NZ$80 million is lost a year on remittance fees to the Pacific Region.

Three-quarters of Pacific Islanders living in New Zealand send money to family in the Pacific Islands, says Hailwood.

“Money sent to the Pacific outstrips aid.”

The minister says remittances are a critical flow of money into the Pacific and provide an important safety net for some families.

“The money sent helps Pacific communities to be strong and sustainable,” says Te Heuheu.

The website shows that sending $200 from New Zealand to Fiji would cost $5.98 using a Westpac pre-paid card and $34.13 through Western Union.

The calculation was based on figures updated on March 20.

Taking note
Both Westpac and the Western Union deliver the money in less than one hour. Other money transfer operators can take up to three days, according to the website.

Money transfer operators have taken note since the website went live, says Capal.

“No-one likes to be seen as the most expensive,” he says.

“Some banks are starting to update us with offers that are relevant to remittance costs.”

Te Heuheu says: “In the end it’s a benefit to the banks as well. If they provide a good service, they will get good business.”

Westpac spokesperson Craig Dowling says it took the World Bank to dig out the scale of the issue. Banks attended forums coordinated by the World Bank and the Ministry of Pacific Island Affairs, he says.

The World Bank demonstrated how exposed Pacific communities are to these fees. A considerable amount of pressure was put on banks by the World Bank around this issue, he says.

The fees were contributing to a massive burden that could be alleviated, he says.

“A 25 percent fee is definitely too much,” he says. “It’s now up to banks to decide where this lies in their priorities.

“Our parent company, Westpac Banking Corporation, has a large footprint in the Pacific so we wanted to demonstrate our commitment to those communities.

Competitive advantage
It becomes a competitive advantage having the lower cost remittance product, he says.

“We decided we could move more quickly than our competitors. Westpac introduced a new card for remittances to the Pacific last year.

“We think there will be a competitive response. Western Union changed some of their rates when Westpac announced their new remittance product,” says Dowling.

He says a broader response by banks is needed to have a full effect.

“Why hamstring the whole Pacific community,” he says.

Westpac has also used the Otara Markets to promote its remittance product.

“Uptake has been okay, but there is a long way to go,” he says.

Capal says that internet use by different Pacific peoples varies. Samoans have a higher internet uptake compared with Tongan and Solomon Islands communities.

Because of the lower internet access, DMA will be regularly updating printed material to be handed out at churches and community groups, he says.

The website generated interest before the launch.

“It’s been notably picked up by bloggers in Papua New Guinea,” he says.

DMA expect the number of hits, currently several hundred a day, to at least triple following the launches in New Zealand in the weekend and Australia next Friday.

The website is part of a wider Pacific remittances project involving a partnership between the World Bank, Reserve Bank, Ministry of Pacific Island Affairs and the Pacific Cooperation Foundation (PCF).

PCF programme manager Tina McNicholas says the foundation is co-funding the education phase of the project.

“Phase two is much wider than the website. The focus will be on financial capability and a community education campaign,” she says.

McNicholas says she hopes that the website will also have an impact on the high level of fees “we’ll be able to pass on savings to families in the Pacific.

Picture: Pacific Island Affairs Minister Georgina te Heuheu (left) and project manager Kim Hailwood. Photo: Krista Ferguson.

Krista Ferguson is a student journalist on the Asia-Pacific Journalism course at AUT University.

Send Money Pacific