SI could lose millions in tax revenue under PACER-Plus

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By Gary Hatigeva

SOLOMON ISLANDS is amongst three Pacific Island nations that are highlighted to be in great risks of losing millions in import tax revenue due to pressure from the PACER-Plus Agreement.

This is according to the full analysis and accompanying briefs of the Pacific Islands Network on Globalisation (PANG), which examines and reveals the impacts of PACER-Plus in relation to the Trade in Goods as well as the Services and Investment components of the agreement.

In a statement, PANG says the analysis also comes as a realisation of the concerns that is said to be held by Pacific communities and some Pacific island governments about the regional free trade agreement under the PACER-Plus, which are well founded according to the new analysis that was released yesterday.

The analysis states that the Trade in Goods chapter requires Pacific Island Countries to make extensive cuts in their import taxes, with Solomon Islands, Samoa, and Vanuatu expected to lose USD$13million, USD$12.5million and USD$7.5million respectively.

Referring to the reports, PANG’s Trade Justice Campaigner Adam Wolfenden, said the PACER-Plus package confirms their fears about PACER-Plus and how it undermines the ability of Pacific Island Countries to determine for themselves what they want development to be and having the tools to make that a reality.

“PACER-Plus does little to help boost the exports of Pacific Island Countries yet it is burdening them with a whole raft of legally binding commitments with meaningless safeguards. This is not development by any definition,” Mr Wolfenden said.

In addition to this the safeguard mechanisms and infant industry, the campaigner stressed that the provisions are too weak to be of any practical use to Pacific Island Countries who need to protect their industries that are being hurt by increased imports under PACER-Plus.

Meanwhile, the PANG official also pointed out that the Trade in Services and Investment chapters represent a serious restriction on the ability of Pacific Island Countries to regulate and ensure that investment that comes in has its benefits maximised.

“Over the years we have seen many experts detail the problematic nature of PACER-Plus and how it was being constructed to Australia and New Zealand’s benefit.

“These warnings, including from an Australian Parliamentary inquiry have been ignored and now we have a binding agreement that won’t address the real economic issues the Pacific Islands have and instead will burden them further with cuts in government revenue and the reduced ability to regulate,” the Organisation’s Trade Justice Campaigner explained.

He further pointed out that under PACER-Plus, Pacific Island governments will have a reduced ability to regulate their service industries and investments, and instead the investors will be given greater rights to challenge any policies or regulations that they may deem to be unfair.

“Pacific Island countries are signing up to a framework that many nations are walking away from in favour of something that better balances the rights of governments and investors,” Mr Wolfenden added.

He said there are very real and serious implications of this agreement that countries need to factor in to their ratification processes.

Fiji, Papua New Guinea, Palau, Republic of Marshall Islands and the Federated States of Micronesia all have not signed on, and the access to Australia’s recently launched Pacific Labour Scheme is linked to progress on PACER-Plus.

PACER-Plus was signed by Australia, New Zealand, and 9 other Pacific Island Countries in 2017, which included Cook Islands, Kiribati, Nauru, Niue, Samoa, Tonga, Tuvalu and Solomon Islands.

Vanuatu signed the Agreement three months later in another summit in Samoa.

The Ministry of Foreign Affairs and External Trade is responsible for the facilitation and implementation of the Agreement, together with its relevant stakeholders and ministries here in Solomon Islands.

A detailed respond is expected when responsible officials return to the country on the issues highlighted in PANG’s reports.

But in a brief statement, the Ministry’s Trade Commissioner, Joseph Ma’ahanua explained from Brussels that the ministry will be undertaking its own process of awareness for PACER-Plus for the country, including their stakeholders and the public soon.

The Pacific Agreement on Closer Economic Relations or PACER-Plus is an umbrella agreement between members of the Pacific Islands Forum, which included the Forum Island Countries plus Australia and New Zealand that seeks to provide a framework for the future development of trade cooperation.

According to its initial establishment plans, the PACER-Plus was created to foster economic growth, investment and employment, at the same time promoting trade and structural reforms in the Pacific Region.

However, the PANG statement disagrees, claiming that PACER-Plus has always been about the interests of Canberra and Wellington, and Australia’s cynical move in connecting the labour scheme to their market access into Pacific economies, is further proof to the matters highlighted.

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