Pacific Trade Agreement Opens Door for Travel Bubble and Rule of Law

After more than 8 years of complex negotiations, PACER (Pacific Closer Economic Relations) ‘Plus’ (added features to include unique aid as well as trade aspects), is a binding Pacific trade agreement.  The Cook Islands recently become the eighth country to ratify PACER Plus thus bringing it into force, joining Kiribati, New Zealand, Niue, Samoa, Solomon Islands, Tonga and Australia.  Fiji may join soon while negotiations continue with PNG.

From a geo-strategic perspective, PACER Plus cements the government’s Pacific ‘step-up’ strategy and consolidates regional support among our Pacific neighbours for a WTO consistent, rules-based trade agreement. Against the backdrop of an incoming Biden Administration committing the US to a stronger role for America in support of the world trade body, and given China’s standing commitment to the WTO – to which it just donated US $500,000 in support of developing country accession - the regional Pacific agreement is a timely reminder of the commitment of countries globally to reduce protection in the spirit of a cooperative, rules based, open trading system.

If supported by a ‘Pacific regional travel bubble’, the mutual benefits of PACER Plus would be immediate. Not only will business and traders profit from lower trade costs and increased access to markets, but a ‘travel bubble’ could underpin a boost for national and regional economic recovery through an increase in labour mobility, tourism, preventative health measures and educational opportunities.

It is therefore now timely for the Australian Government to work closely with the states and our regional Pacific partners to agree on the parameters of a mutually beneficial Pacific travel bubble that would not only help accelerate the gains associated with the trade agreement but also create a number of ‘win-win’ scenarios for the region, specifically:

Pacific seasonal labour filling vital skill shortages: 

There remain a number of critical labour shortages in the Australian economy, not just in farm labour but in abattoirs and construction.  So long as no Australian can fill the jobs, Pacific Islanders are a ready solution. Australia gets it crops picked meaning more timely and cheaper produce, while for the Pacific Islanders, temporary work in Australia provides vital income for low-income families as wages are remitted back home.

Increase in trade, tourism and investment:

A reduction in trade costs and improved regulatory climate will help expand Australian exports to, and investment in, the region, while the aid package will assist Pacific Island businesses to get their goods and services into Australian and NZ markets.  The revival of tourism is vital for Pacific nations – even though 10 Pacific nations are virus free, the global lockdowns have severely impacted the flow of tourists and derivative revenues.  Australians could enjoy a relaxing break in some of the many stunning tropical islands, whilst helping to stimulate regional economic recovery.

Better regional health standards:

PACER Plus includes the upgrading of Pacific Island sanitary and quarantine capabilities which help deal with the containment of animal and human diseases, while reduced tariffs on health products such as on personal protective equipment and medicines along with an increased circular flow of health professionals will be timely in preventing further outbreaks of diseases such as COVID-19, malaria and measles.

Significant growth in services trade: 

Like Australia, for most Pacific nations the services sector accounts for over 65% of economic activity.  The opportunity for increased trade and investment in the region for service providers will be considerably enhanced, especially in accounting, finance, management services, telecommunications, business outsourcing, tourist, health and education services.

Education: 

Over half the Pacific Island population are under the age of 23, and there is a desperate need to upskill young people through access to vocational and tertiary education. Easier access to education service providers in Australia reinforced by a travel bubble would provide strong mutual gains.

Regional security:  

Australia now has a unique opportunity to differentiate itself from other donors to the Pacific including China, Japan and the EU.  A Pacific bubble which enhances the PACER Plus trade agreement, would increase cooperation on infrastructure development, disaster and climate change mitigation measures, good governance, and on regional security issues.

Overall, PACER Plus contains a number of win-win elements that will help stimulate economic recovery in the region and modernise Pacific trade systems. These elements all point to the need now for a timely negotiation of a regional Pacific travel bubble as a high priority for the Morrison Government.

*This article is from the December 14 issue of The Australian Digital Edition. To subscribe, visit https://www.theaustralian.com.au/

Jim Redden Director, Economic Development Services Ltd. Visiting Fellow, Institute for International Trade, Adelaide University

Peter Draper Executive Director, Institute for International Trade, Adelaide University

The views expressed here are the authors’, and may not necessarily represent the views of the Institute for International Trade.