Comments

Julie Bishop's op ed this week was terrific and I commend it to to DPC readers. Another important event was the long-awaited launch of the <a href="http://www.fahcsia.gov.au/sa/women/pubs/govtint/action_plan_women_peace/Pages/default.aspx" rel="nofollow">Australian National Action Plan on Women,</a> Peace and Security - this might be the opportunity to have serious positive impact on women's lives in our region <a href="http://cigj.anu.edu.au/cigj/link_documents/Publications/Building%20Democracy%20after%20Conflict%20SI%20TRC.pdf" rel="nofollow">Read more</a> about why Julie's words are so important in the context of the Solomons Truth Commission process

The fundamental problem with PACER is that it continues to be pursued through the narrow confines of a trade negotiation. My reading is that the Pacific leaders wanted a broader, more in-depth agreement much like the economic partnership between Australia and New Zealand (ANZCER). Trade is only one part of the equation. Regional integration requires a broader consideration, one that also encapsulates the aid program, the investment debate and the migration debate. One that considers the depth of history, social, cultural and political affiliations between countries. Added to the protracted fiasco of PACER Plus is the obsession to hard-wire a ‘regional’ solution. Have we not yet learnt that this only leads to more regional disunity? Before we can cooperate on a regional basis, first each country has to know and own the agenda. We are nowhere close to such country buy in. A broader conversation could bridge the gap, give us an indication of what the people of the Pacific aspire to, and ultimately establish the architecture that will lead to deeper regional integration.

Thank you Wesley and Arnie, Those are very interesting points. Wesley, your point about other avenues through which Australia and New Zealand could assist with trade is excellent - I agree completely. If the govts. of Aus and NZ were really serious about aiding trade in the Pacific these are the areas they ought to be looking into, rather than worrying about PIC tariffs. Thanks Terence

Creating a tidy conclusion to the development/trade issue in Pacific is a bit like a Rubik's cube, particularly when we begin to work out the various sides. Where green may = climate change; blue = private investment; red = development aid; yellow = militarization; white = independence/decolonisation; orange = food/water security. As we begin to spin the cube, the various issues collide until we begin to sort through them, unraveling the system that the cube represents. I personally see Pacer and Picta and FTAs as representing just a part of the cube, neglecting green, orange and white, for example. These agreements are a two-dimensional attempt at justifying its assertion of economic hegemony to pacific island peoples and resources. Do these agreements allow for peoples to steward their lands, labor and resources? How do these agreements allow for Pacific Island governments to profit long-term from exploiting deregulated environmental protections? Part of this problem is that large countries economic growth is generally much faster than small countries, as large countries have greater control over markets, commodities and assets. When Pacific Island's resources are included in the larger countries economies, our potential for growth is even more stunted when we can only include a small percentage of our resources as part of our economic output. If this were in any way a reasonable assessment of the situation, how might we re-frame the problem so that small countries trade with other small countries with expectations of low economic growth? It should be of some interest that large countries with high growth also suffer from high debt, and that small countries should not be further punished by the large countries to pay for a system that is not inherently sustainable. There are unexplored routes for Pacific peoples and nations, and agreements that seemingly purport integration while in reality funnel revenue streams to transnational investments, ought to be put on hold rather than bundled into regional cooperations like APEC.

Great blog Terence. Well summarised overview of the debate around trade policy in the Pacific. With regard to SPARTECA, it should be pointed out that Pacific states did develop some export industry under the preferential access offered to Australian and New Zealand markets. Exports of car parts from Samoa and textiles from Fiji are a case in point. However, SPARTECA isn’t as lenient as is often suggested. Both the car parts and textile exports to Australia relied on ad-hoc derogations from the Rules of Origin (RoO) requirements of SPARTECA. Hence SPARTECA’s restrictive RoO may have acted as a brake on the development of other export industries. So SPARTECA evidently needs to be improved, and the Island countries have called for this for some time. Similarly for agricultural exports, Australian quarantine authorities have been notoriously slow at assessing the entry of new Pacific produce to Australian markets. Certainly there are more export pathways for Pacific tropical fruits and vegetables to New Zealand. So new export pathways are needed for Pacific island agricultural goods. And of course in recent years Pacific island countries have also exported labour to Australia and New Zealand as part of short-term labour mobility schemes in the horticultural sector. So we know that, if designed well, labour mobility schemes can be mutually beneficial. The point is, even if PACER-Plus is less relevant today, there are a number of alternative ways that Australia and New Zealand could help Pacific island countries benefit from trade - if there is sufficient political will.

Thanks Stret - the PNG example you point to seems like a very good example of the ambiguous impacts of tariffs.

You are heading in the right direction with these views. Having worked in the aid supported trade and investment promoting regional I can confirm the following: 1. There is a huge amount of hot air, papers, meetings, reports etc that achieve nothing, cost a huge amount and are an extremely inefficient attempt at promoting development. Over 30% of the time and money spent in aid supported trade & investment bodies can be spent on reporting rather than achieving. 2. The Pacific is made up of island micro nations with micro economies while most economic theory is based on experience in large developed continental nations. The exception is PNG where the arguments can be made either way - a successful job creating sugar industry has survived thanks to its granted monopoly and export trade benefits yet PNG suffers from overpriced cement and fuel due to open ended protectionism offered to foreign investors. PNG often offers overly generous terms to attract FDI. 3. Often the cost of delivering trade assistance, aid, and support far outweighs the value and benefit of what is delivered. Money is spent on activities that deliver nothing and when there is a tangible delivery the delivery cost is much too high. 4. The Pacific can't afford inefficiency with its limited resources. Costs of goods and materials need to come down but this is difficult in micro markets that can only support limited competition in many areas. Inefficient and wasteful governance is seen in government, trade and aid bodies, and regional organizations. 5. The economic text books and theory need to be rewritten to suit isolated micro island micro economies. Officials in Canberra, Wellington,Geneva & New York needs to understand that we don't live in a one size fits all world.

Terence, I don't agree with all you say, but you're spot on with your conclusion. PACER Plus is an irrelevance. Unfortunately, neither Australia nor NZ nor any of the island economies appear prepared to come out and admit to this.

Thank you for the comments. Robert, have a look (if you haven't already) at the Independent Completion Report on the Indonesia Basic Education Program, which can be found <a href="http://www.ausaid.gov.au/publications/pubout.cfm?ID=9890_5853_7042_3555_1061&Type=PubEvaluationReports&FromSection=Publications" rel="nofollow">here</a>. I think that document provides compelling evidence that the modality chosen (implementation through the govermment) worked very well in this case.

Stephen, I think any confusion in this area stems largely from the lack of clear and comprehensive information from AusAID. Hopefully this will change under the new Transparency Charter recommended by the Aid Review. However I'm not sure that the issue of "boomerang aid" or the larger issue of aid getting to the poor has been solved, despite the share of aid to private contractors decreasing.

Thank you for the post for and clarifying several issues. I am interested in your assertion that "Funding to recipient governments now has lots of strings attached, and works well. The Indonesia schools program is the best example." Can you clarify why you believe the Indonesia program is the best example and how the 'strings' ensure this is so? With thanks.

Thank you for setting out these significant shifts in aid delivery. Your blog suggests that AusAID is increasingly giving consideration to the most appropriate channel for aid delivery based on the particular program objectives, rather than simply defaulting to use contractors. This is definitely a good thing. However, I think your discussion of the greater scrutiny of contractors isn't correct. Firstly, evaluations of multilateral activities aren't on AusAID's website, but they are the websites of the multilaterals. While it varies across organisations, many have strong evaluation policies and practices and there is little point in AusAID duplicating this function. Similarly, many NGOS have strong approaches to evaluation and increasingly these are available publically. See for example http://www.careevaluations.org ; CARE’s Electronic Evaluations Library which contains over 400 evaluation reports from CARE projects from all over the world. You suggest that the fact that contractors bid for projects increases the level of scrutiny on their work. Of the new Australian Government grants CARE received last year, 72% were won through competitive processes. In addition, Australian NGOs go through a rigorous accreditation process with AusAID, renewed every 5 years, to ensure that we have the capacity to effectively and efficiently deliver aid. There is a lot of scrutiny on NGO work, although some of it operates differently to the scrutiny on contractors. Thanks for an interesting post. Julia