Australia’s New International Development Directions and Implications for Trade in the Pacific

Pacific Trade

Following the federal budget in May this year, the Australian government concluded a review of Australia’s international development program and its future policy directions.

Below, some of the key implications of the budget and policy review for trade and development in the Pacific Island region are elucidated, with reference to progress and challenges for the implementation of the Pacific Agreement on Closer Economic Relations Plus (PACER Plus) involving Australia, New Zealand, and Pacific Island Countries (PICs).

Australia’s New International Development Policy

The new policy directions are very big picture, although trade and business development are identified as key components for building on Australia’s capacity to “strengthen trade and business ties in the Pacific and build on labour market and migration pathways for PICs”.2 In general terms the policy document posits that:

Trade and investment can create more and better jobs, lower prices and stimulate economic growth. Australia will support partners to benefit from global rules-based trade — as they integrate into the multilateral trading system through the World Trade Organisation (WTO), implement their free trade agreement commitments, strengthen their economies through the Asia Pacific Economic Cooperation (APEC) and the Indo Pacific Economic Framework (IPEF), and increase their participation in the green and digital economies.3

The Review sets out some other encouraging outcomes such as:

  • The establishment of the Australian Development Investments fund capitalised up to $250 million and building on the Emerging Market Impact Investment Fund pilot program.
  • The creation of a Blended Finance and Investor Engagement Unit to help mobilise additional finance.
  • The establishment of an International Development Finance Advisory Committee to advise DFAT and the Government on development finance portfolio issues and risks.
  • Concessional development finance to support Indo-Pacific countries tackle climate change.

The devil will be in the detail. “Blended Finance” mechanisms may just refer to ongoing attempts to encourage greater private sector and capital markets involvement in the aid program, which is not new.

Regarding PICs there is a welcome, if general, emphasis on supporting debt relief and financial sustainability consistent with recent G20 statements, as well as support for the region’s Blue Pacific strategy and trade diversification. There is also a strong commitment to funding for climate change mitigation initiatives and social inclusion measures, which PICs will welcome.


Jim Redden, is an External Trade and Development Advisor to DFAT, Director, Economic Development Services Ltd, and IIT Visiting Fellow

The views expressed here are the author’s alone and not those of the Institute for International Trade.

Tagged in Featured, Policy Brief

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