The Pacific Agreement on Closer Economic Relations (PACER Plus) is a trade and economic integration agreement that aims to create jobs, raise standards of living and encourage sustainable economic development in the Pacific region.

PACER Plus builds on existing trade agreements: the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) (1980) and the original PACER Agreement (2001). 

The agreement includes: Australia, Cook Islands, Federated States of Micronesia, Kiribati, Nauru, New Zealand, Niue, Palau, Republic of Marshall Islands, Samoa, Solomon Islands, Tonga, Tuvalu, Vanuatu.

Why it’s a priority for New Zealand

Pacific Island countries are our nearest neighbours and, with more than 250,000 Pacific Islanders living in New Zealand, we share strong personal ties. New Zealand has a clear interest in a prosperous and sustainable region and our main objective for PACER Plus is to encourage economic development in Pacific countries.

What are the potential benefits?

Opportunities for economic development in Pacific Island countries are limited because of their small size and the difficulty achieving the economies of scale needed to compete in international markets. PACER Plus should help create jobs and wealth in the Pacific by making it easier for these countries to trade.

The intended benefits of PACER Plus are:

  • a more predictable trading environment 
  • more consistent and transparent rules throughout the region on sanitary and phytosanitary measures, technical barriers to trade, and customs procedures 
  • more liberal and product-specific rules of origin 
  • increased investment in the region, in particular by New Zealand and Australian investors into Pacific Island countries 
  • greater certainty around tariffs for exporters
  • more opportunities for trade-related development assistance for Pacific Island countries
  • a more mobile labour force in the region.

Contents of the agreement

Goods

Commitments vary from country to country reflecting their unique stages of development, current levels of liberalisation and respective aspirations. The timeframes for tariff elimination are longer than in previous FTA and a small number of tariffs are excluded. In selecting the excluded products, the Forum Island Countries indicated that they took into consideration products that generate significant revenue, the need to protect their infant industries from competition and the need to safeguard the health of their citizens.
 
As a WTO member all FTAs that New Zealand concludes must provide for tariff elimination on “substantially all trade”.  The extended timeframe will give Pacific countries the ability to meet this standard but with sufficient time to adapt to the gradual elimination of tariffs and avoid detrimental effects on international trade and prices of goods in their countries. Some countries are expected to make bold moves under PACER Plus to liberalise and transform their economies over 15 to 25 years.
 
New Zealand businesses will benefit from increased certainty about tariff rates and reduction and elimination of tariffs on a range of products over the medium term. We have also sought outcomes that will protect New Zealand’s competitiveness against exporters from outside of the Pacific region.
 
Pacific Islands countries currently have duty free access to Australia and New Zealand if they meet the applicable rules under the SPARTECA agreement. However, PACER Plus will provide more flexible rules of origin that will make it easier for Pacific countries to obtain duty free access to Australia and New Zealand for a wider range of products. Lowering import tariffs will also improve consumer choice in the Pacific, reduce the cost of inputs into the manufacturing process and encourage the development of regional supply chains.

Services and Investment

New Zealand’s approach on Trade in Services, Investment, and the Movement of Natural Persons is to ensure high standard provisions in the agreement that support the Pacific Islands countries’ objective of attracting inwards investment, and an expansion of services trade within the region.

Services

Services exports comprise a significant proportion of total exports for Pacific Islands countries. For this reason, a principal objective for Pacific Islands countries is to expand in services trade and attract inwards investment, particularly through increased commercial presence of service suppliers in their countries.

In recognition of the unique context of PACER Plus, New Zealand has agreed to take a “positive list” approach to the services and investment market access negotiations. Doing so will ensure that Pacific Islands countries only make commitments on the sectors that they are comfortable with.

Consistent with usual FTAs, a separate chapter on the movement of natural persons has been negotiated with a view to facilitate the flow of skilled business people. Any commitments would be made within New Zealand’s existing immigration policy provisions.

Investment

New Zealand has sought to negotiate an investment chapter that is ambitious and consistent with Pacific Islands countries’ objective of increasing inward Foreign Direct Investment. Strong core disciplines on national treatment and most-favoured-nation treatment were realised, together with rules on customary international law on expropriation, minimum standards of treatment and other accompanying obligations. These disciplines will apply to both pre- and post-establishment measures.

Pacific Islands countries’ have pursued a preference for a “positive list” approach for investment market access. Although New Zealand’s usual approach is to seek a “negative list” (which is generally seen as leading to higher quality outcomes), in this instance, a “positive list” is appropriate for the varying capacities and national circumstances of Pacific Islands countries, and a more suitable approach to ensure a higher level of commitment by the Parties.

As with most New Zealand FTAs, other than TPP, there will not be Investor State Dispute Settlement (ISDS). ISDS is not considered appropriate in the context of PACER Plus.

New Zealand does not intend to offer any investment market access commitments that will limit the government’s ability to change the investment screening regime as part of PACER Plus. We sought to agree commitments in relation to New Zealand’s investment approval regime that, at most, bind in current thresholds.

The chapter sought to reduce key restrictions which may apply to New Zealand investors in Pacific countries, where Pacific countries also see benefit in doing so. A key success outcome in this regard is to ensure that “most favoured nation” provisions are included in the investment chapter to ensure that New Zealand investors are not disadvantaged in relation to investors from the Pacific Islands countries possible future negotiation partners.

Economic Cooperation

A Development and Economic Cooperation Chapter and Implementing Arrangement to PACER Plus commits Australia and New Zealand funding to ensure Pacific Island countries are able to implement and take advantage of the PACER Plus agreement as intended. A multi-year work programme will be established to address the trade-related needs identified by the Pacific Island countries.

Labour Mobility

PACER Plus is complemented by a Labour Mobility Arrangement. A central plank of this will be the Pacific Labour Mobility Annual Meeting which will provide a forum for cooperation. The annual regional meeting will have a practical focus, connecting Pacific Island governments and workers with opportunities in Australian and New Zealand labour markets.

Most Favoured Nation Provisions 

FTAs often contain provisions that mean that contracting Parties will benefit from concessions granted to other counties in the future.

Treaty of Waitangi

Determining the Crown’s obligations to Māori, including under the Treaty of Waitangi, is a very important  and ongoing question that is quite properly a function of New Zealand’s domestic legal, constitutional and political system.  The function of FTAs like PACER Plus is to avoid impinging on these important domestic processes.
 
PACER Plus contains the same protections for the Treaty of Waitangi as all recent New Zealand FTAs.  This clause, along with other provisions in the Agreement, combine to protect the capacity of the Crown to implement domestic policies that fulfil its obligations to Māori, including under the Treaty of Waitangi, without being obliged to offer equivalent treatment to our PACER Plus partners.

Māori interests in PACER Plus [PDF, 80 KB]

Other Elements

As with all FTAs, PACER Plus will preserve the ability of successive governments to regulate for public policy purposes.  However, some Pacific governments are still developing policies and legislative frameworks for certain matters or wish to rely on existing international agreements and regional architecture to govern areas of common interest to the negotiating parties.  Consequently, there are, for example, no chapters dealing with intellectual property or competition policy.

Timing for the negotiations

Negotiations started: August 2009

Status: Negotiations concluded on 20 Apil 2017. The agreement now needs to be signed and ratified before it can come into force.

How to get involved

The Ministry is seeking further submissions and queries about PACER Plus.  We are also happy to arrange meetings with stakeholders and Iwi/Māori organisations to discuss how PACER Plus may affect them, their business or their communities.
 
Submissions or requests for information can be sent to:

Email PACREG@mfat.govt.nz

Making contact with us will enable us to provide you with further information and updates on PACER Plus.