Catching the Pace on Pacific Free Trade: PACER Plus commencing 13 December 2020

Key Points:

The PACER Plus free trade agreement commences on 13 December 2020, revolutionising trade across the Pacific. Additional countries are set to join the agreement in the coming months.
PACER Plus is set to remove a slew of barriers to trade, including tariffs and government red tape. This will give businesses access to a variety of new markets or remove barriers from doing business in the markets they currently work in.
Under PACER Plus, Pacific businesses will have access to DFAT’s trade portal allowing them to list themselves on the portal and electronically access other businesses to improve their supply chains. Additionally, Pacific countries will be able to access training on how to digitally transform their trade networks.

After opening for signature in 2017, eight countries have now signed and ratified the Pacific Agreement on Closer Economic Relations (PACER) Plus: Australia, Cook Islands, Kiribati, New Zealand, Niue, Samoa, Solomon Islands and Tonga. Cook Islands was the eighth country to ratify the agreement on 14 October 2020, triggering the 60-day countdown for PACER Plus to enter into force.

PACER Plus is due to enter into force on 13 December 2020, and will mark the largest free trade agreement (FTA) to focus on trade amongst Pacific Island nations. Alongside a host of other multilateral and bilateral agreements PACER Plus will be instrumental in creating the legal infrastructure to facilitate trans-pacific trade.

A key objective of the free trade agreement is to support Pacific island countries to become more active partners in, and benefit from, regional and global trade. Relevantly, free trade agreements give countries access to global supply chains and markets that they would normally not have access to or were inhibited from due to red tape.

Under PACER Plus, barriers against trade, such as tariffs and regulation, will be removed, coinciding with the removal of government red tape, increases in transparency, and development assistance across the region relating to trade systems and investment infrastructure. This multipronged approach will create a better financial climate for business in the Pacific, in turn creating opportunities for growth and jobs and increasing living standards.

While PACER Plus will not include unskilled and semi-skilled labour mobility arrangements, the agreement will work in tandem with other agreements between Pacific nations and Australia and New Zealand allowing for labour mobility arrangements. Labour mobility schemes between Pacific countries will continue to be an important and synergistic aspect of trans-pacific trade.

Businesses and countries across the Pacific will also have access to a wealth of resources including ICT services such trade portals. Australia’s Department of Foreign Affairs and Trade (DFAT) FTA Trade Portal is currently accessed by a multitude of countries with standing FTAs with Australia. Under PACER Plus, Pacific businesses will have access to list themselves on the trade portal and electronically access other businesses to improve their supply chains. Additionally, Pacific countries will be able to access training on how to digitally transform their trade networks.

PACER Plus primarily comprises technical chapters on Trade in Goods, Services, Investment and Customs, Movement of Natural Persons, Technical Barriers to Trade, Rules of Origin, Customs and Sanitary and Phytosanitary Measures. The prospective benefits of the agreement include:

more liberal and product-specific rules of origin;
a more predictable trading environment;
more consistent and transparent rules throughout the region on sanitary and phytosanitary measures, technical barriers to trade, and customs procedures;
increased investment in the region, in particular by Australian and New Zealand investors into Pacific Island countries;
more opportunities for trade-related development assistance for Pacific Island nations; and
greater certainty around tariffs for exporters.

However, the fun doesn’t stop there! Nauru, Tuvalu and Vanuatu are predicted to ratify in the coming months, which will expand the effectiveness of the FTA and further facilitate trade.

All Pacific Island Forum members are encouraged to join PACER Plus in the near future. More information about PACER Plus is available in our original article.