Trade, remittances and development Implications of Pacific trade negotiations for the labour movement Nic Maclellan Oxfam International.

Trade, remittancesand development

Implications of Pacific trade negotiations for the labour movement

Nic MaclellanOxfam International

Forum Island Countries’ trade($US millions, 2004-2005)

Exports to Australia 1,576

Imports from Australia1,387

Exports to NZ 54

Imports from NZ 530

Exports to EU 1,603

Imports from EU 732

SPARTECA

• Been in existence since 1982.• Allows goods from FICs into Australia and NZ

duty free.• But SPARTECA is ‘non-reciprocal’ (one way)

– this is not allowed under WTO rules.• So moves to replace SPARTECA with a

‘reciprocal’ trade agreement.

• PICTA and PACER are steps towards this.

FEMM Action Plan

Since mid-1990s, the Forum Economic Ministers’ Meeting (FEMM) has promoted:

• liberalisation of trade and removal of tariffs;• reduction of staffing in the public sector; • flexible labour markets; • corporatisation and privatisation of government agencies

in transport, communications, energy, water and other sectors;

• introduction of Value Added Taxes (VAT or GST);

• removal of some controls on the finance sector.

WTO accession• Forum countries are being encouraged to join

the World Trade Organisation (WTO)• Since 1995, Australia, New Zealand, Fiji, Papua

New Guinea and Solomon Islands have joined• Tonga, Vanuatu and Samoa have applied to join

(Tonga and Vanuatu have delayed accession due to concern over conditions)

• Collapse of global Doha negotiations means regional negotiations are significant

PICTA(Pacific Island Countries Trade Agreement)

• Signed at Forum leaders meeting, Nauru, 2001.• Free trade among FICs seen as first step• Australia and NZ not included, but PICTA now

extending (e.g. to New Caledonia)• Tariffs, quotas and other barriers to trade must

be phased out by 2012

PICTA

• Covers trade in goods (but there are plans to extend it to services)

• Any effects, positive or negative, will be small

• Benefits – brings Forum countries together; training for what is to come

• Negative effects – bigger countries may win, smaller ones lose (e.g. disputes on biscuits / kava)

PACER(Pacific Agreement on Closer Economic Relations)

• Also signed at Forum leaders meeting, Nauru, 2001• Framework for the future development of a free trade

agreement between FICs and Australia- New Zealand • Negotiations must commence by 2011 at the latest, but may

be started (‘triggered’) before then by negotiations with the EU.

• Why Australia and New Zealand want it:

- better access to Pacific markets

- a deal as good as that for the EU

Negative effects of PACER

• Loss of revenue from taxes on imports• Import duties as % of total tax revenue:

Tonga 65% Fiji 23%Kiribati 61% Samoa 18%Tuvalu 48% Cook Is 20%Vanuatu 40% PNG 3%

• Introduction of new forms of tax may be necessary – VAT?

Negative effects of PACER

• Competition from imports from Australia and New Zealand

• Can workers and business people move to a more competitive sector?

• Aust-NZ companies with factories in the Pacific may go home

• Increased dependence on imported food

– impacts on health and food security

From Lomé ….

The Lomé Agreement (1975 - 2000) provided duty free access to the European Union (EU) for African, Caribbean and Pacific (ACP) countries –

• Combination of aid and trade• Compensation mechanisms (Stabex, sysmin)• Commodity protocols - subsidies for crops like

Fiji’s sugar• Joint ACP-EU institutions

…to Cotonou

Lomé was replaced by the Cotonou Agreement in 2000

Cotonou requires negotiations between the EU and each of the regional groups in the ACP – to create reciprocal free trade Economic Partnership Agreements (EPA)

Objectives of Cotonou- To strengthen regional integration - To foster smooth integration into the world

economy- Compatibility with WTO rules- Transformation of the ACP economies so

as to promote sustainable development and poverty alleviation

- EPAs building on regional markets, stimulating investment, trade reforms

EPA negotiations• Preferences maintained during transition period 2000 – 2007 (WTO

waiver on goods)• Negotiations of Economic Partnership Agreements – EPAs(Sept. 2002 - Dec 2007) • Everything-but-Arms: improved access to EU market for LDCs

(Vanuatu, Samoa, Tuvalu, Kiribati, Solomon Islands)

EPA is supposed to- Be an instrument for development- Preserve existing gains obtained under Cotonou- Complement existing initiatives for regional integration- Recognise Special and Differential treatment for SIDS

EPA negotiations…

• Negotiations take place between the EU and a regional negotiating team

• Core group of Fiji, Samoa, PNG, Tonga and Tuvalu who act as spokesmen; Cook Islands, Republic of Marshall Islands and Palau are also involved in the negotiations

• Detailed negotiations are handled by trade officials, who participate in working groups on the key issues

• Support is provided by the Pacific Islands Forum secretariat which has several staff positions paid for by the EU

• PIC governments are expected to consult with “Non-State Actors” (unions, NGOs, churches etc.)

… and EPA challenges

Pacific issues: - optional agreements on goods, services

- investment, fisheries, rules of origin, adjustment costs- temporary workers in hotels and tourism, construction

services and health care

Controversial impacts:– Adjustment costs for reciprocity– Loss of customs revenues– Complex regional integration process– Capacity problems at all levels– Evolving global context

Issues in EPA negotiations

• There has been an absence of democratic debate• ACP Council of Ministers: grave concern that EPA so far

has failed to address development dimensions• Equal partners? Concern over potential impacts from a

reciprocal trade liberalisation between states at different levels of economic development

• Pacific imports face non-tariff barriers, such as overly restrictive food standards and other technical barriers (e.g. recent restrictions on kava exports)

• Will the EU extend its offers to increase the movement of unskilled or semi-skilled workers to work in the EU (e.g. access for more seafarers from Tuvalu and Kiribati)?

Public accountability for services

• A key feature of EPAs (and the other Pacific negotiations) is the inclusion of services, with over 160 different service sectors (education, tourism, water etc)

• The General Agreement on Trade in Services (GATS) sets the framework for services liberalisation

• If it covers essential services, will the poor and those in remote areas be served?

• This is not about tariffs and quotas, but about the rights of governments to regulate in the public interest

Concerns for unions and communities

- Promoting privatisation and contracting out of services will affect jobs and government accountability

- Loss of universal access to essential services (e.g. through a loss of the ability for governments to cross-subsidise service delivery)

- Limits ability of countries to build their domestic economy through supporting the development of domestic service industries

- Labour rights of workers affected through the movement of foreign workers, contracting out and privatisation

Concerns about trade liberalisation

Concerns over trade liberalisation where it is likely to:• Restrict the rights of governments to regulate in the

public interest, particularly to promote development and human rights

• Restrict development options• Undermine public accountability for essential services• Undermine the financial viability of government to deliver

essential services and promote development• Undermine the development of local business and

employment • Affect labour rights, especially in public sector

Labour mobility and the Pacific Plan

• Pacific governments continue to press for greater access to labour markets in Australia and New Zealand, especially for unskilled workers:

“We believe that permitting increased labour mobility should be part of Australia’s and New Zealand’s commitment to implementing the Pacific Plan. It is one way to demonstrate to our leaders that they are serious about assisting island countries to develop their capacity and their economies.”

PNG Foreign Minister Sir Rabbie Namaliu, October 2005

Labour mobility

Agreement to trade liberalisation in the Pacific Plan was largely justified by the potential benefits for PICs in labour mobility, especially unskilled workers.

The issue is important but complex:• There are potential benefits in the light of growing youth numbers,

high unemployment and under-employment in PICs, coupled with aging populations in the rich countries; also remittances

• But there is growing concern over the ‘brain drain’ from the Pacific of teachers, nurses, IT workers, rugby players

• Does it let Pacific governments off the hook for job creation?

Global remittances

• Global remittances to developing countries in 2005 total about US$167 billion - more than twice the amount of official development assistance

1995 2005

ODA US$59 billion

US$79 billion

Remittances US$58 billion

US$167 billion

Remittances in the Pacific

• Smaller Polynesian and Micronesian states reliant on remittances from migrants or seasonal workers, to complement ODA and limited access to FDI.

• Fiji remittances now earn more foreign exchange than other sectors except tourism

2000 2004 Per centage of GDP

Tonga P$105 million

P$184 million

31%

Fiji F$122 million

F$306 million

7%

New focus on issue

• John Howard refused PIC request for seasonal worker programmes at October 2005 Forum in PNG

• ACTU firmly opposed to temporary work schemes for unskilled workers

• Senate inquiry in Australia to report

• World Bank report on labour mobility

• NZ changing policy?

GATS Mode 4

International movement of workers:• Temporary movement of workers is included

under GATS (“Mode 4”) in EPA, WTO Doha negotiations, WTO accession and PACER

• These agreements generally do not include access for unskilled workers and only provide for professionals and highly skilled corporate employees

• There is no recognition of the way that the movement of workers can be used to undermine labour rights and drive down wages

Pacific attitudes: ‘Yes, but …’

Broad support for greater labour mobility and the idea of a seasonal workers scheme but concerns about:– labour rights – impacts on family life and communities– development outcomes for women – lack of legislation and regulation governing

migrant workers

Australian attitudes: ‘No ….’

- Memories of blackbirding

- Immigration policy

- Over stayers

- Wages and working conditions

- Burden sharing for costs of program

- Reciprocity

Union opposition

Guest work arrangements are exploitative of the guest and exploitative of unemployed Australians.Bill Shorten, President, Australian Workers Union (Sydney Morning Herald, 24 February 2005).

The ACTU dies not support guest worker programs based on unskilled or semi-skilled workers from the Pacific region being brought to Australia….systems such as those are akin to slavery and are not supportable under any circumstances.

• ACTU industrial officer Michelle Bissett, Testimony to Senate inquiry on seasonal work programs, 23 August 2006

Labour rights and working conditions

• core labour standards on wages, conditions, union membership, decent work

• clarify contractual rights (Australian, NZ or sending country law? )

• recruitment and labour hire (e.g. Fijians in Iraq)• international labour standards: ILO Conventions

97 and 143 on migrant workers, Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families

Issues for discussion?

• How can unions promote labour rights for migrant workers in the region?

• How should unions react to the call by Pacific governments for seasonal work schemes for unskilled workers in Australia and New Zealand?

• Can increased skills training help address the problem of unemployment and underemployment in Pacific island countries?