OPENING STATEMENT BY MR. W. NOEL LEVI, CBE,

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SOUTH PACIFIC FORUM SECRETARIAT Suva, Fiji Islands

PRESS STATEMENT August 28, 2000 Tanoa International Hotel

FORUM FREE TRADE AREA NEGOTIATIONS

SECRETARY GENERAL, SOUTH PACIFIC FORUM SECRETARIAT

Your Excellencies, Forum Trade Officials, Resource Persons, Representatives of CROP Agencies, Ladies and Gentlemen.

I am pleased to welcome you to this first round of trade negotiations for a Pacific Regional Trade Agreement (PARTA).

2. As you are no doubt aware the Forum since its very inception in 1972 has had the issue of regional trade and economic integration on its agenda. In those thirty years since the founding fathers of the Forum started working on these issues we have made much progress with the development of regional capacity to solve our problems regionally in a host of areas. These have included health and quarantine, education, geo-science, environment, economic and political co-operation and now we are finally moving towards enhanced regional trade integration. Slowly but surely and despite occasional setbacks we are moving to integrate in ways that strengthen each of us individually rather than detracting from our strength.

3. It has now been three years since Forum members returned to the issue of trade integration at the very first Forum Economic Ministers Meeting in Cairns in 1997. Today we meet to begin the actual negotiations of a treaty mandated to us by leaders at the 1999 Palau Forum. Last year the Forum Trade Ministers met and endorsed the principle of a Free Trade Area (FTA) amongst Forum members. This decision was endorsed by Leaders who further tasked officials to:

‘negotiate the details of the draft Agreement, including negative lists and measures to provide for the application of the arrangements to Australia and New Zealand.’

4. When we met in March in Suva it was decided at that meeting that the Forum Secretariat was to complete two important activities prior to the commencement of this first round of PARTA negotiations. The first of these was to undertake a study of the Australia/New Zealand proposal for membership in PARTA as parties principal. The second was to provide members with the necessary technical assistance to prepare negotiating positions for this round of negotiations. I am pleased to say that despite the difficulties that the Secretariat and the region have faced in the last four months we have now completed these tasks.

5. As we begin the process of negotiating PARTA, it is essential to bear in mind that the economies of 14 members of the Pacific Island Forum are fragile and vulnerable and hence the transition to a more liberalized environment will be difficult and painful. It is for this reason that the architecture of the FTA was designed as a first step to wider liberalization with transition periods that are as long as the World Trade Organization (WTO) will normally permit. This will allow Forum Island Countries (FIC) the maximum possible time to make the economic and taxation adjustment to a more liberalized trading environment. But once the transition is complete and the negative list lapses then we will have a real free trade area with the minimum of WTO compatible exemptions. This is to ensure that the costs of the transition are small and that the long-term trade benefits, limited as they may be initially by our capacity to export, will be maximized.

6. In practical terms I seek the indulgence and tolerance of each member to show flexibility in accepting transitional arrangements that may, by necessity of the circumstances of particular members, depart from that found in draft framework agreement. But in making your offers I hope the spirit of compromise is with each of you. I am hopeful that each FIC will at least uphold one binding principle - that where a member has tariffs, that a margin of preference for FIC exports is created at the beginning of the agreement and that by January 1st 2012 we have an FTA across all FICs with no negative list. These, I believe, are some of the underlying principles of the draft framework agreement that was endorsed by leaders.

7. One of the issues that confront us today is the question of an appropriate application of this agreement to Australia and New Zealand. All of you are aware of how difficult a problem this is because of the very complex issues of WTO compatibility of PARTA and the implication of ANZ participation for trade relations with non-Forum trading partners. Prior to the pre-negotiation workshop in March, Australia and New Zealand presented an aide memoire formally asking to be parties principal to PARTA. At that meeting Australia and New Zealand presented a draft text for the consideration of members. Members sought a report analyzing the ANZ draft text. This was agreed and consultants were contracted to undertake the study. The study by Scollay and Myburgh analyzing the numerous options was completed and has been forwarded to members.

8. I want to take this opportunity to thank Robert Scollay and Paul Myburgh for their comprehensive review of the Australia/New Zealand PARTA proposal. The options discussed in the report do pose some difficulties for the FIC but at the same time they do provide a way forward as the basis for negotiation to provide for the application of the PARTA to Australia and New Zealand.

9. Technicalities of Most Favored Nation liberalization, whether Asia Pacific Economic Cooperation (APEC) voluntary, or WTO compulsory, are matters you as trade officials are familiar with. The important thing to bear in mind is to ensure that given the clarity of WTO rules on the formation of free trade areas, the PARTA we negotiate must not be WTO incompatible.

10. I want to leave you with a reminder that you are here to begin the process of negotiating the Pacific Regional Trade Agreement (PARTA). Your main objective is to conclude a PARTA in which all 16 members of the Pacific Islands Forum are in total and absolute agreement. To achieve this desired objective, it is importantly essential that your negotiation must be from the standpoint of deciding issues on their merits, rather than through a haggling process focused on what each side says it will and won't do. I suggest you look for mutual gains wherever possible, and in circumstances where your interests conflict, you should insist that the result be based on some fair standards, independent of the will of those involved in the negotiation.

11. Finally, the bottom line for me, and I am sure for the Leaders as well, is that the winner in PARTA should not be individual FIC, or Australia and New Zealand, but it should be the Pacific Islands Forum and the people of the region.

For additional information, contact: Ulafala Aiavao at UlafalaA@forumsec.org.fj 

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