TEXTILE merchant and veteran garment exporter Mark Halabe has expressed reservations over the Pacific Agreement on Closer Economic Relations Plus or PACER-Plus, a reciprocal trade agreement initiated by Australia and New Zealand for Pacific countries, which he warns has the potential to wipe out Fiji’s manufacturing sector.
In an interview with this newspaper, Mr Halabe said while Fiji has yet to sign on to PACER-Plus, he understood the political and geopolitical reasoning behind it and the efforts to get Fiji to join.
But warned that on a micro level, joining could do more damage to Fiji than good.
“What you hear from the experts from the Australian side is that they have a good case. But at a macro level, not at the micro level.
“That you’ll get a stronger allegiance, you’ll get a stronger trade arrangement, you’ll get more aid packages coming from Australia, you’ll get maybe a high level of budget support, and a greater integration of industries between Australia and the Forum Islands.
“It’s still a soft discussion but they haven’t really convinced me, and one thing that worries me is if we give this agreement to Australia, we’ll have to give it to every trading partner that Fiji has.”
He said this would mean the erosion of Fiji’s tariff revenue, a significant source of national income, which could lead to the possibility of higher taxes and charges for ordinary Fijians in order to offset the loss.
“So there isn’t an easy answer for me to see the way through this and I haven’t heard a strong argument,” he said. “Maybe the smaller Forum Islands don’t have the same issues that Fiji does that they would easily accept a PACER-Plus Agreement but for Fiji, we have industries here.”
Packaged as a development-centred free trade agreement, PACER-Plus is considered by Australia as an “important part” of its engagement in the Pacific, but here in Fiji, it has cast a long shadow of fear.
“Because of the economies of scale,” Mr Halabe said. “One friend of mine manufactures in Fiji, and I told him: ‘surely your costs are cheaper here than if you are to manufacture in Australia’. He said: ‘true, but they’ve got economies of scale.
“‘When I produce x amount of articles here, they’ll produce x times 10 or 100.
“‘And they got all the equipment, all the structure that they can outgun me with the pricing, and they’ll even pay for the freight to Fiji.
“I won’t be able to compete. They’ve got all those economies of scale. I don’t have any in Fiji.
“So that’s why we’re scared of losing industries we’ve worked very hard to get,” Mr Halabe said.
“Tourism now is, depending on who you talk to, 60 per cent or 40 per cent of GDP. But we try very hard to find manufacturing industries in Fiji as well, because we know we have to diversify away from tourism.
“So, we’ve worked hard to get them and now we have to get rid of them because we have to sign PACER-plus. And that’s a threat. That’s a constant threat that we have.”
Mr Halabe said the long standing SPARTECA trade agreement – designed in the 1980s by then New Zealand Prime Minister Robert Muldoon, Australia’s Prime Minister Malcom Fraser and Fiji’s Prime Minister Ratu Sir Kamisese Mara and which Fijian exporters to Australia still use today – is the ideal trade format to guide trade between a small country like Fiji and a big economy like Australia as it is a non-reciprocal agreement that protects Fiji’s manufacturing activities.
