Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Hansard source

May I begin by welcoming the fact that the PACER Plus negotiations have taken another step forward. It is a fairly tiny step, and there will be many, many more steps to follow, no doubt, but I hope that these negotiations can come to a successful outcome. In the end, the benefits of a PACER Plus agreement will be more about the relationship that Australia has with the countries of the Pacific than it will be about economic benefit to this country. Frankly, I believe that a PACER Plus arrangement can provide real benefits to our Pacific neighbours and that it can give them an opportunity to look constructively at their economies and the way they are structured and to appreciate some of the benefits of opening up their economies so that they can participate more fully in the global economic environment.

For some time Australia and New Zealand have eliminated any barriers we may have had to the products produced in the countries of the Pacific, but there has not been a great deal of response from the Pacific island countries. To some extent, I think that has been partly the result of the not-very-good advice that they have been given by nongovernment organisations, many of them out of Europe and other places, who have persuaded them that it is not appropriate for little countries to open up their economies, that they are better off for them to be closed to protect uneconomic and largely unproductive industries, rather than to give themselves an opportunity to participate fully in a broader and more open market.

Many of the economies of these countries are limited and narrow—we accept that—and many have little more than subsistence industries. Others have significant tourism industries and have sought to host industries both primary and secondary, such as manufacturing, over a long period of time. Samoa, of course, is an interesting example, because one factory in Samoa that exports circuitry to Australia’s motor vehicle industry, I understand, is responsible for over 80 per cent of the entire Samoan economy. I will refer to that factory again a little bit later on, but it is a demonstration that it is possible to have a manufacturing sector in these countries and for it to be broadly competitive with the rest of the world, particularly if it is prepared to open itself up to the latest technology and feed a market that is looking for this kind of sophisticated circuitry.

As I mentioned earlier, the relationship between Australia and New Zealand and the countries of the Pacific has been ongoing, but it has not always been a completely harmonious relationship. We are very much, I guess, the ‘big brother’ of the region and I think Australia and New Zealand accept that we have a particular responsibility to those microeconomies, to do what we can to help them improve their own standards of living and to engage with the world.

The original PACER agreement was signed in 2001. It stands, incidentally, for Pacific Agreement on Closer Economic Relations, but the word ‘PACER’ is used so extensively now that I suspect people have even forgotten what it actually stands for. It was designed to provide closer economic cooperation between the 16 countries of the region. Australia and New Zealand have provided duty-free access for inbound Pacific island goods for almost 30 years, enabling annual trade with the Pacific to grow—the last figures I saw were from 2006—to almost $7 billion. There is a deficit for Australia in the trading relationship of over half a billion dollars, and that of itself ought to be a signal to the countries in that region that they have nothing to fear from a stronger relationship with nations like Australia and New Zealand, that we can help build their economies.

Under the 2001 agreement, Pacific countries were obliged to negotiate trade agreements with Australia and New Zealand if they entered into free trade agreement discussions with another developed country so that Australia and New Zealand were not disadvantaged by the concessions that were written into the PACER agreement. Pacific nations began talks in 2001 with the European Union over an economic partnership. That, in a sense, triggered the need to commence discussions in relation to PACER Plus.

The Forum trade ministers agreed in 2005 that there was a need to move beyond the SPARTECA arrangements towards a more comprehensive framework for trade and economic cooperation between Australia, New Zealand and Forum island countries, as provided for under PACER, to foster economic growth, investment and employment in the region. That was a significant step in the process of taking the relationship further. It became necessary because, particularly under the SPARTECA arrangements, Australia and New Zealand had made concessions to countries like Fiji—and the minister referred to those concessions in relation to the textile industry a little earlier—and on the Samoan imports that I referred to earlier. Those concessions repeatedly had to be made more and more generous; otherwise, they ceased to be effective. Initially it was supposed to be a 50 per cent local content rule, and that number progressively became smaller to the stage where the local content, even of the Samoan circuitry, had reached quite a low proportion of the value of those goods. But Australia continued to grant the extra concessions. We did so because we knew it was important for Samoa. There was not any particularly great objection from Australian manufacturers on that issue. But we knew also that if we allowed that industry to close Australia and other countries would need to provide assistance of various forms to the Samoans to enable their economy to be sustained at the level that it had been at that time. So we kept making all of those additional concessions. We went beyond what the black letters of SPARTECA actually said because we wanted to support those economies.

That is why I was particularly disappointed, in my own brief involvement in discussions about this agreement, that the non-government organisations were reacting so negatively to the relationship with the larger economies of the region and telling these countries that Australia and New Zealand had obligations to them and therefore there was no responsibility for them to actually try and do something to improve their own economies. They were, I guess, afraid of the future. It has to be accepted that most of those nations will never have the capacity to do a lot of economic research of their own to make their own independent assessments about what is best for their country, so they will be depending upon advice from other places. But those non-government organisations and others that give that advice should not take advantage of these countries by giving them advice that is fundamentally unsound. They should have been honest with these economies and show them how those least developed countries in the world that have opened their economies have in fact grown and prospered as a result. There are few, if any, examples of poor countries that opened their economies and suffered as a result. In fact, they become exposed to the technology of the world and they grow, and usually their own industrial potential grows and expands as well. Their economy diversifies. So it is very much in the interests of the poorest countries of the world to do what they can also to improve their economy. The negotiations on PACER Plus can, I think, play a useful role in that regard.

When advised that the Minister for Trade was proposing to make this statement I got out a press release that I issued myself on 14 June 2007 on this subject. Many of the themes in the minister’s statement were reflected in that press release just two years ago. When I was referring to the new so-called PACER Plus, I said:

It will foster economic opportunities and competitiveness for countries in the region and help Pacific Island countries secure the benefits from liberalisation and integration while operating within WTO rules. The economic gains from PACER Plus will be firmly geared towards the sustainable development of Pacific Island countries and their gradual and progressive integration into the world economy. Australia and New Zealand recognise the capacity constraints facing Pacific Island countries and their other trade negotiation preoccupations at this time. For that reason, we are receptive to a phased and careful approach to consultations and subsequent negotiations. We are committed to a cooperative, friendly consultation and negotiation process to liberalise regional trade.

I think those are the same sentiments that the minister expressed in his ministerial statement, and therefore I can say nothing more other than that I concur with the advances that have been made. The fact that it has taken two years to get to this stage, I suspect, is an ominous sign as to how long it might take to get to the conclusion. I notice that the minister’s statement made the telling point that this is an agreement to begin talking. It is not yet an agreement that will lead to a final position, but I hope that it does. This is an important step, and I believe that it is important for these countries that they enter these negotiations with courage. I note that there is an intention to provide resources to enable them to be well equipped to undertake their negotiations. I assure the minister that I endorse his comments that there will be no attempt by countries like Australia and New Zealand—because we are bigger and stronger—to take advantage of the poor countries in these negotiations. We want what is best for them, and I think that the PACER Plus negotiations, if conducted in good spirit, can be beneficial to these small economies.

I note the minister’s comments in relation to Fiji. It is regrettable that Fiji cannot be a part of these negotiations. It is one of the bigger economies of the region, but they clearly cannot be included while the country’s democratic situation is as it is. It is true that Australia has sought to protect the people of Fiji from the actions of their government and there is merit in that approach but, on the other hand, it has limited our capacity to take the kind of really stern action that is probably necessary to deliver a better outcome for the people of Fiji. I think it is about time for us to look at what more we can do to put additional pressure on Fiji to restore democracy and to participate in discussions like PACER Plus. They would benefit significantly from those discussions. We do give them concessions under SPARTECA. Fiji is not quite as important to Australia anymore as a supplier of textiles, but whether we can continue to bend the rules to give them a special place in the trade into this country when there is clearly no state of democracy in that land is something that needs to be kept under constant review.

Many of these countries are places we love to visit. They have wonderful tourism industries. They are cheerful people who give Australians on holiday a wonderful welcome and it is an important industry for them. But it is important for those countries and for us that they develop a broader economy so that they are able to sustain a continuing growth in the standard of living of their own people and participate more fully in international negotiations. I compliment the minister on getting us this little further step along the way. Both he and I will probably have to be here quite a long time to have another announcement about the successful conclusion of these negotiations, but I certainly encourage the government to do what they can to walk carefully through the processes so that there will, in the end, be a good outcome.

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