Information about Asia and the Pacific Asia y el Pacífico
Chapter

4 The Pacific Plan for Strengthening Regional Cooperation and Integration

Author(s):
Christopher Browne
Published Date:
August 2006
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Information about Asia and the Pacific Asia y el Pacífico
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Christopher Browne

Pacific Forum Economic Ministers called for a Pacific Plan for Strengthening Regional Cooperation and Integration at their April 2004 meeting in Auckland, New Zealand. They recognized that overcoming the serious challenges facing the region required sharing scarce resources and aligning policies to strengthen national capacities to support living standards. Following this agreement in principle, the concept was developed by the Pacific Islands Forum Secretariat (FORSEC) and discussed in detail with the island countries and major bilateral and multinational donors. The Plan was firmly supported by Australia and New Zealand. A comprehensive draft of the Plan for the upcoming 10-year period was approved by the Pacific Forum Economic Ministers at their June 2005 meeting in Tuvalu. A final version of the Plan was approved by the Pacific Islands Forum leaders at their October 2005 meeting in Papua New Guinea.1

The Plan identifies a strategic framework of regional policies to be achieved over various time horizons. Early practical issues are to be completed or initiated within three years, medium-term proposals within five years, and longer-term matters within 10 years. The proposed activities address, in an appropriate manner, the need to promote economic growth, sustainable development, good governance and security, private sector activities, public enterprise reforms, regional economic integration, and trade liberalization. The Plan also incorporates a wide range of highly ambitious regional initiatives to promote greater income equality, enhance gender and youth empowerment, and create regional bodies for air and sea transport rationalization, protection of intellectual property, auditing, ombudsmen, human rights, and peacekeeping. It will be difficult to make rapid progress in such areas.

Regionalism under the Plan does not imply any limitations on national sovereignty. It is not intended to replace any national programs, only to support and complement them. To facilitate successful implementation of the Plan, which in the first instance will be the responsibility of FORSEC, detailed implementation and monitoring and evaluation strategies have been developed for the first three years, with realistic objectives and outputs and clearly defined coordination responsibilities. There is to be sufficient flexibility to further the goal of regional integration. The main institutions to be involved in the day-to-day Plan implementation include national and regional economic planning and development departments, and treasury and finance officials from the island countries. Updated annual action plans will be prepared by the FORSEC for discussion at future Pacific Forum Economic Ministers’ meetings.

The Plan underscores the commitment of the Pacific island countries to actively pursue measures to stimulate economic growth and poverty reduction. The Plan recognizes that overall economic performance in the region has deteriorated since independence two or three decades ago. It acknowledges that large public sectors, governance issues, corruption, and failure to promote the private sector have contributed to this outcome and that all these issues need to be addressed. With regard to the medium-term outlook, lifting the growth record requires the pursuit of broad economic reforms and continued bilateral and multilateral support. In this regard, the Plan provides a well-thought-out strategy that represents an important, positive step. However, responsibility for the pace of implementation falls squarely on the individual Pacific island countries themselves, rather than on any regional institutions or outside bodies.

Economic Growth

The Plan focuses on achieving faster, sustainable, pro-poor economic growth. This is to be achieved by means of greater trade, including in services; investment; improved efficiency and effectiveness in infrastructure and public service delivery; and increased private sector participation in, and contribution to, development. The main regional initiatives continue to be PICTA, PACER, and the forthcoming Economic Partnership Agreement (EPA) with the European Union.2 It is proposed to integrate into PICTA both trade in services and the movement of Pacific island labor to more advanced economies for seasonal work, although the latter has not been endorsed by Australia and New Zealand. Another initiative is the Regional Trade Facilitation Program (RTFP), which seeks to standardize import taxes, customs regulations, and animal and plant hygiene and quarantine requirements. This will mean stronger competitive pressures among countries, but will also allow for economies of scale and create more jobs. In due course, a regional tourism marketing and investment plan is to be set up. Improved regional transport services are also envisaged, including development of the Pacific Aviation Safety Office, franchising of shipping services, and integrated development of ports.

Pacific Forum Economic Ministers have long recognized the importance of the private sector as a contributor to economic growth (see also Chapter 3). Discussions at their annual meetings have focused on the need for a more favorable climate for investment (including foreign direct investment), the benefits of policy consultation with the private sector, public-private partnerships, and the impact of trade arrangements, taxation regimes, land issues, and country risk. One of the background papers for the Plan addressed the high costs of doing business in the Pacific and discussed such bottlenecks as delays in obtaining approval to start a business; complicated procedures for hiring and firing workers; insufficient access to credit; uncertainties regarding enforcement of legal contracts; and cumbersome procedures for closing a business, particularly bankruptcy laws that can take years to apply.

The Plan incorporates the recommendations of another background paper on principles for the governance and management of public enterprises, which outlines ways to improve their efficiency, effectiveness, and financial sustainability. The Plan calls for preparation in each country of a coherent policy toward state enterprises, incorporating adherence to good corporate governance, and including rules and responsibilities for shareholders, boards, and management. Community service obligations are to be regularly examined and separated from commercial operations and transparently funded by governments. Both financial performance and service quality are to be monitored against appropriate national and international benchmarks. The Plan neither explicitly outlines a strategy for privatization nor defines its potential scope in the region.

Sustainable Development

The Plan encourages each country to develop and implement a National Sustainable Development strategy. Reflecting the regional approach of the Plan, these strategies are meant to incorporate regional conservation and management measures for the sustainable utilization of fisheries resources; regional plans for waste management; and a Pacific Islands Energy Policy to provide reliable, affordable, and environmentally sound energy for sustainable development. Proposals for dealing with Pacific climate change and reducing disaster relief and management include greater public awareness, capacity building, and strengthened governance, risk, and vulnerability assessment. Harmonized approaches in the health sector are expected to address HIV/AIDS and noncommunicable diseases through improved training, enhanced facilities to promote primary health care and immunization, and improved child and maternal health.

Good Governance

Good governance is defined as the transparent, accountable, and equitable management of all resources. The Plan considers good governance a prerequisite for economic growth and sustainable development. It endorses commitments to establish regional audit, ombudsman, and human rights offices to support integrity and oversight. Anticorruption institutions are envisaged, with associated legislation and performance guidance for national attorneys general, including through judicial training and education. Enhanced governance mechanisms for resource management are to be initiated with due regard for the need to harmonize traditional and modern cultural values and structures. This would apply to strengthening traditional courts; improving parliamentary effectiveness; training for peace building and conflict resolution; and developing new models for land ownership, tenure, and use. There would be technical assistance to strengthen treasury and finance functions and to augment country and regional statistical information services and databases.

Security

Security is defined as the stable and safe social and political conditions that are necessary for and reflective of good governance and sustainable development and for the achievement of faster economic growth. The Plan proposes the development and implementation of strategies and associated legislation for maritime and aviation security and surveillance; regional cooperation in border security, including for fighting transnational crime; mentoring for national financial intelligence units; information sharing among law enforcement agencies; and upgrading intelligence services. The regional law enforcement training courses would cover customs; immigration; family, domestic, gender, and sexual violence; human rights; juvenile justice; drug control; exclusive economic zone patrol programs; and military police. Plans for mitigation and management of natural disasters are to be prepared.

Monitoring and Evaluation

Implementation of the Plan will be measured by monitoring and evaluation of its initiatives, although it is agreed that a regional approach will be taken up only if it adds value to national efforts. Indicators have been developed to suit the regional context, as well as to allow for measurement of nationally and globally agreed targets, such as the Millennium Development Goals (MDGs). Political oversight and guidance to the Forum Secretariat will be provided by the Pacific Plan Action Committee, chaired by the Forum and comprising representatives of all Pacific island countries, perhaps at the cabinet level. Additionally, an independent comprehensive review of progress will be conducted every three years.

Indicators for monitoring progress in economic growth include annual percentage increases in the volume and value of goods and services traded by each country, tourist arrivals for each country, GDP per capita, foreign direct investment inflows for each country, the number of registered and operating businesses, and employment in the private sector. Measurement could also be made of annual percentage reductions in the number of canceled flights to and from trading partners and the relative costs of port and transport services for shipping a container to and from trading partners.

Indicators for monitoring progress in development include reductions in the number of people living in poverty, disaggregated into urban and rural sectors; the depth of poverty, defined as the difference between the poverty line and the average income of those who live below that line; the youth unemployment rate; and maternal mortality rates and mortality rates for children under age five. Measurement would also be needed for annual increases in sustainable access to potable water, sanitation, waste collection and disposal, and electricity—all in terms of the percentage of the total population and for both urban and rural areas.

Indicators for good governance include a voice and accountability measure designed to assess political, civil, and human rights; a political stability measure to determine the likelihood of violent threats to, or changes in, government, including terrorism; a government effectiveness measure to review the competence of the bureaucracy and the quality of public service; a regulatory measure for the incidence of market-unfriendly policies; a rule-of-law measure to gauge the quality of contract enforcement, the police, and the courts as well as the likelihood of crime and corruption; and a measure to show progress in the control of corruption. On security, indicators include country evaluations by the Financial Action Task Force of the Asia Pacific Group on Money Laundering, percentage reductions in crime against persons, and the average time taken to respond to national disasters in the region.

Final Comments

The Plan depends on support for regional approaches by Pacific island countries, civil society and private sector organizations, development partners, and other stakeholders. The type of regionalism that will best benefit the region is one that addresses capacity constraints and the lack of economic opportunities, as outlined in the Plan. Large public sectors, governance issues, corruption, and failure to promote the private sector have contributed to poor economic performance in recent years. The objectives of the Plan address these problems.

The Plan does not assess monetary and exchange rate policies, where the record in the region has generally been good. There have been questions from time to time about the need for such small states to have central banks, but the policies of these institutions have been useful in helping to maintain macroeconomic stability and protecting the balance of payments and official external reserves. The IMF has consistently taken the view that the choice of exchange rate regime is the prerogative of individual countries, and it advises on policies that are consistent with those choices, whether they be a peg to a basket of currencies, dollarization, or floating. Recently, there has been increasing interest in a possible currency union in the region, but such a change does not appear appropriate at present (see Chapter 7).

1For further details on the history and details of the Pacific Plan, see www.pacificplan.org.
2In June 2002, EU foreign ministers adopted a mandate for the European Commission to negotiate EPAs with Africa, the Caribbean, and the Pacific (ACP). There are four pillars to the EPAs: (1) partnership—the EU is to open up its market and eliminate trade barriers, and the ACP states are to strengthen supply capacity and reduce transaction costs; (2) regional integration—EPAs are to be based on regional integration initiatives; (3) development—EPAs will take account of the economic, social, and environmental constraints of the ACP countries; (4) link to the World Trade Organization (WTO)—EPAs will define bilateral and operational trade-related provisions within the broad framework of WTO rules. The three EPAs are scheduled to go into effect by January 2008. (Source: http://europa.eu.int/comm/trade/issues/bilateral/regions/acp/nepa_en.htm)

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