The Region in Review: International Issues and Events, 1999

Among the wider political and social forces that influence the Pacific Islands, none mattered more in 1999 than globalization, and in particular the globalization agenda now embraced by regional organizations such as the South Pacific Forum. If globalization is the ever-increasing integration of economies across territorial borders, then the globalization agenda is the set of economic policies that effect such integration. Among these are free trade, privatization, public service reform and harmonization by different governments of their customs procedures, product standards, trade regulations, and laws relating to investment, communications and the enforcement of property rights. In the last few years the South Pacific Forum has endorsed, advocated, and disseminated the globalization agenda in the region; meetings of Forum economic and trade ministers have overshadowed that of the Forum itself, and the Forum has defined key issues of concern to the region as mostly economic.

It was hardly a surprise, then, that the Forum Trade Ministers Meeting in Suva in July made the most important regional decision of the year when it endorsed a Forum Island Countries Free Trade Area to be phased in during the first decade of the new century. By the time regional leaders met for the thirtieth South Pacific Forum in Palau in October and themselves endorsed the proposal, the Forum Secretariat had refined it so that free trade would be implemented in stages. Developing Forum island states would commit themselves to free trade by 2009 while smaller island states and least developed countries in the region would reach the goal by 2011. Forum leaders will consider a detailed draft agreement on free trade at their meeting in 2000.

The significance of the free trade decision does not lie primarily in the fact that Forum island countries will be trading freely among themselves by 2011. After all, those countries trade far more with the rest of the world than with each other.

The decision is rather meant to reassure aid agencies, foreign investors, and international institutions--above all the World Trade Organization (WTO)--that the region is serious about the globalization agenda. As Secretary-General of the Forum Secretariat Noel Levi told a meeting on Post Lomé Trade Arrangements in July, the plan for a free trade area "signals our region's willingness to consider new measures for dealing with globalisation and trade liberalisation, through regional integration." Levi emphasized the importance of the World Trade Organization:

The WTO has emerged as the most important international Forum for negotiation of trade, commercial and general economic policies. The new rules and disciplines that have emerged through successive rounds of negotiations are touching upon the economic and trade relations of countries that are not even WTO members. Some developing countries like the Forum Island Countries have had little say in the creation of these rules. In recognition of this changing global environment Forum Trade Ministers yesterday endorsed in principle an FTA [Free Trade Agreement] amongst Forum Island Countries (PIR 1999a).

Following the Forum's free trade decision, the World Trade Organization funded a week-long seminar on trade negotiations for officials from the Cook Islands, the Federated States of Micronesia, Fiji, Kiribati, Niue, Papua New Guinea, New Zealand, Samoa, Solomon Islands, Tonga, and Vanuatu. The Forum also undertook to establish a Forum delegation in Geneva for the specific purpose of keeping abreast of developments in the World Trade Organization.

The Forum's move to free trade is linked to longer-term prospects for integrating the South Pacific into other free trade areas. In time the FIC Free Trade Area is almost certain to be combined with the Australia-New Zealand Closer Economic Relations arrangements that have already made trade almost free across the Tasman Sea. The FIC Free Trade Area will then be a Forum Free Trade Area, with island countries imposing no tariffs on imports from Australia and New Zealand. Tariffs will diminish as a source of government revenue for a number of island...