VANUATU WARY OF REGIONAL TRADE AGREEMENT

admin's picture

‘PACER’ good for consumers, bad for local businesses

By Jemima Garrett MELBOURNE, Australia (Radio Australia, Dec. 9, 2009) –The Governor of Vanuatu's Reserve Bank says his country's manufacturers would struggle under the proposed PACER Plus [Pacific Agreement on Closer Economic Relations] trade agreement.

Bank Governor Odo Tevi has been in the Australian capital of Canberra, where he has been speaking at the Australian National University's Papua New Guinea and Pacific Update.

[PIR editor’s note: The Pacific Agreement on Closer Economic Relations is an umbrella agreement among the 16 nations that make up the Pacific Islands Forum to gradually implement a system of regional trade aimed at economic development. The agreement has been criticized as serving the trade interests of Australia and New Zealand, the driving forces behind the agreement.]

Mr Tevi has told Radio Australia's Pacific Beat program that the proposed PACER Plus free trade deal involving 13 Pacific countries, Australia and New Zealand, would benefit Vanuatu's consumers but hurt its manufacturers.

"It is the consumers who are going to gain from lower prices in imports, but the counter-argument is that the manufacturing sector are the ones who are going to struggle," he said.

"We could see a decline in the manufacturing sector in Vanuatu, so in terms of industrialisation in the future, that will be a major challenge."

Mr Tevi says Government revenue could also suffer under PACER Plus. He says studies have shown revenue losses could range from 17 per cent to 23 per cent.

"The 17 per cent revenue loss is still high, so we have to think about how do we compensate for that loss," he said.

"We need to ensure that we are reforming now, so that we can achieve progress in the economy - economic growth so that we can recover that revenue loss."

He says taxes could be part of that reform. Vanuatu currently does not have an income tax.

"It's up to the Government to decide the taxation they're pledging for the future," he said.

Mr Tevi says including agreements in PACER Plus that allow seasonal work for Vanuatu citizens in New Zealand and Australia would benefit all three countries.

He says the Vanuatu Government holds the seasonal worker programs "dearly in their heart."

"If we could include labour mobility that will be important, not only in terms of horticulture but also in terms of care givers. Australia and New Zealand, they are facing this ageing population, so we can also assist in that," he said.

"But again it will depend on a lot of capacity building within in our countries and it's important that donor countries help us in that area as well."

Rate this article: 
No votes yet

Add new comment