Page 17 - IB FEB 2020

Economy Economy

that happiness for themselves. Tourism Fiji CEO Matthew NZ Law professor Jane Kelsey has long been a critical voice
Stoeckel believes given the current state of the world it's of globalisation and its impact on developing nations. She
a timely message. "I think our message is more and more believes there is relatively little knowledge at the national
relevant than ever." level about key WTO issues, and there is a misperception that
Further north, the Commonwealth of Northern Marianas there is a conflict between multilateralism and protectionism.
has a much heavier reliance on Chinese visitors. Projected She is concerned about the region’s ability to effectively
arrivals from China in fiscal year 2020 have been revised down engage, and what this will mean for our economies.
to 50,200 from the original 167,103. The loss of the China Countries are also relooking at the PICTA trade agreement.
market due to the novel coronavirus outbreak is a “huge Only seven of the 14 potential signatories are party to the
loss” for some properties, Hotel Association of the CNMI Pacific Islands Countries Trade Agreement (PICTA), which has
chairwoman and Pacific Islands Club general manager Gloria been in various stages of negotiation for eleven years,
Cavanagh says. CNMI will likely boost its promotional efforts Forum Trade Ministers decided that further discussions on
in South Korea and Japan, its other major source markets. the direction of PICTA can only take place after an extensive
The World Bank says Papua New Guinea can expect an PICTA Review and the Rules of Origin Review.
impact on its export and import sectors as manufacturing While PICTA is a trade agreement, leaders are also
in China is constrained. The Bank is forecasting PNG’s GDP discussing PACER Plus, a cooperation framework. The Pacific
growth—which rebounded to 5.6 percent in 2019—to fall to Agreement on Closer Economic Relations Plus needs four
around 3 percent on average between 2020¬ and 2022, mainly countries to join to take effect. Australia and New Zealand
due to delays in finalising agreements and launching large new have allocated US$5.1 million as part of a “readiness
resource projects. However the coronavirus is not helping. package” for nations needing assistance to reach ratification.
“We all know exports of commodities and our liquefied Australian Trade Minister Simon Birmingham is keen to see it
natural gas (LNG) and other minerals are key commodities agreed by the end of the year as it will provide more reliable
exported by Papua New Guinea to China and other countries,” markets for Australian agricultural produce and products.
said World Bank senior economist to PNG, Ilyas Sarsenov. Meanwhile Pacific states have been urged to shake
“If there is lower demand because of lower consumption off “remnants of fatigue and frustrations” of the past in
and supply side disruption in China the external demand for renegotiatng their Post Cotonou agreement with the European
these commodities may weaken and as a result export trading Union. The current agreement is due to expire on 29 February.
may be affected negatively. “The EU has been a crucial development partner in the
Solomon Islands has $US2.3 million allocated to respond region. However, they have also taken harmful unilateral
if the coronavirus reaches the country. The Solomons only actions in declaring some of our tax jurisdictions unfavourable
recently switched diplomatic ties from Taiwan to China. Now and our fisheries unsustainable,” Fiji's Permanent Secretary
some of the big-ticket Chinese funded projects are likely to for Trade, Shaheen Ali says.
be delayed due to the virus outbreak, including the national “We would like to see a change in the dynamics of our
stadium for the Pacific Games 2023. relations, which should be based on mutual respect and equal
Meanwhile PNG’s fishing industry has asked the government partnership.”
to reconsider its ban on fishing and carrier vessels originating
from Asia from entering PNG ports. The PNG Fishing Industry Status: it’s complicated
Association (FIA) says these vessels posed a low risk as their Also worth watching is the impact of Brexit; the United
crew were usually at sea. Kingdom’s exit from the EU. Interim Economic Partnership
Agreements are being set up, but more work will need to
Trading blows be done on understanding the impacts related to trade,
Late last year there appeared to be some pulling back remittances and development assistance on Pacific island
from the trade tensions between the US and China, however economies. Britain itself has seen slowed growth due to
their tenuous relationship continues to create concerns for uncertainty over Brexit. The impact on European economies
the global economy. This comes as Pacific islands attempt to and development assistance is also unclear. For some Pacific
breathe new life into trade negotiations. Islands, such as Marshall Islands and its ship registry, this is a
Forum trade ministers met in Suva this month and heard concern.
from Fiji’s Attorney-General, Aiyaz Sayed-Khaiyum, who This year US and New Zealand voters are also going to the
reminded them of significant global shifts including scrutiny of polls. At this early stag, the incumbents are favoured, but
the rules-based trading system and protectionism dampening the periods leading up to elections often lead to consumer
global trade flows. He encouraged them to look to Asian caution. As two of our most important political and economic
markets and work in collaboration. partners, there will be a flow on for the Pacific if this proves
The WTO is in crisis. With just one remaining judge, the to be the case.
WTO’s Appellate Body is unable to hear new cases. Still, the There’s much for our economic managers and trade
Pacific hopes to go to the 12th World Trade Organisation negotiators to do. 2020 is shaping to be a pivotal year in more
Ministerial Conference in Kazakhstan this June with a united ways than one.
position on fisheries subsidiaries.

Islands Business, February 2020 17