Luxon’s Fiji visit puts Pacific trade pact back in focus

New Zealand Prime Minister Christopher Luxon (left) and Fijian Prime Minister Sitiveni Rabuka have pledged to lift two-way trade between the countries to $2 billion by 2030 (Facebook photo)

Venu Menon
Wellington, June 10,2024

A highlight of Christopher Luxon’s first Pacific tour as prime minister is that it breaks new ground with Fiji potentially open to joining the Pacific Agreement on Closer Economic Relations (PACER) Plus, an initiative spearheaded jointly by New Zealand and Australia.

During bilateral talks in Suva on June 6, which covered a broad range of issues including defence and regional security, trade and people-to-people links, Fijian Prime Minister Sitiveni Rabuka noted “the potential benefits” of joining PACER Plus, as per a joint statement by the two leaders.

PACER Plus is a landmark trade and development agreement aimed at raising living standards, creating jobs and increasing exports in Pacific Island countries.

The agreement also seeks to lower barriers and provide “greater certainty for New Zealand businesses.”

New Zealand, which is home to more than 381,600 Pasifika Peoples (around 8% of its total population), is interlinked with the wider Pacific region through history, culture, trade and languages.

PACER Plus envisages a regional trading bloc with common trading rules that would make it easier for Pacific countries to trade throughout the Pacific and beyond.

Pacer Plus helps Pacific countries attract investment and increase exports. It is a catalyst for economic growth, generating higher incomes and more opportunities within the region.

PACER Plus provides a more “predictable trading environment” that enables New Zealand exporters to gain market access in Pacific Island countries.

New Zealand and Australia are aligned in promoting PACER Plus among Pacific Island countries, and have pooled $25.5 million to help Pacific Island countries in meeting their obligations under, and taking advantage of the opportunities thrown up, by PACER Plus.

Ten Pacific Island Forum (PIF) members have signed the PACER Plus accord. They include Australia, Cook Islands, Kiribati, New Zealand, Niue, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu.

While Nauru has signed, it is yet to ratify the PACER Plus agreement.

PACER Plus offers its members “transparency and predictability” in the trading and investment environment. It streamlines border processes, reducing “risk and the cost of compliance.”

Under PACER Plus, businesses exporting goods to New Zealand or Australia from Pacific countries are exempt from all tariffs provided “they comply with PACER Plus Rules of Origin.”

Other benefits include improved temporary visa access for skilled workers, specialists and businesses that “are conducting business or delivery services in the region.”

In addition, PACER Plus protects the New Zealand government’s right to protect its public policies, including “preserving the pre-eminence of the Treaty of Waitangi in New Zealand.”

In June 2023, two-way trade between New Zealand and PACER Plus countries, excluding Australia, totalled $1.45 billion. New Zealand exported $825.15 million and imported $620.16 million.

Exports from PACER Plus countries included travel, machinery, dairy, and wood. Imports included travel, government services, wood, electrical machinery and vegetables.

PACER Plus builds on existing trade agreements such as the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) of 1980, and the original PACER Agreement of 2001.

PACER Plus negotiations began in 2009 and concluded in April 2017. The agreement came into effect on 13 December 2020.

Venu Menon is an Indian Newslink reporter based in Wellington

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