1. Development Benefits of PACER Plus for the Forum Island Countries OCTA, Brisbane 14 October 2016

2.  Importance of trade to the FICs  Low share in world trade – estimated at 0.05 per cent  Regional economic integration as an instrument for enhancing the participation of the FICs in international trade  Leaders’ vision of closer economic integration in the Pacific  SPARTECA PICTA MSG Trade Agreement  PACER MTEC (Northern Pacific Countries)  Launching of PACER Plus negotiations in 2009  Negotiations cover, inter alia, trade in goods, trade in services, investment, labour mobility and development assistance.  Negotiations concluded on all Chapters. Market access negotiating ongoing. Expected to be concluded in Oct/Nov 2016 Brief background

3. Objectives: Facilitate trade; create larger market of 40 million people; participation in regional value chains; flexible rules of origin Main negotiating issues: Asymmetrical obligations -special and differential treatment; Technical assistance and capacity Development benefits: Special and differential treatment for the FICs; enhanced, secure and predictable market access; access to a larger market; prices of goods will come down – better for consumers and industries using inputs from other PACER Plus Parties in their production process; flexible rules of origin; assistance to the FICs to comply with the relevant SPS and TBT requirements of Australia, New Zealand and key trading partners Trade in Goods in PACER Plus

4. Objective: Simplification of customs rules and procedures to reduce trade costs and facilitate the conduct of trade among PACER Plus Parties Main negotiating issues? Application of WTO disciplines to the FICs; Technical assistance and capacity building No new obligations on the six FICs which are WTO Members. The non-WTO FIC Parties to apply the WTO disciplines only to the extent of their capacity Development benefits: FICs to be provided assistance to streamline their customs procedures to reduce trade costs and enhance competitiveness; assistance to upgrade trade-related infrastructure, including ports. Customs Procedures in PACER Plus

5. Objective: Strengthen the SPS and TBT systems of the FICs with a view to assisting them to comply with the relevant SPS/TBT requirements of key trading partners Main negotiating issues: Application of WTO disciplines to FICs that are not WTO Members; Technical assistance and capacity building Development benefits: assistance to implement the provisions of the SPS/TBT Chapters and strengthen their SPS/TBT systems to take advantage of market access opportunities; enhance ability to ensure that imported products meet relevant standards – measures against the spread of NCDs etc. Development assistance needs: Needs highlighted by the FICs include biosecurity treatment facilities (HFTA, fumigation and testing laboratory, X-ray machines, container treatment machines); processing facilities and pack houses; training on consumer and product safety standards; capacity building on compliance with international certification rules for tuna exports; food safety accreditation and testing facilities for processed fish exports and other products of interest; assistance to negotiate equivalence and mutual recognition agreements SPS/TBT in PACER Plus

6. Objective: increase labour mobility across the region; enhance the existing labour mobility schemes (RSE and SWP) Main negotiating issues: Whether an arrangement or agreement; improving the current schemes; mutual recognition of qualifications; technical assistance and capacity building Development benefits: Increased opportunities for FIC workers (uncapping of the SWP and other improvements introduced by the Australian Govt; NZ has increased the cap from 8000 to 9500 and initiated pilot projects in the construction and fisheries sectors); all FICs to benefit from the SWP (FSM, RMI, Palau, Cook Islands and Niue); assistance to be provided through the Arrangement to ensure that the FICs take advantage of the schemes; Increased remittances; upskilling of FIC workers; benefits for host countries – enhanced productivity of industries using Pacific labour Labour Mobility in PACER Plus

7. Objective: Reduce barriers to trade in services among the Parties; increase the participation of the FICs in regional/ international services trade. Main negotiating issues: Special and differential treatment of the FICs ; Scheduling Approach; Scope of the right to regulate; Technical assistance and capacity building Development benefits: services accounts for over 60% of GDP in most FICs and the largest source of employment in several countries; attract foreign investment into the critical sectors of their economies (telecommunications, financial services, transport, construction, etc.) and enhance their participation in services trade; increased competition – better serviced delivery and affordability. FICs’ proposal on TMNP seek, inter alia, enhanced commitments on mode 4 and on temporary employment. Substantive commitments by A/NZ should provide opportunities for FIC workers to work temporarily in ANZ. Benefits include increased remittances and upskilling of FIC workers Parties have the right to regulate, provided measures not inconsistent with their obligations under the Agreement. Trade in Services in PACER Plus

8. Objective: encourage and promote the free flow of investments between the Parties; creation of a secure, predictable and favourable environment for investors and their investments Main negotiating issues: definition of investment ; scheduling approach; protection of investments; dispute settlement; promotion Development benefits: attraction of foreign direct investment into important sectors of FIC economies (creation of jobs, participation in supply chains, transfer of technology and management skills, etc) Agreement on a positive list approach. Broad flexibility to choose sectors in which to give commitments in line with national priorities. Pre-establishment rights circumscribed under the Chapter. Possibility for countries to exclude sectors, impose limitations in the sectors in which they have undertaken commitments. No ISDS – disputes to be settled in domestic courts Right to regulate recognised under the Chapter. Australia and NZ expected to adopt positive measures to encourage their investors to invest in the FICs. Investment in PACER Plus

9. Objective: strengthen the capacity of the FICs to take advantage of the PACER Plus Agreement to achieve robust economic growth and sustainable development Main negotiating issues: scope of the chapter; new and additional funds for aid for trade; legal status of the Chapter; Implementing Arrangement. Development benefits: A/NZ to provide the FICs with technical and financial assistance to implement their obligations, and also to assist them to address some of the supply side constraints that have prevented them taking advantage of market access opportunities under trade agreements Improved trade-related infrastructure will reduce trade costs and improve efficiency of FIC firms Target amounts for implementation and broader trade-related assistance to be stated in the Implementing Arrangement Parties refining the list of activities to be funded under the Work Programme Development Assistance in PACER Plus

10. Fast-track Activities (i) Support for the transposition of goods tariff schedules and the PSR schedule into HS2017 (ii) Support for all FICs’ customs administration to implement HS2017 (iii) Technical assistance to help plan and mitigate revenue loss (iv) Technical assistance to support FICs’ domestic legislative review and ratification processes (v) Training on the contact point, notification and publication requirements under PACER Plus, including for SPS, TBT, Customs, Tariffs and Trade in Goods Chapter Development Assistance in PACER Plus

11.  PACER Plus is a trade and development agreement. Focus not entirely on market access, but also how to assist the FICs to use trade as an engine of economic growth and development  Special and differential treatment provisions in favour of the FICs under most Chapters – positive list approach in services and investment; possibility to exclude revenue-sensitive items from liberalisation under the Trade in Goods Chapter. Possibility to have recourse to a number of measures to safeguard revenue and protect infant industries (modification/withdrawal of tariffs article; infant industry article; transitional and global safeguards etc) Adequate policy space to pursue development-oriented policies.  Development assistance to be provided to FICs to strengthen their productive capacity to produce goods and services for export  Possibility of attracting foreign investment into critical sectors of their economies  Development benefits of labour mobility schemes – triple win for sending countries, host countries and workers participating in the schemes  Recourse to the General Exception Chapter to promote, health social and environmental goals Concluding Remarks