South Pacific Trade

chipped pine being processed for export at Lautoka, Fiji

chipped pine being processed for export at Lautoka, Fiji

Australia and New Zealand have huge trade surpluses with the Pacific islands and the trade deficits make these nations the main beneficiaries of the island economies. A shipping company, the Pacific Forum Line, was set up in 1977 by the Pacific Islands Forum to facilitate trade with Australia and New Zealand, but in practice, the Line’s large container ships run full northbound and empty southbound. In 2012 the Government of Samoa purchased the PFL to ensure the continuation of reliable and affordable shipping services. Investment and tourism help to offset the trade imbalances somewhat, but these also foster dependence.

The main products exported by the South Pacific countries are sugar (Fiji), seafood (American Samoa, Fiji, New Caledonia, and Solomon Islands), clothing and footwear (Fiji), minerals (Fiji, New Caledonia, and Solomon Islands), timber (Fiji, Solomon Islands, and Vanuatu), and black pearls (the Cook Islands and French Polynesia). Japan purchases timber and fish from Solomon Islands and nickel ore from New Caledonia.

Agricultural products such as bananas, cacao, coconut oil, coffee, copra, palm oil, pineapples, sugar, taro, tea, and vanilla are subject to price fluctuations over which local governments have no control, plus low demand and strong competition from other developing country producers. Most of these commodities are processed and marketed outside the islands by transnationals. Even worse, efforts to increase the output of commodities reduces subsistence food production, leading to imports of processed food. Bodies such as the World Bank push for cash cropping and expanded trade in food, usually at the expense of self-sufficiency. New Zealand meat exporters routinely ship low-quality “Pacific cuts” of fatty, frozen mutton flaps unsalable on world markets to countries like Tonga and Samoa. American companies dump junk foods such as “turkey tails” in the islands, and tinned mystery meats arrive from afar. Processed foods saturated with sugar and fat are popular in the islands due to their convenience and low cost; imported rice is less expensive than taro. Diet-related diseases such as diabetes are the hidden cost.

The new order of colonialism in the Pacific is known as “globalization.” The World Bank and other international banks aggressively market “project loans” designed to facilitate the production of goods for sale on world markets. The initial beneficiaries of these projects are the contractors, while the ability of transnational corporations to exploit the region’s natural resources is enhanced. Subsistence food production is reduced and the recipient state is left with a debt burden it can only service through exports. Free trade forces Pacific countries to compete with low-wage producers in Asia and Latin America where human rights and the environment are often of scant concern.

Should commodity exports fail, the International Monetary Fund steps in with emergency loans to make sure the foreign banks don’t lose their money. Local governments are forced to accept “structural adjustment programs” dictated from Washington, and the well-paid Western bankers mandate that social spending be cut. Another favorite trick is to persuade governments to shift the tax burden from rich to poor by replacing income and company taxes with a value-added tax. Customs duties are removed and tottering administrations are forced to clearcut their rainforests or sell their soil to meet financial obligations. This kind of chicanery has caused untold misery in Africa, Asia, and Latin America, usually with the connivance of corrupt local officials.

A much fairer arrangement is the 20-year Cotonou Agreement (signed in 2000), previously known as the Lome Convention, which provides for the preferential entry into the EU at fixed prices of set quotas of agricultural commodities from 78 African, Caribbean, and Pacific countries. Many experts believe that trade subsidies of this kind are the most effective way of delivering aid to developing countries without the intervention of state bureaucracies. This type of arrangement is crucial to countries that rely on a single export for much of their foreign exchange. The United States has lobbied vigorously against subsidized trading agreements of this kind in favor of “free trade” to allow American corporations based in Latin America to export tropical commodities produced cheaply through the use of semislave labor to Europe.