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Tuesday, 14 August, 2001, 10:44 GMT 11:44 UK
Pacific islands to sign trade pact
Coral reefs along the coast of Fiji
Island states: Clubbing together to reduce trade barriers
Leaders from across the Pacific are meeting in the island state of Nauru to sign off on two trade deals to ease economic pressures on their fragile economies.

The Pacific Islands Forum, now in its 31st year, aims to complete negotiations to tie 14 island states into a free trade agreement, dubbed the Pacific Islands Countries Trade Agreement (PICTA).

The Forum's secretariat also hopes to get Australia and New Zealand, both of which are also members, on board to join a full-scale free trade area in a few years' time.

The agreements are well-nigh complete. But the talks could be overshadowed by the absence of a number of heads of state, including Australian prime minister John Howard.

Environmental concern

Mr Howard, who was due back in Australia from visits to Japan and Indonesia on a day before the forum meeting started on 14 August, sent his defence minister in his place.

Australian prime minister John Howard
Mr Howard angered islanders by opposing Kyoto
His absence is a source of annoyance to many of the other countries represented, because they are keen to take Australia to task for its reluctance to sign up to the Kyoto Agreement on climate change.

Australia was one of the US administration's key supporters in trying to weaken the agreement.

The low-lying Pacific islands are among those most at risk should the predictions of global warming and rising oceans turn out to be accurate.

Dirty money

There is also the embarrassment which is being caused by the decision of the host, Nauru, to ban a journalist working for the AFP news agency.

Pacific Islands Forum members
Australia*
Cook Islands
Fiji
Kiribati
Micronesia
Nauru
New Zealand*
Niue
Palau
Papua New Guinea
Marshall Islands
Samoa
Solomon Islands
Tonga
Tuvalu
Vanuatu

*Not a PICTA signatory
The refusal to grant Michael Field a visa is thought to stem from his coverage of Nauru's offshore financial industry, one of the country's few ways of acquiring foreign exchange.

Nauru is on international blacklists for aiding both money laundering and tax evasion, with US agencies alleging that the country is a major conduit for the finances of Russian mafia organisations.

New Zealand Prime Minister Helen Clark backed Mr Field, a New Zealander, who was banned from the 2000 summit in Kiribati as well.

"I don't know how far back the practice reaches but certainly last year it was a problem, this year it's a problem," she said. "A letter was sent last year, a letter will go this year, something will be said."

Small islands, huge areas

But the fuss is unlikely to get in the way of pushing ahead with the trade agreements.

With the exception of Papua New Guinea, the 14 island states in the Forum all suffer from the combined effects of tiny populations and huge economic areas.

Nauru itself is only 21 square kilometres in size, much of it strip-mined for phosphate both before and after independence in 1968, and has a population of fewer than 12,000 people.

The Marshall Islands, meanwhile, are home to 68,000 people in a land area of 181 square kilometres that never rises more than 10 metres above sea level. But it encompasses an economic area the size of Greenland.

Setting aside the near-five million population of Papua New Guinea, the 14 countries that will sign PICTA have a population of about 2.1 million, spread out across the multi-million square kilometre area of the Pacific. Almost 40% of those live in Fiji alone.

Trade limitations

Few have much in the way of indigenous industry, and trade is largely a matter of mineral deposits, some offshore finance and tourism.

They all need to reduce trade barriers where they can, and the agreements - both PICTA and the looser deal tying in Australia and New Zealand, the Pacific Agreement on Closer Economic Relations (PACER) - could help.

The agreements commit the two richer states to offer "transitional assistance" - financial support - to their smaller brethren as they try to integrate into a broader world economy.

And they also hold out at least the possibility of New Zealand and Australia helping their neighbours when they deal with the World Trade Organisation, and come face to face with the batteries of experienced lawyers and negotiators that Western countries can deploy.

See also:

27 Oct 00 | World
Pacific nations seek stability
25 Oct 00 | Asia-Pacific
Fiji chiefs charged over coup
05 Jun 00 | Asia-Pacific
Analysis: Pacific unrest linked?
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