PACER Plus is the proposed free trade agreement between the Forum Island Countries and Australia and New Zealand. Forum Island countries were firmly convinced of the need for an independent body to advise and support the PACER Plus negotiations, and the Office of the Chief Commercial Advator (OCTA) should therefore be set up. On March 29, 2010 was appointed Trade Adviser Head Chris Noonan, which is the first step towards the creation of the Office of the Chief Commercial Adverb. OCTA`s independence may have been compromised by the support it receives from some donors. In May 2005, the Forum`s trade ministers decided that a broader framework for trade and economic cooperation between Australia, New Zealand and the FICs, beyond THE DIVISION, as envisaged under PACER, was needed to promote economic growth, investment and employment in the Pacific region. They called for a study to examine the possible effects of such a comprehensive framework and to analyze the CIF`s needs for capacity building, trade promotion and structural reforms. The mandate of the study was approved in 2006 and a draft study was submitted to trade ministers in 2007. It does not contain substantial provisions on trade liberalization; Rather, it provides for a gradual process of trade liberalization. This begins with a free trade agreement on goods between Pacific Island States (PICTA) which will be implemented from September 2008 and will likely be extended to services thereafter. Pacer provides programmes to assist members of island states, which facilitate exchanges and capacity building.
It also provides for future forum-based reciprocal free trade negotiations (including Australia and New Zealand). For the time being, these negotiations are not scheduled for 2011, but they are likely to be preferred following the negotiations of the Pacific Island countries for an economic partnership agreement with the European Union. The agreement stipulates that the “Year 1 LDCs” for tariff reductions will be the calendar year following the date of their LDC graduation. The Solomon Islands, for example, will be considered for a closing ceremony at the next three-year review of the UN Development Policy Committee in March 2018. If the Solomon Islands were recommended and such a recommendation was approved by the United Nations Economic and Social Council and the General Assembly, the country could be completed as early as 2021, even if later deadlines are possible. Tariff reductions could therefore begin in 2022. Most tariffs would be zero by 2032 and tariffs on all products would be abolished by 2047. The nine Pacific Island States share the economic characteristics, challenges and opportunities of small island developing states. The biggest challenge is its “smallness” in terms of area, population and savings, which is an important driver of their economic vulnerability, as it involves small economies and a narrow resource base, resulting in limited opportunities for production, export and employment. In response to these challenges, the PACER Plus agreement took into account the different levels of development between the parties and provided for financial and technical assistance provisions that Australia and New Zealand make available to the nine development partners. PACER Plus has a small provision for technical assistance and assistance.
The Australian government will provide a total of AUD 19 million to fund the management and implementation of a development and economic cooperation work programme to help the islands benefit more from trade. New Zealand will provide $7 million. Australia is committed to a target of 20% of official Pacific Development Assistance (ODA) for pacific trade aid funding.