“In its current bilateral form, development assistance from Australia and New Zealand (ANZ) allows only little that directly benefits the development of the private sector in Forum Island Countries (FICs) in general and trade and investment in particular.
“This will not have significant effects on the development of trade in goods by FICs.”
This is a point Trade Negotiations Envoy Robert Sisilo stressed after Australia presented its Development Assistance Programme for the region at the closing stages of the PACER-Plus meeting held in Adelaide, South Australia Thursday.
Such assistance, according to Sisilo, should specifically target trade and investment development in several forms.
“One such form is for a fund to assist FIC development banks facilitate investments by local Small Medium Enterprises (SMEs) to invest in bankable projects.
“This fund can only be managed by an independent Project Management Unit that is external to existing banking institutions,” Sisilo, mindful of the region’s long history of such funds being unsustainable as national development banks were allowed to provide both unbankable and often political loans, said.
“Nevertheless, it remains the case that there would be more sound and bankable investments if loanable funds were made available to domestic investors in the FICs on terms with a longer grace period and at lower interest rates,” he further stated.
According to Sisilo without investment in FICs by both domestic investors and ANZ transnationals to generate exports and employment, the overall objective of the PACER-Plus Agreement will just not see the light of day.
“Without the effective use of development assistance to encourage investment, no diversification of the export base in FICs is likely to occur.
“And given that FICs already have duty free access to ANZ markets through SPARTECA, then PACER-Plus is unlikely to have significant effects on the development of trade in goods by FICs,” Sisilo stressed.
PACER-Plus is a process launched by Forum Leaders in 2008 and now being developed to discuss, more broadly, regional economic integration of the FICs with ANZ.
The process was formally commenced by Forum Trade Ministers in October 2009.
Ministers identified a number of priority subjects for negotiation – labour mobility, development assistance, rules of origin, trade facilitation, services and investment.