Pacer Plus comes into force to boost New Zealand exports

The Pacific Agreement on Closer Economic Relations Plus (CERP) popularly as ‘Pacer Plus, comes into force today, Sunday, December 13, 2020, marking an important chapter in trade relations between New Zealand and the ten other member countries in the Pacific region.

Pacer Plus countries currently include Australia, Cook Islands, Kiribati, Nauru, New Zealand, Niue, Samoa, Solomon Islands and Tonga.

Countries out of the Pact

Tuvalu and Vanuatu and yet to sign the Agreement.

Fiji and Papua New Guinea, the two important economies in the region, have refused to join the trade bloc, citing the ‘Most-Favoured Nation Clause’ as detrimental to them.

According to the two countries, this Clause includes a pledge by Pacer Plus members to extend to Australia and New Zealand any terms negotiated with another region or country: in effect counteracting regional integration.

The non-signatories said they were concerned about losing the ability to protect infant industries, although this concern may be less warranted.

New Zealand’s Minister of State Trade and Export Growth Phil Twyford welcomed the CERP, saying that it will be instrumental in supporting Pacific economies to rebuild from the devastating impacts of Covid-19. 

“The Agreement provides opportunities for goods and services produced in the region to be sold within the Pacific and globally, thereby using trade as an engine of economic growth and sustainable development,” he said.

Pacer Plus will improve market access to every-day goods

Increased Aid

Describing the CERP as a ‘Landmark Trade and Development Agreement,’ Mr Twyford said that it demonstrates New Zealand’s enduring commitment to the Blue Pacific.

“As a part of that commitment, New Zealand has agreed to commit 20% of our Official Development Assistance towards Aid for Trade activities in the region. This support will provide opportunities to build capacity, enhance infrastructure and improve the ability of countries to benefit from trade opportunities such as those made possible through Pacer Plus,” Mr Twyford said.

About the Agreement

The Pacific Agreement on Closer Economic Relations (PACER) Plus is a landmark trade and development agreement that will raise living standards, create jobs and increase exports in Pacific Island countries, lowering barriers and providing greater certainty for New Zealand businesses.

The Ministry of Foreign Affairs & Trade (MFAT) website said that as a Pacific country, the wellbeing of New Zealand’s people, economy and environment is closely linked to the wellbeing of the wider Pacific region.

“We are connected through history, culture, people, trade, languages and shared interests. New Zealand is home to more than 381,600 Pasifika peoples, about 8% of New Zealand’s total population. Our Pacific neighbours face unique challenges for economic development, including their small size and difficulty achieving the economies of scale needed to compete in international markets. Pacific Island countries have been severely impacted by the Covid-19 pandemic, with global travel restrictions affecting key economic sectors such as tourism, trade and labour mobility,” the website said.

Common rules, easier trade

Pacer Plus establishes a common set of trading rules for the region, which will make it easier for businesses to trade throughout the Pacific. Open, rules-based trade is crucial to help the region and the world recover from the economic impact of the Covid-19 pandemic.

It will help Pacific countries to attract investment and increase exports, driving economic growth and providing higher incomes and more opportunities for people. Pacer Plus also improves market access for New Zealand suppliers and investors and provides a more predictable trading environment.

New Zealand and Australia are offering dedicated development cooperation assistance to help Pacific Island countries adjust to Pacer Plus and the opportunities it offers.

Pacer Plus Highlights

For Pacific Island countries, the agreement helps to increase exports and attract investment.

It reduces tariffs across the region, improves transparency for businesses, and provides more liberal rules of origin, which makes it easier to determine what qualifies as a Pacific Island product. It helps to create opportunities for Pacific exporters to get their products and services into Australian and New Zealand markets, and trade throughout the region. 

Pacer Plus improves market access for New Zealand suppliers and investors. It provides greater certainty around tariffs and creates efficiencies in clearing customs. It also provides New Zealand businesses with legal protections that guarantee market access and treatment equivalent to that given to local and foreign competitors, unless subject to specific exceptions.

Development Assistance

To help Pacific Island countries adjust to Pacer Plus, New Zealand and Australia are offering dedicated development assistance. This includes A$25.5m five-year Development and Economic Cooperation Work Programme.

New Zealand has also committed to invest at least 20% of its total Official Development Assistance (ODA) in aid for trade activities in the Pacific. This will support Pacific countries to build their capacity to trade and attract investment.

According to the MFAT website, Pacer Plus is an arrangement which will look at ways to enhance regional labour mobility opportunities among participants – the Arrangement on Labour Mobility.

“Regional labour mobility benefits both New Zealand and the Pacific region. Through working in New Zealand, Pacific workers can learn new skills and gain higher incomes, and their communities back home can benefit from remittances and local investment. New Zealand businesses can access a reliable Pacific workforce in industries where there are not enough local workers,” it said.

The above story has been sponsored by