Ministerial Conference on
Environment and Development
in Asia and the Pacific 2000
Kitakyushu, Japan 31 August - 5 September 2000
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Trade in the Pacific islands From the appearance of the first Europeans, Pacific island people enthusiastically traded local resources for European manufactured goods. Cloth, metal items of all kinds, tobacco, alcohol, fat-enriched foods, and manufactured items remain the basic motivation for exploitation of primary resources through agriculture, fisheries, timber, mining and energy production. The need to develop manufacturing and tourism industries is linked to the need to remain economically viable in global trade. Virtually all Pacific island primary sector ministries were formed and operated specifically to promote primary production for export purposes. Environmental degradation is inevitable when the natural resources are used at maximum or above maximum levels of exploitation. Since the exploitable resource base in most Pacific islands is very small, and since demand for trade goods is very large, governments have encouraged or at least condoned unsustainable exploitation in all primary sectors. Most of the “locally produced” environmental issues have been caused by trade-induced primary commodity production. Industrialised countries like Japan, the United States and the European Union sometimes cause environmental degradation to the Pacific through unfair agricultural subsidies or protectionism. The European Union, for example, pays preferential prices for Fiji sugar but also pays preferential prices for African and Caribbean sugar. The European Union also limits importation of sugar into Europe and dumps excess production in other parts of the world, driving prices down. The World Bank’s answer to decreasing world prices for agricultural products from developing countries is to encourage the Pacific island countries to increase the production of other primary goods for export. When many countries in the Pacific and the developing world produce more of the same goods, such as spices, sugar or bananas, the price comes down and the market collapses. For example, a large increase in vanilla production in Madagascar and other parts of the world forced the price of vanilla in Tonga from T$80 a kilo in 1997 to T$60 a kilo in 1998 resulting in a loss of $T20,000 per tonne. In 1999, the Pacific Islands Forum agreed to form a Pacific Islands Free Trade Zone. Details of this trade zone are now in the process of being worked out, although how this will fit into the World Trade Organization plans is not yet clear. The World Trade Organization and the Pacific Islands Recent rulings by the World Trade Organization that some of the islands' trade preferences violate free trade agreements have fueled concern that small island economies will not have sufficient time or resources to reinvent their economies before suffering a sharp economic downturn. Tighter national budgets, it is feared, will inevitably lead to fewer available resources for programmes to protect the environment. In addition, some decisions prohibit current environmental protection trade restrictions, such as the ban on export of whole logs in Vanuatu. Specks of land in the ocean, small islands are easily swamped in today's world economy. Yet they rely on international trade more than most countries, as their limited land mass and resources require that they import virtually everything, from energy to health supplies to machinery. Total freight costs as a percentage of import value for the small islands were 55 per cent higher than for developed market-economy countries in 1993, and by 1996, the disparity grew to as much as 66 per cent. This reliance on the outside world drives up the cost of living and doing business for islanders, and makes it extremely difficult for them to compete against lower-cost agricultural producers in other countries. Furthermore, because of climate, soil and sometimes severe weather conditions -- such as hurricanes in the Caribbean, cyclones in the Indian Ocean, and typhoons in the Pacific -- small islands are often limited in the types of crops they can grow. Small islands have been able to sell their agricultural products in many developed countries for more than the market price as a result of several international agreements, often based on former colonial relationships. These have included the Generalized System of Preferences, which was negotiated under the General Agreement on Tariffs and Trade (GATT), and a number of regional agreements. In particular, under the Lomé Convention, a trade and aid pact often cited as a model of north-south cooperation, the European Union agreed to import commodities such as sugar from small islands and other African, Caribbean and Pacific nations at a negotiated price--usually higher than prevailing market rates. The subsidies from these arrangements have helped sustain many small island economies. In addition to bringing in valuable foreign exchange, these agreements have also provided the islands with guaranteed access to northern markets, which has been important for attracting foreign investment for other ventures. Yet some have argued that the preferences have lulled the islands into a false sense of security that prevented them from either diversifying or from adopting measures to remain competitive in the global marketplace. Negotiations are currently underway for a successor to the Lomé Convention, and new terms of trade between the small island developing States and the developed nations are being discussed. The EU has said that it will make an effort to ensure that the Lomé talks, as well as at the Millennium Round of multilateral trade negotiations under the WTO, will reduce remaining trade barriers and provide the small islands with more secure access to export markets for their products. The ACP group addressed the special needs of SIDS in their discussions on the future of the Lomé convention. In November 1997, the Heads of State and Government of the ACP group met in Libreville, Gabon and discussed the future ACP-EU relations. In the declaration of the summit the vulnerability of the economies of the ACP states in general is mentioned in relation to the application of WTO rules and obligations. The declaration calls for the adjustment of WTO rules to the special circumstances and needs of the fragile and weak economies of the least developed, land-locked and small island developing countries. For the future of Lomé the ACP group asks for the positive differentiation in a future agreement to meet specific development needs, also for the land-locked and small island countries, taking due account of the fragility and vulnerability of their economies. A future development co-operation agreement, should recognise: "the peculiar vulnerability of the numerous small states in our Group and the special difficulties posed for the diversification of their economies" (Libreville declaration, 1997) |
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