The Pacific Agreement on Closer Economic Relations (PACER Plus) is a trade and economic integration agreement that aims to create jobs, raise standards of living and encourage sustainable economic development in the Pacific region.
PACER Plus builds on existing trade agreements - the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) (1980) and the original PACER Agreement (2001). New Zealand and Australia provide funding to the Office of the Chief Trade Adviser to assist and support Pacific Island countries in the PACER Plus negotiations.
The negotiations include all members of the Pacific Islands Forum: Australia, Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Nauru, New Zealand, Niue, Palau, Papua New Guinea, Republic of Marshall Islands, Samoa, Solomon Islands, Tonga, Tuvalu, Vanuatu.
Pacific Island countries are our nearest neighbours and with more than 250,000 Pacific Islanders living in New Zealand, we share strong personal ties. New Zealand has a clear interest in a prosperous and sustainable region and our main objective for PACER Plus is to encourage economic development in Pacific countries.
Opportunities for economic development in Pacific Island countries are limited because of their small size and the difficulty achieving the economies of scale needed to compete in international markets. A regional trade and economic integration agreement should help create jobs and wealth in the Pacific by making it easier for these countries to trade.
The PACER Plus negotiations cover sanitary and phytosanitary measures, technical barriers to trade, customs procedures, rules of origin, trade in goods, trade in services, investment, economic and development cooperation, and labour mobility.
The potential benefits of this type of agreement are:
- 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
- more liberal and product-specific rules of origin
- increased investment in the region, in particular by New Zealand and Australian investors into Pacific Island countries
- greater certainty around tariffs for exporters
- more opportunities for trade-related development assistance for Pacific Island countries
- a more mobile labour force in the region
Commitments will vary from country to country reflecting their unique stages of development, current levels of liberalisation and respective aspirations. The timeframes for tariff elimination will be longer than in previous FTA and a small number of tariffs will be excluded. In selecting the excluded products, the Forum Island Countries indicated that they took into consideration products that generate significant revenue, the need to protect their infant industries from competition and the need to safeguard the health of their citizens.
As a WTO member all FTAs that New Zealand concludes must provide for tariff elimination on “substantially all trade”. The extended timeframe will give Pacific countries the ability to meet this standard but with sufficient time to adapt to the gradual elimination of tariffs and avoid detrimental effects on international trade and prices of goods in their countries. Some countries are expected to make bold moves under PACER Plus to liberalise and transform their economies over 15 to 25 years.
New Zealand businesses will benefit from increased certainty about tariff rates and reduction and elimination of tariffs on a range of products over the medium term. We are also seeking outcomes that will protect New Zealand’s competitiveness against exporters from outside of the Pacific region.
Pacific Islands countries currently have duty free access to Australia and New Zealand if they meet the applicable rules under the SPARTECA agreement. However PACER Plus will provide more flexible rules of origin that will make it easier for Pacific countries to obtain duty free access to Australia and New Zealand for a wider range of products. Lowering import tariffs will also improve consumer choice in the Pacific, reduce the cost of inputs into the manufacturing process and encourage the development of regional supply chains.
Services and Investment
New Zealand’s approach on Trade in Services, Investment, and the Movement of Natural Persons is to ensure high standard provisions in the agreement that support the Pacific Islands countries’ objective of attracting inwards investment, and an expansion of services trade within the region.
Services exports comprise a significant proportion of total exports for Pacific Islands countries. For this reason, a principal objective for Pacific Islands countries is to expand in services trade and attract inwards investment, particularly through increased commercial presence of service suppliers in their countries.
In recognition of the unique context of PACER Plus, New Zealand has agreed to take a “positive list” approach to the services and investment market access negotiations. Doing so will ensure that Pacific Islands countries only make commitments on the sectors that they are comfortable with.
Consistent with usual FTAs, a separate chapter on the movement of natural persons is negotiated with a view to facilitate the flow of skilled business people. Any commitments would be made within New Zealand’s existing immigration policy provisions.
New Zealand has sought to negotiate an investment chapter that is ambitious and consistent with Pacific Islands countries’ objective of increasing inward Foreign Direct Investment. Strong core disciplines on national treatment and most-favoured-nation treatment were realised, together with rules on customary international law on expropriation, minimum standards of treatment and other accompanying obligations. These disciplines would apply to both pre- and post-establishment measures.
Pacific Islands countries’ have pursued a preference for a “positive list” approach for investment market access. Although New Zealand’s usual approach is to seek a “negative list” (which is generally seen as leading to higher quality outcomes), in this instance, a “positive list” is appropriate for the varying capacities and national circumstances of Pacific Islands countries, and a more suitable approach to ensure a higher level of commitment by the Parties.
As with most New Zealand FTAs, other than TPP, there will not be Investor State Dispute Settlement (ISDS). ISDS is not considered appropriate in the context of PACER Plus.
New Zealand does not intend to offer any investment market access commitments that will limit the government’s ability to change the investment screening regime as part of PACER Plus. We sought to agree commitments in relation to New Zealand’s investment approval regime that, at most, bind in current thresholds.
The chapter sought to reduce key restrictions which may apply to New Zealand investors in Pacific countries, where Pacific countries also see benefit in doing so. A key success outcome in this regard is to ensure that “most favoured nation” provisions are included in the investment chapter to ensure that New Zealand investors are not disadvantaged in relation to investors from the Pacific Islands countries possible future negotiation partners.
There will be a Development and Economic Cooperation Chapter and Implementing Arrangement to PACER Plus under which New Zealand and Australia will commit funding to ensure Pacific Island countries are able to implement and take advantage of the PACER Plus agreement as intended. A multi-year work programme will be established to address the trade-related needs identified by the Pacific Island countries.
PACER Plus will be complemented by a Labour Mobility Arrangement. A central plank of this will be the Pacific Labour Mobility Annual Meeting which will provide a forum for cooperation. The annual regional meeting will have a practical focus, connecting Pacific Island governments and workers with opportunities in Australian and New Zealand labour markets.
Most Favoured Nation Provisions
FTAs often contain provisions that mean that contracting Parties will benefit from concessions granted to other counties in the future.
Treaty of Waitangi
Determining the Crown’s obligations to Māori, including under the Treaty of Waitangi, is a very important and ongoing question that is quite properly a function of New Zealand’s domestic legal, constitutional and political system. The function of FTAs, like PACER Plus, is to avoid impinging on these important domestic processes.
This will be done by ensuring that PACER Plus contains the same protections for the Treaty of Waitangi as all recent New Zealand FTAs. This clause, along with other provisions in the Agreement, combine to protect the capacity of the Crown to implement domestic policies that fulfil its obligations to Māori, including under the Treaty of Waitangi, without being obliged to offer equivalent treatment to our PACER Plus partners.
Māori interests in PACER Plus [PDF, 80 KB]
As with all FTAs, PACER Plus will preserve the ability of successive governments to regulate for public policy purposes. However, some Pacific governments are still developing policies and legislative frameworks for certain matters or wish to rely on existing international agreements and regional architecture to govern areas of common interest to the negotiating parties. Consequently, there are, for example, no chapters dealing with intellectual property or competition policy.
Negotiations started: August 2009
Status: A Special Forum Trade Ministers’ Meeting, chaired by Minister McClay, was held in Christchurch on 26 August where the legal text of PACER Plus was concluded.
At this stage parties are close to concluding all market access negotiations. The Agreement will then be referred for legal verification and opened for signature early in 2017.
The Ministry is seeking further submissions and queries about PACER Plus. We are also happy to arrange meetings with stakeholders and Iwi/Māori organisations to discuss how PACER Plus may affect them, their business or their communities.
Submissions or requests for information can be sent to:
Making contact with us will enable us to provide you with further information and updates on PACER Plus.