The Diplomat 30th March 2018

The fate of the Pacific Agreement on Closer Economic Relations free trade agreement (PACER Plus) is in jeopardy after the withdrawal of Tonga this week. The deal was signed in the Tonga capital Nukuʻalofa in June last year, however, the Tongan prime minister has stated that the agreement is no longer appropriate for Tonga’s interests.

The withdrawal of Tonga has the potential to derail the agreement which had been in negotiations since 2009. It was envisioned as the centerpiece of a new regional trading and strategic framework. Tonga now joins the two largest Pacific economies (aside from Australia and New Zealand), Papua New Guinea (PNG) and Fiji in being non-signatories to PACER Plus. These two countries avoided involvement in the agreement due to concerns that its provisions the movement of goods would mean that their local manufacturing industries would be overrun by the more advanced companies operating out of Australia and New Zealand. 

Tonga’s withdrawal from the agreement is driven by similar concerns, with a number of sectors being skepticalabout its benefits and lobbying the government to reconsider Tonga’s participation. It remains unclear exactly what tangible gains that PACER Plus may bring. Tonga, along with most Pacific Island countries, already has quota and tariff-free access to the Australian and New Zealand markets for many of their industries under the South Pacific Regional Trade and Economic Co-operation Agreement (SPARTECA). The reciprocity within PACER Plus would open these industries up to the competition that PNG and Fiji believes they would be unable to adjust to.

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