Pacific regional order

Peebles, Dave

2005

DOAB

This book shows that a new strategic vision is needed for the Pacific to realise its potential as a prosperous, dynamic region. The Pacific currently lacks a vision that
marries forward-looking goals with the depth of regional integration needed to resolve the current underlying causes of regional disorder. The book proposes that members of the Pacific Islands Forum should pursue five goals: sustainable economic development; security; the rule of law; democracy; and integration with the wider region. To realise these goals, Forum members must commit to far more substantive regional integration in these critical areas. To this end, the Forum needs to evolve into a new body, the Oceania Community, that follows, and improves on, the European Union model. The Pacific’s challenges can only be addressed through the shared sovereignty and leverage possible in such a Community.
The book begins by outlining the Pacific’s current challenges, policy settings and institutions, to identify the need for such a new vision. Next, the guiding philosophy of a new vision is considered, and the overarching features of the Oceania Community outlined. The book then details the new agreements and institutions needed to promote the five goals through the Oceania Community.
These plans involve: a common market; a regional commitment to inflation targeting and, in many instances, monetary union; a security centre and standing peace monitoring group; a human rights commission; a regional court; and a regional parliament. Further, the Community needs to seek out integration actively with other states in the wider Pacific. A regional community dedicated to the promotion of sustainable economic development, security, the rule of law, democracy and wider integration through these agreements and institutions represents an integrated new strategic vision for the Pacific. This vision is necessary, it is achievable, and it is the best way, perhaps the only way, for the Pacific to realise its potential as a prosperous, dynamic region.

Economics

English

9781920942465 (Print)

0 7315 3733 5 (online)

About the author
Dave Peebles is the Senior Adviser to Bob Sercombe, Shadow
Minister for Overseas Aid and Pacific Island Affairs. He has
previously worked as a counter-terrorism specialist and a trade
negotiator with the Department of Foreign Affairs and Trade, as
a peace monitor in Bougainville, as a consultant in Moscow
and as a commercial lawyer in Melbourne. He is currently
working on his second book on Australian education policy.

i

ii

Pacific
Regional Order

iii

iv

Pacific
Regional Order
Dave Peebles

Co-published by
ANU E Press and Asia Pacific Press
The Australian National University
v

vi

Dedication
To Justine, Mum and Dad

vii

© Dave Peebles 2005
This work is copyright. Apart from those uses which may be permitted under the
Copyright Act 1968 as amended, no part may be reproduced by any process
without written permission from the publishers. The views expressed in this book
are those of the author and not necessarily of the publishers.

Co-published by ANU E Press and Asia Pacific Press
The Australian National University
Canberra ACT 0200 Australia
Ph: 61-2-6125 4700 Fax: 61-2-6125 8448
Email: books@asiapacificpress.com
Website: http://www.asiapacificpress.com

National Library of Australia Cataloguing-in-Publication entry
Peebles, Dave.
Pacific regional order.
Bibliography.
Includes index.
ISBN 0 7315 3733 5.
1. Regionalism - Pacific Area. 2. National security - Economic aspects - Pacific
Area. 3. Economic policy - Pacific Area. 4. National security - Pacific Area. 5.
Pacific Area - Economic integration. 6. Pacific Area - Foreign relations. I. Title.
337.195

Editor: Asia Pacific Press
Cover design: Annie Di Nallo
Cover photographs: Annie Di Nallo and Debra Grogan
Printed in Australia by University Printing Service, The Australian National University
viii

Foreword
This book shows that a new strategic vision is needed for the Pacific to realise its
potential as a prosperous, dynamic region. The Pacific currently lacks a vision that
marries forward-looking goals with the depth of regional integration needed to
resolve the current underlying causes of regional disorder.
The book proposes that members of the Pacific Islands Forum should pursue
five goals: sustainable economic development; security; the rule of law;
democracy; and integration with the wider region. To realise these goals, Forum
members must commit to far more substantive regional integration in these
critical areas. To this end, the Forum needs to evolve into a new body, the Oceania
Community, that follows, and improves on, the European Union model. The
Pacific’s challenges can only be addressed through the shared sovereignty and
leverage possible in such a Community.
The book begins by outlining the Pacific’s current challenges, policy settings and
institutions, to identify the need for such a new vision. Next, the guiding
philosophy of a new vision is considered, and the overarching features of the
Oceania Community outlined. The book then details the new agreements and
institutions needed to promote the five goals through the Oceania Community.
These plans involve: a common market; a regional commitment to inflation
targeting and, in many instances, monetary union; a security centre and standing
peace monitoring group; a human rights commission; a regional court; and a
regional parliament. Further, the Community needs to seek out integration
actively with other states in the wider Pacific.
A regional community dedicated to the promotion of sustainable economic
development, security, the rule of law, democracy and wider integration through
these agreements and institutions represents an integrated new strategic vision
for the Pacific. This vision is necessary, it is achievable, and it is the best way,
perhaps the only way, for the Pacific to realise its potential as a prosperous,
dynamic region.

ix

x

Contents
Foreword
Tables
Figures
Abbreviations
Acknowledgments

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.

ix
xii
xiii
xiv
xvi

A strategic vision
Challenges to regional order
Australia and regional order
The Pacific Islands Forum
From a Forum to a Community
Free trade
Monetary cooperation and integration
Security
Human rights
The rule of law
Democracy
Evolution
Forging regional order

Appendices
1. Key facilitation measures for the Oceania Common Market
2: Further features of the Oceania labour mobility agreement
3: Tourism—the Oceania trade order in action
4: UN reform to aid the Oceania Community
References
Index

xi

1
13
44
58
81
102
140
161
193
215
229
243
259
269

276
315

Tables
Table 2.1
Table 2.2
Table 2.3
Table 2.4
Table 2.5
Table 2.6
Table 2.7
Table 2.8
Table 2.9
Table 2.10
Table 2.11
Table 3.1
Table 3.2
Table 4.1
Table 5.1
Table 5.2
Table 6.1
Table 6.2
Table 6.3
Table 6.4
Table 6.5
Table 6.6
Table 7.1

Key data for Forum members
14
1999 Human Development Index—Forum island country rankings 14
Forum island countries: real growth in gross domestic
product, 1996–2001
16
Economically inactive population in Forum island countries, 2000 16
Forum island countries: annual population
growth rates, 1985–2001
17
Information and communication technology levels
in Forum island countries
20
Foreign direct investment in Forum island countries, 1991–2000 20
Forum island country inflation rates, 1992–2001
24
Forum island country ratifications of key human
rights instruments
32
Forum island country ratifications, accessions and
successions to key humanitarian law instruments
33
Forum island country membership of select international
organisations
34
Size of Forum members’ populations and economies
45
Lead donors to Forum members, 2000
46
Forum members’ assessed contributions
60
Phases in the development of the European Union
88
Proposed regional taxation system (for the commencement
of the Oceania Community)
98
Goods liberalisation among Forum island countries
105
Goods liberalisation among less developed Forum
island countries
105
Goods liberalisation between Forum island countries
and Australia and New Zealand
105
Goods liberalisation between less developed
Forum island countries and Australia and New Zealand
106
Sample services liberalisation commitments
113
The Oceania Labour Mobility Agreement—sample
Australian intake
129
Economic growth in Australia and New Zealand—real
growth in gross domestic product, 1996–2002
148
xii

Table 7.2
Table 8.1
Table 11.1
Table 11.2
Table 12.1
Table 12.2
Table 12.3
Table 12.4
Table 12.5
Table A4.1

Australian inflation rate, 1996–2002
Proposed minimum commitments for the Oceania
Peace Monitoring Group
Formula for representation in the Oceania Parliament
Levels of representation in the Oceania Parliament
in the first phase of the Oceania Community
Current population and GDP of countries from the
first phase of the European Union
Current population and GDP of countries from phases
one to six of the European Union
Possible phases in the development of the Oceania Community
Current population and GDP of countries proposed for
phase one of the Oceania Community
Current population and GDP of countries proposed for
phases one to three of the Oceania Community
Proposed Oceania Community members—membership of
current UN electoral groups

153
177
239
239
245
245
250
250
251
274

Figures
Figure 4.1
Figure 5.1
Figure 5.2
Figure 6.1
Figure 6.2
Figure 7.1
Figure 9.1
Figure 13.1

Structure of the Pacific Islands Forum
Structure of the Oceania single undertaking treaty
Proposed structure of the Oceania Community
Tariff rates in a sample free trade agreement
Tariff rates in a sample customs union
Real effective exchange rates, 1980–99
The Oceania Human Rights Charter
Structure of the Oceania single undertaking treaty

Key to tables
n.a.
..
.

not applicable
not available
zero
insignificant

xiii

61
93
97
107
108
153
211
263

Abbreviations
ACTU
ADF
APEC
ASEAN
ASX
BRA
BSDP
CARICOM
CCPR
CER
CESCR
CMT
CRTA
DFAT
DWFN
ECP
EMEAP
ESCAP
EU
FICS
FEMM
FTA
GATS
GATT
GDP
ICC
IFM
ILO
IMF
IPMT
ISO

Australian Council of Trade Unions
Australian Defence Forces
Asia-Pacific Economic Cooperation
Association of South East Asian Nations
Australian Stock Exchange
Bougainville Revolutionary Army
Business Skills Development Program
Caribbean Community and Common Market
Covenant on Civil and Political Rights
Australia-New Zealand Closer Economic Relations Agreement
Covenant on Economic Social and Cultural Rights
Cut, Make, Trim (Factories)
(World Trade Organization) Committee on Regional Trade
Agreements
(Australian) Department of Foreign Affairs and Trade
Distant Water Fishing Nation
Enhanced Cooperation Program
Executives Meeting of East Asia Pacific Central Banks
United Nations Economic and Social Commission for Asia and
the Pacific
European Union
Forum island countries
Forum Economic Ministers Meeting
Free Trade Agreement
General Agreement on Trade in Services
General Agreement on Tariffs and Trade
Gross Domestic Product
International Criminal Court
Istabu Freedom Movement
International Labour Organization
International Monetary Fund
(Solomon Islands) International Peace Monitoring Team
International Standards Organisation
xiv

IT
LDC
MAI
MEF
MFAT
MFN
MSG
NGO
NLTB
NZ
OAS
OAU
OECD
OSCE
PACER
PATCRA

Information technology
Least-developed country
Multilateral Agreement on Investment
Malaita Eagle Force
(New Zealand) Ministry of Foreign Affairs and Trade
Most-favoured nation
Melanesian Spearhead Group
Non-government organisation
Native Land Trust Board
New Zealand
Organisation of American States
Organisation of African Unity
Organisation for Economic Cooperation and Development
Organisation for Security and Cooperation in Europe
Pacific Agreement on Closer Economic Relations
Papua New Guinea-Australia Trade and Commercial Relations
Agreement
PICTA
Pacific Islands Country Trade Agreement
PMC
(Solomon Islands) Peace Monitoring Council
PMG
(Bougainville) Peace Monitoring Group
PNG
Papua New Guinea
PNGDF
Papua New Guinea Defence Forces
RAMSI
Regional Assistance Mission to Solomon Islands
RBA
Reserve Bank of Australia
ROOS
Rules of Origin
RTA
Regional Trade Agreement
SME
Small to medium-sized enterprise
SPARTECA
South Pacific Regional Trade and Economic Cooperation
Agreement
SPARTECA–TCF South Pacific Regional Trade and Economic Cooperation
Agreement—Textiles Clothing and Footwear Agreement
TMG
(Bougainville) Truce Monitoring Group
TNC
Transnational Corporation
UN
United Nations
UNCITRAL
United Nations Commission on International Trade Law
UNCTAD
United Nations Committee on Trade and Development
UNDP
United Nations Development Programme
VAT
Value-added tax
WTO
World Trade Organization
xv

Acknowledgments
Special thanks to
Justine Braithwaite
Jennifer Balint
Cornelis Reiman
Stanley Johnston
Fiona Haines
Sami Yläoutinen
Maree Tait
Matthew May
Polly Hemming
Bridget Maidment
and Debra Grogan
Iakon Ampen
Robert Atherton
Michelle Atherton
Inesis Berzins
Sally Berzins
Cornelius Besia
Shelton Bond
Len Brassington
Faye Brassington
Scotty Breen
Deborah Bronnert
Adam Clements
Tim and Helen Corney, and
the rest of the IMPACT team
Peter Davey
Trevor Davies
DFAT Library Staff
Claus Dirnberger
Athel Duncan
Rose Edwards
Patrick Foley
Arie Freiburg
Mark Gray
Jane Gronow
Christina Hajdu
Gavin Hansford
Alana Harris

Karl Hauke
Stephen Henningham
Peter Heyward
Angus Hindmarsh
Jeff Holachek
Nina Holachek
Peter Hooton
Vanessa Houghton
Peta Hudson
Siriol Hugh-Jones
Catherine Graham
Karkar
Justin Kelly
Ben King
Francis Kabano
Pablo Kang
Chief John Komarind
Christopher Lang
Jon Li
Bobo Lo
Frederick Lyons
Robyn Lyons
Malcolm Maclean
Aileen Macleod
Jane Madden
Hamish McEwen
Gareth Meyer

xvi

Carolyn Millar
Andrew Northfield
Wanda Oram-Miles
Alex Peebles
Catherine Peebles
Cameron Peebles
Rhys Puddicomb
John Putt
Ian Prentice
Chief Raphael
Tony Regan
Jon Richardson
Jean Rodrigues
Charmaine Rodrigues
John Settle
Jemal Sharah
James Tanis
Alf Torrents
Josie Vains
Sannamaaria Vanamo
Chris Ward
Elizabeth Wetherell
Leigh Wright
Penny Xirakis
Tim Yeend
’99 GTs and overseas
students

A strategic vision

1

A strategic
vision

Pacific 2020
In 1993, The Australian National University’s National Centre for Development Studies
initiated a series of studies under the banner ‘Pacific 2010’ (Callick 2000a; Cole
1993; Tait 1994). Based on the available data and policy settings then, the series
considered what the Pacific may look like in 2010. The vision was a bleak one.
Population growth in the Pacific islands is careering beyond control: it has
doubled to 9 million; malnutrition is spreading and is already endemic in
squatter settlements…there are beggars on the streets of every South
Pacific town…levels of unemployment are high…deaths from AIDS, heart
disease and cancers have greatly increased, government services have
been privatised or in many cases have lapsed…aid donors have turned their
attention elsewhere…crime has increased…pollution and land degradation
has spiralled…much of the surviving rainforest has been logged…coastal
fisheries have been placed under threat from over fishing…skills shortages
in the labour market yawn wide (Cole 1993:i).

Although the series was criticised for being overly pessimistic (see, for example,
Fry 1996), on current trends the Pacific in 2010, particularly Melanesia, will more
closely resemble the projections of the pessimists than the optimists (see, for example,
United Nations Development Programme 1999a). If the timeframe were lengthened
to 2020, the projections would be equally bleak, or more so—and would most likely
include a number of failed states (see Australian Strategic Policy Institute 2003).
I prefer a different Pacific 2020 scenario. One where the region’s citizens enjoy
good standards of health and education, long lives and a wealth of opportunities;
1

Pacific Regional Order

where economic growth is constantly improving, driven by environmentally
sustainable service industries; where coups, civil wars and the dangers of failed
states have been relegated to the past; where the Pacific is integrated into the wider
region, and is an influential voice in world affairs.
Yet the Pacific currently lacks a comprehensive strategic vision that would enable
it to realise its potential as a prosperous, dynamic region by 2020. This book aims to
make an original contribution by presenting a new vision for achieving Pacific regional
order, weaving together previous proposals for Pacific integration, as well as the
most recent developments in Pacific regionalism.
This chapter introduces the central goals of Pacific regional order: sustainable
economic development, security, the rule of law, democracy and integration with
the wider region. I believe the pursuit of these goals through regional integration is
essential for addressing the region’s challenges, and for winning the benefits of a
stable and prosperous Pacific.

The beginnings of a strategic vision
The Pacific Islands Forum, formerly the South Pacific Forum, is regarded as the preeminent political grouping in the Pacific (Pacific Islands Forum 2004b), and is the
key international institution considered in the book. There have been a number of
important developments in Pacific regionalism in recent years. The sixteen members
of the Forum—Australia, the Cook Islands, the Federated States of Micronesia, Fiji,
Kiribati, Marshall Islands, Nauru, New Zealand, Niue, Palau, Papua New Guinea,
Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu—have added economic reform
to the region’s agenda (South Pacific Forum 1995). Forum institutions have been
invested with greater sovereignty to manage security crises (Pacific Islands Forum
2000a). Various Forum members have contributed to a successful peace monitoring
operation in Bougainville and a peacekeeping operation in the Solomon Islands
(Regan 2002; Wainwright 2003). Australia has abandoned its hands-off approach
to the Pacific and is pursuing a number of high-impact initiatives (Australian Strategic
Policy Institute 2003; Howard 2003a).
Yet there have also been a number of disturbing developments in recent years,
and a failure to address some of the region’s long-term challenges. Sustainable
economic growth continues to elude many of the Pacific island states (Asian
Development Bank 2002). There have been coups in Fiji and violence in the Solomon
Islands. Governments have violated domestic and supranational law (see Chapter
Two). The Bougainville peace monitoring operation was precipitated by a civil war that
cost 10,000–20,000 lives (Australian Parliament Joint Standing Committee on Foreign
Affairs, Defence and Trade, 1999:6);1 the Solomon Islands peacekeeping operation
2

A strategic vision

by fears that the Solomon Islands was about to collapse as a functioning nation-state
(Australian Strategic Policy Institute 2003). Fears have been expressed, too, that
other Pacific states exhibit some of the symptoms of failing states (Ashton 1990;
Australian Strategic Policy Institute 2002; Dobell 2003; Windybank and Manning
2003). More broadly, the Pacific has been isolated from the substantive regional
integration that many other regions in the world are pursuing (see Chapter Two).
The Pacific currently lacks a strategy for drawing together and maximising the
benefits from positive developments, and for addressing the manifestations and
long-term causes of regional disorder.
However, there is cause for optimism, because the beginnings of a new strategic
vision for the Pacific are evident, particularly in the Australian Foreign Affairs, Defence
and Trade References Parliamentary Committee’s 2003 report, A Pacific Engaged:
Australia’s relations with Papua New Guinea and the island states of the south-west
Pacific, and the Auckland Declaration made by Forum Leaders in April 2004 (Pacific
Islands Forum 2004b).
A Pacific economic and political community
The Australian Foreign Affairs, Defence and Trade References Parliamentary
Committee’s (hereinafter ‘Australian Parliamentary Committee’) key
recommendation was that ‘the idea of a Pacific economic and political community
which recognises and values the cultural diversity in the region, and the independent
nations within it, and takes into account differing levels of growth and development,
is worthy of further research, analysis and debate’ (Australian Parliamentary
Committee 2003:xiii). The Committee envisaged that such a community would
involve, over time, establishing a common currency, a common labour market and
common budgetary standards (Australian Parliamentary Committee 2003:xiii). These
proposals largely followed ABC journalist Graeme Dobell’s submission to the
Committee (Dobell 2003).
The idea of a Pacific ‘economic and political community’ is not a new one. Mike
Moore, former New Zealand Prime Minister and WTO Director-General, proposed an
economic and political community for the South Pacific in 1982, the key feature of
which would be a Pacific parliament (Moore 1982). As Moore argued, the Forum
needs to ‘provide the unity and vision…to make the region function’ (1982:42). The
New Zealand government has previously commissioned a report, Towards a Pacific
Community, which in 1990 proposed further discussion of the development of ‘a
community of countries working together to help meet the needs and concerns of
the region’ (South Pacific Policy Review Group 1990:224).2 Nonetheless, the
Australian Parliamentary Committee’s recommendation represents a significant
development: for the first time, a group of Australian politicians from all parties
3

Pacific Regional Order

acknowledged that closer integration with Pacific states may form a meaningful
part of Australia’s future, and be an essential vehicle for addressing the region’s
challenges. Since Australia is the largest and richest member of the Forum, its
commitment to such a venture is critical.
Whilst acknowledging the Australian Parliamentary Committee’s vital contribution
to the evolving debate about Australia’s Pacific relations, it is necessary to remain
realistic about the status of its recommendation. As the Committee itself wrote, it
had ‘taken the approach of putting forward the idea of an economic and political
community for public debate. We have done so because insufficient evidence and
analysis has been received by our inquiry to enable us to be categorical about all of
the likely issues such a community raises’ (Australian Parliamentary Committee
2003:7). Thus, the Committee was not making a categorical recommendation for
immediate government implementation.
Some of the Committee’s other comments suggested that the benefits of a true
economic and political community, and the level of commitment needed to realise
them, are yet to be fully appreciated. For instance, at one point the Committee
states that, while it ‘did not receive specific evidence on the advantages or
disadvantages of the development of such a community in the Pacific region, the
Committee suspects that…economies would need to be similar in structure in relation
to trade, industry and financial development’ (Australian Parliamentary Committee
2003:79). This is untrue, as the experience of the less-developed countries that
have joined the European Union demonstrates. As a result, one of the greatest
benefits of European integration has been that the real GDP per capita of lessdeveloped members converged toward those of more-developed members between
1960 and 2001 (see Kaitila 2004).
Further, when considering the idea of a regional court, the Committee suggested
that ‘if such a court or tribunal were to become a reality, it could only be at the
instigation of Pacific islands governments themselves’ (Australian Parliamentary
Committee 2003:116). This ignores the fact that a legal mechanism is a vital part
of any substantive regional integration project, not an optional extra. As the
European, Caribbean and Inter-American experience demonstrates, it would be
impossible to have an ‘economic and political community’ without a regional court
to interpret and enforce the underlying agreements (see Chapters Five and Ten).
Thus, while the Committee has advanced an important ideal, it has not dwelt on
the practical steps needed to realise it. Nor has it recognised that integration
cannot be a piecemeal effort, that certain key institutions and processes are
needed for it to be effective.
More generally, parliamentary committee reports are not government policy. The
Australian Parliamentary Committee’s report makes the worthy recommendation
4

A strategic vision

that a Pacific labour mobility scheme be trialled (Australian Parliamentary Committee
2003:xviii); in 1989 the Parliamentary Joint Committee on Foreign Affairs, Defence
and Trade also recommended a Pacific work experience program be trialled
(Parliamentary Joint Committee on Foreign Affairs, Defence and Trade 1989:137),
however this recommendation was not taken up. Thus, governments are free to
ignore committee recommendations.
The Auckland Declaration
In August 2003, the heads of government attending the Forum Leaders’ meeting
agreed that the ‘serious challenges, both old and new, facing the countries of the
region warranted serious and careful examination of the pooling of scarce regional
resources to strengthen national capabilities’ (Pacific Islands Forum 2003: para
54). To this end, leaders agreed to carry out a review of the Forum (Pacific Islands
Forum 2003: para 58). This led to a Special Leaders’ Retreat in April 2004, where
leaders adopted a new vision for the Forum as part of the Auckland Declaration.
Leaders believe the Pacific region can, should and will be a region of peace,
harmony, security and economic prosperity, so that all its people can lead
free and worthwhile lives…We seek a Pacific region that is respected for
the quality of its governance, the sustainable management of its resources,
the full observance of democratic values, and for its defence and promotion
of human rights. We seek partnerships with our neighbours and beyond…to
ensure a sustainable economic existence for all (Pacific Islands Forum
2004b:1).

The Auckland Declaration is a highly encouraging development: it is the type of
forward-looking vision that has been missing from the Forum’s recent deliberations.
Its explicit recognition of the importance of democratic values, and the defence and
promotion of human rights is commendable, as the Forum has avoided these issues
for much of its history.
Yet the Auckland Declaration’s vision, like the Australian Parliamentary
Committee’s vision, is an incomplete one. The Forum has had vision statements
and reviews before—and, as the Pacific’s recent upheavals demonstrate, these
alone have not resolved the region’s challenges.3
Collins and Porras (1991) usefully suggest two necessary components of a
comprehensive vision: a guiding philosophy, and the detailed plans, or tangible
images, of the vision. In the Auckland Declaration, the leaders have provided a
vision of how they would like to see the Pacific develop, but we do not yet see a
guiding philosophy, and, lacking this, there is clearly no comprehensive plan to realise
this vision.
This shortfall can be made clearer by a consideration of the founding treaties of
the European Union 4 and the Caribbean Community and Common Ma rket
5

Pacific Regional Order

(CARICOM). The preamble to the European Union’s founding treaty states that
members are
…resolved to substitute for historical rivalries a fusion of their essential
interests; to establish, by creating an economic community, the foundation
of a broad and independent community among peoples long divided by
bloody conflict; and to lay the bases of institutions capable of giving direction
to their future common destiny (Treaty of Paris, Preamble).

In the preamble to CARICOM’s founding treaty, members announced their ‘common
determination to fulfil the hopes and aspirations of their peoples for full employment
and improved standards of work and living’ (Chaguaramas Treaty establishing the
Carribean Community. Hereinafter ‘CARICOM Treaty’). CARICOM members believed
these objectives could ‘most rapidly be attained by…accelerated, coordinated and
sustained economic development’ and ‘a common front in relation to the external
world’ (CARICOM Treaty, preamble). Thus, CARICOM’s key objective was ‘the economic
integration of the Member States through the establishment of a common market
regime’ (CARICOM Treaty, Article 4).
The European Union promoted its vision of bringing together peoples divided by
conflict, but it also identified the vehicles for accomplishing this goal—an economic
community and the needed institutions. CARICOM promoted its vision of fulfilling the
aspirations of Caribbean citizens for better development, but it too identified the
vehicle for accomplishing its goal—economic integration through a common market.
The Auckland Declaration provides a vision, but not a vehicle for achieving this
vision. Although Forum leaders have indeed established a planning process to help
the Forum realise the vision (Pacific Islands Forum 2003: para i), it is not clear that
they share underlying assumptions about how this vision may be achieved. For
example, Australian Prime Minister John Howard has said that Australia sees the
Forum review process leading to ‘pooled governance approaches…to better assist
[small] island countries’ (Howard 2004:1), because these countries should integrate
their education, police and transport services (O’Callaghan 2003a). On this reading
of the declaration, deep integration between all Forum members is not on the
agenda. Instead, Howard refers to the small island countries as ‘look[ing] to Australia
and others for practical advice, cooperation and assistance’ (Howard 2004:1). This
implies that Australia can be a catalyst for change by providing advice and assistance,
but without changing any of its own policy settings. If the leaders’ vision is to be
realised, Australia must be an intimate partner in the process, and there are areas
where Australia must do better by its Pacific partners.
An integrated strategic vision
It is my contention that a Pacific economic and political community is the best
vehicle for addressing the Pacific’s challenges, and for realising the leaders’ vision
6

A strategic vision

of the Pacific as a region of peace, harmony, security and economic prosperity. The
realisation of this integrated strategic vision requires a new guiding philosophy: all
Forum members need to pursue greater levels of shared sovereignty through the
Pacific Islands Forum, to develop a regional community that follows, and improves
on, the European Union model. For the purposes of this book, shared sovereignty is
defined as those areas of relations between community members that are governed
by regional agreements and institutions.
Thus, this book aims to respond to the challenge presented by the Australian
Parliamentary Committee and the Forum Leaders: to demonstrate the critical
importance of an economic and political community as a vehicle for resolving many
of the problems facing Pacific states; and to detail the agreements and institutions
needed to pursue regional integration and realise such a community.

The five goals
It is appropriate to identify the goals that such proposals should aim to realise.
Pacific regional order should promote
• sustainable economic development
• security
• the rule of law
• democracy
• integration with the wider region.
The first four goals are interconnected and mutually reinforcing. This interconnection
is vital. The Pacific’s security crises, for example, should be properly understood as
a manifestation of the other challenges, such as lack of economic development
and poor governance, rather than viewed in isolation. Promoting sustainable
economic development will improve the Pacific’s security environment; but
sustainable growth is likewise dependent on a benign security environment, and
institutions to promote the rule of law and democracy.
As New Zealand’s South Pacific Policy Review Group suggested in 1990, the
challenge is to develop ‘a comprehensive and integrated approach…which
encompasses the whole range of security issues, which extends far beyond the
narrow military sense to include political, economic, trade, social, environmental,
resource and natural disaster issues’ (South Pacific Policy Review Group 1990). As
Esben-Oust Heiberg has argued in the European context, ‘strong economic
development is difficult to achieve without security and security is difficult to achieve
without a well-functioning economy’ (1988:193). In considering prospective
European Union members from Central and Eastern Europe, Heiberg argued
[t]hese countries need help to develop their economies and democracy…The
stability and economic development that is likely to come from EU

7

Pacific Regional Order
membership will enhance the strength and stability of those countries
and, with economic development and a higher standard of living, their
internal stability will be improved (1988:194).

Ad hoc, reactive initiatives cannot replace the long-term strategy that is needed
to address the Pacific’s current challenges. A comprehensive plan is needed to
promote sustainable economic development, security, the rule of law and democracy
through permanent commitments and institutions. Jéan Monnet, one of the founders
of European integration, believed in the transformative influence of regional
institutions: states ‘subject to the same rules will not see any change in their nature,
but they will see a transformation of their behaviour’ (Wright 1998:2). European
integration has, in effect, encouraged governments to behave responsibly
(‘Converging hopes’, The Economist, 13 February 1999). The experience of the
Caribbean is also instructive in this regard—promoting regional integration through
CARICOM has resulted in the Caribbean being a far more prosperous and secure
region than the Pacific (Fairbairn and Worrell 1996).
Promoting the first four goals involves deepening the Pacific integration process.
Such integration is vital for addressing the underlying causes of Pacific disorder, for
ensuring the shared sovereignty necessary to pursue common solutions.5
In the past, when the Forum has sought to pursue one or more of these same
goals, members have not been prepared to commit to the necessary depth of
integration. In some instances, the Forum has made declarations focused on national
initiatives, rather than shared regional initiatives. For example, the Honiara
Declaration on Law Enforcement Cooperation, which sought to promote the goal of
security, encouraged Forum members to implement various national legislative
initiatives.6 Forum Communiqués for the next decade then encouraged members
to implement these initiatives.7 Clearly this regional declaration was ultimately
unsuccessful in addressing the underlying causes of regional disorder.
Where a Forum declaration has proposed regional initiatives to promote one of
these goals, the subsequent follow-through has typically lacked the necessary shared
sovereignty. For example, the Forum’s Madang Action Plan on ‘Securing Development
Beyond 2000’ proposed various measures to promote regional trade integration.
• [Forum members have] agreed to review existing patterns of trade, investment
and other aspects of regional economic relations with a view to broadening,
deepening and diversifying regional economic cooperation.
• Particular attention should be given [to] strategies for increasing national
and regional competitiveness by cooperating in reducing both tariff and nontariff barriers to trade in the region.
• The Forum agrees that the various measures outlined in this Plan for
promoting regional cooperation in trade, transport and tourism should be
implemented without delay (South Pacific Forum 1995: paras 3, 4, 17).
8

A strategic vision

Conceivably, such measures could have led to the creation of a Pacific common
market. Instead, Forum members eventually settled on the Pacific Closer Economic
Relations Agreement–Pacific Islands Country Trade Agreement framework (PACER–
PICTA). This framework does not promote deep trade integration between all Forum
members. It could evolve, but as it currently stands it cannot be an effective vehicle
for sustainable economic development.
The important exception in this brief survey is the Biketawa Declaration, which
did actually promote a regional sovereignty, and a deepening of the integration
process, by committing the Forum to act collectively in addressing the region’s security
challenges (Pacific Islands Forum 2000a). The Biketawa Declaration led to the
Forum’s comprehensive intervention in Solomon Islands, to rescue the country from
becoming a failed state. A distinction can be drawn, then, between regional
cooperation and regional integration at a deep enough level to accomplish necessary
change and successfully promote the goals of regional order.
Thus, a deepening of the integration process is needed to provide the impetus,
the shared commitment and the shared resources necessary to address the
underlying causes of Pacific disorder.
The fifth goal relates to widening the Pacific integration process to other states.
The purpose of this goal is partly defensive—a dynamic community, seeking out
integration with other states, may assist Forum members to address their isolation
from the nascent Asian regionalism and other regional integration efforts around
the world. More positively, though, integration with the wider region will further
promote economic development and security. It will also allow Forum members to
win the benefits that are possible in a larger and more powerful organisation, ensuring
they have a greater impact in other international organisations such as the United
Nations and the World Trade Organization.
The Forum Leaders, in the Auckland Declaration, named economic growth,
sustainable development, good governance and security as the Forum’s key goals
(Pacific Islands Forum 2004b:1). As can be appreciated, there are slight differences
to the goals I have proposed. Good governance is indeed vital to Pacific development,
but in terms of what a regional community can contribute, I believe this is more
usefully stated in the explicit goals of promoting the rule of law and democracy, and
the agreements and institutions that flow from these goals. The leaders did not
suggest wider integration as a Forum goal, although their vision did state that they
would ‘seek partnerships with our neighbours and beyond’ (Pacific Islands Forum
2004b). For the reasons above, it is vital that integration with the wider region
should also be made explicit.
The Australian Parliamentary Committee also produced a similar but expanded
list, including additional objectives such as ‘health, welfare and educational goals’
(Australian Parliamentary Committee 2003:xiii). However, we need to remain realistic
9

Pacific Regional Order

about what regional integration can achieve, and to consider carefully where integration
can bring the most benefit, compared to areas that are best managed by national and
local governments. In European terms, this is described as the debate about
‘subsidiarity’—deciding which level of governance is best suited to carrying out a
particular function (Bermann 1993; Van Kersbergen and Verbeek 1994; Cass 1992;
Toth 1992). More generally, it is a feature of the debate between ‘intergovernmentalists’, who see the European Union as about cooperation between a
group of nation–states, and ‘institutionalists’ or ‘neofunctionalists’, who view the
European Union as a nascent super-state, or, in some cases, as a federation already
(see Pachala 1999; Moravcsik 1993). My own approach to Pacific integration falls
into the inter-governmentalist camp. My hope is that Pacific states will embrace what
Lister defines as a ‘confederation’, similar to, but more developed than, the relationship
between the United Nations and its member states. Lister writes that the distinction
between federation and confederation is that ‘a federation is a union of peoples in a
single state, whereas a confederation is a union of states (and secondarily of peoples)
that lock together carefully specific sovereign functions under an intergovernmental
treaty-constitution’ (Lister 1996:106; see also Hirst and Thompson 1999).8
This distinction is an important one. Chand (2003), for example, has discussed
whether the Australian Parliamentary Committee’s proposal for a Pacific economic
and political community could be taken to mean ‘political unification’. I do not believe
this was the Committee’s intent, and it is not mine here: a regional community can
exist by sharing sovereignty in particular areas—allowing these areas to be governed
by regional agreements and institutions—without the need for separate nation-states
to merge into one.

Conclusion
This chapter has advocated an integrated strategic vision for drawing together recent
positive developments in Pacific regionalism, and addressing some of the critical
challenges confronting the region. The recent recommendation from the Australian
Parliamentary Committee for a Pacific economic and political community, combined
with the Forum Leaders’ Auckland Declaration, represents the beginnings of such a
strategic vision.
To ensure a prosperous, dynamic Pacific in 2020, I have proposed that Pacific
states should pursue regional integration through the Pacific Islands Forum:
developing an economic and political community that follows, and improves on, the
European Union model. The central goals of Pacific regional order should be
sustainable economic development, security, the rule of law, democracy and
integration with the wider region. As can be appreciated, the first four goals are
interconnected and mutually reinforcing, and relate to deepening the Pacific
10

A strategic vision

integration process. The fifth goal relates to widening the process to encompass
other states. These criteria also serve as my framework for assessing the region’s
past policies and current challenges. For example, a regional trade agreement cannot
be judged successful if it has failed to promote sustainable economic development.
This chapter has introduced the guiding philosophy of Pacific integration and
what it should aim to achieve. Chapters Two through Four consider various aspects
of the present state of the Pacific, suggesting why such a new guiding philosophy is
important and necessary. Chapter Two, ‘Challenges to regional order’, provides an
overview of the considerable gap between the Pacific’s current policies and trends,
and the vision of a prosperous, dynamic Pacific in 2020. Challenges to sustainable
economic development, security, the rule of law and democracy are considered, as
well as the challenge affecting all Forum members—regional integration in the wider
region, and the rest of the world.
Since Australian leadership would be critical in any substantive Pacific integration
effort, Chapter Three, ‘Australia and regional order’, considers Australia’s Pacific
interests, its evolving Pacific policy, and why Pacific integration would be in Australia’s
interest. Chapter Four, ‘The Pacific Islands Forum’, examines the Forum’s efforts
thus far to promote the five goals of regional order. It provides a case study of the
negotiations for the Forum’s trade agreement, PACER–PICTA, to highlight the policies
of Forum members and Forum bureaucrats that would need to change for more
substantive integration to occur.
Chapter Five, ‘From a Forum to a Community’, further details the guiding
philosophy. The European Union is assessed to examine the degree to which an
existing regional integration project has succeeded in realising the five goals. The
European Union is considered because it is the most advanced model of a regional
integration project; where successful, its institutions and policies can serve as a
template for Pacific initiatives. CARICOM is also considered throughout the book as
a basis for comparison with the Pacific Islands Forum. CARICOM provides an example
of what a group of small, developing island countries have been able to achieve
through regional integration, demonstrating that the benefits of integration are not
restricted to large, developed countries. This chapter proposes that the Forum should
evolve into a more substantive body; and to advertise the creation of a shared, more
powerful sovereignty it should be renamed the Oceania Community.
Chapters Six through Twelve then provide the detailed plans for how the
guiding philosophy should be realised. Chapter Six, ‘Free trade’, considers how a
Pacific common market could be created to promote sustainable economic
development. Chapter Seven, ‘Monetary cooperation and integration’, likewise
proposes various measures to promote sustainable economic development
through monetary policy.
11

Pacific Regional Order

Chapter Eight, ‘Security’, advances the measures necessary to prevent and
manage conflict in the region. Chapter Nine, ‘Human rights’, and Chapter Ten, ‘The
rule of law’, propose the regional mechanisms needed to promote the rule of law,
including a regional human rights commission and a regional court. Chapter Eleven,
‘Democracy’, proposes a regional parliament to assist in addressing the region’s
challenges to democracy.
Chapter Twelve, ‘Evolution’, argues that the Oceania Community should be a
dynamic organisation, seeking integration with the wider Pacific. Various phases in
the Community’s development are proposed, and the Community’s potential impact
in other international fora is also considered.
A regional community dedicated to the promotion of sustainable economic
development, security, the rule of law, democracy and wider integration through
these agreements and institutions represents an integrated new strategic vision for
the Pacific. This vision is necessary, it is achievable, and it is the best way—perhaps
the only way—for the Pacific to realise its potential as a prosperous, dynamic region
by 2020.

Notes
1

2

3

4

5

6

7
8

Regan suggests that it is difficult to know with certainty how many people died without
more detailed investigation (Regan 1999).
In 1979, Jack Ridley, a former New Zealand parliamentarian, also argued for a ‘South
Pacific federation’, which would involve political unification (Ridley 1989).
‘Forum members [will] cooperate in efforts to maintain security, improve living standards
and ensure sustainable development throughout the region’ (South Pacific Forum
1995b:2, 20).
The Treaty of Paris established the European Coal and Steel Community in 1951. In
accordance with the Treaty of Rome, 1957, this body was renamed the European Economic
Community. In 1967 this became the European Community and its current name, the
European Union, was acquired in accordance with the Maastricht Treaty of 1992. For
ease of understanding, ‘European Union’ will be used throughout the book to refer to
these three bodies.
The World Bank, for example, notes in relation to trade integration between Australia,
New Zealand and developing Pacific states that ‘greater benefits will flow from deeper
integration’ (World Bank 2002:33).
See Paras 4, 6 and 9 of the Declaration by the South Pacific Forum on Law Enforcement
Cooperation, Attachment to the Twenty-Third South Pacific Forum Communiqué. Available
at http://www.forumsec.org.fj [accessed 12 October 2002].
See Forum Communiqués at http://www.forumsec.org.fj [accessed 18 September 2003].
Jean Monnet, regarded by many as the father of European integration, was clear that
federation was his ambition, writing in 1950 that ‘Europe must be organised on a
federal basis’ and announcing in 1952 that ‘[w]e are not forming coalitions between
States, but union among people’ (Time, 13 April 1998; see also Fontaine 1995).

12

Challenges to regional order

2

Challenges to
regional order

This chapter provides an overview of the present state of the Pacific. The purpose is
to highlight the gap between the present state, and the vision of a prosperous,
dynamic Pacific in 2020. This considerable gap demonstrates why a comprehensive
program of regional integration is so critical for the Pacific.
The challenges currently confronting Pacific states are grouped according to the
five goals of regional order and cover: challenges to sustainable economic
development; to security; to the rule of law; to democracy; and the challenge
represented by the rise in regionalism elsewhere in the world, a development that
has so far excluded Pacific states.
Although the Pacific Islands Forum is comprised of sixteen unique members, the
intention is to provide a regional overview, rather than a comprehensive treatment
of any individual Forum member. The focus in this chapter is largely on the challenges
confronting the Forum’s smaller and poorer members, known as Forum island
countries (FICs). Although technically Australia and New Zealand are island countries
as well, the intention is to distinguish between the Forum’s richer and poorer
members. Yet the final challenge considered—that of Pacific states’ isolation from
wider integration—concerns all Forum members.
Some key features of Forum members are outlined in Table 2.1. With the exception
of Australia, Papua New Guinea and New Zealand, all other Forum members have
a population under 1,000,000. Of the 14 Forum island countries, seven have a
population of around 100,000 or under, and four have a population of 20,000 and
under. Five have some type of shared sovereignty arrangement with the United
13

Pacific Regional Order

Table 2.1

Key data for Forum members

Australasia
Australia
New Zealand
Melanesia
Papua New Guinea
Solomon Islands
Vanuatu
Polynesia
Fiji
Samoa
Tonga
Cook Islands
Tuvalu
Niue
Micronesia
Fed. States of Micronesia
Kiribati
Marshall Islands
Palau
Nauru

Political status

Population
(‘000)

Land area
(sq. km.)

Sea area
(’000 sq. km.)

Independent
Independent

19,800.0
3,900.0

7,713,000
271,000

10,000
4,053

Independent
Independent
Independent

5,100.0
500.0
200.0

462,243
27,556
12,190

3,120
1,340
680

Independent
Independent
Independent
Free association
with NZ
Independent
Free association
with NZ

800.0
180.0
100.0
17.8

18,272
2,935
747
237

1,290
120
700
1,830

10.2
1.7

26
259

900
390

Compact with the US
Independent
Compact with the US
Compact with the US
Independent

112.6
88.1
54.0
20.3
12.1

701
690
181
488
21

2,978
3,550
2,131
629
320

Source: Australian Department of Foreign Affairs and Trade, 2004a. Country Fact Sheets,
Commonwealth of Australia, Canberra. Figures are for 2002, or nearest available year; Henningham,
S., 1995. No easy answers: Australia and the Pacific islands region, Commonwealth Parliamentary
Research Paper No. 5, Commonwealth of Australia, Canberra.

Table 2.2

1999 Human Development Index—Forum island country rankings

Country
Palau
Cook Islands
Niue
Fiji
Nauru
Tonga
Samoa
Tuvalu
Federated States of Micronesia
Marshall Islands
Kiribati
Vanuatu
Solomon Islands
Papua New Guinea

Ranking
46
62
70
101
103
107
117
118
120
121
129
140
147
164

Source: United Nations Development Programme, 1999. Pacific Human Development Report,
United Nations Development Programme, Suva:13.

14

Challenges to regional order

States or New Zealand. These factors suggest that all Forum members would benefit
from closer cooperation to address these issues of capacity.
As can be appreciated, Melanesian states account for the vast majority of the
collective population and landmass of Forum island countries, and also have the
most economic potential. With the exception of Fiji, the Polynesian states have less
landmass, and their resource bases less depth (Fiji is ethnically Melanesian but
culturally Polynesian and so can be placed in either group). The Micronesian states are
small, scattered and generally have less resource potential (Fairbairn et al. 1991).

Challenges to sustainable economic development
Overview
Most Forum island countries have struggled to achieve sustainable economic growth
for their citizens. Of the fourteen Forum island countries, five are among the world’s
least developed countries, according to the United Nations: Kiribati, Samoa, Solomon
Islands, Tuvalu and Vanuatu. To provide a fuller picture of a country’s state of
development, the UNDP’s Human Development Index measures a country’s
development level in terms of whether its citizens can enjoy a long and healthy life,
a decent standard of living, and whether they have good levels of education (UNDP
2002). In its Pacific Human Development Report, the United Nations Development
Programme (UNDP 1999a) ranked the Forum island countries against 175 other
countries (Table 2.2). Only Palau, the Cook Islands and Niue have reasonable
rankings. The largest Forum island country, Papua New Guinea, was ranked near the
bottom of the scale.
Economic growth in these countries has generally been poor, averaging around 2
per cent a year in the 1980s (World Bank 1998). It rose to 3.5 per cent in the early
1990s, but, through 1996–2001, fell to an average of 1.38 per cent a year (this
figure was obviously not helped by coups in Fiji and Solomon Islands in 2000) (Asian
Development Bank 2002). Many Forum island countries have continued to struggle
to produce an even, sustainable rate of economic growth in recent years (with
honourable exceptions in Tuvalu, Samoa and Kiribati). The Solomon Islands economy
contracted by 14 per cent in 2000, then by a further 3 per cent in 2001, following
the coup (Table 2.3).
Unfortunately, the economic development that does take place is often
unsustainable (Waddell 1997). The Solomon Islands has suffered considerable
deforestation because of short-term deals with overseas companies (Chevalier
2000; Fairbairn and Worrell 1996; Liloqula and Pollard 2000). Concerns have also
been raised about forestry policies in Papua New Guinea, Fiji, Vanuatu and Samoa
(Barber 1995; World Bank 1998). A further issue is unsustainable tuna fishing by
15

Pacific Regional Order

Table 2.3

Forum island countries: real growth in gross domestic product,
1996–2001 (percentage change year on year)
1996

Cook Islands
–0.2
Fiji
3.1
Kiribati
3.0
Marshall Islands
–15.9
Fed. States of Micronesia –1.8
Nauru
..
Niue
..
Palau
7.8
Papua New Guinea
7.7
Samoa
7.3
Solomon Islands
3.5
Tonga
–0.4
Tuvalu
10.3
Vanuatu
2.5
Average FIC growth
2.24

1997

1998

1999

2000

2001

–2.8
–0.9
5.7
–9.4
–5.1
..
..
0.7
–3.9
1.2
–2.3
0.1
3.5
1.5
–0.98

–4.2
1.4
5.0
1.1
–2.1
..
..
–5.2
–3.8
2.4
1.1
2.4
14.9
2.2
1.27

5.8
9.7
6.2
0.1
0.9
..
..
..
7.6
2.6
–1.3
3.1
3.0
–2.5
3.2

9.8
–2.8
0.2
–0.9
2.1
..
..
..
–0.8
6.9
–14.0
6.7
3.0
3.7
1.26

..
2.6
..
1.7
1.5
..
..
..
–2.5
6.5
–5.0
3.0
4.0
–0.5
1.26

Sources: Asian Development Bank, 2002. Key Indicators of Developing Asian and Pacific
Countries, Asian Development Bank, Manila:59; Palau data from Australian Department of
Foreign Affairs and Trade, 2004a. Country Fact Sheets, Commonwealth of Australia, Canberra.

Table 2.4

Economically inactive population in Forum island countries, 2000
(per cent of population aged 15–64)

Cook Islands
Fiji
Kiribati
Marshall Islands
Federated States of Micronesia
Nauru
Niue
Palau
Papua New Guinea
Samoa
Solomon Islands
Tonga
Tuvalu
Vanuatu

Female

Male

52
62
22
69
68
54
..
..
32
60
20
59
14
21

30
17
9
20
41
35
..
..
14
23
14
17
15
11

Source: Asian Development Bank, 2002. Key Indicators of Developing Asian and Pacific Countries,
Asian Development Bank, Manila:54.

16

Challenges to regional order

various distant-water fishing nations (‘Making waves in the Pacific’, The Economist,
21 August 1993; World Bank 1998). These are examples of poverty-related
pressures causing environmentally unsustainable practices (Australian Department
of Foreign Affairs and Trade 2000).
Poor economic growth results in less government revenue, often leading to lower
levels of medical care and fewer educational opportunities. For example, a male
born in Papua New Guinea in 2000 can only expect to live 55 years; and the infant
mortality rate in that country is 79 per 1,000 births (Asian Development Bank 2002).
The UNDP has also expressed concern that HIV/AIDS will become the major
development problem in the region (UNDP 1999b). The poor economic growth also
limits opportunities for employment in the formal cash economy (Table 2.4).
Yet even though economic growth is often stagnant, and job opportunities in the
cash economy poor, Forum island populations continue to grow, in some cases
rapidly (Table 2.5). Papua New Guinea has one of the highest rates of population
growth in the world, and on current estimates its population will reach 10 million by
2025 (Sheridan 2002; Downer 2003a). Solomon Islands and Marshall Islands also
have population growth rates above 3.5 per cent a year. At least 40 per cent of the
population in these countries, and Vanuatu, is under 15 years old (UNDP 1999a).
Much of the population growth flows to urban areas, where there is not the same
subsistence safety net as may exist in rural areas (Tait 1994).

Table 2.5

Forum island countries:annual population growth rates, 1985–2001
(per cent)

Cook Islands
Fiji
Kiribati
Marshall Islands
Federated States of Micronesia
Nauru
Niue
Palau
Papua New Guinea
Samoa
Solomon Islands
Tonga
Tuvalu
Vanuatu

1985–1990

1995–2000

2000–2001

–0.2
1.1
2.3
2.6
2.8
2.0
..
..
2.1
0.1
3.6
0.5
1.9
2.7

–1.6
1.0
2.3
2.1
0.2
2.4
..
..
4.9
0.8
3.7
0.3
1.9
2.6

1.7
2.7
2.2
3.6
2.0
2.1
..
..
..
2.0
3.7
0.3
2.0
2.7

Source: Asian Development Bank, 2002. Key Indicators of Developing Asian and Pacific Countries,
Asian Development Bank, Manila:52.

17

Pacific Regional Order

To put these figures in perspective, it has been estimated that from 1978 to
2001 the size of Papua New Guinea’s formal workforce grew from 124,000 to only
146,000, but there are now 50,000 school leavers attempting to enter the labour
market each year (Windybank and Manning 2003:6; Australian Department of
Foreign Affairs and Trade 1996a). At the time of the first coup in Fiji, 72 per cent of
urban Fijians aged 15–24 were unemployed (Knapman 1990). According to the
1996 census in Fiji, of a population of 775,000, two-thirds were under 30, and half
under 20, with many experiencing unemployment.1 Lieutenant Colonel Filipo
Tarakinikini, the chief army spokesman after the third Fijian coup, spoke of a ‘moral
recession’ and said ‘I see those in the parliamentary compound who cannot find a
job. I see young men who flock into urban areas and cannot make a living. And they
have to take their frustration out on someone’ (Mottram 2000:17). The same thing
happened in Bougainville in the 1980s and 1990s—young unemployed people
drifted into the Bougainville Revolutionary Army (BRA) and were convinced of the
merits of destroying the Panguna mine (Regan 1998, 1999).
Globalisation means island populations are aware of, and aspire to, a better
lifestyle (Tait 1994). Yet a key theme of the UNDP’s Pacific Human Development
Report was the region’s ‘poverty of opportunity’ (UNDP 1999a:vii).2 The lack of
economic growth and employment opportunities contributes to regional disorder.
Trade
Forum island countries’ exports typically consist of a narrow range of commodities
(UNDP 1999a). Until now, these have depended on preferential access to the Australian
and New Zealand markets through the SPARTECA agreement; the European Union
market through the Lomé and Cotonou agreements; and in the case of Micronesia,
Palau and the Marshall Islands, the US market through the Compact agreements.
However, these exports are uncompetitive on global markets because their trade
has been dependent on non-reciprocal trade agreements which are being phased
out, and because Pacific island governments have tended to adopt an ‘import
substitution’ approach to industrial development. With import substitution, a
domestic firm receives favourable treatment from the national government, and
high tariffs make overseas products uncompetitive.3 However, few industries can
get all the component products they need from within the borders of their own
country, especially when the population of the relevant country is small. So industries
source their components from overseas, but these imports attract high tariffs. Each
time a domestic industry uses an imported component product, it inflates the price
of its own final product, making its exports less competitive.4 Generally, high tariffs
on imports raise the cost of living—they are indiscriminate, regressive taxes (Centre
for International Economics 1998).
18

Challenges to regional order

Given falling tariff margins around the world,5 preferential access for goods to
the Australian, New Zealand, European Union and, in some cases, US markets will
not give Forum island countries a sufficient comparative advantage (Mellor 1997;
United Nations 1999). Thus, current Forum island country trade policies are
unsustainable in terms of developing competitive industries. Without sufficient
specialisation and value-adding, the Fiji garment industry, for example, is unlikely to
last long if the Indonesian garment industry receives similar access to the Australian
market (Duncan 1996). Forum island countries must develop competitive
economies—though not necessarily in manufactured goods—or risk losing market
share to ASEAN.6
In terms of developing alternative policies, Fiji and Mauritius are often compared.
Fiji and Mauritius are of similar size, in terms of land mass and population, and
have similar economic potential. Mauritius achieved independence a few years
before Fiji; its economy at the time was dependent on sugar and other commodities.
Today Mauritius still relies in part on sugar, but it also exports manufactured goods
and tourist services and is looking to develop exports in financial and information
technology services. More than 480 overseas companies in Mauritius employ over
80,000 locals. Mauritius seeks integration with the world economy and offers
overseas investors political stability; it has delivered economic growth and rising
health standards to its citizens.
E-commerce could be an important vehicle for Forum island countries to overcome
their isolation and develop service industries to diversify their economies. Poor
telecommunications infrastructure and telecommunications monopolies, however,
have left many areas of most Forum island countries without telephone access, let
alone internet access (Table 2.6).
Fiji aimed to raise telephone penetration to 13 per cent nationally by 2000; but
this still left rural penetration at 4 per cent. In 1999, Fiji’s largest internet service
provider had only 2,000 personal and business customers. Those areas of the
Forum island countries with internet access often suffer from low bandwidth, a
problem that will have to be rectified if e-commerce is to become an export tool
(Australian Department of Foreign Affairs and Trade 1999a).
Investment
Investment is considered here as a special sub-set of Forum island countries’ overall
trade relations, given its potential importance in driving development (World Bank
1999). Foreign direct investment in Forum island countries has remained static or
decreased (Table 2.7). No Forum island country has managed to achieve a steadily
growing level of foreign direct investment. Papua New Guinea, for example, attracted
US$455 million in investment in 1995; this fell to US$130 million in 2000.
19

Pacific Regional Order

Table 2.6

Information and communication technology levels in Forum island
countries

Internet users
1999
Cook Islands
Fiji
Kiribati
Marshall Islands
Fed. States of Micronesia
Nauru
Niue
Palau
Papua New Guinea
Samoa
Solomon Islands
Tonga
Tuvalu
Vanuatu

Main telephone
lines
2001
(per ‘000 households)

Total estimated
personal computers
2001
(per ‘000 persons)

..
110
40
60
83
..
..
..
14
56
16
99
..
34

..
61
25
50
..
..
..
..
61
7
48
..
..
..

..
8,000
1,000
1,000
2,000
..
..
..
135,000a
1,000
3,000
1,000
..
3,000

2000 figure.
Source: Asian Development Bank, 2002. Key Indicators of Developing Asian and Pacific
Countries, Asian Development Bank, Manila:81.
a

Table 2.7

Foreign direct investment in Forum island countries, 1991–2000
(US$ million)

1991
Cook Islands
..
Fiji
5.2
Kiribati
0.4
Marshall Islands
..
Fed.States of Micronesia ..
Nauru
..
Niue
..
Palau
..
Papua New Guinea
117.0
Samoa
3.0
Solomon Islands
15.0
Tonga
0.4
Tuvalu
..
Vanuatu
25.0
Total
166.0

1992 1993
..
..
103.6 91.2
0.4 –0.8
..
..
..
..
..
..
..
..
..
..
104.0 62.0
5.0 5.0
14.0 23.4
1.0 2.0
..
..
26.0 26.0
254.0 208.8

1994
..
67.5
0.4
..
..
..
..
..
57.0
3.0
2.1
2.0
..
30.0
162.0

1995
..
69.5
..
..
..
..
..
..
455.0
3.0
2.0
2.0
..
31.0
562.5

1996
..
2.4
..
..
..
..
..
..
111.3
4.0
5.9
2.0
..
33.0
158.6

1997
..
16.0
..
..
..
..
..
..
28.6
4.0
33.8
3.0
..
30.0
115.4

1998
..
107.0
..
..
..
..
..
..
110.0
3.0
8.8
2.0
..
20.0
250.8

1999
..
–33.2
..
..
..
..
..
..
296.5
2.0
9.9
2.0
..
20.0
297.2

2000
..
..
..
..
..
..
..
130.0
9.9
2.0
..
20.0
161.9

Source: Asian Development Bank, 2002. Key Indicators of Developing Asian and Pacific Countries,
Asian Development Bank, Manila:71.

20

Challenges to regional order

To put the importance of foreign direct investment in perspective, by 2005,
worldwide investment in travel and tourism may total US$1.6 trillion (World Tourism
Organisation 1995). Forum island countries need attract only a fraction of this to
transform their economies and societies. Foreign investment is particularly important
in the Pacific context because none of the Pacific countries, including Australia,
have enough domestic savings to fund the investment they need for economic
growth (Australian Department of Foreign Affairs and Trade 1999c).
Yet the Forum island countries’ approach to foreign direct investment is curious.
They realise they need investment and want to attract it, but some of their policies
repel it (World Bank 2002; Price Waterhouse 1999; Ashton 1990). Complicated
approval procedures, onerous requirements and changing legal frameworks add to
the sovereign risk of investing in these countries (Duncan et al. 1999). For example,
Papua New Guinea complains that Australia is not doing enough to facilitate foreign
investment under the Papua New Guinea-Australia Trade and Commercial Relations
Agreement (PATCRA) and the bilateral agreement on the Promotion and Protection
of Investments. But at the same time, Papua New Guinea prohibits foreign investment
in many sectors, and has not done much to address specific issues like taxation,
repatriation of earnings and financial stability. 7 Bougainville provincial government
leaders want to attract foreign investment, but locals will assault potential investors.8
One reason for the Forum island countries’ hesitation when it comes to foreign
investment is concern about the activities of transnational corporations. Without
regulation, such corporations are capable of terrible abuses. The Australian-owned
Panguna mine in Bougainville was a major cause of the conflict in Bougainville,
when Bougainville Copper Limited failed to provide enough compensation to local
landowners for the damage the mine was causing.9 The Ok Tedi mine, in which BHP
had a 52 per cent controlling share, is the third largest open-cut copper mine in the
world. It dumped 100,000 tonnes of waste tailings into the Fly River, with devastating
environmental consequences (Gordon 1995). Before the mine was opened, 40,000
indigenous people had been sustained by the forests, fish and fertile soil of the Ok
Tedi–Fly River area (Imhof 1996). Some 30,000 landowners launched a class action
in Australia in response to the pollution, and the case was eventually settled by BHP
paying out US$500 million.
Investment and communal land
A major impediment to investment is the lack of a comprehensive and transparent
system of property rights in Forum island countries (World Bank 1998). In Fiji, for
example, the British froze communal land tenure into blocs that did not necessarily
reflect the reality of ownership, so 83 per cent of the land in Fiji is communal land
(Lawson 1991; World Bank 1998). That land is administered by the Native Land
21

Pacific Regional Order

Trust Board (NLTB) which redistributes the rent according to a formula that sees 25
per cent going to the Board, 30 per cent to chiefs, and only 45 per cent to the
‘commoners’ (Lawson 1991).
Land is the commoners’ main asset, even if it is not of much value because of
the amount they lose to the Board and their inability to sell it. Land is also tied up
with cultural and spiritual validation (Bole 1992).10 Even so, many Fijians will rent
out the land or sell up when there are clear benefits in doing so.
High chief Maivalili is known for his scrupulous attention to the views of
his people. ‘We are not happy with they way the NLTB is running things’, he
says. ‘How can we move forward when the official people aren’t looking
after us? I feel we should do our own negotiations, because these people
are sleeping—they are sitting on their backside’. Chief Tawakelevu is just
as wary of the board’s protective hand. ‘Most of the top chairs, they just
want to fill their own pockets’ (Feizkhah 2001:37).

Thus, many landowners seek private arrangements: those with money seem happy
to purchase freehold land for themselves rather than share communal land.11
For investors, particularly foreign investors, ‘lack of security of tenure is the
major constraint to investment, especially large-scale investments’ (World Bank
1998:15). Leases are ‘vulnerable to challenge and renegotiation’ and there can be
‘numerous disputes over ownership’ (World Bank 1998:15). Often the national
government lacks credibility in the eyes of the locals, so the locals do not recognise
its sovereignty to make such deals (Larmour 1997a; Cole 1986).
This undermines sustainable development. Since locals might forcibly remove
them at any time, investors get in and out as quickly as they can turn a profit, often
with devastating environmental consequences (Duncan and Duncan 1997).
Communal land problems have ramifications throughout the whole economy: lack
of accommodation holds back tourism, for example, and Forum island countries
have less than 10 per cent of the room supply of their Caribbean counterparts (King
and McVey 1998).
So foreign investors and domestic enterprises do not enjoy easy access to land,
and locals cannot access capital because they are unable to put up their communal
land as security (World Bank 1998; UNDP 1999a).
Investment and corporate welfare
A further problem with many Forum island country investment regimes is the
indiscriminate use of corporate welfare. Corporate welfare refers to those measures,
such as tax breaks and subsidies, which aim to provide artificial incentives for a
particular transnational corporation to invest in a particular country or region. This is
to be distinguished from research and development grants, which have more general

22

Challenges to regional order

benefits. Fiji’s Rabuka encouraged investment with a thirteen-year tax holiday for
businesses close to the regime (Howard 1991). These policies have been continued
by the Qarase government, in its Blueprint for the Protection of Fijian and Rotuman
Rights and Interests (Callick 2000b). Such tax breaks deplete government revenue
and do not encourage sustainable development. Rather than making a long-term
commitment to a country, transnational corporations are encouraged to get in, make
their profit and get out again within the period of the tax break.
An example from the Cook Islands is instructive. In 1987, the government
guaranteed a loan taken out by an Italian construction company. The company was to
build a luxury hotel to promote tourism to the islands. The result was that A$60 million
disappeared through crooked Mafia dealings within a few years. ‘The project was 80
per cent complete when the insurance firm cut off funding to the builders. The country’s
finances were crippled as the government’s liability ballooned to A$122 million. The
issue of who owns the hotel has been stuck in the courts for years’ (Dusevic 2001:14).
Aid
In per capita terms, Forum island countries have been among the highest aid
recipients in the world (UNDP 1999a; OECD 2003). The combination of high aid
levels and low economic growth led the World Bank to refer to a ‘Pacific paradox’
(World Bank 1993, 1995; Tarte 1989). Attempts to explain the Pacific paradox
suggested that overseas aid had bloated the public sector in these countries, causing
governments to become too involved in the domestic economy (Chand 1999; Duncan
et al. 1999). Many began undertaking business activities best left to the private
sector and consequently crowded out private sector initiatives (Chand 1999).12 Aid
disbursement also sometimes led to the employment of expatriates and overseas
consultants, rather than the development of indigenous skills (UNDP 1999a).
The inflow of foreign aid money has also artificially inflated exchange rates,
making Forum island country exports less competitive—a phenomenon known as
‘Dutch disease’ (Laplagne 1997). Another symptom of Dutch disease is that it bids
away resources from other sectors to the favoured sector, which is the public sector
in the case of the Forum island countries (Duncan et al. 1999). For example, skilled
labour goes to where the money is, putting pressure on wages in other sectors.
Aid dependence also has political consequences. Henningham writes that Forum
island leaders ‘believe donor states have an obligation to provide aid’, but that they
simultaneously ‘resent the dependence of their countries on aid’ (Henningham
1995:20).
All this is not an argument against foreign aid, though such aid should always be
directed to strategic goals. Rather, it suggests that Forum island countries need to
do more to become self-reliant by attracting capital from private investors, instead

23

Pacific Regional Order

of relying to such a large degree on other governments, and that aid alone has not
promoted economic growth in these countries.
Inflation
Some Forum island countries still tolerate high inflation, either through lack of will
or perhaps through a (mistaken) belief that high inflation equals high growth (Table
2.8).13
The Reserve Bank of New Zealand lists the following examples of the ill-effects
of high inflation
• the usefulness of money is significantly reduced if the value of money is
rising (or falling) unpredictably
• assessing what to produce and consume becomes difficult, and using money
to store value becomes risky
• doing business becomes more uncertain, and the economy and living
standards suffer
• people’s savings fall capriciously in value
• it may lead to an asset price-boom, with the price of physical assets escalating
sharply. Eventually, however, these asset prices fall. People can risk ruin, and
the banking system may be damaged as loans go bad
• the poor, and those on modest or fixed incomes, will only lose from inflation
(Reserve Bank of New Zealand 1998, 1999).
Further, ‘contracts and investments that span time, such as those which
determine what a firm should pay its employees for the coming year, become harder
to make’ (Reserve Bank of New Zealand 1999:6). Wage claims are often made in
response to high inflation, which in turn increases the cost of goods and services in
an inflation spiral. If high inflation were eliminated, wage claims could instead be
based on improvements in productivity.
Finally, ‘when savers and investors put their money into asset speculation, then
the economy is often starved of investment in its longer-term productive capacity’
(Reserve Bank of New Zealand 1999:7). Generally, high inflation repels investors.
For example, an overseas investor might expect to make 12 per cent on an
investment in a particular Forum island country. If inflation is running at 10 per cent
a year in that country (as it did in Solomon Islands in 1999), however, the real return
is only 2 per cent, making the investment less attractive. With high inflation, a
government must raise interest rates to ensure investors receive a reasonable
return, which hurts domestic borrowers. Those relying on domestic savings (such as
the elderly) can also be devastated if inflation erodes the value of their savings.

24

Challenges to regional order

Table 2.8

Forum island country inflation rates, 1992–2001 (percentage
change year on year)
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Cook Islands
Micronesia
Fiji
Kiribati
Marshall Islands
Nauru
Niue
Palau
Papua New Guinea
Samoa
Solomon Islands
Tonga
Tuvalu
Vanuatu

3.5
4.9
4.0
10.3
..
10.0
..
..
4.3
8.5
10.8
8.0
2.2
4.8

7.3
2.6
5.2
0.8
6.1
5.3
5.0
5.7
6.0
4.0
–3.7 –36.7
..
..
..
..
5.0
2.9
1.7 12.1
9.2 13.3
0.9
1.2
2.3
1.8
4.2
2.7

0.9
2.2
3.6
8.3
4.0
1.8
..
..
17.3
–2.9
9.6
0.4
5.6
1.8

–0.6
3.0
1.1
9.6
3.0
4.1
..
..
11.6
5.4
11.7
2.8
1.1

–0.4
3.4
1.9
4.7
2.2
6.1
..
..
4.0
6.8
8.1
1.8
1.6
3.3

0.7
5.7
3.7
2.4
1.5
3.9
..
..
13.6
2.2
12.3
2.9
0.6
3.3

1.4
2.0
1.8
1.7
2.6
6.7
..
..
14.9
0.2
8.3
3.9
7.0
2.2

3.1
1.1
0.4
1.6
3.2
..
..
..
15.6
1.0
4.8
4.9
..
2.7

8.7
4.3
8.8
..
2.6
..
..
..
9.3
4.0
1.8
6.3
..
3.2

Source: Asian Development Bank, 2002. Key Indicators of Developing Asian and Pacific Countries,
Asian Development Bank, Manila:65.

Caribbean comparison
The challenges to sustainable economic growth in the Pacific are not common to
island regions generally. A 1996 study by Fairbairn and Worrell comparing the Pacific
and Caribbean island economies found that growth rates in the Caribbean were
higher, and income per capita was several times higher in the Caribbean and growing
more quickly, and growth was spread widely among Caribbean economies. As a
result, Caribbean health and education standards were decidedly superior. They
found that the Caribbean attracts large amounts of foreign investment, and has
established various regional companies. The Caribbean has a buoyant tourism sector,
and this appeared to have made the greatest contribution to growth for most
Caribbean economies (Fairbairn and Worrell 1996). Thus, the poor economic growth
found in the Pacific island countries cannot be solely attributed to their small island
status.
There are many challenges to sustainable economic development in Forum
island countries. Yet the Caribbean experience, which will be explored again in
Chapter Four, suggests that a different set of policies may serve as an impetus for
reform, and address the issues of capacity with which many Forum island countries
are grappling.

25

Pacific Regional Order

Challenges to security
Two of the region’s key security challenges in recent years have been vicious internal
conflicts—in Bougainville in Papua New Guinea, and in Solomon Islands.
Bougainville
Bougainville, closer geographically and ethnically to the Solomon Islands, has always
been ambivalent about being part of Papua New Guinea (Regan 1998).
Bougainvilleans considered striking out for their own independence before Papua
New Guinea as a whole was declared independent from Australia on 1 July 1975; it
was only the promise of extra provincial powers that brought Bougainville back into
the fold (Australian Parliament Joint Standing Committee on Foreign Affairs, Defence
and Trade 1999). Yet one critical issue remained outstanding—the Panguna gold
and copper mine was a sore point between Bougainvilleans and the national
government, and between Bougainville and Australia. The mine was the catalyst for
conflict when combined with the latent desire for independence and growing
concerns about economic inequality, environmental degradation, ‘outsiders’
overrunning Bougainville, and the loss of traditional ways (Regan 1998, 1999).
The crisis began in 1988. Francis Ona, a former employee of Bougainville Copper
Limited, put in a claim of K10 billion to compensate for the problems the mine had
caused. When this was refused, Ona began sabotaging the mine. The quest for economic
justice quickly transformed into a secessionist crusade (Regan 1998). The Bougainville
Revolutionary Army (BRA) was formed, and found ready recruits among uneducated,
unemployed young men and criminal raskol gangs (Regan 1997, 1998). A vicious
cycle of violence erupted when Papua New Guinea’s defence forces, with little oversight,
committed atrocities in combatting the BRA (Regan 1998).
The Bougainvilleans expelled the Papua New Guinea Defence Force (PNGDF) in
1990, but the PNGDF retaliated by blockading Bougainville using boats supplied by
Australia through the Pacific Patrol Boat program (Australian Parliamentary
Committee 2003). In response, Ona declared Bougainville independent in May
1990 and renamed it the Republic of Me’ekamui, with himself as president
(Australian Parliament Joint Standing Committee on Foreign Affairs, Defence and
Trade 1999; Regan 1998). Victory was within the Bougainvilleans’ grasp; with a
unified approach, their unilateral declaration of independence could have worked.
Instead, they turned on each other (Regan 1998; Australian Parliament Joint Standing
Committee 1999), prompting a crisis estimated to have killed 10,000–20 000
people.14 Many died because the PNGDF blockade prevented food and medical
supplies reaching non-combatants (Australian Parliament Joint Standing Committee
1999).

26

Challenges to regional order

As part of Ona’s ‘back to basics’ approach, Bougainvilleans who had an education,
or a government job, were targeted (Regan 1998). The Bougainville Revolutionary
Army’s atrocities drove some parts of Bougainville to invite the PNGDF back. In
1992 a Bougainville Resistance force was formed to help the PNGDF fight the BRA
(Australian Parliament Joint Standing Committee 1999; Regan 1998). The resulting
conflict was marred by atrocities on all sides, and there often seemed little distinction
between the BRA, the Resistance and the raskol gangs (Regan 1997, 1998, 1999).
Sixty thousand Bougainvilleans were displaced, becoming refugees in ‘care centres’
throughout Bougainville and the Solomon Islands (Regan 1997).
Australia was discredited in the eyes of the Bougainvilleans because of the
assistance it provided the PNGDF. In one of the worst incidents of the crisis, the
Valentine’s Day Massacre in 1990, Australian-supplied Iriquois helicopters were used
in the murder of a number of Bougainvilleans (Australian Parliament Joint Standing
Committee 1999; Fry 1991). When, in 1989, Australia agreed to Papua New Guinea’s
request for helicopters, it had made the Papua New Guinea government promise that
the helicopters would only be used for patrol, surveillance and medivac purposes, to
little effect (Joint Standing Committee 1999; Rosewarne 1997). Papua New Guinea
also used its Australian-supplied patrol boat to raid villages in the Solomon Islands in
1992 (Bergin 1994).
Various Papua New Guinea national governments vacillated between peace
overtures and escalating the violence (Australian Parliament Joint Standing
Committee 1999; Regan 1998). Some Bougainville leaders, aware of the deep
war-weariness amongst ordinary Bougainvilleans, were receptive to the peace
overtures (Regan 1997). The conflict was eventually resolved through the efforts of
New Zealand, Australia and several Forum island countries.
Solomon Islands
Solomon Islands gained independence in 1978 but, like Papua New Guinea before
it, its citizens were often more focused on their immediate province, faction or
ethnic group than on the nation-state.15 Solomon Islands also started life as an
independent state with great potential, until economic mismanagement, corruption
and high birthrates through the 1990s exacerbated inequalities and led to falling
living standards (O’Callaghan 2000a).
Residents of Guadalcanal province felt particularly aggrieved by the settlers from
the neighbouring island of Malaita. The Malaitans were believed to have taken
communal land, jobs and business opportunities at the expense of locals. This led
to the formation of the Guadalcanal Revolutionary Army, later renamed the Isatabu
Freedom Movement (IFM), which demanded compensation for the injustices they
felt they had suffered. There were close links between the IFM and the Bougainville
27

Pacific Regional Order

Revolutionary Army, with the latter supplying surplus arms (Daley 2000b). Some
9,000 Bougainvilleans had fled to Solomon Islands during their own crisis, and they
grew sympathetic to what they saw as an analogous campaign for economic justice
(Smellie 2000). From December 1998 the IFM embarked on a campaign of
harassment of Malaitan communities. Some 20,000 Malaitans had to flee Honiara,
and more than 60 people were killed (Australian Department of Foreign Affairs and
Trade 2003a).
The violence spilled over from rural areas into Honiara, the capital, and became
increasingly brutal. Key investments, such as the Australian-owned Gold Ridge Mine,
and Solomon Islands Plantations, closed because of the conflict. By early 2000 a
rival militia force had been established, the Malaita Eagle Force (MEF), which tried
to counter IFM efforts to push Malaitans off Guadalcanal. The MEF likewise demanded
compensation for the suffering and loss of property for which the IFM were
responsible (Australian Strategic Policy Institute 2003).
The Solomon Islands government asked Australia for 50 federal police to train
and support the Solomon Islands police.16 Australia refused, because it could not
see an exit strategy, and wanted to avoid being drawn into a ‘Bougainville-style’
situation (Dobell 2003; Daley 2000c).
Solomon Islands then looked elsewhere for assistance. The Commonwealth
appointed former Fijian Prime Minister, Sitiveni Rabuka, to resolve the problem and
it also facilitated the establishment of a Multinational Police Assistance Group made
up of Fijian and ni-Vanuatu police (Australian Department of Foreign Affairs and
Trade 2003a). The group attempted to work with Solomon Islands police to restore
order, and Australia contributed some A$500,000 to increase the group’s presence
from 10 to 50 personnel. Australia itself did not provide personnel, and the extra
police never arrived because of the third coup in Fiji (‘Renewed hope for Solomons
ceasefire’, The Age, 17 May 2000:13). Increasingly desperate, the Solomon Islands
government asked Cuba for assistance with a ‘military solution’, possibly in return
for mineral rights (‘Solomons to seal Cuban alliance’, The Age, 19 May 2000:14).
By mid 2000, the MEF had teamed up with various members of the Solomon
Islands police force. On 5 June, they took Prime Minister Bartholomew Ulufa’alu and
Governor-General John Ini Lapli hostage at gunpoint, cut communications and seized
strategic points around Honiara. The MEF’s key demand was that Ulufa’alu should
resign (Australian Department of Foreign Affairs and Trade 2003a).
The Bougainville Revolutionary Army entered Gizo, in the northwestern province of
Solomon Islands, and took over a police station to protect it from the MEF, but
subsequently withdrew (Daley and Skehan 2000a; ‘Next moves in Solomons’, The
Sydney Morning Herald, 12 June 2000:16). The MEF used an Australian-supplied

28

Challenges to regional order

patrol boat to shell IFM-controlled areas indiscriminately (Smellie 2000; O’Callaghan
2001a). On 13 June, Ulufa’alu duly submitted his resignation. Australia and the region’s
attempts to resolve the conflict from this point on will be explored in Chapter Eight.
The risk of failed states
Helman and Ratner identify the following features of failed states: civil strife,
government breakdown and economic deprivation. Ultimately, the failed nationstate is ‘utterly incapable of sustaining itself as a member of the international
community’ (Helman and Ratner 1993:3).
It is not difficult to make the argument that Solomon Islands was, until 2003, a
failing state (Wainwright 2003). Weber suggested a key definition of a nation-state
is that it has a m onopoly on the legitimate use of force (Gerth and Wright-Mills 1970;
Wainwright 2003). The Solomon Islands national government had no monopoly on
the use of force. Its use of force was regarded as illegitimate by many citizens,
because the police and prison officers had been severely comprised: ‘the two
supposedly disciplined forces were more loyal to their tribes than to the state’
(Tuhanuku 2000:iv). The government was unable to assert control over areas of the
country (Field 2003). Chand suggests the country’s fiscal and monetary positions
were ‘being sustained on “borrowed time”’ (Chand 2002:154–55)18 and Chevalier
notes that government revenue collection had collapsed (Chevalier 2000). Basic
government functions, such as health and education, were dependent on donor
support (Chand 2002). Schools were closed for most of 2002 (Wainwright 2003).
Some foreign government donors simply bypassed the national government to work
directly with communities (Dobell 2003).
Papua New Guinea is not a failing state, but there are some troubling signs
(Windybank and Manning 2003).19 Like Solomon Islands, it had no central authority
until imposed by outsiders (Tuhanuku 2000). Polynesian and Micronesian states
are typically populated by people of one language and culture; Melanesian states
are far more fragmented (Crocombe et al. 1992b). Papua New Guinea, for
example, has over 700 different language groups (Australian Department of Foreign
Affairs and Trade 1996a). Thus, there is a strong identification with the local tribal
and ethnic group, but weak national cohesion (Henningham 1995). Bougainville’s
secessionist struggle is well-known, but within Bougainville itself many
Bougainvilleans want a very weak national government (if independence is achieved)
so they can levy taxes and provide services at a sub-provincial (or tribal) level.
Like Solomon Islands, Papua New Guinea has, at times, suffered economic
stagnation. Law and order remains a significant problem (Larmour 1996; Dinnen
1999), with crime rates among the worst in the world (Pitts 2001). Violence against

29

Pacific Regional Order

women is particularly widespread (Dinnen 1999).20 Police numbers have remained
largely unchanged since independence, even though the population has increased
70 per cent in that time (Windybank and Manning 2003). The national government
also has weak or no control over some parts of the country (Windybank and Manning
2003). For example, violence in the Central Highlands, including political
assassination, caused considerable disruption to the 2002 elections (Forbes 2002).
In all, 30 people were killed in ethno-political disputes during the 2002 elections
(Reilly 2002). Tribal fighting is common, notably around large-scale resource
development initiatives (Dinnen 1999; Ashton 1990).
Papua New Guinea has also suffered two army revolts in recent years. The first
followed the Sandline affair, when the government engaged mercenaries to force a
military resolution to the Bougainville situation (Dinnen 1999). The second came in
response to proposals for military reform (Windybank and Manning 2003; Australian
Department of Defence 2002).
Pitts (2001) argues that corruption is ‘rampant’ in Papua New Guinea. Former
Prime Minister Mekere Morauta admitted that corruption in Papua New Guinea is
both ‘systemic and systematic’ (Windybank and Manning 2003:4). Reilly suggests
Papua New Guinea politicians ‘do not see their role as part of a national government
but rather as delegates chosen to deliver resources back to their own group of tribal
supporters’ (Reilly 2002:134–35; Ashton 1990). Thus, the local, rather than the
national interest is prosecuted, and one symptom is decreased investment in public
infrastructure.
The national government’s failure to provide many basic services leaves many
Papua New Guinea citizens with a weak attachment to the state. Douglas (2000:3)
refers to ‘the invisibility of the nation’ in many areas.21 It would be a mistake to
presume that all Bougainvilleans, for instance, intrinsically wanted independence.
What radicalised ordinary people to support independence during the peace process
was the failure of the national government to provide basic services, such as roads,
education and medical supplies.
In sum, Papua New Guinea cannot perform some of the essential acts of a
nation-state: it cannot ensure security and law and order, nor provide basic services,
for many of its citizens. Thus, there are weak ties between the national government
and many citizens.
A large failed state in the region would have security consequences for most
Forum members. Helman and Ratner suggest that a failed state imperils its own
citizens and threatens its neighbours through refugee flows, political instability, illicit
arms traffic and random warfare (Helman and Ratner 1993). In the Pacific context,

30

Challenges to regional order

we could add the dangers of non-state actors taking advantage of a lawless
environment (Windybank and Manning 2003). Wainwright argues that
[f]ailed or failing states are often Petri dishes for transnational criminal
activity such as money laundering, arms smuggling, drug trafficking, people
trafficking, and terrorism…A bankrupt or illegitimate government
representing the state can obtain money from many sources by selling
aspects of its sovereignty. This is one of the factors which transforms
state failure from a human tragedy into a security issue for neighbouring
states (2003:486).

Yet the situation is not irretrievable. As Helman and Ratner (1993) argue, the United
States’ commitment and aid following World War II rescued Western European
states, which were so ravaged by war as to constitute failing states.
Further security challenges
Non-state actors pose significant challenges to Forum members. Indonesia is not a
Forum member, but the two Bali bombings, and the murder of 90 Australian citizens,
demonstrate the devastating effects terrorism can have on one Forum member,
Australia (Flitton 2003). It is clear that terrorists are operating in the region, and a
number of Forum island countries may be facilitating their work through their
passport schemes and offshore banking services (Wainwright 2003; Chulov and
Stewart 2003; Stewart et al. 2003). The OECD and other organisations were targeting
these havens prior to the terrorist attacks of 11 September 2001 (OECD 1998),22
but there is now an even greater impetus for reform (Chulov and Stewart 2003;
Stewart et al. 2003).
There are further security challenges in the near region which have the potential
to impact greatly on Forum members (Kerin and Videnieks 2003). The West Papua
independence movement, which includes a small but dedicated band of fighters,
has the potential to cause friction between Papua New Guinea and Indonesia
(Hartcher 2000; Daley 2000a; Worth 2000; O’Callaghan 2003c). In addition to
terrorists, other non-state actors, such as drug smugglers and people smugglers,
contribute to the deteriorating security environment (Australian Parliamentary
Committee 2003).
This region is now sometimes referred to as the ‘arc of instability’ (Australian
Parliamentary Committee 2003; Dobell 2003). The scale and viciousness of the
internal conflicts in the largest and third-largest Forum island countries, and the
dangers of failing states and non-state actors, demonstrate the seriousness of the
region’s security challenges.

31

Pacific Regional Order

Challenges to the rule of law
Challenges to the rule of law can be considered in two categories: failures to respect
or uphold supranational law, created by the global system; and Forum island
countries’ failures to uphold their own domestic laws.
Supranational law
In terms of supranational law, the Pacific region has one of the lowest rates of
ratification of the key human rights and humanitarian law instruments. Table 2.9
shows that it is only the Convention on the Rights of the Child that has enjoyed
widespread support among these countries.
The low rate of ratification of humanitarian law instruments is also of concern,
given the viciousness that has been displayed in the region’s internal conflicts.
This reluctance to engage with, and commit to, supranational law also applies in
the trade sphere. If Forum island countries are to diversify from their commodity-

Table 2.9

Forum island country ratifications of key human rights instruments
Convention
Covenant Covenant on
Convention
on the
on
Economic,
on the
Elimination Convention
Civil and Social and Convention Elimination of Discrim.
on the
Political
Cultural
Against
of Racial
Against
Rights of
Rights
Rights
Torture
Discrim.
Women
the Child

Cook Islands
•
Fiji
Kiribati
Marshall Islands
Fed. States of Micronesia
Nauru
Niue
Palau
PNG
Samoa
Solomon Islands
•
Tonga
Tuvalu
Vanuatu

•

•

•
•

•
•

•
•
•
•
•

•
•
•
•

•
•
•
•
•
•
•
•
•

Source: Office of the UN High Commissioner for Human Rights, 2002. Status of Ratifications of
the Principal International Human Rights Treaties, United Nations, Geneva, 10 July.

32

Challenges to regional order

Table 2.10

Forum island country ratifications, accessions and successions to
key humanitarian law instruments

Geneva
Conventions
Cook Islands
Fiji
Kiribati
Marshall Islands
Fed. States of Micronesia
Nauru
Niue
Palau
Papua New Guinea
Samoa
Solomon Islands
Tonga
Tuvalu
Vanuatu

Geneva Conventions
Protocol I
Protocol II

•
•
•

•

•

•

Statute of the
International
Criminal Court

•
•
•
•
•

•
•
•
•
•
•
•

•
•
•

•
•

•

•

•

Source: International Committee of the Red Cross (http://www.icrc.org)

based economies, they need to develop competitive service industries, most
obviously in the tourism sector (UNDP 1999a). However, in the Uruguay Round, the
global trade agreement that created the World Trade Organization, Fiji made
commitments in only one of the twelve services sectors: tourism and travel-related
services. Of the four sub-sectors in tourism, Fiji made commitments in only one:
hotels and restaurants. So Fiji has made commitments in only one of the 155 subsectors in the General Agreement on Trade in Services (GATS), and then only to spell
out existing restrictions. Solomon Islands made commitments in four sectors, and
Papua New Guinea made commitments in six sectors.
Part of the problem is the failure of many Forum island countries to be plugged
into international organisations generally. To take one example, only three Forum
island countries are currently WTO members (Table 2.11). In contrast, thirteen of the
fourteen members of CARICOM are WTO members (World Trade Organization 2000).
One explanation might be that individual Forum island countries do not have the
resources to engage properly with international organisations; in which case they
need another vehicle through which to prosecute their interests.
33

Pacific Regional Order

Table 2.11

Forum island country membership of select international
organisations

United
Nations
(UN)
Cook Islands
Fiji
Kiribati
Marshall Islands
Micronesia
Nauru
Niue
Palau
Papua New Guinea
Samoa
Solomon Islands
Tonga
Tuvalu
Vanuatu

•
•
•
•
•
•
•
•
•
•
•
•

UN Economic
and Social
International Asia-Pacific Commission
World Trade
Labour
Economic for Asia and
Organization Organization Cooperation the Pacific
(WTO)
(ILO)
(APEC)
(ESCAP)

•

•

•

•

Currently acceding

•

•

Currently acceding

•
•
•
•
•
•

•
•
•
•
•
•
•

Sources: Individual organisations’ websites (see http://www.un.org; http://www.wto.org; http://
www.apec.org; http://www.ilo.org; http://www.unescap.org).

Domestic law
In terms of failing to uphold the domestic rule of law, the most egregious example is,
of course, Fiji. The constitution has been overthrown three times; Fiji has been
governed through military decrees; arbitrary arrests have frequently been made;
and key judges have often abandoned judicial impartiality.
The first Fijian coup occurred on 14 May 1987, when an élite unit of the Fijian
army under the command of Lieutenant-Colonel Sitiveni Rabuka stormed parliament
and kidnapped the government. The government had been led by a Fijian, Timoci
Bavadra, and was made up of the Labour Party (which drew its support from Fijians
and Indo-Fijians) and the National Federation Party (largely supported by Indo-Fijians).
The Coalition had promised to look into the land rights of Indo-Fijian farmers leasing
communal land, and to investigate the claims of corruption that had surrounded the
previous government (Lawson 1991). This was of great concern to the Alliance
Party, led by Ratu Sir Kamisese Mara, Fiji’s ‘founding father’ and prime minister
34

Challenges to regional order

since independence (Howard 1991). The Alliance Party was largely supported by
Fijians, and represented the interests of chiefs in eastern Fiji (Lawson 1991).
Rabuka declared martial law, and set up an interim government under GovernorGeneral Sir Penaia Ganilau. Ganilau eventually tried to broker a deal, the Deuba
Accords, that would allow a return to civilian rule pending new elections (Howard
1991). But when Rabuka began to think he would be sidelined in any power-sharing
arrangement, and that there might not be an express provision in the Accords granting
him immunity, he launched his second coup on 25 September 1987 (Lal 1998).
Rabuka revoked the constitution and declared Fiji a republic on 7 October in
Interim Military Government Decree No.1. The Chief Justice and other judges were
dismissed, with Rabuka claiming he would appoint judges loyal to the regime. Ganilau
wrote to the Queen and resigned as Governor-General. He was then appointed
President and pardoned Rabuka (Howard 1991). As Rabuka asserted control, several
hundred people—cane farmers, Labour Party supporters, unionists, journalists,
academics, even judges—were arrested (Clements 2001).
Various decrees, notably Decree No.12, the Fundamental Freedoms Decree,
gave the army absolute power to break up meetings, impose curfews and detain
people. Strikes were outlawed and the courts were authorised to hold trials in camera
(Ghai 1990). A member of the extremist Taukei movement said ‘[i]t is simply our
way of getting what we want. If we can’t get it legally we will have to get it illegally’
(Howard 1991:319).
Fiji eventually returned to a constitutional democracy in July 1997.23 At the
elections in May 1999, the Labour Party was elected and Mahendra Chaudhry
became Fiji’s first Indo-Fijian prime minister. However, on 19 May 2000, George
Speight, a frustrated businessman, overran parliament with his supporters, who
included members of an élite unit of the Fijian army. As he took 38 hostages,
Speight announced, ‘I am asserting executive power over Fiji. We have revoked the
constitution and have set that aside’ (Speight 2000:7).
Fiji’s Great Council of Chiefs endorsed the coup and granted Speight an amnesty,
without clarifying their legal basis for doing so. When various attempts to resolve the
crisis failed, the head of the army, Commodore Frank Bainimarama, announced on
29 May, ‘all the nation has been saddened by the extent to which the country has
fallen during the last week. I have therefore, with much reluctance, assumed
executive authority’ (Conway 2000:1).
Some judges surrendered any pretense of impartiality during the third coup.
Chief Justice Timoci Tuivaga and other judges drafted the decrees for Ratu Mara (by
then, Fiji’s President) to dismiss the prime minister and abrogate the constitution,
and continued to assist with drafting military decrees (Australian Broadcasting
Corporation 2001a). Later, when the military’s actions were tested in the courts,
35

Pacific Regional Order

Tuivaga tried to shift the case from Justice Gates to a more compliant judge. The
Chief Justice wrote to Gates accusing him of ‘judicial perversity in breach of the
judicial culture of this country’ (O’Callaghan 2001b:9).
Fiji provides an extreme and violent example of a more general ambivalence
among the Forum island countries about the rule of law. Various authors suggest that
Forum island countries generally favour consensus and ‘the Pacific Way’ in dispute
resolution, rather than appeals to the rule of law and binding rulings (White 1997;
Mataitoga 1992). Henningham writes that ‘island leaders mostly set great store in
traditional ways of…conflict management, although at times appeals to tradition and
customs provide a convenient rationale for the protection of vested interests’
(Henningham 1995:8). The Pacific Way was first promulgated by Ratu Mara prior to
Fiji’s independence when he was chief minister. 24 It is now frequently invoked by all
Forum island politicians and officials, and refers to the process of talking though
issues ‘in an unhurried fashion in informal meetings, in pursuit of a consensus
acceptable to all involved’ (Henningham 1995:10). Howard argues, though, that
…the Pacific Way has served as an ideological support for the maintenance
of chiefly rule in Fiji based on a distorted view of Fiji’s peaceful past and an
emphasis on consensus in such as a way as to mean consenting to the
wishes of those in authority…In practical terms, the Pacific Way has meant
support for conservatism (Howard 1991:129).

Addressing these challenges to the rule of supranational and domestic law is
critical in its own right, but also as a means for addressing the challenges to
sustainable economic development, security and democracy.

Challenges to democracy
Democracy can take many forms. In the Pacific context, colonial powers often
implemented an imperfect model of Westminster democracy, which in some cases
has been further corrupted rather than improved by Forum island countries. These
challenges to democracy have disenfranchised wide sections of some Forum island
country populations, removed a check on executive power, and have prevented a
more equitable distribution of the benefits of development.
Fiji
Fiji’s three coups obviously represent significant challenges to democracy, as well
as to the rule of law. Two key British policies during the colonial period diminished
Fiji’s chances of developing a pluralist democracy.
First, the British fostered communal politics, in part to cover up the privileged
position of Europeans in the colony. Fiji, gaining independence on 10 October 1970,
inherited what was termed a communal constitution, an imperfect model of
36

Challenges to regional order

Westminster liberal democracy. Indo-Fijians had pushed for a common electoral
roll, but lost (Lawson 1991). Thus, the 1970 constitution allocated 22 seats each
for Fijians and Indo-Fijians—12 were to be elected by each race and 10 by both
races voting together (Larmour 1997b).
There was an understanding that the use of separate rolls would be a temporary
situation. However, the Alliance Party rejected the findings of a Royal Commission
held shortly after independence, which had recommended a move to a common
roll. Because the British had done little to encourage a domestic polity, in this time
of confusion parties formed around the most obvious point of division—race. The
communal system of politics has exaggerated and distorted an imagined cleavage
of interests, and in turn has reinforced differences and racial segregation at the
grassroots level (Lawson 1991).
Second, the Great Council of Chiefs, or Bose Levu Vakaturaga, was an artificial
colonial creation, established to facilitate the British colonial system of indirect rule
(Lawson 1991, 1993). The system eased British rule, but it reinforced and froze
traditional structures, obstructing dynamism and evolution (Lawson 1991). Through
the Great Council of Chiefs, the British set the chiefs up to play a political role that
removed them from the neutral and impartial role that chiefs need to play to unite
their communities. There is nothing inherently wrong with a Great Council of Chiefs
in theory, as a means of encouraging indigenous culture and as a point of identification
for indigenous Fijians or, indeed, all Fijians. In Fiji, though, the authority of the Great
Council, and its potential to be a unifying force, has been undermined by its entry
into partisan politics and its efforts to protect the interests of chiefs in one part of
Fiji, the east (Lal 1992; Lindstrom 1997).25 In contrast, the Federated States of
Micronesia rejected the creation of a Chamber of Chiefs as part of the political
system so as to uphold the impartiality of chiefs.26 The juncture between the chiefs
and the political system in Fiji has damaged both, robbing the chiefs of their moral
authority and traditional standing, and corrupting the political process (Lawson 1991).
Stephanie Lawson argues democratic politics failed in Fiji because wide sections
of the population did not view the opposition as a legitimate alternative government
(Lawson 1991). Each time the party representing chiefly interests lost, it assumed
that the constitution was flawed, rather than realising it deserved to lose. After 30
years of independence, Fiji has yet to survive a change of government from the party
representing chiefs. Communalism has usurped class politics, and any critique of
the chiefly party is regarded as an insult from ‘guests’ abusing the hospitality of
‘hosts’ (Lal 1992).
Cultural relativists may argue that democracy and the rule of law are alien, Western
concepts in the Fijian context and, indeed, other Forum island countries (Lal 1992;
Lawson 1997a, 1997b), but so too are many of the other constructs in Fiji’s neo37

Pacific Regional Order

traditional political landscape, such as communal politics, the Great Council of Chiefs
and communal land tenure (Lal 1992).27 Britain’s failure was to introduce these other
constructs and not the rule of law and full democracy, leaving Fiji and other Pacific
societies caught awkwardly between traditional and Western systems of governance.
Tonga
Fiji is not the only Forum island country where there are challenges to democracy. In
Tonga, under the structure of government established in 1875, the Privy Council
assists the King in the discharge of his duties. The Privy Council consists of the
Cabinet and anyone else appointed by the King. The twelve-member Cabinet is
appointed by the King and holds office at his pleasure (the King has previously
appointed his youngest son prime minister). Tonga’s legislative assembly consists
of the Cabinet, nine nobles elected by the holders of Tonga’s 33 hereditary noble
titles, with the remaining nine elected by the general population (Helu 1992;
Australian Department of Foreign Affairs and Trade 1998; Montogomery 2000).
Thus, it would be impossible for the government to change following a general
election (Lawson 1997a).
A pro-democracy movement has slowly grown in Tonga, but the government
frequently uses criminal prosecution and civil actions to stymie its effectiveness
(James 1997; Helu 1992; Lawson 1997a).
Democracy and traditional authority
Most Forum island countries include chiefs, or indigenous representation, as part of
their domestic polity. The situation in Fiji has been discussed above, but in the Cook
Islands, for example, the House of Ariki is a forum for high chiefs to make
recommendations to parliament on customary issues (Ingram 1992). The Vanuatu
parliament includes seats for chiefs, and the parliament can also call on an advisory
body of chiefs. In Palau the president has an advisory body of chiefs (Helu 1992;
Lindstrom 1997). Only those with chiefly titles can stand for parliament in Samoa,
and before 1990 only those with chiefly titles could vote (Lindstrom 1997). Both
Solomon Islands and Micronesia have chambers of chiefs at the provincial level
(White 1997; Petersen 1997).
To suggest that there are challenges to democracy in the Pacific is not to attack
the role of traditional authority and chiefs in Pacific societies generally. 28 Rather,
what has been identified is the problem of imbuing traditional authority with political
power. The political systems in Fiji and Tonga, where chiefly privilege is entwined
with political power, represent a challenge to democracy.
Ultimately, sustainable development is dependent on democratic governance,
because stability is needed to attract investors (World Bank 1994; Iqbal and Jong38

Challenges to regional order

Li You 2001; Gradstein and Milanovic 2002; Dethier et al. 1999), and democratic
governance also ensures that the benefits of economic growth are more evenly and
easily spread among all sectors of the population (Crocombe et al. 1992b).

The rise in regionalism
Around the world, there has been an increasing interest in exploring regional
arrangements to tackle common problems. To take one example, regional free
trade agreements have become a prominent feature of the international trading
system. Half of all global trade takes place through such arrangements and over
250 agreements have been notified to the World Trade Organization. Most of Europe
now forms a single market for trade in goods, and at its core is a common market for
goods, services, investment and labour covering 25 countries. NAFTA is to be
subsumed by the Free Trade Area of the Americas, which will cover the whole
continent except for Cuba.
Yet the importance of regionalism needs to be understood in more than just
trade terms. Regional arrangements are an expression of political solidarity and
shared interests, as we see in the European Union, the Organisation of American
States, the African Union, CARICOM, and so on. Unfortunately substantive regionalism
is a phenomenon from which Pacific states have largely been excluded.
There has been a renewed interest in Asian regionalism following the financial
crisis of 1997 (Pearson 2000; Dieter and Higgot 2000; Bergsten 2000). Following
the financial crisis, Japan proposed an Asian Monetary Fund. Central banks in the
ASEAN Plus Three (Japan, Korea and China) group would make a percentage of their
reserves available to each other in the event of a financial crisis (Li Lin and Rajan
2001; Rajan 2000). Eventually the name ‘Asian Monetary Fund’ was dropped, but
the substance largely remained when ASEAN Plus Three members signed the Chiang
Mai agreement in May 2001 (Li Lin and Rajan 2001). Australia was not invited to
participate, despite being a member of the Executives’ Meeting of East Asia Pacific
Central Banks (EMEAP), which encompasses all these countries,29 and despite
being one of only two countries to participate in all three IMF bail-out packages
during the Asian crisis, contributing A$3 billion (New Zealand is also a member of
EMEAP). Another example is that Forum members continue to be excluded from the
Asia-Europe summit (‘Continental drift’, The Economist, 20 January 1996).
ASEAN Plus Three countries have invited Australia and New Zealand to the initial
‘East Asia Community’ summit, but there has been no discussion about including
the other 14 Forum members. Some Forum members are members of APEC, the
ASEAN Regional Forum security dialogue and the Asia Pacific Forum of National
Human Rights Institutions. But these bodies are not part of an agenda for regional
39

Pacific Regional Order

integration. APEC is a useful forum for discussing trade facilitation and for allowing
ministers and leaders from diverse countries to meet annually, 30 but it has not
evolved into the force for trade liberalisation that its instigators envisaged (Ravenhill
2000; Rudner 1995; Elek 1996; Hawke 1992; Hay 1994).
So many regions around the world are pursuing regional integration, and Pacific
states have largely been excluded from the nascent Asian regionalism. Forum island
country government representatives and Forum officials often express fears about
the Forum island countries being left behind and isolated. To address their isolation
and influence others, the challenge for Pacific states is to devise their own attractive
regional integration project.

Conclusion—challenges and opportunities
This chapter has provided an overview of the present state of the Pacific, outlining
the key issues facing the region. Although the Pacific is made up of 16 unique
states, many of the challenges considered in this chapter have resonance across
many Forum island countries. To summarise, they include
• poor economic performance, reliance on commodity exports and declining
trade preferences
• aid dependency
• growing urban populations and, in some cases, unsustainable population
growth
• communal land issues
• weak central authority, leading to security issues, from money laundering to
civil war
• a poor understanding and commitment to the rule of supranational law, and
sometimes domestic law as well
• the legacy of the colonial era
• the politics of dealing with populations that are not ethnically homogeneous
• conflict between traditional authority and Westminster-style democratic
politics
• concerns about ‘being left behind’.
In addition, Forum members face the challenge of isolation from the wider region.
The severity of the challenges confronting Pacific states demonstrates the critical
need for new policies, and should be a catalyst for collective action. That no Forum
member is adequately realising all five goals of regional order, and that several
members are failing to meet many of the goals, is an indictment of the region.
Regional integration will not solve all of these challenges directly, nor will progress
in resolving these challenges be immediate. Further, some challenges faced by
40

Challenges to regional order

Forum island countries, such as rising sea levels, can only properly be resolved
through global mechanisms. Yet promoting the five goals of regional order would
create a new framework for encouraging and facilitating change. In the rest of the
book, the focus shifts from the challenges to regional order, to developing the policies
and institutions necessary to address these challenges and build regional order.
The following chapter considers the role Australia may play in addressing these
challenges. The resolution of these challenges requires Australia to embrace a new
phase in its Pacific policies, and the constructive leadership role it has often avoided.

Notes
1

2

3

4

5
6

7

8

9

10

11

In Samoa, young people are three times more likely to be unemployed than older
workers, and unemployment for urban youth in the Marshall Islands is around 50 per
cent (UNDP 1999; Jones and Pinheiro 1999).
Poverty of opportunity ‘embraces a lack of education or health, a lack of economic
assets or access to markets or jobs that could create them, and various forms of social
exclusion or political marginalisation. [It] is a term that rings true for too many Pacific
island people, especially the young. The waste of human and social capital is not only
an economic loss but is manifest in various negative ways, such as rapid emigration
from some countries, unemployment, and a subculture of youthful crime and despair’.
Most Forum island countries have high tariffs, ranging from effective nominal ad
valorem rates of 10–40 per cent (World Bank 1999).
The World Bank argues that Forum island countries’ tariffs ‘have had protective effects
for some import-competing activities and have raised the cost structure of the economy,
consequently, reducing the competitiveness of exports’ (World Bank 1999:13).
See, for example, APEC (2000).
The World Bank has suggested that, rather than attempting to directly compete with
Southeast Asia for markets for manufactured goods, Forum island countries should
attempt to diversify their economic bases into services and tourism (World Bank 1999).
The World Bank notes generally that ‘where there is market potential, foreign investors’
main problems are access to land, enforcement of contracts, freedom to repatriate
capital and selling ownership rights’ (World Bank 1999:17). The UNDP has stated that
‘[f]oreign and domestic investment is encouraged by governance systems that are
legitimate and transparent, that encourage broad-based participation and the efficient
use of resources, and that rest firmly on the rule of law’ (UNDP 1992:92).
While I was in Bougainville, a Coca-Cola manager considering the establishment of a
new plant was assaulted.
The mine, though a major cause of the conflict, was not the only cause (see Regan
1999, 1998).
See also Overton and Scheyvens (1999), which discusses the idea of vanna—the links
between land, the environment, culture and society in Forum island countries.
This became clear from my discussions with a number of Fijians throughout the course
of research for this book.

41

Pacific Regional Order
12

13

14

15

16

17

18

19

20

21

22

23

24

See also World Bank (1998:xiii), which notes that ‘the government markets agricultural
goods and operates fishing fleets, mines, plantations, timber mills, aviation services,
and hotels, plus engages in a wide range of other quasi-commercial activities’.
In the short-term, high inflation means that producers make large profits and may reinvest in the economy and employ more people. But the profits have to be paid for—high
inflation means high prices for consumers and high interest rates, which leads to a
bust. High inflation is more likely to result in boom–bust cycles rather than steady
growth.
Regan (1999) suggests that it is difficult to know with certainty how many people died,
without more detailed investigation.
Liloqula and Pollard (2000:6–7) suggest that ‘[s]ince we became one country, Solomon
Islanders have yet to accept each other as one people…Whilst educated people may
have some ideas about the purpose of being one nation, the vast majority of Solomon
Islanders see the nation state as threat to their resources, their cultural identity and
culture, their environment and the basis of their sustained community living’. See also
Liloqula (2000).
The request came from the Solomon Islands’ Prime Minister, the Leader of the
Opposition, the Chief Justice and the Governor of Western Province. Interview with
Laurie Brereton, Sunday Program , 11 June 2000. Available at http://
sunday.ninemsn.com.au/04_political_interviews/article_516.asp [accessed 13 June
2000].
Wainwright elaborates that failing states are ‘characterised by a breakdown in law and
order, the collapse of service delivery such as education and health, and a sharp decline
in living standards. The economic situation deteriorates and people lose their sense of
loyalty to the government…People transfer their allegiances away from the central
authority towards their clan, group or warlord’ (2003:485).
Government budgets were not adhered to. For example, from January–July 2003, the
police force spent four times its permitted budget (Downer 2003a).
Even in 1990, Ashton was asking whether Papua New Guinea was a ‘broken-backed
state’ (1990:35). The Australian Strategic Policy Institute (2002:28) believes that
Vanuatu and Papua New Guinea constitute ‘failing neighbour[s]’.
According to the United Nations, Papua New Guinea had the highest incidence of
sexual assault in the world, with nearly 12 per cent of women 16 years and over victim
to sexual assault at least once in the previous year; and more than 32 per cent in the
preceding five years (Pitts 2001).
See also Dinnen (1999). Ashton (1990) suggested that in the future the ‘Papua New
Guinea’ government would continue in Port Moresby, funded in part by foreign aid, but
with little sovereignty outside the capital.
The OECD and the G7’s Financial Action Task Force expressed concerns about Nauru,
Vanuatu, Samoa, the Cook Islands, Marshall Islands, Tonga and Niue (Cornell 2000;
Randall 1999).
See Lal (1998) and Lal and Larmour (1997) for details on the gradual return to
constitutional democracy.
The first enunciation of the ‘Pacific Way’ was at the UN General Assembly in 1970
(Howard 1991).

42

Challenges to regional order
25

26

27

28

29
30

See Lindstrom (1997) for a discussion of the ‘modern functions’ that chiefs can safely
and usefully perform.
Petersen suggests that most Micronesians felt that ‘their chiefs can more effectively
serve them by remaining outside the national government’ (1997:183).
Chiefs had an explicit role in the British colonial administrations in Fiji, Solomon
Islands and Vanuatu, and in the French administrations in Vanuatu and New Caledonia
(White 1997).
Churney complains of the ‘disparaging and unfair “bad chief” stereotype where chiefly
systems are judged ineffective due to a belief that all chiefs are prone to greed, corruption
and abuse of power’ (1997:124). Any leadership group in any society has its bad
elements, but this has certainly not been my experience from the many chiefs I have
worked with and met; and I do not mean to suggest it in this book.
See http://www.emeap.org [accessed 7 July 2003].
See http://www.apecsec.org.sg

43

Pacific Regional Order

3

Australia and
regional order

As the largest member of the Pacific Islands Forum—in terms of population, economy,
defence and diplomatic resources—it is vital that Australia demonstrate leadership
if the Forum is to evolve. This chapter considers the important threshold question of
whether Australia could be convinced of the merits of pursuing regional integration
through the Pacific Islands Forum.
This chapter first considers the history of Australia–Pacific relations and the
degree to which each phase has promoted the five goals of regional order. The
argument is then made that there are indeed challenges that call for a new phase in
Australia’s Pacific relations. Further, pursuing comprehensive regional integration
through the Pacific Islands Forum would benefit Australia because of Australia’s
broad interests in the Pacific, the deteriorating security environment in Australia’s
local region, and the rise in regionalism around the world.
To meet these challenges will require a new boldness in Australia’s foreign policy,
and recognition of the need for a new vehicle through which to pursue Australia’s
national interest.

Australia as the pivotal player
Pacific regional integration depends on Australian leadership and engagement.
Australia should be regarded as the pivotal player for the following reasons.
First, Australia has the largest population, and the largest economy, as the following
table demonstrates. Australia is also the hub for Pacific regional trade, and the largest
source of private investment in Forum island countries (Australia-Fiji Business Council
44

Australia and regional order

et al. 2002; World Bank 2002; Asian Development Bank 2002). Australia is the
largest aid donor to the region, both bilaterally and regionally (Tables 3.1 and 3.2).
There is already a degree of monetary integration among Forum members based
on the Australian dollar. Kiribati, Tuvalu and Nauru use the Australian dollar, and a
possible future president of an independent Bougainville told me that Bougainville
may also end up using the Australian dollar (the Cook Islands and Niue use the New
Zealand dollar, and the Marshall Islands, Palau and Micronesia use the United
States dollar).
Australia also has the largest military in the region.1 Through the Defence
Cooperation Program, Australia underwrites a significant element of Forum island
countries’ defence capabilities—their Pacific Patrol Boats. From 1985 to 1997,
Australia provided the Forum island countries with 22 patrol boats, which are
specifically built for these countries to patrol their exclusive economic zones. Australia
meets the cost of the vessels, ongoing maintenance, logistics, Australian advisors,
and, in some cases, fuel—a commitment totalling A$475 million by 2000. In August
2000, Australia agreed to meet the A$350 million cost of doubling the life of the
patrol boats (Australian Department of Defence 2002). In terms of regional
operations, the sustainability of the Bougainville peace monitoring operation was

Table 3.1

Size of Forum members’ populations and economies
Population
(‘000)

Australia
Cook Islands
Federated States of Micronesia
Fiji
Kiribati
Marshall Islands
Nauru
New Zealand
Niue
Palau
Papua New Guinea
Samoa
Solomon Islands
Tonga
Tuvalu
Vanuatu

19,800.0
17.8
112.6
800.0
88.1
54.0
12.1
3,900.0
1.7
20.3
5,100.0
180.0
500.0
100.0
10.2
200.0

GDP
(US$ billion)
398.69
0.08
0.23
1.60
0.05
0.01
..
58.20
..
0.12
2.90
0.28
0.24
0.14
0.01
0.21

Source: Australian Department of Foreign Affairs and Trade, 2004a. Country Fact Sheets,
Commonwealth of Australia, Canberra. Figures are for 2002, or nearest available year.

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Pacific Regional Order

Table 3.2

Lead donors to Forum members, 2000 (A$ million)
Amount
(A$ million)
461.6
260.8
84.1
29.3
22.5
8.7
6.9
4.4
2.2
2.3
882.8

Australia
Japan
New Zealand
United States
France
Germany
United Kingdom
Canada
Netherlands
Other European countries
Total bilateral aid

Source: Australian Agency for International Development, 2002. Submission to the Senate
Foreign Affairs, Defence and Trade Committee Inquiry into Papua New Guinea and the Island
States of the South West Pacific, Australian Agency for International Development, Canberra.

dependent on high-level Australian involvement, and the Solomon Islands
peacekeeping operation was dependent on Australian leadership and involvement.
Finally, Australia has the most extensive diplomatic network in the region, giving
it the capacity, should it choose to exercise it, to be an effective advocate of new
proposals (Smyth et al. 1997).

Phases in Australia’s Pacific relations
Australia’s relations with Forum island countries can be broadly divided into four
phases: the colonial period, the strategic denial phase, the constructive
commitment phase, and the current phase of cooperative intervention.2 Each
phase continues to provide an important context for Australia’s current and future
policymaking.
Phase One: the colonial period
For the first half of the twentieth century, the Pacific states enjoyed a much higher
profile in the Australian consciousness. For much of this period, Australia’s focus
was on promoting the goal of security. The islands’ security was seen as crucial to
Australia’s security, as was demonstrated in World War II. Following World War II,
Australia’s relations with Pacific states were largely conducted with other colonial
powers through the South Pacific Commission. What is often forgotten is that
Australia, too, was a colonial power during this period, with responsibility for Papua

46

Australia and regional order

New Guinea from 1883 to 1975 and, along with the United Kingdom and New
Zealand, for Nauru until 1968.
Australia’s record as a colonial power was, at times, less than honourable.
Henningham refers to Australia’s ‘decades of neglect’ in Papua New Guinea, and a
bipartisan parliamentary report on Australia’s relations with that country concluded
that Australians were ‘diffident colonisers who governed with casual practicality and
who departed with alacrity and too little care’ (Joint Parliamentary Committee
1991:1). Phosphate mining during the colonial period left two-thirds of Nauru a
blasted, unproductive landscape. Australia only provided compensation for this
damage after Nauru initiated an action in the International Court of Justice (‘Making
waves in the Pacific’, The Economist, 21 August 1993; Evans and Grant 1995).
Dobell believes Australia suffers from a ‘popular amnesia’ about its role as a
colonial power (Dobell 2003). Australians may have short memories in this regard,
but the Forum island countries do not—after all, this is the era in which many of their
current leaders grew up.
Phase Two: strategic denial
Following the Forum island countries’ independence, Australia pursued a policy of
strategic denial, acting on behalf of the Western Alliance and working to deny the
Soviet Union a presence in the Pacific (Herr 1986). The fear was that any Soviet
involvement in the region could lead to political influence, a military base, and threats
to Australia’s sea lines (Fry 1991). Again, promoting the goal of security was Australia’s
most critical goal, with a hint of interest in sustainable economic development.
The strategic denial policy led, at times, to some misjudged diplomacy (Fry
1996). Grave concern was expressed, for example, about the Soviet Union entering
a fishing agreement with Kiribati (and later Vanuatu), and Australia pressured
Kiribati to abrogate the agreement. We can be thankful for the passing of the
Soviet Union, but Kiribati’s interest in a Soviet fishing agreement at a time when
the United States was refusing to pay fishing fees was understandable. Australia
also worked to ensure that Vanuatu and Solomon Islands resisted Soviet offers to
conduct hydrographic research and negotiate Aeroflot landing rights. Another
concern during this period was a Libyan proposal to establish a bureau in Vanuatu,
which Australia likewise resisted (despite the presence of such a bureau in
Australia) (Fry 1991).
The policy of strategic denial did ensure some ongoing Australian interest in the
region, and resulted in significant increases in aid and the creation of the South
Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) (Fry 1991;
Rosewarne 1997). However, there was also a lack of substantive engagement: Bill

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Pacific Regional Order

Hayden, for example, did not visit the region in his first three years as Australian
Foreign Minister (Rosewarne 1997).
Phase Three: constructive commitment
A new policy of constructive commitment was announced by Gareth Evans shortly
after he became Foreign Minister in 1988 (Evans 1988). Australia, he said, was ‘a
part of the region and we wish to be a helpful neighbour ready to use our resources for
the common good’ (Evans and Grant 1995:32). In an effort to draw a line under the
excesses of the strategic denial period, Australia would ‘approach the region within a
framework of regional partnership, not dominance’ (Evans and Grant 1995:31–32).
During this phase, Australia’s interest in promoting the goal of security continued, but
there was heightened interest in promoting sustainable economic development, and
the beginnings of interest in promoting the rule of law and democracy.
The government later appointed a Minister for Pacific Island Affairs, Gordon
Bilney. The engagement of Bilney (see Bilney 1994), and Prime Minister Keating, led
to the adoption of the Forum’s Madang Action Plan, which aimed to improve
governance and economic growth in the region (South Pacific Forum 1995).
The policy of constructive commitment was continued, with little change in
emphasis, under the Coalition government elected in 1996. The new Foreign
Minister, Alexander Downer, spoke of Australia’s ‘deep and long-term commitment
to the region’ (Downer 1997) and the Coalition government’s foreign policy
cautioned, ‘whilst Australia is able to exercise a leadership role, it must do so
through assistance and constructive advice, rather than through assuming the
role of pious lecturer’ (Australian Department of Foreign Affairs and Trade 1997c).
The initiative of a Minister for Pacific Island Affairs was, however, not continued
under the Coalition government, and the Prime Minister, John Howard, missed
various Forum meetings (Australian Parliamentary Committee 2003). Downer,
however, seemed to have a genuine interest in the Pacific and was responsible for
the deployment of two Pacific peace-monitoring operations (Australia-Fiji Business
Council et al. 2002).
The policy of constructive commitment was sufficiently broad and flexible enough
to be somewhat schizophrenic as well. It covered Bilney and Keating’s explicit criticisms
of Pacific economic management, which led to the Madang Action Plan, and Downer’s
two deployments of peace monitors. But it also covered frequent protests by
policymakers, as in the 2003 Foreign Affairs and Trade White Paper, that ‘Australia
cannot presume to fix the problems of the South Pacific countries. Australia is not a
neo-colonial power. The island countries are independent sovereign states’
(Commonwealth of Australia 2003:93). The lack of engagement apparent in
Australia’s approach to the PACER–PICTA negotiations, to be discussed in the next
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Australia and regional order

chapter, is evidence of this approach; as is Australia’s refusal of the Solomon Islands’
initial request for assistance in 2000 (Australian Strategic Policy Institute 2003).
There are two elements to statements such as ‘Australia cannot presume to fix
the problems of the South Pacific countries’ as in the 2003 White Paper. On the one
hand, they reflect a genuine desire to avoid Australia being characterised as an
interfering, neo-colonial power. Yet such lines can also become bureaucratic mantras,
avoiding more creative and strategic thinking on the part of policymakers. Most
insidiously, they become the excuse for a hands-off approach and a failure to engage.
Dobell, for instance, quotes a senior official in the Australian Department of Foreign
Affairs and Trade as saying Australia’s objective in the Pacific was merely to ‘cleverly
manage trouble’ (Dobell 2003:4).
By 2003, some policymakers were realising that the hands-off approach was
not working and, indeed, constituted a threat to Australian interests.
Phase Four: cooperative intervention
In June 2003, the Australian Strategic Policy Institute released a report, Our Failing
Neighbour: Australia and the future of the Solomon Islands. It warned that the
‘process of state failure’ in the Solomon Islands was ‘far advanced’, and that it had
‘virtually ceased to function as an effective national entity’ (Australian Strategic
Policy Institute 2003:1, 3). The report warned that Australia’s
…present cautious policy approach offers no real prospect that the Solomon
Islands can be turned around. The most likely outcome is therefore…the
cessation of effective government. It would be a very serious step for
Australia to decide that this was an acceptable trajectory for our immediate
neighbourhood (Australian Strategic Policy Institute 2003:4).

Without intervention, the Solomons Islands could become a ‘post-modern
badlands, ruled by criminals and governed by violence’ (Australian Strategic Policy
Institute 2003:13). The consequences for Australia could include terrorism and the
fall-out from transnational criminal operations.
The report correctly identified Australia as the only country with the interest, and
the capacity, to act. It was time, then, for ‘new policy approaches’ (Australian Strategic
Policy Institute 2003:1). The report proposed a multi-nation police force to stabilise
the security situation, and the re-building of the Solomon Islands’ ‘political structures
and security institutions’, to help address the ‘underlying social and economic problems’
(Australian Strategic Policy Institute 2003:4). The report envisaged that the operation
would last ten years, and that Australia would have to meet half the cost.
Despite rejecting such an intervention as late as January 2003,3 Downer and
Howard had apparently been re-thinking their approach to the Solomon Islands, and
the Pacific, for some time (O’Callaghan 2003b; Kelly 2003a). In a major foreign49

Pacific Regional Order

policy speech on 1 July, Howard said ‘[a] number of our friends in the Pacific are
experiencing economic collapse, corruption and lawlessness to a degree which
threatens their very sovereignty…Our friends and neighbours in the Pacific are looking
to us for leadership and we will not fail them’ (Howard 2003a). Downer had earlier
labelled the new policy ‘cooperative intervention’ (Downer 2003; Kelly 2003a).
By the end of July 2003, 2,250 Australian police, military and civilian personnel
had been deployed to the Solomon Islands (the Solomon Islands force will be
discussed further in Chapter Eight).
The focus in the cooperative intervention phase is again on promoting the goal
of security; the threat this time is failing states, and the risk of transnational terrorists
taking advantage of them.

The need for a new phase: regional integration
The policy of cooperative intervention is, for the most part, an encouraging
development. As the Australian Strategic Policy Institute proposed, ‘a major threshold’
has been crossed (Australian Strategic Policy Institute 2003:3), where the ‘handsoff’ paradigm, a core element of Australia’s approach to the Pacific states since
Papua New Guinea’s independence (Kelly 2003a), has been abandoned. This
considerably broadens the range of options available to Australian policymakers.
Australia needs a mix of courage, commitment and strategy if it is to facilitate
the resolution of the Pacific’s challenges. In the Solomon Islands intervention, we see
the requisite courage, and the beginnings of greater commitment on the part of
Australian policymakers. However, the problem with Australian policymaking in the
security phases of Australia’s Pacific policy—the strategic denial phase, and now the
cooperative intervention phase—is that Australian interest wanes when the perceived
threat, whether the Soviets or failed states, recedes. Immediate crises may be handled,
sometimes admirably, but without a long-term strategic vision for avoiding future
crises. Further, viewing Forum island countries solely through a security prism risks
damaging Australia’s relations with those countries. During the strategic denial phase,
Forum island countries came to resent Australia’s heavy-handed attempts to counter
Soviet influence (Henningham 1995; Rosewarne 1997; Fry 1991); unless properly
handled, Forum island countries may come to resent Australia’s current, more assertive,
role.4 This danger is exemplified by the difficulties surrounding Australia’s Enhanced
Cooperation Program with Papua New Guinea (the program involved Australian police
and public servants working in line positions in Papua New Guinea).
The case for regional integration certainly rests in part on the need to address
the region’s security challenges. Yet the policy of cooperative intervention does not
represent a holistic response to the challenges of the Pacific. Security challenges
are only one part of the wider challenges confronting the Pacific.
50

Australia and regional order

My hope is that the risk of failed states, and Australia’s current policy of
cooperative intervention, will serve as an impetus for a fifth phase in Australia’s
Pacific policy: regional integration.5 A policy of regional integration would represent
a more sustainable, balanced, long-term basis for Australia’s Pacific relations, and
would better address the range of challenges facing Pacific states.
The issues of sustainability and balance are important. As discussed in Chapter
One, Prime Minister John Howard has announced that Australia will encourage smaller
Forum island countries to pursue economic union, integrating their education, police
and transport services (O’Callaghan 2003a). Such proposals are sensible—this,
after all, is what the Organisation of Eastern Caribbean States has pursued—but it is
more likely to come about through a process of wider regional integration rather
than bilateral lecturing. I fear that this latest initiative risks echoing the PACER–
PICTA negotiations to be discussed in the next chapter: that it will be another case of
Australia encouraging an otherwise worthy policy goal (such as free trade), but without
itself offering any concession to provide impetus for change.
Australia cannot dictate the nature of Forum island country legislation and
electoral systems, but it can facilitate a regional climate that speeds these internal
changes. It also represents a safer approach for Australia: a regional intervention in
a failing state, for example, better shares the responsibility and burden of such
endeavours—and the blame when, inevitably, setbacks occur.
A new policy of regional integration would be justified by Australia’s Pacific
interests, and by wider foreign policy challenges.

Australia’s current interests in the Pacific
Australia currently has broad, substantive interests in the Pacific. Australia’s security,
commercial and aid interests all highlight the need for Australia’s involvement.
In terms of security interests, the government’s decision to intervene in Solomon
Islands is clear evidence of the seriousness with which Australia views the risks of
failed states and terrorism in the region.
The Solomons intervention needs to be seen, too, in its wider context. Government
ministers and the Australian Strategic Policy Institute were clear that the cooperative
intervention policy could apply to other Forum island countries, most particularly Papua
New Guinea, if they were on the verge of collapse. The Institute’s report stated that the
Solomons Islands has ‘implications for Australia’s responses to the wider problems of
the Southwest Pacific…The Solomon Islands is a small country. If we cannot help
there, it is doubtful that we can help any of our neighbours if and when they fall into
serious trouble’ (Australian Strategic Policy Institute 2003:7). Where Australia is not
robustly engaged, there are ‘opportunities for others with interests potentially contrary
to Australia’s to become involved’ (Wainwright 2003:485).
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Pacific Regional Order

Papua New Guinea’s Foreign Minister, Sir Rabbie Namaliu, asked Downer about
the wider application of the cooperative intervention policy, ‘code for whether it applied
to Papua New Guinea’ (Kelly 2003b:1). Downer responded ‘…if a country got into
grave difficulty and asked Australia for help then I hope that we would respond’ (Kelly
2003b:1).6 Trevor Kennedy, formerly chair of Papua New Guinea’s largest company,
has suggested that Australia needs to be clear about the consequences if it does not
act: it would not be implausible, given Papua New Guinea’s proximity to the Australian
mainland, for 500,000 Papua New Guineans to attempt to canoe across to escape
chaos or violence in their country (Kennedy 2003).
Australia has also made explicit and implicit commitments for the mutual defence
of all Forum island countries (Dobell 2003). Under the Australia-Papua New Guinea
Joint Declaration of Principles Guiding Relations, signed in 1987, Australia is obliged
to consult with Papua New Guinea ‘about matters affecting their common security
interests [including] in the event of external armed attack’.7 Papua New Guinean
leaders understand this to be ‘an effective guarantee of Australian commitment’
(Mokis 1990:309).8 The 2000 Defence White Paper states that ‘in the highly unlikely
event of unprovoked armed aggression against any of our immediate neighbours,
Australia would want to be in a position to help our neighbours defend themselves’;
Australia would, in fact, be very likely to ‘provide substantial support’ to any Southwest
Pacific country in these circumstances (Commonwealth of Australia 2000:44).
Further, Australia has ‘a key interest in helping to prevent the positioning in
neighbouring states of foreign forces that might be used to attack Australia’
(Commonwealth of Australia 2000:33).
Civil strife, lawlessness and the potential for terrorism all endanger the many
Australian citizens living in the region. There are around 10,000 Australians living in
Papua New Guinea (Australian Parliament Joint Standing Committee 1999). Prior
to the collapse of governmental authority, Solomon Islands was home to 100
Australian companies and thousands of Australians (Australian Strategic Policy
Institute 2003). Following the 2000 coup, Australia engaged in a high-profile military
evacuation to ensure their safety.
In the Pacific region, Australia clearly has considerable security interests which
should encourage policies to minimise the regional disorder that contributes to
terrorism, the flow of asylum seekers, small arms, illicit drugs and money laundering.
Australian citizens, investments overseas and company tax returns are put at risk if
there is a culture of lawlessness in the region; and preventive action is preferable to
dangerous and expensive deployments.
Australia also has considerable commercial interests in the Pacific. Australia’s
goods exports to the Pacific total A$9.5 billion annually, accounting for some 8 per

52

Australia and regional order

cent of Australia’s total goods exports (Australian Department of Foreign Affairs and
Trade 2001a). Moreover, Austrade, the Australian government’s export promotion
agency, encourages small businesses and first-time exporters to export to the Pacific.
The strong links that exist between the countries of the South Pacific and
Australia make it relatively easy to do business, and many successful
Australian exporters first gained their export skills in the region. Almost
anything that sells successfully in Australia can find a market in the South
Pacific (Austrade 1998:2–3).

Given small to medium-sized enterprises account for almost half of all Australian
jobs (Australian Department of Employment, Workplace Relations and Small
Business 2000), Australia has a considerable interest in protecting and developing
their Pacific trading interests. Yet the European Union, the United States and China
all have trade interests in the Pacific, and the various Australian Business Councils
in the region have warned that ‘these market shares are long standing, but should
not be taken for granted as they are constantly under threat’ (Australia-Fiji Business
Council et al. 2002:5). Thus, Australia has an interest in promoting economic
development in the region to increase its exports, and in promoting secure trading
arrangements to protect its current market share.
Australia also gives some half a billion dollars in aid to Forum island countries
annually (AusAID 2003). In today’s terms, Australia has donated some A$50 billion
dollars over the last 30 years (Hughes 2003). According to AusAID, the Australian
government aid agency, the aim of Australia’s aid program is ‘to advance Australia’s
national interest by assisting developing countries to reduce poverty and achieve
sustainable development’ (AusAID 2002:1). Chapter Two outlined the severe
challenges to sustainable economic growth in the region, demonstrating that
Australia’s aid policy is not succeeding in its second objective. Chapter Four, in a
consideration of the Forum’s recent trade negotiations, provides an example of the
limitations on Australia’s influence in the Pacific, so Australia’s aid policy is also
failing to advance Australia’s national interest. One think-tank has even suggested
that Australia should cease all aid to the Pacific (Hughes 2003). I do not endorse
this course, but it is surely in Australia’s interests to explore new and better ways of
utilising its aid.
Many politicians and academics also suggest another reason for Australia’s
active Pacific engagement: that outside powers, particularly the United States, will
judge Australia on how well it is perceived to have ‘managed’ the Pacific.9 This may
be a useful argument for marshalling the interest of Australian decision-makers, but
policymaking based solely on this reason will be self-defeating. I believe Australia
has the capacity to exercise leadership in the region, by promoting a persuasive

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Pacific Regional Order

policy package designed to realise a prosperous shared future; but management
implies a degree of control that Australia either does not have or could not usefully
exercise (Fry 1991, 1999). In any event, the imperative for regional integration is
real enough, independent of external perceptions.10

A time for boldness
The previous chapter introduced the challenge of the rise in regionalism, including
in Asia. Australia’s Pacific links, and its membership of the Pacific Islands Forum,
have the potential to be an important vehicle in addressing this challenge.11 Australia
needs to put far more effort into its Pacific relations, and utilise this grouping for
wider leverage. In the Pacific, Australia has the standing to exercise creative
diplomacy and to maximise a strategic opportunity.
Thus, as a matter of urgency, I believe Australia must launch a regional integration
initiative that follows and improves on the European Union model. Australia must
establish a position of policy leadership that can place it at the centre of a new
regional order, rather than standing on the sidelines of emerging regional groupings
and relying on ad hoc bilateral initiatives.
Australia’s current position in the Pacific gives it the capacity to establish the
guiding principles for a new phase in the development of the Pacific Islands Forum.
The advantage of a proactive approach to regional integration is that Australia would
design the new architecture in which it would invest its sovereignty. The alternative
is to stand by and rely on participating in regional institutions created by others.
The Pacific Islands Forum offers Australia an existing regional architecture from
which to proceed—but Australia must aim to both develop the Forum’s sovereignty
and expand its membership, to transform a Forum into a Community.

New Zealand and regional order
New Zealand, as the Forum’s other richer member, is likewise a key actor—it too is
a founding member of the Forum and indeed hosted the initial meeting—and the
Forum’s evolution would be dependent on its commitment and resources.
New Zealand, like Australia, has considerable security, commercial and aid
interests in the Pacific.12 It also faces the challenge of isolation from the wider
region, and has been disappointed with Australia’s unwillingness so far to pursue a
joint approach to free trade agreements.13
Unlike Australia, however, New Zealand has demonstrated a consistent interest
in the Pacific, and greater comfort about its Pacific links. This additional interest can
be explained in part by its demography, its special responsibility for the two Forum

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Australia and regional order

members in free association with New Zealand (the Cook Islands and Niue) as well
as Tokelau, and perhaps by a greater sensitivity to the needs of smaller states
(Henderson 1996; Australia-Fiji Business Council et al. 2002). Unlike Australia,
New Zealand has never promoted a ‘hands-off’ policy to the Pacific as justification
for a lack of involvement.
New Zealand has therefore been a fertile source of ideas for promoting further
Pacific integration: notably in Norman Kirk’s proposal for a Pacific Council (Moore
1982), Jack Ridley’s (1989) proposal for a South Pacific federation, Mike Moore’s
(1982) proposal for a South Pacific economic and political community, and the New
Zealand Government Report, Towards a Pacific Community (South Pacific Policy
Review Group 1990). An important practical example of New Zealand interest is
that it led the initial Truce Monitoring Group in Bougainville, at a time when Australia’s
standing with Bougainvilleans was low. New Zealand, thus, hardly needs convincing
of the merits of greater integration and cooperation.
Of course, Australia cannot take New Zealand’s support for specific proposals
for granted. It can proceed, though, knowing that the Forum’s other developed
member has the interest in and commitment to developing its Pacific links. The
reverse has not always been true.

Conclusion
As the largest and richest member of the Pacific Islands Forum, Australian leadership
is essential in the pursuit of further integration. There has been a gradual evolution
in Australia’s relations with the Pacific, from the colonial period to the policy of
strategic denial, to the policy of constructive commitment, to the current approach
of cooperative intervention. The challenges facing Australia and other Forum
members, however, suggest it is time for a dynamic, new phase in Australia–Pacific
relations: the pursuit of regional integration.
For Australia, these challenges include the growing importance of regional
arrangements around the world, the Pacific arc of instability and the threat this
poses to Australian citizens, the need to protect Australia’s commercial interests,
and the need to improve the effectiveness of Australia’s aid program. These
challenges also largely apply to the Forum’s other rich member, New Zealand, which,
to its credit, has consistently devoted high-level interest to Pacific issues.
Only by embracing a bold new plan can Australia and New Zealand meet these
challenges. Ultimately the Forum’s two richer members can only gain from a regional
community that seeks to promote sustainable economic development, security, the
rule of law, democracy and integration with the wider region.

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Pacific Regional Order

Due to its size and economic weight, Australia has the capacity to be the nominal
leader of the Pacific Islands Forum, but its position is certainly not that of a hegemon
able to dictate the course of the Forum. Australia’s leadership will come through
offering attractive policy packages and an aid partnership conditional on the pursuit
of regional order. Essential is a new strategic vision for Australia’s relations with its
neighbours, and a detailed plan for how Australia and other Forum members can
achieve this.

Notes
1

2
3

4

5

6

7

8

9

New Zealand, Papua New Guinea, Fiji and Tonga also have military forces, and Vanuatu
and the Solomon Islands have paramilitary forces (Australian Department of Defence
2002).
These classifications draw on and extend those suggested by Fry (1991).
In possibly the last official expression of the hands-off, ‘Australia cannot do anything’
approach, Downer wrote: ‘[t]he fundamental problem is that foreigners do not have
answers for the deep-seated problems afflicting the Solomon Islands’ (Downer
2003:11).
Following Australia’s decision to intervene in the Solomon Islands, former Solomon
Islands Prime Minister Manasseh Sogavare accused Australia of having colonial
ambitions, saying that the Solomon Islands was being ‘deliberately used as a puppet
for overseas agendas’ and that the intervention would ‘be nothing short of re-colonising
this country’ (O’Callaghan and Walters 2003:5); Vanuatu’s Foreign Minister, Serge
Vohor, also accused Australia of adopting a colonial attitude to Pacific states
(O’Callaghan and Walters 2003; Kerin and Walters 2003).
Fry (1996) has critiqued Australian attempts to frame the islands, then to prescribe
solutions for them, benevolent or otherwise, as expressions of Australian leadership.
However, it depends on one’s conception of leadership. Leadership is to be welcomed
if it involves the leader living up to its responsibilities, and recognising its own faults
and rectifying them. Fry does approve, for instance, of Evans’ attempts to establish a
more genuine partnership with the Forum island countries through his policy of
constructive commitment. A regional integration project could be seen as the ultimate
expression of constructive commitment, to be approached in a spirit of partnership
and common endeavour, not dominance.
Howard also said the Solomon Islands operation ‘sent a signal to the region that help
would be available to other troubled states should they ask’ (Walker 2003:6).
Article 3(d), Australia-Papua New Guinea Joint Declaration of Principles Guiding
Relations. Available at http://www.austlii.edu.au [accessed 27 February 2004].
Although the language is mild, it is nonetheless stronger than the US commitment
given to Australia through ANZUS, on which much of Australia’s defence planning rests
(Buckley 1989).
See, for example, Howard (2003a, 2003b); Australian Strategic Policy Institute (2003);
Evans and Grant (1995); Wainwright (2003). Some figures in New Zealand also

56

Australia and regional order

10

11

12

13

apparently believe that external players will judge it according to how it discharges its
Pacific responsibilities (Fry 1990).
In the European context, Britain has excellent bilateral relations with the United States,
but pursues regional integration through the European Union because of the benefits
it brings—its views on the European Union are independent of its bilateral relationship
with the United States.
Consider Australia’s existing assets in terms of international political groupings, other
than the United Nations (where Australia’s effectiveness is hamstrung by its
membership of the West Europe and Others Group anyway). The two political bodies to
which Australia belongs are the Forum and the Commonwealth (the WTO and APEC are
economic bodies and the ASEAN Regional Forum and ANZUS are security arrangements).
The Commonwealth helps Australia maintain contacts with African states, but it is
otherwise too dispersed for Australia’s needs.
See http://www.mfat.govt.nz/foreign/regions/pacific/pacific.html and http://
www.nzaid.govt.nz/programmes/r_pac_regional.html [accessed 17 March 2004].
This has been made clear in my various discussions with New Zealand diplomats. See
also Harvey (2004).

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Pacific Regional Order

4

The Pacific
Islands Forum

The Pacific Islands Forum is the Pacific’s pre-eminent regional organisation. As such,
it is the most obvious vehicle through which Pacific states can work together to
address the challenges they face.
Nonetheless, a clear-eyed approach is needed in considering the Forum’s
potential to evolve. This chapter recounts the background to the establishment of
the Forum, and provides an overview of its current institutional structure before
surveying the Forum’s efforts to promote the five goals of regional order. Often,
Forum members have resisted developing a shared sovereignty and a framework is
provided to explain the Forum’s missed opportunities.
The chapter then outlines the achievements of CARICOM, which demonstrates
that island states can achieve a great deal through high-level regional integration,
and that the Forum still has some way yet to develop. To highlight how the Forum
needs to change so that it can pursue this more substantive integration, a detailed
case-study is presented of the Forum’s Pacific Closer Economic Relations–Pacific
Islands Country Trade Agreement (PACER–PICTA).

The beginning of the voyage to regional order
In 1947 the six colonial governments with administrative responsibilities in the
South Pacific established the South Pacific Commission. Representatives of the
colonial powers controlled the Commission’s activities, and its agenda was limited
to development matters—‘no politics were to be discussed’ (Moore 1982:19; Howard
1991:131). For example, island countries could not discuss French nuclear testing
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at the Commission because it was a ‘political matter’ (Tarte 1989:181, 184). In
1965, the head of Fiji’s colonial legislature, Ratu Mara, led the ‘Lae rebellion’,
demanding that the Commission give island countries a greater say in their own
affairs (Tarte 1989:183). Ratu Mara continued to agitate for a regional organisation
indigenous to the South Pacific.
Australia was sympathetic to these demands for more participation and, in 1971,
Australia, the Cook Islands, Fiji, Nauru, New Zealand, Samoa and Tonga established
the South Pacific Forum (South Pacific Forum 1971) as an organisation with a
potentially wider ambit than the South Pacific Commission. The Forum was
established without a founding charter or treaty; rather, there was simply a
commitment to informal, annual meetings of heads of government.
The South Pacific Commission, now renamed the Pacific Community, will not be
considered further because it includes members that are not indigenous to the
region, and so it cannot be a vehicle for regional integration.1

Institutional structure
The Forum is still centred around the annual leaders’ meetings, where heads of
government meet in an informal setting to discuss regional issues. The leaders
release a non-binding Forum Communiqué at the conclusion of their meeting. The
themes in recent years’ communiqués have been economic reform, security issues,
fisheries, nuclear testing, radioactive waste and environmental issues (from sea
turtles to reefs to forests to biological diversity in general).2 Communiqués will often
note and discuss problems, or note progress, or lack of progress, on particular
issues. More rare is a program to solve the problems. Former Australia Prime Minister
Paul Keating has written that ‘each year’s meeting took the previous year’s agenda
as its starting point and many of the same comments were recycled. There was a
good deal of routine business which did not require the attention of heads of
government and, to my mind, too great a tendency to blame other people for the
region’s ills’ (Keating 2000:196).
Forum economic ministers now hold annual meetings in addition to the Leaders’
meetings, and there are also regular meetings of trade, foreign, aviation,
communication and education ministers. There is also a Forum Regional Security
Committee, made up of officials from members’ law enforcement agencies.
The Forum’s attendant bureaucracy has grown over the years. The South Pacific
Bureau for Economic Cooperation was established in 1972 to encourage trade and
economic development. In 1988, the Bureau became the Forum Secretariat and is
now the chief vehicle for implementing the Forum’s agenda. The Forum SecretaryGeneral is the head of the Secretariat and the chief regional bureaucrat.3
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Table 4.1

Pacific Islands Forum members’ assessed contributions

Country

Per cent of regular
Secretariat budget
37.16
37.16
5.49
2.24
1.98
1.98
1.98
1.98
1.98
1.98
1.01
1.01
1.01
1.01
1.01
1.01

Australia
New Zealand
Papua New Guinea
Fiji
Federated States of Micronesia
Palau
Samoa
Solomon Islands
Tonga
Vanuatu
Cook Islands
Kiribati
Nauru
Niue
Marshall Islands
Tuvalu

Source: Australian Agency for International Development, 2003. Aid Budget Summary 2003–
04, Australian Agency for International Development, Canberra.

The Forum Secretariat itself is funded by a regular budget, for which all Forum
members are responsible through assessed contributions (detailed in Table 4.1)
The Forum Secretariat’s programs and activities are funded through an extra
budget, which is funded by Australia, New Zealand, non-Forum members and
international organisations. The Forum Secretariat’s combined regular and extra
budget in 2003 was F$12,932,000. Australia is the biggest donor. 4
A number of specialised agencies are also attached to the Forum. There is a
nominal division of responsibilities between the Forum Secretariat and the
specialised agencies: the Forum Secretariat is responsible for providing policy advice,
and the other agencies implement technical programs (Pacific Islands Forum 2004a:
para 28). To manage natural resources, the South Pacific Forum Fisheries Agency
was established in 1979, the South Pacific Applied Geoscience Commission in
1984 and the South Pacific Regional Environment Programme in 1991. These
organisations, together with the Forum Secretariat, the Tourism Council of the South
Pacific, the University of the South Pacific and the Pacific Community, form the
Council of Regional Organisations of the Pacific (CROP).5 Figure 4.1 sets out the
structure of the Pacific Islands Forum.
I turn now to a consideration of the Forum’s efforts to promote the five goals of
regional order.
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The Pacific Islands Forum

The Forum and goal one: sustainable economic development
For much of its history, the Forum made little substantive effort to promote
sustainable economic development. The Forum initially made some effort to promote
trade cooperation between its members. The Papua New Guinea-Australia Trade
and Commercial Relations Agreement (PATCRA) entered into force in February 1977.6
PATCRA was the genesis for the South Pacific Regional Trade and Economic
Cooperation Agreement (SPARTECA),7 as other Forum island countries lobbied for
the same preferential access. SPARTECA entered into force in January 1981.
SPARTECA provides Forum island country products with preferential, non-reciprocal
access to Australia and New Zealand—that is, Forum island country goods enter the
Australian and New Zealand markets duty free, but Australian and New Zealand
goods still face high tariffs in Forum island country markets. Like PATCRA, SPARTECA
was intended to encourage economic and industrial cooperation, expand and
diversify trade, stimulate investment in exports, provide cooperation in marketing,
and promote other forms of commercial cooperation (Robertson 1986).

Figure 4.1

Structure of the Pacific Islands Forum

Heads of Government
Economic
Ministers

Trade
Ministers

Foreign
Ministers

Aviation
Ministers

Communications
Ministers

Education
Ministers

Pacific Islands Forum Officials Committee

Secretary-General
Council of Regional Organisations of the Pacific
Forum Secretariat
South Pacific
Applied
Geoscience
Commission

Development Political and
& Economic International
Policy Division
Affairs

Trade and
Investment
Division

South
Pacific
Regional
Environment
Program

University
of the
South Pacific

Corporate
Services
Division

South Pacific
Forum
Fisheries
Agency

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Tourism
Council
of the
South Pacific

Pacific Regional Order

SPARTECA was initially cause for celebration (Sutherland 1986); but, as suggested
in Chapter Two, the agreement is flawed because of its non-reciprocal nature and
trade diversion effects. Thus, it has failed to promote the goal of region-wide
sustainable economic development.
In recent years, Forum island countries have realised the importance of
undertaking more measures to promote sustainable economic development, given
the current challenges to economic growth in the region. In 1997, the Forum
instituted a new annual meeting, the Forum Economic Ministers Meeting (FEMM),
to discuss economic difficulties, identify new policies and serve as an impetus for
further reforms. Forum Leaders endorsed the FEMM Action Plan, which contemplates
a range of economic reforms (South Pacific Forum 1997a: para 5). The reforms are
mostly aimed at liberalising trade and investment policy, and encouraging a more
disciplined fiscal policy. Monetary policy, though, has not been a focus.
Forum island countries, from small to large, have embraced the reform agenda
to varying degrees. Samoa has committed itself to moving beyond aid dependency
within 25 years. Vanuatu has instituted a Comprehensive Reform Program, following
consultations with all parts of its society. Vanuatu’s reform plans, like Samoa’s,
include seeking membership of the World Trade Organization. Former Papua New
Guinea Prime Minister Sir Mekere Morauta showed tremendous commitment to
reforming Papua New Guinea’s economy and polity. Nonetheless, the Forum can do
more to create an enabling regional environment.
Arguably, the most important aspect of the economic reform process thus far
has been the conclusion of a framework that could facilitate free trade in the region.
At the 2001 Forum, leaders adopted two agreements to govern trade relations
between members for the foreseeable future: PACER, a head, or umbrella agreement,
covering all Forum members, and PICTA, covering Forum island countries only. This
framework will be considered in detail below.

The Forum and goal two: security
After a slow start, the Forum has begun to pursue more substantive joint security
measures in recent years.
In 1992, the Forum agreed to the Honiara Declaration on Law Enforcement
Cooperation (South Pacific Forum 1992). The Honiara Declaration was an effort to
combat transnational crime, particularly financial crime and drug smuggling. In the
declaration, leaders recognised that ‘an adverse law enforcement environment could
threaten the sovereignty, security and economic integrity of Forum members and
jeopardise economic and social development’ (South Pacific Forum 1992: para 1).
The Honiara Declaration contemplated a range of legislative initiatives, and enhanced
cooperation between law enforcement officials (South Pacific Forum 1992).
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Yet Forum members were not ready to embrace fully a joint approach to security
issues in the early 1990s. Implementing the Honiara Declaration proved problematic.
Successive Forum Communiqués noted the lack of progress in implementing the
Honiara Declaration and stressed its importance.8
The Forum also played little role in addressing, let alone resolving, the
Bougainville conflict (Tarte 1998). The 1998 Forum Communiqué, for example,
simply welcomed ‘positive developments’, whilst noting Papua New Guinea’s
territorial integrity (South Pacific Forum 1998). The Forum’s lack of response to a
major civil war in Papua New Guinea—which spilled over at times into another
Forum member, the Solomon Islands—was a clear indictment of the Forum’s lack of
institutional capacity, and its unwillingness to tackle difficult, though necessary,
issues. Ultimately, four Forum members supported Papua New Guinea in resolving
the conflict, but there was no exercise of regional sovereignty through the Forum.
Perhaps in response to these concerns, leaders passed the Aitutaki Declaration
in 1997. In it, leaders ‘acknowledged that existing arrangements have not provided
explicit mechanisms to facilitate consultations that would enable members to
respond promptly and effectively to requests for assistance’; and ‘accepted the
need for the region to take on a more comprehensive approach to regional security’
(South Pacific Forum 1997b). The Aitutaki Declaration contemplated developing
preventive diplomacy mechanisms in the future. The importance of the Aitutaki
Declaration was in broadening the Forum’s interest in security matters from law
enforcement cooperation (as in the Honiara Declaration), to the broader arena of
‘natural disasters, environmental damage and unlawful challenges to national
integrity and independence’ (Forum Secretariat 2000b).
The twin coups in Fiji and the Solomon Islands in 2000 proved to be the real
catalyst in the Forum’s approach to security issues. The response differed markedly
from the Forum’s previous attitude to regional disorder. The Forum’s Biketawa
Declaration of October 2000 commits the Forum collectively to ‘constructively
addressing difficult and sensitive issues including underlying causes of tensions
and conflict’, such as ‘ethnic tension, socioeconomic disparities, lack of good
governance and land disputes’ (Pacific Islands Forum 2000a: para 1).
That the coup in Solomon Islands followed the Fiji coup by a mere three weeks
probably shocked many Forum members out of their complacency. 9 As a result of
the Biketawa Declaration, the Forum established an Eminent Persons Group to visit
the Solomon Islands and report on what role the Forum could play (Pacific Islands
Forum 2002a: para 15). The Biketawa Declaration allows the Forum SecretaryGeneral to act in a ‘good offices’ capacity to help resolve future security crises
through a number of mechanisms (Pacific Islands Forum 2000a: para 2). In August
2002, Forum Leaders passed the Nasonini Declaration on Regional Security, which
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commits Forum members to ‘act collectively’ in response to ‘security challenges
including the adverse effects of globalisation such as transnational crimes’ (Pacific
Islands Forum 2002b: para 1). The Nasonini Declaration also commits members to
‘good governance practices as a key fundamental strategy for addressing some of
the difficult and sensitive issues underlying the causes of tension and conflict in the
region’ (Pacific Islands Forum 2002b: para 2). Forum members are encouraged to
introduce legislation and national strategies to combat money laundering, drug
trafficking, terrorism and people smuggling (Pacific Islands Forum 2002b: para 8).
Forum members also re-commit themselves to implementing the legislation required
by the Honiara Declaration by the end of 2003 (Pacific Islands Forum 2002b: para 7).
All these efforts laid the groundwork for the remarkable evolution in the Forum’s
role that occurred in 2003. The Forum agreed to an intervention force for the Solomon
Islands, consisting of Australia, New Zealand, Papua New Guinea, Fiji, Vanuatu,
Tonga, Cook Islands and Kiribati, and to Australia and others assuming responsibility
for much of Solomon Islands’ governance. The comprehensive nature of the
intervention is explicitly acknowledged in the Outcome Statement from the Forum
Foreign Affairs Ministers’ Meeting.
• Ministers agreed that the extent of the problems facing Solomon Islands
called for a concerted regional response, as envisaged in the Biketawa
Declaration.
• Ministers welcomed the assistance package proposed by Australia. In
particular, they noted its comprehensive nature, encompassing law and order,
the justice and prison systems, rebuilding the Solomon Islands institutions
and establishing conditions under which Solomon Islands could achieve
economic recovery.
• Ministers endorsed the provision of a package of strengthened assistance to
the Solomon Islands, including a policing operation to restore law and order,
supported, as required, by armed peacekeepers (Forum Foreign Affairs
Ministers’ Meeting 2003b: paras 5, 7, 10).
This suggests the Forum and its members have entered a new era, with members
embracing the shared security and shared sovereignty that they have shunned in
the past.

The Forum and goal three: the rule of law
Most of the Forum’s impressive achievements have come through efforts to promote
the rule of law (between states, rather than within states), when it has banded
together to negotiate international agreements. For example, the Forum had a
victory at the UN Law of the Sea negotiations between 1973 and 1982. After sustained
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joint advocacy by Forum members, the world community recognised the justice of
allowing them to manage their marine resources, and granted each Forum island
country an exclusive economic zone of 200 nautical miles.10 These states, with
their limited land resources, now have an interlocking series of exclusive economic
zones covering one-sixth of the Earth’s surface—the largest fisheries in the world.
But with the right to the exclusive economic zones came the responsibility to
police them from distant-water fishing nations that sought to continue exploiting the
marine resources without paying fees. The United States refused to recognise the
exclusive economic zones. The situation was finally resolved in 1987 when the
United States signed a multilateral fisheries agreement with Forum members.11
This outcome demonstrates what the Forum can achieve when united. It also
demonstrates the outcomes that are possible when Australia is fully engaged.
Through the Pacific Patrol Boat program, Australia provided the practical support
Forum island countries needed to enforce their legal rights. This is backed up by the
Treaty of Niue,12 which provides a framework for regional maritime surveillance and
fisheries law enforcement, and the Convention for the Prohibition of Fishing with
Long Driftnets in the South Pacific.13 In 2000, Forum members, together with distantwater fishing nations, concluded the Convention on the Conservation and
Management of Highly Migratory Fish Stocks in the Western and Central Pacific
Ocean, which aims to ensure sustainable stocks for highly migratory species.14
Caring for the environment has been a Forum theme, from its initial concern
over the effects of nuclear testing, to more recent concerns about global warming.
Three conventions give effect to these environmental concerns. The Treaty of
Rarotonga in 1985 established the South Pacific Nuclear Free Zone.15 This treaty
dealt with Forum concerns to prevent nuclear testing, storage or dumping in the
region, whilst still allowing nuclear-armed US warships to visit ports. The following
year, the Forum established the Convention for the Protection of the Natural
Resources and Environment of the South Pacific Region, designed to control
pollution.16 This was further refined in the Waigani Convention 1995, which regulates
and minimises transboundary movements of hazardous and radioactive wastes.17
These various conventions demonstrate that Pacific states will embrace the
supranational rule of law when such legally binding commitments are in their interests.

The Forum and goal four: democracy
Until recently, the Forum has been ambivalent about any efforts to promote or
uphold democracy. In 1987, despite Australian Prime Minister Bob Hawke’s advocacy,
the Forum refused to include the Fijian coup as a formal agenda item: other Forum
members accepted the coup as a legitimate reassertion of indigenous rights (Alley
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1990; Howard 1991). The coups were seen as an internal problem, and most Forum
members believed it was better to abide by a policy of non-interference (Alley 1990).
Tonga even sent a congratulatory telegram to the coup leaders (Howard 1991). The
Forum statement simply noted the ‘complexity of the problems’ and hoped ‘for a
peaceful and satisfactory solution’ (South Pacific Forum 1987: para 3) Fiji’s GovernorGeneral refused to accept a delegation led by Hawke (Alley 1990). When Ratu Mara
attended the Forum the following year, he was successful in ensuring the situation
in Fiji was not discussed (Alley 1990).
However, under the Biketawa Declaration, Forum members commit themselves
to ‘belief in the liberty of the individual under the law, in equal rights for all citizens
regardless of gender, race, colour, creed or political belief’, and to ‘upholding
democratic processes and institutions which reflect national and local circumstances,
including the peaceful transfer of power’ (Pacific Islands Forum 2002a: para 15).
The Biketawa Declaration led the Forum to establish its first Elections Observer
Mission, to observe the 2001 elections in the Solomon Islands and provide support
for the democratic process there.

The Forum and goal five: integration with the wider region
The Forum has continued to expand from its initial seven members, to cover sixteen
states. Although the Forum has expanded, there has been a clear understanding until
now that expansion should be restricted to independent or self-governing small Pacific
islands (Tarte 1998). For example, Article 27 of PICTA, the trade agreement between
Forum island countries, states that by unanimous agreement the Parties may permit
non-Forum states, territories or self-governing entities to accede to the agreement.
This would be encouraging, but for the fact that it was intended to be limited to nonForum small Pacific islands (namely the United States and French territories in the
region) (Forum Secretariat 2002). From the discussions at the PACER–PICTA
negotiations, it was not intended to be a vehicle for wider integration.
Thus, the Forum has occasionally had an ad hoc involvement with other small
Pacific islands, but the Forum has not pursued a long-term vision of wider integration.
Forum Leaders’ 2004 vision of seeking ‘partnerships with our neighbours and beyond
to…ensure a sustainable economic existence for all’ may provide the basis for a
change in approach (Pacific Islands Forum 2004b:1).

Explaining missed opportunities
For much of its history the Forum has done little to promote the five goals of regional
order. Nonetheless, the Forum has successfully promoted the rule of law between
states, even if not within states, and has recently pursued more substantive measures
to promote sustainable economic development and security.
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As a result of the Forum’s slow development as a regional institution, there have
been various missed opportunities. More radical innovations, such as economic
union (discussed at the first Leaders’ Meeting in 1971; see South Pacific Forum
1971), Sir Julius Chan’s suggestion for the establishment of a regional peacekeeping
force (Fry 1990) and Mike Moore’s proposal for a Pacific Parliament (Moore 1982),
fell by the wayside, perhaps because the Forum was established without a charter
setting out any goals (South Pacific Forum 1971). Perhaps the crises in Bougainville,
the Solomon Islands and Fiji would have been avoided or muted if a regional human
rights commission and a regional security mechanism had been established.
Pharand (1994) distinguishes between external and internal sovereignty, where
external sovereignty refers to a state’s interaction with other states and international
organisations, and internal sovereignty refers to a state’s authority to determine its
own governmental institutions and the law governing the lives of its citizens.18 Until
recently, Forum members resisted any measure that would impact on their internal
sovereignty. This is why they could band together to promote the rule of law between
states, but oppose any measure to promote the rule of law within their own states.
The Forum’s approach is changing, as evidenced by the Biketawa Declaration and
the Solomon Islands operation, which involved Solomon Islands surrendering much
of its internal sovereignty. However, the fact is that Pacific regionalism will stagnate
without further initiatives that will impact on internal sovereignty.
One obstacle to such initiatives is the negative side to the ‘Pacific Way’. Like the
phrase ‘Asian values’, the Pacific Way can also be code for intransigence, avoiding
difficult issues by blaming others and, in extreme cases, glossing over human rights
abuses (see, for example, Alatas 1993:81; Chan 1995:25; Howard 1991:129).
Sometimes the Pacific Way in the Pacific Islands Forum seems to be the direct
descendant of the ‘no politics’ rule at the South Pacific Commission, used by colonial
governments to avoid discussion of substantive, sensitive issues. We all seek
consensus and the peaceful settlement of disputes. But the Pacific Way, as currently
formulated, is not enough and there is no safety net when it falters. Bougainville is
evidence of the devastation that occurs when consensus fails: tens of thousands of
lives lost and a shattered infrastructure, with Melanesians killing fellow Melanesians
and Bougainvilleans killing each other (Joint Standing Committee 1999:6).
According to the Forum’s Secretary-General, Greg Urwin, the Pacific has only recently
concluded its ‘immediate post-colonial phase’ (Forum Secretariat 2004: para 5). This
phase represented another obstacle to more dynamic initiatives: it is understandable
that initial Forum island country leaders, having achieved independence from colonial
rulers, did not immediately seek out a shared regional sovereignty. This attitude will
probably change as new leaders emerge. Indeed, the Secretary-General has noted the
‘generational change as younger leaders, who did not inherit their power from colonial
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rules, take the helm of their nations’ (O’Callaghan 2004:10). The Caribbean is more
advanced in its regional integration efforts, possibly because the Caribbean states
achieved independence much earlier than the Pacific states.

New hope
Forum members need to be convinced that pooling their sovereignty in regional
order lifts their political status and power in a wider structure. Regional cooperation,
even where it impacts on internal sovereignty, is needed to prevent isolation and
irrelevance. The Pacific Way needs to stand for more than politeness—it needs to
stand for strength and unity in diversity, for innovation and openness and a willingness
to overcome the challenges outlined in Chapter Two.
The Forum’s recent initiatives to promote sustainable economic development
and security better, and the Auckland Declaration outlining Forum Leaders’ vision of
the future, give cause for hope that Forum members are realising the benefits, and
the necessity of pursuing regional integration as the Caribbean and many other
regions in the world have done. This is a promising start—marking the end of the first
phase of the Forum’s development, which lasted some 30 years—but much more
comprehensive integration is needed to promote all five goals of regional order.

Caribbean comparison
A Caribbean comparison is again instructive, because it demonstrates that not all
island groupings resist measures that impact on internal sovereignty, and the
outcomes that are possible when a group of island states pursue regional integration.
CARICOM was established in 1973. Its founding charter had three explicit goals:
economic integration through the establishment of a common market, the
coordination of members’ foreign policies, and functional cooperation (CARICOM
Treaty, Article 4). CARICOM countries viewed regional integration ‘as an essential
element in their strategies for survival and development’ (Andriamananjara and
Schiff 1998:27).
As with the Forum, CARICOM heads of government are at the top of the institutional
hierarchy; however, CARICOM heads of government meet twice a year rather than
once a year. The Community Council of Ministers, meeting four times a year, is
responsible for strategic planning and coordination between members, as well as
external relations (World Trade Organization 2000; Fairbairn and Worrell 1996).
CARICOM also has four ministerial councils which meet regularly: the Council for
Trade and Economic Development, the Council for Foreign and Community Relations,
the Council for Human and Social Development, and the Council for Finance and

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Planning (World Trade Organization 2000). Like the Forum, CARICOM is served by a
Community Secretariat, and has a number of specialised agencies.19
Thus, to a large extent, CARICOM has a similar institutional structure to the
Pacific Islands Forum. The key difference in the organisations is that CARICOM
members have been willing to pursue legally binding measures which will impact on
their internal sovereignty, as its founding treaty makes clear. As an example of this
commitment to shared sovereignty, CARICOM’s Council for Finance and Planning is
responsible for coordinating economic policy, and the financial and monetary
integration of members. CARICOM also has a Council of Central Bank Governors, to
monitor members’ monetary and economic policy (Fairbairn and Worrell 1996).
Most importantly, CARICOM members agreed in 1989 to pursue more
comprehensive economic integration (World Trade Organization 2000). Whilst
regional trade in goods had been largely liberalised, members decided to pursue a
comprehensive common market, with free trade in services, investment and labour,
as well as goods. Further, members pursued greater harmonisation of the laws and
regulations affecting commerce, including customs procedures, intellectual property,
competition policy and corporate taxation (World Trade Organization 2000).
Subsequently, members decided to institute measures to coordinate macroeconomic
policy, develop a common currency, pursue capital market integration and harmonise
fiscal and other incentives (World Trade Organization 2000).
The Organisation of Eastern Caribbean States (OECS) is a sub-set of CARICOM,
consisting of the Caribbean’s smallest states. The OECS has pursued deeper
integration at a faster pace than the rest of CARICOM, and already has its own
common currency and central bank (Fairbairn and Worrell 1996). The bank’s
constitution allows it to discipline members, to ensure currency stability and low
inflation; a collective decision by members can overrule an individual government
which may be tempted to overspend (Fairbairn and Worrell 1996). Members of the
OECS also share a Supreme Court.20
CARICOM has been the more dynamic, successful organisation; and we can
draw a link, too, between CARICOM’s dynamism and the higher economic growth of
Caribbean states compared to Pacific states (see Chapter Two).

PACER–PICTA
A number of the Forum’s current aspects need to change before it can better emulate
CARICOM’s success. This is usefully demonstrated by a consideration of the
negotiations for the Forum’s most recent trade achievement, the Pacific Closer
Economic Relations Agreement–Pacific Islands Country Trade Agreement (PACER–

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PICTA), which occurred between 1997 and 2001. The following case study provides
various lessons for future efforts to develop the Forum’s sovereignty. The case study
also highlights the approach of some of the players in Pacific regionalism and
demonstrates that, in large part, it is for Australia to display innovative leadership if
it hopes to maximise the Forum’s potential. Yet the Forum Secretariat must also do
better in harnessing the Forum’s potential, and doing so means accepting the merits
of closer integration between the Forum’s richer and poorer members.
Key features
The key features of PACER are
• a commitment by all Forum members to work towards a common market
• a non-binding commitment to general trade liberalisation
• a commitment to commence free trade arrangement negotiations with
Australia and New Zealand eight years after PICTA enters into force
• a commitment to commence ‘consultations’ with Australia and New Zealand
in the event of Forum island countries commencing free trade agreement
negotiations with any other OECD country, or any other country with a GDP
higher than New Zealand’s.21
The key feature of PICTA is a plan to establish free trade in goods among Forum
island countries by 2010, or by 2012 in the case of least developed countries and
small island states.22
PACER–PICTA is a potentially important framework for facilitating future efforts
at closer integration. Nonetheless, it is a second-best outcome. It delays, possibly
until 2011,23 the comprehensive integration all Forum members need to pursue for
economic and political reasons (Australian Parliamentary Committee 2003). The
agreements split the integration efforts of the Forum into two streams: between
Forum island countries alone, and between these countries and Australia and New
Zealand.
Beginnings
Following sustained advocacy by the Forum Secretariat, the idea of a Pacific Free
Trade Agreement was discussed at the Forum Economic Ministers’ Meeting in 1997,
and in 1999 Forum Trade Ministers included Free Trade Agreement negotiations in
their action plan. Such negotiations were subsequently endorsed at the Forum
Leaders meeting (South Pacific Forum 1999b: para 8).
Unfortunately the new-found interest in a free trade agreement was the result of
external developments, rather than an initiative from a Forum member keen to
pursue regional integration amongst all Forum members. The European Union wanted
Forum island countries to work together so it could more easily negotiate its own
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trade agreement with them (the European Union’s then agreement with Forum island
countries had been found to be illegal under WTO law).24 The Forum Secretariat wanted
to promote a Forum island countries-only free trade agreement as a first step to
negotiating a Regional Economic Partnership Agreement with the European Union.
Thus, from the outset of the PACER process, the Forum Secretariat did not want
to facilitate a Forum-wide free trade agreement that would include Australia and
New Zealand. Australia’s initial reaction to the Secretariat’s proposal for a free
trade agreement was to stall further progress,25 reinforcing the Secretariat’s position.
Australia’s response demonstrated a lack of historical insight. The Forum had
been talking on and off about economic union since its inception (South Pacific
Forum 1971). Australia had commissioned a study in the 1980s on extending its
Closer Economic Relations (CER) agreement with New Zealand to the Forum island
countries (Drake and Hall 1987), and the Forum island countries had said in 1986
they would ‘give further consideration to the advantages of moving to a CER type
relationship’ (South Pacific Forum 1986: para 26). So the idea had been around, if
inert, for 30 years. Australia’s response should have been an enthusiastic
endorsement of an opportunity to tackle high Forum island country tariffs and create
a world-class developed–developing country free trade agreement. Instead,
Australia’s approach was that of an outsider looking in on developments in an
external region,26 when it should have been reacting as a vital member of a regional
grouping, keen to pursue a regional integration initiative.
When Australia realised there was some momentum behind the PACER proposal,
it changed its argument—if a free trade agreement was to go ahead, it wanted to be
included as a full member, as befitted its status as a founding member of the
Forum. Australia suggested that PACER should be viewed not just in economic terms
but as a political statement about the Forum banding together. Australia was also
concerned that if Forum island countries negotiated an agreement with the European
Union, the European Union would receive duty-free access to Forum island country
markets before Australia.
The economics of an agreement
Economic modelling supported Australia’s inclusion. A Forum Secretariat study
showed that there were few economic benefits to be had in a Forum islands-only
free trade agreement27 Australia and New Zealand examined the implications of a
Forum-wide free trade agreement and found that although the adjustment costs
would be higher, the gains would be much higher. 28 Such an agreement would match
existing trade patterns, as well as being more likely to lead to trade creating outcomes,
and to allow members to exploit complementarities (Centre for International
Economics 1998). It would create a market of 28 million people. As the World Bank
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subsequently wrote, a free trade agreement between Forum island countries and
Australia and New Zealand would promote increased investment, technology
transfer, new knowledge and cheaper inputs for Forum island countries, as well as
locking-in economic policy reforms (World Bank 2002).
In contrast, the Forum islands-only free trade agreement would cover only six
million people and very little of the trade between the parties. It was also unlikely to
realise dynamic gains like increased investment from richer Forum members and
countries outside the region. In short, it would fail to promote the goal of sustainable
economic development.
Legal impediments
Notwithstanding the economic benefits, there were two legal obstacles to Australia
forming a free trade agreement with the Forum island countries. Any such agreement
between Australia, New Zealand and the Forum island countries would have to
meet the disciplines of Article 24 of the General Agreement on Tariffs and Trade
(GATT),29 such as implementing free trade within ten years. Yet the Forum Secretariat
and many Forum island countries wanted the flexibility possible under the WTO’s
Enabling Clause,30 which sets lesser standards for agreements between developing
countries, such as not having to implement free trade within ten years. This would
only be possible with a Forum island countries-only free trade agreement (the fact
that developing countries do not have to meet the disciplines of GATT Article 24 may
explain why regional integration efforts between developing economies alone have
generally been unsuccessful (De Melo and Panagariya 1992; see also El-Agraa
1994; and De Melo and Panagariya 1993). CARICOM is a notable exception, as it
has pursued substantive liberalisation).
Second, the possibility of an Australia–New Zealand–Forum island country free
trade agreement was complicated by the complex web of defensive most-favoured
nation clauses in the region’s trade architecture. A defensive most-favoured nation
clause, included in many free trade agreements, provides that if a member of the
free trade agreement passes on trade benefits to any non-member of the agreement,
the same benefits must also be passed on to all fellow agreement members. Because
of the European Union’s agreement with all Forum island countries,31 and the US
agreement with some Forum island countries,32 opening Forum island country
markets to Australia and New Zealand also means opening up to the European
Union and the United States within a similar timeframe. Since Australia, New Zealand,
the European Union and the United States account for most Forum island country
imports, this would involve opening up to almost the whole world. Australia’s
challenge was to produce a comprehensive structure demonstrating how Forum
island countries would benefit from, and be supported through, this large first step.
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Political impediments
There were also two political impediments. Forum island country officials, encouraged
by the Forum Secretariat, wanted a ‘stepping stone’ approach to trade liberalisation.
They felt that Forum island country politicians would be in for a difficult time if they
made a commitment to long-term liberalisation with Australia. The situation was
complicated by the fact that many Forum island countries rely heavily on tariffs for
government revenue—on average, tariffs make up 40 per cent of the Forum island
countries’ tax revenue (Filmer and Lawson 1999). Since most of their imports are
sourced from Australia and New Zealand, some of the Forum island countries would
lose an average of 26.6 per cent of their tax revenue under a free trade agreement
that included those countries (Filmer and Lawson 1999). Forum island countries
with value-added taxes would have had to raise them, and those without them
would have had to introduce them to replace the revenue lost from tariffs.
Second, Forum island countries were worried that a commitment to liberalise
trade with Australia and New Zealand in the short term would prejudice their
negotiations with the European Union. So Forum island countries were more
concerned about the reaction of the distant but powerful European Union, than
cementing a relationship with their fellow Forum members.
Negotiations
The Forum Secretariat disregarded the modelling that showed there was little
economic benefit in a Forum islands-only free trade agreement. The Secretariat
proposed that Australia and New Zealand should be excluded from the main
agreement; Forum island countries could sign on to an optional protocol if they
wanted to establish free trade with Australia and New Zealand. So it was entirely
conceivable that Australia and New Zealand would maintain duty-free access for
Forum island countries under SPARTECA and that no Forum island countries would
join the optional protocol. Meanwhile, Forum island countries would be negotiating
with the European Union to allow European Union countries duty-free access to their
markets before Australia and New Zealand.
Australia and New Zealand presented their own plan in response. Their proposal
sought minimal textual changes to the Forum Secretariat’s draft agreement, but
under their proposal the agreement would apply to all Forum members. Australia
and New Zealand’s initial proposal did not specify the implementation period for
Australia–New Zealand–Forum island country free trade, and did not specify any
trade facilitation assistance.
At the PACER pre-negotiations workshop in March 2000, only one country, Tonga,
supported Australia’s proposal. The meeting did however agree to engage consultants
to consider Australia’s proposal.
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Australia began to refine its proposal in response to Forum island countries’
concerns. The first problem was that the usual ten-year implementation period for
free trade agreements, as specified in GATT Article 24, seemed too onerous for
Forum island countries, requiring both broad and deep liberalisation over a relatively
short period. Australia and New Zealand planned to continue providing duty-free
access for Forum island countries from the start of the agreement. However, Australia
believed the Forum island countries’ developing country status constituted the
‘exceptional circumstances’ allowed in GATT Article 24 that could justify stretching
the implementation period for Forum island countries to 20 years.33
Australia and New Zealand believed that a 20-year implementation period for
Forum island countries could be justified to the WTO, because of the number of
least-developed countries involved. A free trade agreement among this many
developed and least developed countries had not been attempted before. If it
worked, it would serve as an example of the successful large-scale integration of
developing countries into the global economy. Australia might have been in a
considerably better position at the negotiations if it had argued for this proposal
from the beginning of the PACER process.
Formal negotiations started in August 2001. Although some Forum island country
ministers had expressed support for Australia’s plan, this was not reflected at the
negotiations. Forum island country trade officials accepted that it was inappropriate
to relegate Australia and New Zealand to an optional protocol to the main agreement,
but could not accept Australia’s plan to introduce free trade among all Forum
members over a 20-year period.
Since Australia had failed to convince Forum island countries of the merits of
committing to comprehensive trade integration, there was a need to produce a
structure that would allow these countries to go about their business without splitting
the Forum permanently, and without alienating Australia and New Zealand completely.
The Forum consultants proposed an ‘umbrella approach’ to resolve the impasse,
which would consist of a head agreement that would include all Forum members. The
head agreement would not be a free trade agreement, but would contain some trade
facilitation provisions, and could contain any number of subsidiary agreements.34 The
first of these would be the Forum islands-only free trade agreement.35
Following some Australian refinements,36 the PACER–PICTA framework was
produced, with PACER being the umbrella agreement and PICTA the Forum islandsonly Free Trade Agreement. This framework could be an important vehicle for regional
integration, but some of its potential substance has been robbed by Australia’s lack
of desire to counter some of its shortcomings, and the Forum island countries’
desire to get on with their own free trade agreement.

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Lessons
Forum island countries are still grappling with the implications of economic reform
and free trade. Any new plan, such as the one that Australia proposed at the outset
of the PACER–PICTA process, needs a long lead-in time where there is plenty of
scope for frequent discussions, ideally face-to-face. If Australia wants to sell new
initiatives for regional integration, it cannot rely on reactive refinements to overcome
significant resistance.
In trying to sell its initiative, Australia did not bring anything new to the PACER–
PICTA negotiating table. It did not offer a strategic vision of the region’s future. It did not
offer more aid, nor to fix up the trade provisions in SPARTECA that have frustrated
Forum island countries for twenty years. But nor did Australia threaten to cut aid if it
was not included in the agreement, nor to review the Forum island countries’ duty-free
access to Australia under SPARTECA. Forum island countries were given no reason to
think they would be worse off for leaving Australia out. Unconvinced of the theoretical
benefits of free trade, Forum island countries sought practical, long-term assistance
to provide a safety net if they were to take what seemed like a leap of faith.
There are also other, broader factors to be considered in explaining the PACER–
PICTA outcome, and to this we must look to Australia–Forum island country relations
in general. Australia has long been regarded as the ‘Big Brother’ of the Pacific.
Sometimes, this has been a derogatory label to indicate a domineering relationship;
at other times, it is an affectionate label to indicate thanks for advice and assistance
(Smyth, Plange and Burdess 1997:45). At the PACER negotiations, it seemed that
the derogatory label held sway—there was seemingly little trust that anything Australia
said could be taken at face value. Doubtless this reflects in part the complexity of
the plan Australia presented at the first round of negotiations—but the reason it was
complex was to try and meet Forum island country concerns, not to disregard them,
a point which Forum island countries did not seem to accept.
Ultimately, Australia needs a strategic vision for where it wants its relations with
the Forum island countries to be in 20 years time. Australia’s current approach falls
awkwardly and unsuccessfully between benign neglect and full commitment (see
Rosewarne 1997; Evans and Grant 1995). If Australia’s approach to PACER–PICTA
had indeed been one of neglect, Australia would not have cared about Forum island
countries having their own free trade agreement, and it would not have bothered
trying to convince them of the merits of free trade between developed and developing
countries. If Australia had been fully committed, it would have produced a plan for
pursuing a common market over a 20-year period, or, at the least, tackled the
implementation and selling issues to ensure Australia’s plan for free trade in goods
was accepted. Naturally, countries will only adopt a plan that has something in it for

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them. And even when the gains are clear, it helps to know that fellow members are
sharing the risk in pursuing regional integration. Australia’s PACER proposals had no
political risk for Australia and much political risk for Forum island countries.
The failed Australian plan to introduce free trade in goods over a 20-year period
represents a lost opportunity for all Forum members to develop a Pacific trade
order. Australia and New Zealand got the guarantee that other developed countries
would not receive preferential access to Forum island markets before them. Forum
island countries—and the Forum Secretariat—got the Forum island countries-only
free trade agreement they were after, with some minor concessions.
The Forum Secretariat also has to accept some responsibility for this minimalist
outcome. It turned PACER into a zero-sum game with winners and losers. The Forum
Secretariat’s adversarial approach prevented more constructive outcomes. Prior to
the pre-negotiations workshop, the Secretariat distributed its critique of Australia and
New Zealand’s proposal to a number of non-Forum countries and organisations, without
asking the Forum membership first. Australia found out about the Secretariat’s concerns
at the same time as Japan, the United States and the European Union, as well as
various UN bodies. At the pre-negotiations workshop, the then Forum Secretary-General,
Noel Levi, told officials ‘that they should not be preoccupied with the question of
whether Australia and New Zealand should be in or out of the FTA as this would only
distract officials from deliberating on the real issue’ (Forum Secretariat 2000a:7), the
Forum island countries-only free trade agreement.
The Forum as a whole needs to change its mind-set on two key issues: it needs
to be convinced of the merits of deeper, and wider, integration, so it can win the
solutions and leverage that are only possible in a larger, more united organisation.
The economic modelling commissioned by the Forum Secretariat demonstrated
that the Forum island countries-only free trade agreement is a dead-end: it will not
promote sustainable economic development. By promoting integration among Forum
island countries alone, the Secretariat did them a disservice, as such an approach
will not resolve the critical challenges confronting them. The Secretariat’s approach
also allowed Australia to avoid more substantive commitments.
If the Forum is serious about tackling the region’s challenges to sustainable
economic growth, its next step should be to invest the PACER structure with substance
and urgency. The task is to enlarge it into an agreement that includes a commitment
to free trade on the part of Forum island countries and meaningful trade facilitation
on the part of Australia and New Zealand. Australia and the Forum Secretariat must
produce a comprehensive package to tackle the challenges facing Forum island
countries. Pacific citizens deserve better, and Pacific governments need to do better
by themselves and their fellow Forum members.

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Conclusion
This chapter has outlined the Forum’s efforts at regional integration so far, and
some of the obstacles to the pursuit of regional order. There have been some
impressive achievements in the Forum’s history, but there has also been an implicit
reluctance to embrace measures that impact on internal sovereignty. The PACER–
PICTA negotiations were examined as a vehicle for considering some of the obstacles
to deeper regional integration in detail. The negotiations came about as a result of
a European Union initiative, an initiative that the Forum’s largest member initially
resisted. The Forum Secretariat sought to exclude the Forum’s richer members, and
when these members were finally engaged, they failed to produce a timely package
that was suitably attractive to overcome the political impediments to a comprehensive
agreement. As the case study demonstrated, some Forum members resist a wider
sovereignty, through misplaced suspicion or a failure to recognise opportunities and
pursue strategic outcomes. These issues have held back the Forum and its members,
as the comparison with the more advanced CARICOM showed. A key theme in the
PACER–PICTA case study was the need for Australian leadership to carry proposals
for Pacific integration forwards—and the consequences when this leadership is
lacking.
However, growing threats to security, and the desire for closer economic ties,
have highlighted the need to develop the Forum’s sovereignty and have led to a
gradual change in approach on the part of Forum members. The culmination of this
evolution is the 2003 Solomon Islands intervention, when Forum members agreed
to a peace-keeping operation and to Australia assuming responsibility for much of
the Solomon Islands’ internal sovereignty.
But the seriousness of the challenges facing Pacific states suggests that the
need for Forum members to pool their sovereignty will only grow. The difficulties of
implementing any regional integration project are not to be underestimated; but
CARICOM’s pursuit of a shared vision of regional integration, made explicit in its
founding treaty, demonstrates the benefits that integration would offer the Pacific.
This chapter concludes the review of the present state of the Pacific, and its
current policies. The ensuing chapters outline a new vision, and plan, to enable the
Pacific to achieve regional order. In the following chapter, the European Union will be
examined as the model that the Forum should emulate, and the proposal for the
Oceania Community put forward.

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Notes
1

2
3
4
5

6

7
8
9

10

11

12

13
14
15

16
17

18

19

The members of the Pacific Community are: American Samoa, Australia, the Cook
Islands, Micronesia, Fiji, France, French Polynesia, Guam, Kiribati, Marshall Islands,
Nauru, New Caledonia, Niue, the Northern Mariana Islands, New Zealand, Palau, Papua
New Guinea, the Pitcairn Islands, Samoa, the Solomon Islands, Tokelau, Tonga, Tuvalu,
the United Kingdom, the United States, Vanuatu and Wallis and Fortuna.
See Forum Communiqués at http://www.forumsec.org.fj [accessed 18 September 2003].
The Secretary-General is elected by Forum Leaders for a renewable three-year term.
http://www.dfat.gov.au/geo/spacific/regional_orgs/spf.html [accessed 1 June 2004].
The Council of Regional Organisations of the Pacific is chaired by the Forum SecretaryGeneral.
Available at http://www.austlii.edu.au [accessed 6 July 2001]. PATCRA is theoretically
a reciprocal agreement—that is, both parties benefit—but there is little evidence of this
in practice. See PATCRA, Article 9.
Available at http://www.austlii.edu.au [accessed 6 July 2001].
See Forum Communiqués at http://www.forumsec.org.fj [accessed 18 September 2003].
Samoan Prime Minister Tuila’epa Sa’ilele Mallelegaoi said that ‘[i]t is incumbent on
the current regional leadership to do everything it can as individual governments and
as a Forum to discourage…what some observers think is the emergence…of a political
culture that encourages the use of force to effect political and consequently economic
and social change’. Australian Foreign Minister Downer said ‘[t]here was a clear
commitment to face up to the political problems in the region and to work collectively
to try to solve them—something that has never been done before’ (O’Callaghan 2000b:7).
See United Nations Convention on the Law of the Sea. Available at http://
www.austlii.edu.au [accessed 27 August 2003].
Agreement among Pacific Island States Concerning the Implementation and
Administration of the Treaty on Fisheries between the Government of Certain Pacific
Island States and the Government of the United States of America. Available at http://
www.austlii.edu.au [accessed 27 August 2003].
Niue Treaty on Cooperation in Fisheries Surveillance and Law Enforcement in the
South Pacific Region. Available at http://www.austlii.edu.au [accessed 27 August 2003].
Available at http://www.austlii.edu.au [accessed 27 August 2003].
Available at http://www.austlii.edu.au [accessed 27 August 2003].
South Pacific Nuclear Free Zone Treaty. Available at http://www.austlii.edu.au [accessed
27 August 2003].
Available at http://www.austlii.edu.au [accessed 27 August 2003].
Waigani Convention to Ban the Importation into Forum Island Countries of Hazardous
and Radioactive Wastes and to Control the Transboundary Movement and Management
of Hazardous Wastes with the South Pacific Region. Available at http://
www.austlii.edu.au [accessed 27 August 2003].
However, as MacCormick states, no state today ‘is in a position such that all the power
exercised internally in it, whether politically or legally, derives from purely internal
sources’ (1993:1).
These include the Caribbean Disaster Emergency Response Agency, the Caribbean
Meteorological Institute, the Caribbean Meteorological Organisation, Caribbean Food

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20
21
22

23
24

25

26

27

28

29

Cooperation, the Caribbean Environment Health Institute, the Caribbean Agriculture
Research and Development Institute, the Caribbean Regional Centre for the Education
and Training of Animal Health and Veterinary Public Health Assistants, the Association
of Caribbean Community Parliamentarians, the Caribbean Centre for Development
Administration and the Caribbean Food and Nutrition Institute, and associate
institutions such as the Caribbean Development Bank.
See http://www.oecs.org/iust_ecsc.htm [accessed 13 December 2003].
Available at http://www.forumsec.org.fj [accessed 22 July 2003].
Available at http://www.forumsec.org.fj [accessed 22 July 2003]. Since PACER does
not contain any trade liberalisation schedules, it is only PICTA that is a free trade
agreement within the meaning of the WTO rules on regional trade agreements. General
Agreement on Tariffs and Trade, Article 24.
PICTA entered into force in 2003.
The European Union’s Lomé Agreements provided development assistance and dutyfree access to the European Union for some seventy African, Caribbean and Pacific
states, including many (now all) Forum island countries. However, the arrangement
was illegal because it failed the WTO’s most-favoured nation rule, the key rule of the
multilateral trading system. This states that reductions in trade barriers given to one
WTO member must be given to all WTO members. Under WTO law, it is possible to give
developing countries benefits that are not passed on to developed countries as well,
but it is illegal to give benefits to some developing countries and not to all developing
countries. These legal flaws, combined with frequent criticism and various WTO cases,
brought the European Union’s fourth Lomé Agreement to an end. The European Union
asked the WTO General Council for a five-year waiver from its obligations, after which
time it would look to establish Regional Economic Partnership Agreements, in effect
WTO-compatible free trade agreements, with its developing country partners. The
European Union was initially looking to have such agreements in place by 2005.
Australia believed that multilateral liberalisation and APEC offered greater benefits for
Forum members, and that they should be the focus of the Forum’s efforts.
This is consistent with Fry’s criticism of Australia’s Pacific policy: too often, Australia
sees the rest of the Pacific as somehow separate from itself. This limits the opportunity
for shared understanding and common solutions (Fry 1991:22). See also Joint
Parliamentary Committee (1989), which concluded, somewhat defeatedly, that Australia
‘will inevitably remain somewhat apart’ (1989:227).
Because of the low levels of inter-Forum island country trade—only 2 per cent of total
Forum-wide trade—the agreement would result in an annual GDP increase of only A$5
million (Scollay 1998; see also World Bank 2002).
A Forum-wide agreement would result in annual welfare gains for Forum island
countries of over A$200 million. Australia and New Zealand would experience an annual
welfare gain of A$58 million. Australia–New Zealand and the Forum island countries
are already ‘natural partners’ because of the high percentage of trade between them
(Centre for International Economics 1998; see also World Bank 2002 and Krugman
1991 for a discussion of ‘natural partners’).
Available at http://www.wto.org/english/docs_e/legal_e/legal_e.htm [accessed 20
October 2001]. GATT Article 24 and the Understanding to GATT Article 24 outline the
framework of WTO law within which free trade agreements dealing with goods must

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30

31

32

33

34

35

36

operate. These rules specify four key requirements that a free trade agreement to
which developed countries are party must meet if it is to qualify as an exception to the
WTO’s most-favoured nation rule. An agreement must
1. cover ‘substantially all the trade between the parties’
2. be implemented within ten years, unless there are ‘exceptional circumstances’
3. not raise barriers to non-parties to the agreement
4. be notified to the WTO and demonstrate to other WTO members how the parties
will achieve free trade between them within the specified time.
There are sound economic reasons for the disciplines in Article 24. For example, an
agreement meeting the criterion for covering ‘substantially all the trade’ will involve
meaningful liberalisation, leading to increased welfare for the parties. Further, the
requirement that non-parties should not suffer from increased trade barriers helps to
ensure that the trade diversion effects of the arrangement are minimised. See Hoekman
and Kostecki (1995) and below, for a discussion of regional trade agreements and
GATT Article 24.
The Enabling Clause, GATT Part 4 and the 1979 Decision on Differential and More
Favourable Treatment of Developing Countries was established to recognise that
developing countries need ‘special and differential treatment’ in their efforts toward
free trade. Free trade agreements between developing countries do not have to meet
the disciplines of Article 24.
Annex 5, Article 4 of the European Union agreement with Forum island countries
states that if a member of the agreement passes on a benefit to any other developed
country, it must also be passed on to the European Union.
Micronesia, Palau and the Marshall Islands currently enjoy preferential access to the
United States through their Compacts of Free Association (these are also illegal under
WTO rules, but have a waiver until 2006). Section 4, Article 243 of the US Compacts
states that trade benefits given to any country must also be passed on to the United
States. Unfortunately for Australia’s trading interests in the Pacific, there is no most
favoured nation defensive clause in SPARTECA.
Many of the European Union’s free trade agreements with developing countries have
implementation periods of 12 years for the developing country, and some parts of
NAFTA are being phased in over 12–15 years.
Without trade liberalisation provisions, there would be no need to notify the agreement
to the WTO.
Later there could be an Australia–Forum island country Free Trade Agreement and a
New Zealand–Forum island country Free Trade Agreement, or Australia and New Zealand
could have individual free trade agreements with every single Forum island country.
Australian officials further refined the plan by suggesting the head agreement should
be as substantive as possible, and there should be only one subsidiary free trade
agreement, the Forum island country-only free trade agreement. When Forum island
countries were ready to embrace liberalisation towards Australia and New Zealand, the
subsidiary free trade agreement would be ‘folded back’ into the head agreement. The
final result—a single, all-encompassing agreement.

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5

From a Forum
to a Community

Pacific states face serious challenges to sustainable economic development, security,
human rights, the rule of law and democracy, as well as the danger of isolation from
the wider region. Aid alone has failed to resolve these challenges. Further, a lack of
partnership between the Forum Secretariat and the Forum members with the
resources to assist in the resolution of the challenges has previously been a feature
of regional policymaking.
New and better approaches are possible, as the Forum’s Biketawa Declaration,
which led to the exercise of a regional sovereignty in the Solomon Islands,
demonstrates (Pacific Islands Forum 2000a). Yet a more holistic approach is needed
to address the region’s challenges comprehensively. The first step is the development
of a shared vision of the region’s future—encouragingly, we see the beginnings of
such a vision in the Forum Leaders’ Auckland Declaration (Pacific Islands Forum
2004b). Yet this step must also involve the development of a model by which this
future can be realised.
This chapter examines the European Union, the most advanced model of regional
order, showing how regional integration can successfully promote the goals of
sustainable economic development, security, the rule of law, democracy and
integration with the wider region.
A substantial evolution is then proposed in the Forum’s development. This would
change what it means to belong to the Pacific region, and how the Pacific region is
regarded by the rest of the world. It involves a commitment by all Forum members to

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an exciting shared future, and to the institutional arrangements needed to promote
sustainable economic development, security, the rule of law, democracy and wider
integration.
Thus, the Forum should be reorganised, and renamed the Oceania Community,
to make it a more dynamic and more powerful organisation. The necessary
agreements and structure are outlined for this to be achieved, and a sustainable
funding arrangement is proposed, which would represent a new approach to aid in
the Pacific. The chapter also shows that sustainable regional integration requires
Community members to embrace the rule of regional law and a shared regional
sovereignty.
This is the integrated strategic vision needed to resolve the Pacific’s current
challenges, and to realise a prosperous and peaceful future.

The European Union and goal one: sustainable economic development
A consideration of the European Union demonstrates what a greater commitment
to regional integration can achieve in terms of the five goals of regional order.
First, the European Union has pursed regional trade integration, later
supplemented by monetary integration, as the best means of promoting sustainable
economic development.
The case for regional trade integration rests, in the first instance, on the general
case for free trade. Adam Smith (1777 [1990]) proposed that countries would
benefit by developing an absolute advantage in particular goods, then trading with
other countries which had an absolute advantage in producing other goods. This
would promote efficiency, by fostering competition and providing opportunities for
specialisation and economies of scale (Carbaugh 1995; ‘The economics of free
trade’, The Economist, 22 September 1990; Gonnelli 1993),1 ultimately leading
to increased economic growth and welfare for citizens. David Ricardo (1817[1990])
refined this by suggesting that countries did not need an absolute advantage—
they only needed a comparative advantage (Ricardo 1817 [1990]; Kreinen 1995).
Thus, countries benefit from trading with one another; and free trade involves
countries removing barriers to imports from other countries. This benefits the
exporting country which has sold its product, and the importing country which can
access products more cheaply than if it produced them itself; thus, consumers in
the importing country pay less and enjoy greater choice (Gonnelli 1993). These are
just the static gains; the dynamic gains can include increased savings and investment,
and the promulgation of new technology, innovation and productivity gains (Australian
Department of Foreign Affairs and Trade 2000). These dynamic gains can generate
growth throughout an economy, including in non-export sectors (Kreinen 1995).
Regional trade integration is a useful vehicle, then, for promoting free trade
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among a group of countries more quickly or deeply than may be possible at the
global level (De Melo and Panagariya 1992; Sager 1997).
The empirical evidence supports the link between open trading policies and
economic growth, both generally and through the impetus of regional agreements.2
In the European case, the link between integration and improved economic
performance is strong. For example, it has been estimated that the completion of
the European single market in 1992 has resulted in an additional 300,000–
900,000 jobs (World Trade Organization 2003).
Between 1958 and 1970, trade among the initial European Union members
increased six-fold, and three-fold with the rest of the world. Average gross national
product increased by 70 per cent. Davison has analysed the effect of European
Union accession on the nine countries that then joined between 1973 and 1995.
In the year they applied to join the European Union, all but one had growth rates
below the European Union average; in the year following accession, all had
growth rates exceeding the European Union average, except for Denmark (below
average) and Greece (equal to average) (Davison 1998). Over time, relatively
poorer countries that joined the European Union, such as Ireland, Portugal and
Spain, all converged toward the European Union average after accession (see
Kaitila 2004). In 1973, when Ireland joined, its per-capita income was 62 per
cent of the European Union average; in 2002, it was 121 per cent. The Irish
President of the European Parliament has said that European Union membership
turned Ireland ‘from a stagnant, backward, failed part of the British regional
economy into a modern and prosperous European country’ (‘Dancing an Irish jig’,
The Economist, 17 April 2004).
Likewise, the countries that joined the European Union in May 2004 have
experienced higher growth than existing European Union members, as a result of
trade integration and the economic reforms they undertook as part of the accession
process.3 Shortly after their independence, the European Union created a network
of bilateral trade agreements with these countries, and then later insisted that
acceding countries must be competitive market economies.4 As a result, the
European Union ‘became the trade anchor of the transformation process in Central
and Eastern Europe’ making the European Union ‘the engine of export growth’ for
these countries, with exports to the European Union from the Central and Eastern
European countries increasing by 53 per cent (Inotai 1994).
The European Union’s trade integration policies, and its insistence on economic
reform, have prompted the International Monetary Fund (IMF) to describe the Central
and Eastern European countries joining the European Union as ‘in many respects
perfect examples of small open economies’ (Cottrell 2003:12). Kaliningrad, an
exclave of Russia surrounded by Poland and Lithuania (both now European Union
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members), provides a contrast to its neighbours which were able to pursue European
Union membership. Its average wage is US$150 a month, roughly half the level in
Lithuania, and one-third of the wage in Poland (Cottrell 2003).
The European Union has also pursued monetary integration as a means of
combating inflation, increasing trade and facilitating further economic reform (see
Yläoutinen 2001). Low inflation is an important element of sustainable economic
growth, encouraging investment, allowing longer-term planning and avoiding boom
and bust economic cycles (see Reserve Bank of New Zealand 1998, 1999). In
Finland, for example, ‘post-war economic policy had produced a pattern of recurrent
bursts of rapid growth and these periods of boom had sowed the seeds for the next
cycle of inflation followed by devaluation’ (Yläoutinen 2001:22). Finland joined the
Euro to win the benefits of ‘lower inflation and more stable economic growth’; the
Euro was viewed as ‘the best guarantee for sustainable, employment-friendly
economic growth’ (Yläoutinen 2001:6, 18).
The European Union has also worked to ensure that economic growth is environmentally sustainable. One of the key arguments made in favour of allowing the Central
and Eastern European countries to join the European Union was that they would be
obliged to adopt European Union environmental safety standards, thus avoiding the
risk of environmental damage from unsustainable industries (Van Ham 1993).
In the Pacific context, Mark Malloch Brown, former head of the United Nations
Development Programme, has argued ‘[y]ou can’t solve the chronic problems of
each of the Pacific island states, the lack of a viable economy, weak political
institutions, you can’t solve it island by island’ (‘UN development body supportive of
Pacific community plan’, ABC Radio, 13 August 2003).5 No Forum island country
has an internal market big enough to drive economic growth on its own, nor will
integration with other Forum island countries be sufficient. Previous efforts at trade
integration between developing countries alone have demonstrated that the internal
markets of such countries ‘were too small relative to world markets to serve as the
engine of growth’ (De Melo and Panagariya 1992:39; see also El-Agraa 1994). De
Melo and Panagariya state bluntly that ‘as far as South–South integration is
concerned, there is no future in it’ (1993:20). Thus, Forum island countries would
benefit from secure access to larger markets, and their industries and consumers
would benefit from competitive imports (Gonnelli 1993). Trade in capital could be
particularly important for Forum island countries. The literature suggests foreign
investment is critical for development, providing increased employment and higher
wages; opportunities to upgrade skills, technology and production methods, leading
to increased productivity; and serving as a stimulus for domestic investment (OECD
1999; Australian Department of Foreign Affairs and Trade 1999c). Finally, trade
integration may also help Forum island countries break the cycle of aid dependency.
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Loo and Tower (1989) found that trade was twice as important as aid for the welfare
of developing countries.
Thus, sustainable economic growth is unlikely to be achieved in the Pacific without
regional integration. Based on the European Union experience, Pacific integration
would contribute to higher levels of trade, improved economic performance and a
stable monetary environment. Further, as with the European Union, regional
integration would provide better mechanisms to enforce the Pacific’s current
environmental agreements.

The European Union and goal two: security
Promoting security has been a core concern for the European Union—the impetus
for integration was the desire to prevent another major war between European
powers. In 1946, Churchill argued for a ‘United States of Europe’.
The fighting has stopped; but the dangers have not...The structure of the
United States of Europe, if well and truly built, will be such as to make the
material strength of a single state less important. Small nations will count
as much as large ones and gain their honour by their contribution to the
common cause (Churchill 2002:957–58).

In 1950, the French Foreign Minister, Robert Schuman, proposed the integration
of heavy industries to ensure France, Germany and other combatants would not go
to war again (Pinder 1994; Fontaine 1995). Garton Ash argues that one of the key
achievements of European integration is
…the unique, unprecedented framework and deeply ingrained habits of
permanent institutionalised cooperation that ensure that the conflicts of
interest that exist—and will continue to exist—between the member states
and nations are never resolved by force…It is an economic community, of
course, but it also a security community—a group of states that do find it
unthinkable to resolve their own differences by war (1998:51).

Given that there were three devastating wars between France and Germany
between 1870 and 1945, helping prevent another war between them would be a
sufficient security achievement. Yet the European Union continues to be a major
contributor to European stability. In the early to mid 1990s, for example, fears were
expressed about a reunited Germany, and the rise of anarchy in the newly liberated
Central and Eastern European countries (Edwards 1992; Hama 1996; Pinder 1994;
Van Ham 1993). Even former German Chancellor Helmut Kohl argued that European
union was needed to ‘contain a potentially dangerous Germany within Europe’
(Feldstein 1997:60).
The European Union deserves much of the credit for peacefully managing both
these challenges. Monetary union helped address fears of German dominance, and
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the prospect of accession to the European Union assisted the Central and Eastern
European countries through the rigours of the transition to a market economy, as w ell
as promoting democracy and protecting minorities. Bertram believes that the European
Union provided a ‘structure of order’ for Eastern Europe following the collapse of
communism (Bertram 1995).6 The process continues, too—Friedman and others
suggest that Turkey’s accession to the European Union is vital for promoting security. 7
The European Union has been criticised, though, for its inability to project military
power, and to manage the break-up of the former Yugoslavia (Dettke 1994). This
perhaps misunderstands the nature of the European Union’s contribution to
European security, underselling its achievement in promoting stability through soft
power rather than military force. Nonetheless, future integration efforts can learn
from the European Union experience, and include mechanisms for preventive
diplomacy from the outset.
Contrary to the European Union, Pacific integration will not be driven by fears of
war between states. Instead, internal instability, the risks of potential failed states and
the dangers posed by non-state actors represent the new security challenges. Arguably,
these new challenges would also be alleviated by regional integration, in the same
way that regional integration alleviated inter-state tensions in the twentieth century. 8

The European Union and goal three: the rule of law
Perhaps the European Union’s most obvious success has been in promoting the
rule of law. The substantive integration achieved by the European Union would have
been impossible without the legally binding commitments in the European Union’s
various intergovernmental treaties. These treaties have provided clear supranational
rules to guide relations between member states. However, they have also assisted
in promoting the rule of law at the national level, which benefits individual citizens.
For example, the simplification and standardisation of business rules benefits
domestic individuals and companies as well as foreign individuals and companies.8
The European Union’s ‘Copenhagen criteria’, adopted in 1993, specified the
criteria which Central and Eastern European candidate countries had to meet before
being allowed to accede to the Union. According to the criteria, acceding countries
had to demonstrate they ‘had achieved stability of institutions guaranteeing…the
rule of law’ and ‘the ability to take on the obligations of membership’ (European
Union 2003). To this end, candidate countries had to implement 1,400 European
Union laws and regulations, totalling some 80,000 pages, and demonstrate that
they had the administrative and judicial capacity to enforce European Union laws
(European Union 2004; Davison 1998). Thus, they were obliged to create a
transparent legal framework following years of communist rule. It has been estimated
that some 50 per cent of national legislation in member states is now generated by
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the European Union (‘Snoring while a superstate emerges?’, The Economist, 10
May 2003), and that legal integration has proceeded ‘quietly, incessantly, and without
much controversy’ (McManus 1998:126) (whether all the European Union’s laws
are strictly necessary is part of the ongoing, healthy debate between
intergovernmentalists and institutionalists).9
An important element of the rule of law in the European Union context is that
small states have enjoyed legal equality with large states. Yalem, for example, argues
that the legal equality of member states is essential to the success of regional
integration (Yalem 1973). Although there have been times when larger states have
acted according to their own prerogatives—France and Germany, for example,
breached the European Union’s Stability and Growth Pact, to the frustration of smaller
members—this is more of an exception (‘The death of the stability pact’, The
Economist, 29 November 2003) .
The creation of a substantive dispute settlement mechanism in the European Court
of Justice has allowed members, small and large, as well as individual citizens, to assert
their rights and resolve disputes in a peaceful manner. The creation of a system based
on rules rather than power is no small achievement after centuries of European conflict
(World Trade Organization 2003), where large states overran small states.
Thus, the European Union has been highly successful in promulgating the rule of
law. Falk argues that ‘European regionalism has demonstrated that it is possible to
extend the rule of law beyond the state, often promoting further human rights gains’
(Falk 1995:85). In the Pacific context, greater commitment to the rule of law would
benefit all Forum members, small and large. The Pacific could usefully emulate the
European Union model of comprehensive agreements between members being
backed up by a regional dispute settlement mechanism.

The European Union and goal four: democracy
From its outset, the European Union has insisted that members must be
democracies. Article 237 of the Treaty of Rome stated that the European Union was
‘open to all democratic European nations’.10 Greece, Portugal and Spain all joined
after periods of non-democratic government (Dettke 1994). Bertram and others
have argued that European Union membership helped these countries emerge
‘from authoritarian regimes to make the transition to social and democratic stability’
(Bertram 1995:67; see also Van Ham 1993; Wright 1998). Indeed, the European
Union allowed Greece to join even though it technically did not meet other criteria,
‘partly on the grounds that membership would safeguard Greek democracy whereas
exclusion might put it at risk’ (Cottrell 2003:20).
The Copenhagen criteria also specified that acceding countries must have
‘institutions guaranteeing democracy’. This provided an important incentive for the
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newly independent Central and Eastern European countries to maintain democratic
polities, especially where there was no history of democratic government (Henig
1997). This achievement should not be underestimated. Dettke, for instance, warned
in 1994 of ‘the weakness of, and lack of experience with, the institutions of civil
society and democratic pluralism’ and ‘the danger of relapse into authoritarian
forms of government’ in these countries (Dettke 1994:183). However, the accession
process gave these countries ‘the motivation and the models they need[ed] to
entrench or restore democratic institutions’ (Cottrell 2003:20).11
Thus, European Union membership has worked as an incentive for reinstating or
reinforcing democracy. The European Union’s efforts to facilitate economic
development have also contributed to stronger democracy. Economic development

Table 5.1

Phases in the development of the European Union

Phase
1

Year
1951

2

1973

3
4

1981
1986

5

1995

6

2004

7

acceding

8

candidate

Countries
Belgium
France
Germany
Italy
Luxembourg
Netherlands
Denmark
Ireland
United Kingdom
Greece
Portugal
Spain
Austria
Finland
Sweden
Cyprus
Czech Republic
Estonia
Hungary
Latvia
Lithuania
Malta
Poland
Slovak Republic
Slovenia
Bulgaria
Romania
Turkey
Croatia

Source: http://europa.eu.int/comm/enlargement [accessed 4 October 2005].

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has allowed Europe to avoid the threats to democracy previously inspired, at least in
part, by economic stagnation and inequality. 12
The European Union has also worked to ensure that democratic majority rule
has not been at the expense of protection for minorities. The Copenhagen criteria
required institutions guaranteeing human rights and protection of minorities. Again,
Dettke worried that ‘every single East European state has a minority problem within
or outside of its borders’ (Dettke 1994:183). Yet, in contrast to the obvious example
of the former Yugoslavia, acceding countries managed to work through minority
issues peacefully.
Notwithstanding its success in reinforcing national democracy, it is more
debatable whether the European Union has been successful in promoting
transnational democracy. Arguably, the European Parliament has been the most
underdeveloped of the European institutions—indeed, many authors have highlighted
the risk of a ‘democratic deficit’ from European integration (see, for example,
Featherstone and Sonntag 1984; Neunreither 1994; Weiler 1997). Zuleeg (1997)
suggests a democratic deficit occurs when sovereignty is transferred to the
supranational level, weakening democratic legitimation at the level of the nation–
state, without sufficient compensation at the supranational level.. Weiler argues the
European experience has meant that ‘the value of each individual in the political
process has inevitably declined, including the ability to play a meaningful civic role in
European governance’ leading to ‘a continuing sense of alienation from the Union
and its Institutions’ (Weiler 1997:65, 151). Thus, it is vital that regional integration
efforts find ways to engage individual citizens.
The European Union demonstrates that regional integration can have an
important normative influence in the promotion and protection of democracy. The
challenge, then, for a Pacific integration project is to find mechanisms to promote
democracy at the national level, as well as reinforcing the democratic legitimacy of
the integration effort itself.

The European Union and goal five: integration with the wider region
The European Union has been successful in deepening its integration process, but it
has been as successful in widening the process. The European Union’s membership
remained static in its first twenty years because of France’s veto over new members
(Fontaine 1995). Since then, it has adopted a dynamic approach to membership,
expanding to 25 countries, with more in prospect. The following table lists the various
phases in the European Union’s expansion.
Robert Keohane and Joseph Nye (1977) first distinguished between hard and
soft power. Hard power refers to military capabilities, and the ability to use threats or
rewards to get others to do what they otherwise would not. In contrast,
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…soft power is the ability to get desired outcomes because others want
what you want. It is the ability to achieve goals through attraction rather
than coercion. It works by convincing others to follow or getting them to
agree to norms and institutions that produce the desired behavior. Soft
power can rest on the appeal of one’s ideas or culture or the ability to set
the agenda through standards and institutions that shape the preferences
of others…If a state can make its power legitimate in the eyes of others and
establish international institutions that encourage others to define their
interests in compatible ways, it may not need as many costly traditional
economic or military resources (Keohane and Nye 1998:84).

The European Union can be regarded as one of the most effective projections of
soft power, given its continued success in attracting new members. For the Central
and Eastern European countries, the European Union ‘offered a vision of freedom
and prosperity for which countries hungered after decades of communist rule’
(Cottrell 2003:20). Countries queue to join the European Union and accept its
market disciplines in return for the benefits of belonging to a wider organisation. In
turn, democracy and economic growth are strengthened in the acceding country
(Kelly 2003c). Existing members enjoy the benefits of stability, new markets and
investment opportunities (Lintner 1997).
The benefits of the European Union’s integration with the wider region are twofold. Expansion has promoted sustainable economic growth, security, the rule of law
and democracy over much of Europe. Yet the European Union’s size gives it the
ability to project power into the wider world. Ongoing integration has made the
European Union the world’s largest trading bloc (European Commission 1999),
giving it considerable negotiating power in multilateral and bilateral trade
negotiations—far more power, of course, than any one European state could marshal—
and an effective bloc in the United Nations when united (see Brückner 1990).
A Pacific integration project would offer members the opportunity to influence
and exercise soft power over each other. Just as important would be their ability to
promote wider integration and to project soft power into the world.

Developing the Forum: the Oceania Community
In the mid 1990s, Inotai argued that the
…traditional behaviour of the [European Union] toward Central and Eastern
Europe is based on emergency support to the most needy countries. This
approach does not offer sustainable stability because it treats the
symptoms of the problem rather than its cause. Such an approach does not
contribute to economic modernisation [and]…[e]mergency support helps
strengthen the rent-seeking mentality of certain actors (1994:163).

Yet there were alternatives to this approach to the struggling European states, in
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precisely the same way that there are alternatives if Forum members wish to truly
assist the Pacific’s struggling states. The European Union, ‘in contrast to traditional
international organisations, does not stop at the national borders of its members but
reaches into their domestic structures and procedures, allowing nation-building from
within—the only location from which it can be done with any hope of success’ (Bertram
1995:40). This degree of impact on a state’s internal sovereignty is only possible if
there is a sense of genuine shared endeavour. European Union members accepted
the challenges of reforming the Central and Eastern European countries, and they
succeeded, but only because they offered full membership of the European Union in
return. In the Pacific context, Australia cannot hector from ‘outside’ the region, as it
has often sought to do: it can lead the quest for regional order by exercising soft power,
but it must also be an integral, intimate partner in the process.
Thus, to resolve the region’s challenges, Forum members must pursue substantive
regional integration, and the Forum must become the core of new, more dynamic
organisation, in the same way that the initial six-member European Coal and Steel
Community has served as the core for the 25-member European Union.
Regional organisations have often changed their names to advertise new
substance and new membership. The European Coal and Steel Community evolved
to the European Economic Community, to the European Union, which may yet evolve
to the United States of Europe. The Organisation of African Unity likewise reformed
under the banner of the African Union.
‘Oceania Community’ is proposed as a new name for the Pacific Islands Forum.
‘Forum’ implies a vehicle for conveying views and raising concerns. ‘Community’
better conveys the sense of a group of states pursuing joint solutions to common
problems. Consistent with my intergovernmentalist approach, I choose ‘Community’
instead of ‘Union’ because my vision is for a group of nation-states coming together
to pursue common solutions to the challenges of the region, rather than a group of
nation-states agreeing to create a Pacific super-state. Different structures may be
needed in 50 years’ time, but the timeframe of my concern is the next 20 years. So
the book is about establishing a community, rather than a union, and ‘Oceania’ is
used to distinguish this initiative from existing institutions.
To give effect to the goals of sustainable economic development, security, human
rights, the rule of law and democracy, I propose that the Oceania Community should
consist of
• a trade order, given form in a common market
• a monetary order, involving joint measures to promote monetary cooperation,
such as inflation targeting and monetary union
• a security order, consisting of a crisis prevention and management centre
and a standing peace monitoring group
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• a human rights order, embodied in a human rights commission
• a legal order, led by a regional court, dealing with human rights, environmental,
trade and constitutional issues
• a political order, involving a regional parliament
• a commitment to pursuing the integration process with the wider region.
For this level of integration to be achieved, though, community members must
be committed to the rule of regional law, and a shared regional sovereignty.

The rule of regional law
Substantive regional integration will only come about through legally binding
commitments. Countries interested in building regional order must be committed to
the regional rule of law. This would mean recognising that all states are equally bound
by the agreements of the Oceania Community, and accountable to the Community’s
institutions.13 This would protect the interests of large and small members, as the
European Union has demonstrated. A commitment to the law of the Community
would also allow states and their citizens to be more strategic in their long-term
planning, thereby affording greater security and certainty. 14 This is one of the key
opportunities afforded by a Pacific integration project—regional integration ensures
that the rule of law governs relations between states, but also between states and
their citizens, and between citizens. As the European Court of Justice has stated,
‘[c]ommunity law…not only imposes obligations on individuals but is also intended to
confer on them rights which become part of their legal heritage’ (Case 26/62, Van
Gend en Loos v Nederlandse Administratie der Belastigen, 1963 ECR 1, 12).
Thus, the rule of law is a key plank of regional integration. To advance regional
integration, the New Zealand government report, Towards a Pacific Community,
proposed ‘an umbrella compact which pulls together within a Forum framework the
instruments of regional security that are already in place…The goal is…a community
of countries working together to help meet the needs and concerns of the region’
(South Pacific Policy Review Group 1990:224). To give effect to the rule of law, the
constitution for the Oceania Community should consist of such an umbrella compact,
or single undertaking treaty, made up of a number of agreements that all members
of the Community would have to ratify. The single undertaking treaty would consist
of the following main agreements to
• establish a common market
• commit members to a common band of acceptable inflation
• establish permanent security mechanisms
• establish a regional human rights charter, and a regional human rights
commission
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From a Forum to a Community

• establish a regional court
• establish a regional parliament.
In addition to the compulsory single undertaking treaty, there would be optional
protocols on telecommunications liberalisation, monetary union and some aspects
of the jurisdiction of the regional court (Figure 5.1).
The single undertaking treaty incorporates the critical agreements, the minimum
amount of integration needed to promote the five goals of regional order. The optional
protocols would include important further integration initiatives for those members
that are ready, but these are not critical to the establishment of the Oceania Community.

Figure 5.1

Structure of the Oceania single undertaking treaty
OCEANIA SINGLE UNDERTAKING TREATY
Common Market Agreement
Sub-agreement on Trade in Goods
Sub-agreement on Trade in Services
Sub-agreement on Trade in Investment
Sub-agreement on Labour Mobility

Inflation Targeting and Monetary
Cooperation Agreement
Security Agreement
Human Rights Charter and Human
Rights Commission Agreement
Regional Court Agreement
Regional Parliament Agreement
Optional Protocol on
Telecommunications Liberalisation
Optional Protocol on Monetary Union
Optional Protocol on Additional
Jurisdiction for the Regional Court
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Regional order and global order
It is crucial that Oceania Community law draws on the law of the global system, to
the extent that it is applicable. This is because regional initiatives that are not
informed by the values and law of the global system can be inward-looking and
xenophobic, contributing to world disorder. As discussed in Chapter Two, the Pacific
Way is sometimes promulgated by élites to cover up their own considerable interests
whilst facilitating widespread discrimination (Howard 1991). Even the European
Union, the best example of a framework for promoting regional order, has flaws. The
European Union’s trade policies lock out the most efficient producer, often located
in a developing country, through massive agricultural subsidies.15 In its negotiations
for ‘free’ trade agreements, the European Union pressures developing countries
into accepting sub-standard agreements that carve out sensitive sectors such as
agriculture, which then reduces the pressure on the Union to make concessions in
multilateral negotiations.16 Further, critics argue that the European Union’s
development assistance policies often serve to trap developing countries into
commodity-based economies, instead of facilitating more productive and profitable
service industries.17
These potential negatives of regionalism demonstrate the need to relate regional
initiatives to more general norms and interests. Forum members risk losing more
from damaging the United Nations and the World Trade Organization than they
stand to gain from regional integration efforts that do not support the global system.
So it is vital that Forum members utilise the Oceania Community to promote the law
of the global system—the United Nations, the World Trade Organization and the
International Labour Organization—in our region.
There will be areas where the Oceania Community should rightly surpass the
global system—for example, in the promotion and regulation of investment, the
movement of workers and the promotion of democratic participation in supranational
governance. Innovative measures taken through the Oceania Community may serve
as precedents for the global system. But where there is an existing precedent, the
Oceania Community should work to give local effect to it so as to contribute to and
uphold world order.
Therefore, in detailing proposals for the Oceania Community, future chapters will
work from global precedents where relevant. Thus, the Oceania common market
should uphold WTO law generally, and the provisions on regional trade agreements
in GATT Article 24 and GATS Article 5 specifically. The Oceania security mechanisms
should be consistent with the UN Charter, and its provisions for regional security
arrangements. The Oceania human rights charter should develop the UN human
rights covenants, not undermine them.
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Developing a regional sovereignty
The Oceania Community’s authority will depend on the extent to which current
Forum members are willing to invest more national sovereignty in developing the
Forum. This is the second key plank of regional integration. As discussed in Chapter
Four, Forum members have so far only slowly embraced measures that impact on
their internal sovereignty (given that there is no treaty between Forum members
and that it is guided only by an understanding that the heads of government will
meet annually, an argument could be made that members have not invested any
sovereignty in the Forum).
Consequently, the Forum’s effectiveness has been constrained. Forum citizens
and governments need to be convinced that looking to sovereignty, or authority,
outside their own country does not damage their national interest. Resolving the
region’s challenges depends on the willingness of citizens and national governments
to embrace new and larger forms of sovereignty. A consideration of the region’s
security challenges makes this clear. Terrorists and transnational criminals move
outside the traditional forms of state-based sovereignty; only by also moving beyond
these traditional forms and embracing collective security can the impact of terrorism
be reduced. Closer integration is the key. We have already had some indication of
how this may develop in the Biketawa Declaration—the Forum’s gradual embrace of
more intrusive security measures paved the way for the Solomon Islands intervention.
Granted, a careful cost–benefit analysis should be made when deciding whether
to agree to measures that will impact on internal sovereignty. It is appropriate that
citizens maintain a healthy scepticism about investing national sovereignty in
supranational organisations. National politicians and international bureaucrats
should have to justify why such an investment is necessary. However, the serious
challenges confronting the Pacific demand a new approach to resolve them. Forum
members must invest a certain amount of sovereignty in carefully targeted regional
measures.
The effectiveness of an international organisation depends on the amount of
sovereignty that its members are willing to invest in it. Investing sovereignty is like
any other investment—Forum members have to put in enough to make it worthwhile.
This, for example, is a limitation of APEC—countries have not invested enough
sovereignty, or authority, in APEC to make it much more than a forum for dialogue
and trade facilitation (Australian Department of Foreign Affairs and Trade 2000;
Ravenhill 2000; Rudner 1995). Already, though, investing sovereignty in multilateral
organisations and treaties has brought great benefits for Forum members. A key
example is the Law of the Sea negotiations, which granted Forum island countries
their 200-mile exclusive economic zones. So it should be, too, with the Oceania
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Pacific Regional Order

Community. As the European Union demonstrates, much can be achieved at the
regional level—the European Union’s sovereignty in WTO negotiations is far more
powerful than the sovereignty of any of its individual members.
Lintner argues that the impact of globalisation has led many European countries
to conclude that European Union membership and pooling sovereignty is the ‘only
realistic means of maintaining control over their economic (and indeed political)
destinies’ (1997:171). Heiberg states that ‘in an increasingly globalised and
interdependent world, states will have to be very large or pool some of their
sovereignty into regional organisations such as the European Union in order to have
influence in international affairs’ (1998:193).

Structure and funding of the Oceania Community
Structure
The evolution of the Pacific Islands Forum to the Oceania Community will demand
institutional innovation to prevent the duplication of organisations, ensure regional
resources are productively allocated to where they are most needed, and facilitate
the development of an Oceania voice and the prosecution of Oceanian interests on
the world stage.
The current institutional structure of the Pacific Islands Forum and associated
organisations was shown at Figure 4.1. Figure 5.2 shows the proposed institutional
structure for the Oceania Community.
This diagram demonstrates that the important features of the current Pacific
institutions would be retained in the Oceania Community. For example, the Pacific
Islands Forum becomes the Oceania Forum of Heads of Government, the equivalent
of the Council of Heads of Government in the European Union. However, the Forum
Fisheries Agency, the South Pacific Regional Environment Programme and the South
Pacific Applied Geoscience Commission should be incorporated into the Environment
Division of the Oceania Commission. The need for the South Pacific Organisations
Coordinating Committee would be eliminated.
Ministerial meetings in the Pacific Islands Forum currently take place annually,
with senior officials’ meetings being, at best, an ad hoc process. Under the proposed
Oceania Community, ministerial councils would be held twice a year, and senior
officials’ councils six times a year.
Funding
This section discusses funding for the Oceania Community, which would facilitate a
new approach to aid in the Pacific. As discussed in Chapter Two, aid in the Pacific is
currently problematic on two levels. The first issue is that Forum island countries
‘resent the dependence of their countries on aid’ (Henningham 1995:20). The
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From a Forum to a Community

second issue is that aid has failed in most cases to put Forum island countries on
the path to sustainable economic development.
The first issue is a problem of political perception. As discussed in Chapter Four,
the Forum Secretariat and its programs are funded through two budgets—the regular
budget, for which all Forum members are responsible through assessed contributions,
and an extra budget, which is funded by Australia, New Zealand, non-Forum members
and international organisations. In addition, Australia and New Zealand disburse
substantial bilateral aid.

Figure 5.2

Proposed structure of the Oceania Community

Oceania Parliament
President
Oceania Human Rights
Commission

Oceania Court
Constitutional
Chamber

Human
Rights
Chamber

Environment Common
Market
Chamber
Chamber

Oceania Forum of
Heads of Government
Economic Trade
Foreign Communication
Ministers Ministers Ministers
Ministers

Defence Aviation AttorneysMinisters Ministers General

Education
Ministers
Central Bank
Governors

Senior Officials Councils
Oceania Commission
Secretary-General
Trade
Division

Economic
and Monetary
Affairs

Trade
Promotion
Offices

Disaster Relief
Fund

Oceania
Online

Fiscal
Transfer Fund

Oceania Security
Centre

Environmental
Division

Oceania
Peace
Monitoring
Group

Community
Fisheries
Program
Oceania
Applied
Geoscience
Commission

Technical
Assistance
Fund

Oceania
Environment
Program

97

Legal and
Corporate Affairs
Division

University
of the
South
Pacific

Pacific Regional Order

To remove some of the political problems, the Community’s budget should be
funded through a regional system of progressive taxation, and there must be a
single budget to which all Community members contribute. This would assist in
removing the perception of aid as a form of charity and hence, a source of resentment.
I propose the following adjustments to the Forum’s current contributions (Table
5.2). I am guided by a country’s GDP in determining each member’s contribution, but
this is not an absolute determinant. Strictly followed, basing taxation on GDP would
mean that Australia and New Zealand would contribute close to 100 per cent of the
Forum’s budget. Even given the vast differences in GDP, all Forum members should
be contributing something to develop a sense of ownership and pride in their regional
organisation. The reality is that all members with the exception of Australia and New
Zealand would receive far more in regional transfers that the amount they are taxed.
Expressed in percentage terms, Australia’s contribution to the Oceania
Community would be, at 64.25 per cent, much larger than its current contribution of
37.16 per cent to the Forum’s regular budget. This, however, reflects the fact that
Australia is currently a major contributor to the Forum’s extra budget, which would
be integrated into this single budget (Australia is also currently a large bilateral
donor, some of which may instead be channeled into the Oceania Community budget).
Expressed in percentage terms, all other Forum members would be contributing
a smaller percentage to the regional organisation’s budget than they do currently.

Table 5.2

Proposed regional taxation system (for the commencement of the
Oceania Community)
Percentage of the
Community budget

Australia
New Zealand
Papua New Guinea
Fiji
Federated States of Micronesia
Samoa
Solomon Islands
Vanuatu
Tonga
Palau
Marshall Islands
Cook Islands
Kiribati
Nauru
Niue
Tuvalu

64.25
20.00
5.00
2.00
1.00
1.00
1.00
1.00
0.75
0.75
0.75
0.50
0.50
0.50
0.50
0.50

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The reality is, however, that the Oceania Community’s budget would be larger than
the Forum’s budget, given the greater range of activities. Thus, in monetary terms,
members may end up contributing the same, or even more, to the regional
organisation. Even if there were slight increases in monetary contributions this would
be still fair, since the benefits of the Oceania Community would be greater than
those of the Forum.
In terms of addressing the second issue, the failure to set Forum island countries
on the path to sustainable economic development, it must be admitted that Pacific
aid has often not been tied to any strategic outcomes (for example, until recently,
Australia’s aid to Papua New Guinea consisted of substantial direct transfers to the
Papua New Guinea budget).
In the European Union context, however, aid has played a vital role in narrowing
the gap between the European Union’s richer and poorer countries (see Bornschier,
Herkenrath and Ziltener 2004). The European Union demonstrates that aid can
make a critical contribution to the realisation of the goal of sustainable economic
development in the context of regional integration. As discussed above, the
European Union had the commitment, and the strategic vision, to use its aid
relationship with Central and Eastern European countries to facilitate economic
reform in those countries. It pursued ‘clear-cut modernisation…based on a mediumterm comprehensive package that includes substantial financial transfers…in
exchange for strict but reasonable conditions’, to win better results and reduce
long-term outlays (Inotai 1994:163). It did not display any embarrassment in
pursuing this ‘normative straitjacket’ either (Murphy 1995:119). As the European
Commission argued, ‘in return for concrete progress in the implementation of
political, economic and institutional reforms, the EU’s neighbourhood is to benefit
from the prospect of closer economic and political links with the EU’ (European
Commission 2003:7).
In the earlier years of the Oceania Community, substantial technical assistance
would be needed to enable Forum island countries to implement the commitments
proposed in the Oceania common market agreement and the Oceania inflation
targeting and monetary cooperation agreement. Over time, the technical assistance
component of aid will fall as reform is implemented and the number of Forum
island country citizens participating in the Oceania labour mobility programs increases
(these labour mobility programs will be discussed in the next chapter; they will entail
their own costs, and can rightly be regarded as a substitute for other forms of aid). As
Inotai argues, substantial initial outlays are needed to enable reform (Inotai 1994),
but the strategic intention in doing this is to reduce long-term outlays, not to institute
a permanent and greater dependence.

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To facilitate the strategic use of aid, the Forum’s richer members should commit
to five-year programs rather than annual funding. This would allow Forum island
countries to engage in longer-term planning. It is reasonable to expect Forum island
countries to commit to long-term reform to promote sustainable economic
development; but it is also reasonable to expect richer Forum members to commit
to long-term support for this process.
Ultimately, aid can provide a safety net and a hand-up but it cannot underwrite
individual countries’ development: aid alone cannot correct the pursuit of unsound
national policies. Yet moving to a system of regional taxation would correct some of
the political problems in Pacific aid, and utilising aid to support the economic reform
inherent in the Oceania agreements would introduce greater strategic rigour (and
limit the potential to pursue unsound national policies). Given reciprocal binding
commitments to Pacific regional order, richer countries can and should facilitate a
supportive regional environment, better enabling poorer countries to promote
sustainable economic development.

Conclusion
This chapter has further detailed a new strategic vision for the Pacific, developing
the respective visions proposed by the Australian Parliamentary Committee and the
Forum Leaders in the Auckland Declaration. It has outlined the European Union’s
success in promoting the five goals of regional order, and proposed that Forum
members seek to emulate this success through a renamed and reconceptualised
Pacific Islands Forum: the Oceania Community. Yet this will only be possible if Pacific
states embrace the binding legal commitments and shared sovereignty that are
inherent in the regional integration process. I have argued, too, that Forum members
have much to gain by working at the global and regional levels in tandem, drawing
on the existing legal and normative framework of the global system to pursue
integration. The proposal for the structure and funding arrangements for the Oceania
Community represents a new approach to the difficult issue of Pacific aid.
The first stage of Pacific regionalism was a colonial creation—the South Pacific
Commission. Until recently, the second stage focused on polite discussions in the
Forum. It is now time for the third and substantive stage, where members embrace
an organisation, modelled on the European Union, that will be more effective in
resolving the region’s challenges, and more powerful in prosecuting its wider
interests. Ensuing chapters consider the detailed plans needed to realise this
strategic vision—an agenda for the Oceania Community that will build the foundations
for Pacific regional order.

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Notes
1

2

3

4

5
6

7

8

9

10

11

12

13
14
15

16

17

As Gonnelli states ‘in order to become wealthier, countries want to use their resources—
labour, land and capital—as efficiently as possible’ (1993:9).
See, for example, Organisation for Economic Co-operation and Development, ‘trade and
foreign direct investment are major engines of growth in developed and developing countries
alike…In the last decade, countries that have been more open have achieved double the
annual average growth of others’ (1999:5); Carbaugh, ‘the phenomenal growth in international
trade over the last half century has led to a rapid increase in the living standards of all
countries pursuing policies that encourage trade’ (1995:3); Australian Department of Foreign
Affairs and Trade, ‘economies with strong institutions and open policies have grown at nearly
eight times the rate of those with weak institutions and closed policies’ (2000:viii); Gould,
Ruffin and Woodbridge (1993); World Bank (1987), which classifies countries by trade
orientation, finding that outward oriented countries experienced greater growth.
Studies by the European Commission suggested that the latest phase of enlargement would
increase GDP growth in the acceding countries by between 1.3 and 2.1 percentage points
annually, and by 0.7 percentage points for existing members. Conservatively, there would be
an economic gain of 23 billion euro for new members and 10 billion euro for existing
members.
The Copenhagen criteria, adopted in 1993, insisted that acceding countries must demonstrate
‘the existence of a functioning market economy as well as the capacity to cope with competitive
pressure and market forces within the union’. Available online at http://
europa.eu.int.enlargement/agenda2000/strong/2.htm [accessed 11 November 1999].
Transcript available at http://www.abc.net.au/am/content/2003/s923089.htm.
Heiberg argued that ‘the stability and economic development that is likely to come from EU
membership will enhance the strength and stability of [acceding] countries and, with economic
development and a higher standard of living, their internal stability will be improved’
(1998:194–95).
According to Friedman, refusing Turkey admission to the European Union would be a ‘hinge
of history mistake’. The Economist likewise argues that it would be ‘a geo-strategic error of
historic proportions’ (see Friedman 2004; ‘The importance of backing Erdogan’, The Economist,
31 January 2004; ‘Turkey belongs in Europe’, The Economist, 7 December 2002).
Lodgaard (1991) comes closest to addressing these issues, when he suggests that the arms
trade, secessionist movements and environmental problems could be addressed through
regional mechanisms.
For example, European Union regulations even dictate the permissible curvature of imported
bananas (Feldstein 1997).
The updated version, in Articles 49 and 6(1) of the Maastricht Treaty, is that ‘any European
state which respects the principles…of liberty, democracy, respect for human rights and
fundamental freedoms, and the rule of law…may apply to become a member of the Union.’
For example, in Slovakia a new coalition was elected in 1998 because the ‘arbitrary rule’ of
the country’s previous leader risked Slovakia’s European Union accession.
Average per capita income in the initial 15 European Union members was US$22,740 in
2002 (Cottrell 2003).
Compare with Hayek 1944:54.
Compare with Hayek 1944:54.
Almost 50 per cent of the European Union’s budget is devoted to agricultural subsidies
(European Commission 2000).
Australia was a frequent critic of these provisions at the WTO Committee on Regional Trade
Agreements.
Matthews notes that ‘critics maintain that the Lomé process perpetuates the historic division
of labor, allocating the production of primary commodities to Africa and the production of
industrial goods to Europe’ (1991:5). See also Sawyerr (1986).

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6

Free trade

Lack of development is one of the prime causes of Pacific disorder. 1 A key test of
Pacific regional order would thus be whether it can facilitate sustainable economic
development. As discussed in previous chapters, economic theory and the
experience of the European Union, CARICOM and other substantive regional
integration projects suggest that increased trade leads to greater economic growth.
Thus, a comprehensive common market—promoting trade in goods, services,
investment and labour—would be the Oceania Community’s most important initiative
for lifting Pacific economic growth.
Therefore the Oceania single undertaking treaty should include four agreements
to establish the Oceania common market

• an agreement on free trade in goods, to help Forum island countries develop
more competitive goods, and to address their current trade concerns

• an agreement on free trade in services to facilitate the diversification of Forum
island economies into the skills-intensive and high-wage services sector
• an agreement on free trade in investment, so that Forum island countries
can attract the private capital they need to underpin economic growth
• an agreement on labour mobility, vital for improving Forum island countries’
skills base and raising the level of remittances flowing back to their
economies.
These agreements would forge a comprehensive trade order and in turn an
integrated Oceania economy. This chapter considers how the PACER–PICTA framework
could be developed into a comprehensive common market agreement, and outlines
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a plan to achieve free trade in goods, services, investment and labour, in accordance
with the WTO agreements where relevant. The issue of an appropriate
implementation period for the common market is then addressed.
There are many issues involved in creating a common market. This chapter sets
out a legal framework to guide the common market and to identify the major
implementation issues; however, not every legal or implementation issue is
considered. As will be clear, there is much that Forum island countries must do
better to achieve an Oceania common market, but there are also many areas where
Australia has to do better by its regional partners.

Developing the PACER–PICTA framework
The European Union experience suggests that an Oceania common market would
be an important vehicle for promoting sustainable economic development. The
PACER–PICTA framework, discussed in Chapter Four, represents a potentially vital
beginning in this regard. It implicitly acknowledges that free trade has been the
missing ingredient in the Pacific growth equation. At this time, however, PACER–
PICTA only sets out an agenda for trade liberalisation between Forum island countries,
rather than all Forum members.
But the PACER–PICTA framework does provide a roadmap for future regional
integration between all Forum members. In the preamble, Forum members commit
to encouraging ‘trade liberalisation and economic integration in the Pacific region,
with a view to the eventual full and complete integration of all sectors of their
economies’ (PACER, Preamble). This commitment will only be realised through a
comprehensive Oceania common market.
There are two specific triggers in PACER for when Forum island countries have to
negotiate a free trade agreement with Australia and New Zealand, and, potentially,
one general trigger. The two specific triggers are
• a commitment to commence ‘consultations’ with Australia and New Zealand
with a view to negotiating a free trade agreement in the event that Forum
island countries commence negotiations with any OECD country, or any other
country with a GDP higher than that of New Zealand (PACER, Article 6)
• a commitment to commence free trade agreement negotiations with Australia
and New Zealand eight years after PICTA enters into force (PACER, Article 5)
(PICTA entered into force in 2003, so this would be 2011) (Australian
Parliamentary Committee 2003).
The potential general trigger is that Forum members agree to a major review of the
agreement within three years of its entry into force, and every three years thereafter
(PACER, Article 16).
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Rather than waiting until 2008 (when a Forum island countries–European Union
agreement is implemented), or 2011 (eight years after PICTA), or later, all Forum
members must demonstrate the courage to develop the PACER framework fully as
soon as possible. In the PACER framework, Forum island countries have accepted
that in the future they will enter a free trade pact with Australia and New Zealand. In
the meantime, their attitude is ‘make us an offer’. One Forum Secretariat official said,
‘Forum island countries are crying out for a deal—they will happily put everything on the
table, as long as Australia and New Zealand are prepared to do so as well’ (personal
communication). Therefore, a major review of PACER should occur as soon as possible,
with the intention of initiating negotiations for the Oceania common market.
Ultimately, the Oceania agreements must supercede PACER–PICTA. Pacific
regional order demands more than various agreements amongst sub-sets of the
Forum. There needs to be one overarching structure, so that PICTA—and Australia
and New Zealand’s Closer Economic Relations (CER) agreement2—can be folded
back into a larger, more comprehensive agreement. When Australia, New Zealand,
the Forum island countries and the Forum Secretariat are serious about pursuing
sustainable economic development and strategic foreign policy outcomes, they will
move beyond discussing a free trade area for goods alone, and tackle services,
investment and labour mobility.
I turn now to a consideration of how a comprehensive trade order between the
Forum’s richer and poorer members could be achieved in goods, services, investment
and labour by 2025.

Goods
Liberalising trade in goods involves reducing the tariffs on goods imported from
another country, as well as reducing non-tariff barriers that inhibit trade, such as
onerous customs procedures. It is vital that the Oceania goods agreement address
both of these impediments to free trade.
Tariffs are typically applied as a percentage of the cost of the product being
imported. Through PICTA, Forum island countries committed to the trade liberalisation
schedules between themselves (Table 6.1). Small island states and least-developed
Forum island countries committed to the schedules shown in Table 6.2.
Each Forum island country was also entitled to submit a ‘negative list’, detailing
products they were planning to exempt from the free trade regime for the foreseeable
future because of their sensitivity (PICTA, Annex III). Forum island countries also
committed themselves to regular reviews of the agreement, with the intention of
removing products from the negative lists and speeding the liberalisation schedules
(PICTA, Article 23).
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Table 6.1

Goods liberalisation among Forum island countries
Maximum tariff (per cent)
on goods from

Base tariff on goods on entry
into force of this Agreement
More than 20%
More than 15%; not more than 20%
More than 10%; not more than 15%
Not more than 10%

Entry into
force of this
Agreement 1.1.2004
20
15
10
-

15
10
5

1.1.2006
10
5
-

1.1.2008 1.1.2010
5
-

-

Source: Pacific Island Countries Trade Agreement (PICTA), Annex II.

Table 6.2

Goods liberalisation among less developed Forum island countries

Base tariff on goods on entry
into force of this Agreement
More than 25%
More than 20%; notmore than 25%
More than 15%; notmore than 20%
More than 10%; notmore than 15%
Not more than 10%

1.1.2004
25
20
15
10
-

Maximum tariff (per cent)
on goods from
1.1.2006 1.1.2008 1.1.2010 1.1.2012
17.5
15
10
5

10
10
5
-

5
5
-

-

Source: Pacific Island Countries Trade Agreement (PICTA), Annex II.

Table 6.3

Goods liberalisation between Forum island countries and Australia
and New Zealand
Maximum tariff (per cent)
on goods from

Base tariff on goods on
entry into force of this
Agreement
More than 20%
More than 15%; not more than 20%
More than 10%; not more than 15%
More than 5%; not more than 10%
Not more than 5%

Entry into
force of this
Agreement 1.1.2010
20
15
10
5
-

15
10
5
-

1.1.2015
10
5
-

Source: Pacific Island Countries Trade Agreement (PICTA), Annex II.

105

1.1.2020 1.1.2025
5
-

-

Pacific Regional Order

Table 6.4

Goods liberalisation between less developed Forum island
countries and Australia and New Zealand

Base tariff on goods on entry
into force of this Agreement
More than 25%
More than 20%; notmore than 25%
More than 15%; notmore than 20%
More than 10%; notmore than 15%
More than 5%; not more than 10%
Not more than 5%

1.1.2007
25
20
15
10
5
-

Maximum tariff (per cent)
on goods from
1.1.2010 1.1.2015 1.1.2020 1.1.2025
17.5
15
10
5
-

10
10
5
-

5
5
-

-

Source: Pacific Island Countries Trade Agreement (PICTA), Annex II.

This same regime could be adopted in the Oceania goods agreement, albeit over a
longer implementation period (Tables 6.3 and 6.4).
One important factor is the loss of tariff revenue that Forum island countries
would experience as a result of implementing free trade with Australia and New
Zealand. In this respect, Australia and New Zealand should provide technical
assistance to aid in the introduction of value-added taxes. As can be appreciated
from this issue alone, a crucial part of the goods agreement would be the trade
facilitation and technical assistance measures to which Australia and New Zealand
committed themselves.
Non-tariff barriers
One consequence of falling tariffs is that non-tariff barriers become the more
important impediment to free trade in goods. There are four areas to address in the
Oceania goods agreement: rules of origin, quarantine, anti-dumping actions and
emergency actions. The strategic goal would be to harmonise standards and
regulations across the region, and for Forum island country exports to meet the
quarantine and technical standards of developed country markets. Given Forum
island country sensitivities, it will be impossible to sell Forum island countries on
the benefits of signing on to a comprehensive trade order if Australia does not assist
in these areas.
Rules of origin
Rules of origin are a necessary part of any free trade agreement. With a free trade
agreement, as opposed to a customs union, members maintain their own separate
tariff regimes against countries outside the agreement. This can be represented as
shown in Figure 6.1.
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Free trade

Thus the temptation for countries outside the agreement is to export a product to
the country within the agreement that has the lowest external tariff rate (Country A),
and then re-export it to the country with the highest external tariff (Country B), as
shown in the second section of Figure 6.1.
To prevent this ‘trade deflection’, rules of origin stipulate that a certain percentage
of the good must be produced using material or labour from countries within the
free trade agreement. Thus, Country B might insist that 50 per cent of a good must
be manufactured in Country A before it can take advantage of the zero tariffs between
the two countries.
The rules of origin in SPARTECA (the current limited trade agreement among
Forum members) stipulate that 50 per cent of a product’s materials and associated
labour must be sourced from one or more Pacific Islands Forum members, in order
to qualify for duty free access to the Australian market (SPARTECA, Article 5). The 50
per cent threshold was the usual rate in other trade agreements at the time SPARTECA
was created, and it was the figure used in the CER Agreement (SPARTECA, Article 3).

Figure 6.1

Tariff rates in a sample free trade agreement
Rest of the world
5% tariffs

25% tariffs
Free Trade Agreement

Country A

Country B
0% tariffs

Exporter
5% tariffs

25% tariffs
Free Trade Agreement

Country B

Country A
0% tariffs

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Pacific Regional Order

Figure 6.2

Tariff rates in a sample customs union

Rest of the world
5% tariffs
Customs Union
Country A

Country B
0% tariffs

Forum island country representatives have long argued that SPARTECA’s 50 per cent
threshold is too high. Australia tells Forum island countries to become globally
competitive, but requires 50 per cent of their materials to be sourced from Australia,
rather than cheaper materials from Asia. This raises the price of the goods they produce
and reduces their competitiveness. Australia, however, has had little interest in moving
from its favoured 50 per cent threshold. The reason is domestic industry pressure. If
the SPARTECA threshold were lowered, Fiji garment manufacturers could source their
textiles from cheaper Asian sources and Australian manufacturers might miss out.
It is reasonable that Australia sets a rules of origin level that ensures Australia is
only accepting those products from Forum island countries that are ‘genuine’ Forum
country products—it is not enough for a product to arrive in a Forum island country,
be only slightly modified, and then be sent duty-free to Australia as a Forum country
product. However, it is less reasonable for Australia to set a rules of origin level
simply to guarantee that Forum island countries use only Australian textiles rather
than more price-competitive Asian textiles.
Rules of origin must be seen as a form of aid, like the duty-free access Australia
gives to Forum island countries and other least developed countries, to reduce
poverty and help these countries become globally competitive. A comprehensive,
supportive industry plan for Australia should be complementary with Forum island
countries’ interests, not at their expense. Australian garment exporters should carve
out their own niche in Forum island country markets through quality-competitiveness,
if not price-competitiveness, but this should not be forced on Forum island countries.

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Rules of origin are a threshold issue for Forum island countries in developing the
Oceania trade order. Forum island countries will not embrace substantial
liberalisation toward Australia without movement on this issue (similarly, Australia
is unlikely to move from the current SPARTECA threshold of 50 per cent until Forum
island countries embrace more liberal trade relations with Australia).
This leaves the question of an appropriate rules of origin threshold. Forum island
countries have already sought a 40 per cent threshold, following their long-standing
complaints about the 50 per cent threshold. In order to win these countries’
adherence to the Oceania agenda, Australia should move to a 40 per cent threshold
in the context of the Oceania goods agreement, but this could be phased in to match
Forum island countries’ liberalisation commitments (for example, movement to 45
per cent on ratification of the agreement, then a further reduction to 40 per cent
after a certain number of years, provided the Forum island countries are meeting
their commitments). Such a concession would also tie New Zealand more firmly
into the Oceania agenda.
One radical solution to the rules of origin dilemma would be for the Oceania
Community to form a customs union rather than a free trade agreement. In a customs
union like the European Union, all members have the same common external tariff
(Figure 6.2).
This eliminates the need for rules of origin, because countries outside the bloc
no longer have the incentive to try re-exporting to Country B through the bloc member
with the lowest tariffs (previously Country A).
Although forming a customs union with a common external tariff barrier is a
logical extension of harmonising other trade measures, this would be of only
marginal benefit in the Pacific. To negotiate a common tariff on all tariff lines
among so many countries would require more negotiating resources than the
end result would justify. GATT Article 24 stipulates that WTO members cannot
raise their tariffs against non-members of a customs union. Therefore, Australia
could not raise its tariffs to meet Forum island countries half way; Forum island
countries would have to adopt the Australian tariff schedule and Australian
decisions about tariff reductions. Given the concerns these countries have about
maintaining their national sovereignty, this is unlikely to be acceptable, and
there are better areas to expend the political capital in arguing for a regional
trade order. An added problem is that New Zealand’s tariffs are in some cases
lower than Australia’s. Since tariffs, even at the most-favoured nation rate, are
falling steadily around the world, in the end, it is better to maintain the rules of
origin at a favourable rate as part of a free trade agreement than attempting to
negotiate a customs union.

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Quarantine
Under its quarantine regime, Australia maintains a ‘zero risk’ policy, which, though
unusual amongst WTO members, is legitimate under the WTO’s Sanitary and
Phytosanitary Measures Agreement (World Trade Organization 1994). A WTO
member can take any consistent measure necessary to protect human, animal
and plant life as long as the measures are backed up by scientific evidence.
Australians deserve no less than a ‘zero risk’ standard, but this is a high standard
for Forum island countries trying to export to Australia. Technical assistance might
bring Forum island countries up to this standard so they can compete more easily
in Australia. As the Australian Senate Foreign Affairs, Defence and Trade References
Committee stated, it would be preferable to raise Forum island country standards
rather than lower Australian quarantine standards (Australian Parliamentary
Committee 2003).
Quarantine is a lever Australia can use to entice its regional partners into the
Oceania goods agreement, but an issue on which Forum island countries would
expect recognition of their concerns before committing to the common market.
Anti-dumping
Under GATT Article 6 and the WTO Anti-Dumping Agreement (World Trade Organization
1994), a country can impose an additional duty when it believes that overseas
traders are exporting at a price lower than it costs them to produce the good. Australia
does at times instigate anti-dumping investigations. Although these can be a
legitimate trade tool for protecting domestic industries, it is also time-consuming for
a company to prove that it is not dumping. Forum island countries have often
complained about the possibility of Australia using anti-dumping and emergency
actions to prevent other countries’ exports entering Australia. As a point of fact,
Australia has not taken any anti-dumping actions against Forum island countries
since the WTO Anti-Dumping Agreement was implemented. Nonetheless, during the
PACER negotiations, Australia was still not prepared to renounce the possibility of
future actions as part of a regional integration agreement.
Australia and New Zealand should preclude themselves from anti-dumping and
other emergency action measures against Forum island countries as part of the
Oceania goods agreement. Forum island countries are unlikely to have the resources
to sell below cost anyway (the reverse is more likely to be true). Anti-dumping actions
have been eliminated under the CER agreement. Now, such problems are dealt
with under the anti-competition or predatory pricing provisions of domestic trade
practices legislation. Such an initiative for all of Oceania will be considered in Chapter
Ten.

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Services
Although they may be able to create niche markets for goods, Forum island countries
can never compete with the comparative advantage Southeast Asia has in
manufacturing. For example, the Fiji garment industry consists of cut, make, trim
(CMT) factories, with no design or value added element—the job can be done
anywhere. This is problematic because wages in the manufacturing industry in Fiji
are 346 per cent higher than Indonesia and 649 per cent higher than China (Prasad
and Asafu-Adjaye 1998).3
So Forum island countries are unlikely to become bases for extensive
manufacturing, and commodities alone cannot sustain the economic development
these countries need. The skills-intensive and high-wage services sector is the future:
in the Forum island country context, foreign exchange earnings from one tourist can
be as much as the earnings from 300 kilograms of coffee, a tonne of cocoa, or 10
cubic metres of logs (Levantis 1998). Forum island countries desperately need to
diversify—because of the current reliance on goods alone, a bad crop or cyclone can
devastate an economy for the year—and developing service industries is the key to
this diversification.
Thus, for the region to promote sustainable economic development, and to hold
its own in global competition, the future for all Pacific countries is in trade in services,
particularly in tourism and e-commerce for Forum island countries.
The law
A service can cover any activity from ordering a pizza over the internet, to flying on a
plane, taking a holiday, making a phone call, doing the banking or managing a
company. Free trade in services is about facilitating overseas companies’ and
individuals’ access to the domestic market to deliver services. Allowing such access
can broaden the skills-base in the domestic economy, introduce new technology,
provide cheaper prices for consumers, and ensure more internationally competitive
domestic services. This is critical because, according to the WTO, services are the
largest and most dynamic component of both developed and developing country
economies. Liberalising trade in services is also important because services are
also inputs into the production of most goods (for example, creating most goods
involves the use of electricity services).
The complement to GATT Article 24 is Article 5 of the General Agreement on
Trade in Services (GATS) (World Trade Organization 1994), which stipulates the
conditions a free trade agreement dealing in services must meet in order to qualify
for an exception from the most-favoured nation rule (that is, that reductions in
barriers to services trade should ordinarily be passed on to all other WTO members).

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First, a free trade agreement dealing with services must have ‘substantial sectoral
coverage’. Substantial sectoral coverage refers to
• the number of service sectors and sub-sectors covered4
• the volume of trade affected5
• the modes of supply.
The four GATS modes of supply are cross-border supply, consumption abroad,
commercial presence and the movement of natural persons. In the tourism industry,
• cross-border supply refers to when a consumer in one country buys services
from a business in another country; for example, an Australian buying a holiday
package from a Forum island country travel agent
• consumption abroad refers to when a consumer from one country consumes
services in another country; for example, an Australian travelling to a Forum
island country for a holiday
• commercial presence refers to the establishment of a physical presence in
another country to provide the service. For example, if an Australian company
builds a hotel in a Forum island country to supply tourism and recreational
services
• the movement of natural persons refers to the temporary entry of
professionals; for example, an Australian going to the Forum island country
to manage the hotel.
GATS Article 5 also states that a free trade agreement must
• involve a commitment by members to give each other ‘national treatment’—
that is, a service from a foreign supplier must be regulated and treated the
same way as a domestic supplier
• be implemented within a ‘reasonable timeframe’
• not raise barriers to non-parties to the agreement
• be notified to the WTO and demonstrate to WTO members how the parties
will achieve free trade between them (GATS, Articles 5.1b, 4, 7).
The Oceania Community should largely adopt the GATS framework. GATS uses a
positive list approach to services liberalisation: a country makes a new commitment
each time it wants to indicate it is happy to liberalise an area of services trade.6
Under GATS, a country makes commitments in each of the 155 possible subsectors as it sees fit, listing the limitations on market access and national treatment
it maintains in each of the four modes of supply. 7
Table 6.5 has various hypothetical entries. Where an entry reads ‘none’ it means
that the country has no restrictions for trade in services; where an entry reads
‘unbound’ it means that the country made no commitments.
I consider how the Oceania common market should handle Mode 3, commercial
presence, in the next section on investment, and Mode 4, the movement of natural
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Table 6.5

Sample services liberalisation commitments

Sub-sector

Mode

Hotels and
restaurants

Limitations on
market access

Limitations on
national treatment

1–Cross-border
supply

Unbound

Unbound

2–Consumption
abroad

None

None

3–Commercial
presence

Normal government
approval and registration
required for all foreign
investors.

Foreign investors not entitled
to 10-year tax holiday like
domestic investors; investors
can only own 35 per cent of
any company.

4–Temporary
movement of
natural persons

Normal government
approval for foreign
nationals required.
Managers must have an
MBA from Sydney
University; chefs must
have a Michelin star.

Skilled chefs must train
locals in their culinary
delights.

persons, in the final section on labour mobility. For the purposes of the Oceania
common market, the GATS approach to Modes 3 and 4 should be revamped and
expanded.
Most WTO members made commitments in the GATS under Mode 1, crossborder supply, and Mode 2, consumption abroad, as they do not impact as much on
internal sovereignty. To recap, an example of Mode 1 would be a Forum island
country travel agent selling a holiday package to an Australian, and an example of
Mode 2 would be a Australian travelling to a Forum island country for a holiday. Yet
if Forum island countries are to maximise the benefits of such activities, it is vital
that they also implement a new framework for facilitating e-commerce as part of
the Oceania services agreement.
E-commerce
In 1997 and 1999, the Australian Department of Foreign Affairs and Trade (1997a,
1999a, 1999b) commissioned studies into e-commerce and found that
• e-commerce breaks the old rules about natural trading partners. Geography
no longer has to be the prime consideration. Australian firms have forged
strategic alliances with Scandinavian firms, because these countries are at
the forefront of the e-commerce revolution.
• traditionally, firms had to be a particular size to be able to export: a firm that
exported needed a minimum staff of five and a minimum turnover of A$2
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million. Again the old rules no longer apply—the size, staff and turnover needed
for a firm to export have been dramatically reduced.
• for a country to benefit from e-commerce, a competitive telecommunications
sector, combined with good telecommunications infrastructure, is vital.
These findings have a number of critical implications for Forum island countries.
With its potential to beat distance and allow small firms to export, e-commerce is a
technological revolution tailor-made for Forum island countries. Tourism is the Forum
island country export that will particularly benefit from e-commerce. Forum island
country businesses will be able to cut out the overseas middle man, and sell directly
to overseas consumers. Forum island country tourist operators may save up to 40
per cent of the cost of their services by cutting out United States and European
travel agents (Australian Department of Foreign Affairs and Trade 1999a). There is
also potential to increase the export of commodities. Many Asian hotels and
restaurants put in last-minute orders to Australian farmers for fresh produce
(Australian Department of Foreign Affairs and Trade 1999b). With e-commerce,
Forum island countries could also exploit such opportunities.
To realise this potential, however, Forum island countries need to address two of
the challenges identified earlier: poor telecommunications infrastructure, and a
lack of internet users. The Forum has frequently discussed telecommunications
reform,8 so the rhetoric on the importance of the new economy is there. Nonetheless,
progress will be slow without binding commitments. As part of the Oceania services
agreement, an Oceania legal framework for e-commerce, based on global precedents,
may provide the necessary fillip.
The Telecommunications Annex to GATS provides a useful precedent for the
Oceania services agreement. After the Uruguay Round, WTO members negotiated
an additional optional annex to GATS to promote further liberalisation in
telecommunications. Many countries recognised the need for a competitive
telecommunications sector to take advantage of globalisation.9 Only Papua New
Guinea, however, made any commitments under the telecommunications protocol.
Forum island countries have been reluctant to allow competition that may detract
from government revenue, even if it might result in improved service or cheaper
prices. Given the sensitivities about Forum island country telecommunications,
additional provisions on telecommunications deregulation could be made an optional
protocol to the Oceania Community’s single undertaking treaty, replicating the
situation in the World Trade Organization.
Forum island countries could also usefully adopt the UN Commission on
International Trade Law’s Model Law on Electronic Transmissions (Electronic
Commerce Expert Group 1998).10 The key principles in the Model Law are

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• technology neutrality—law should not discriminate between different forms
of technology
• functional equivalence—electronic and ‘paper’ commerce should be treated
in the same way, for example, domestic laws should recognise digital
signatures as much as signatures on paper.
Forum island countries also need to take steps to ensure the security of
transactions on the internet. Thus, the Oceania services agreement would require
members to enact their own version of the Model Law, and to take steps to ensure
the security of e-commerce transactions.

Investment
The Pacific needs a region-wide investment agreement, to ensure a predictable,
stable and transparent investment regime, to encourage and regulate foreign
investors. An Oceania investment agreement would have three key benefits. First, it
would ensure that basic rights—such as property and contract rights—are upheld,
which Forum island countries have often failed to do. Second, it would ensure a
consistent approach to investment across the region; few big investors have the
time or inclination to master wildly different investment regulations in fourteen
small island states (Price Waterhouse 1999; South Pacific Forum 1999c). Third, it
would regulate transnational corporations when they enter nation–states—this will
be more effectively done through regional regulations than by Forum island countries
acting alone. Properly implemented, the Oceania investment agreement would
increase investment flows both within, and into, the Oceania common market. This
is vital because foreign direct investment is one of the most important drivers of
sustainable economic development (World Bank 1999).
The first priority is to get rules on foreign direct investment (investment that is
about establishing an ongoing, significant interest in an enterprise) rather than
portfolio investment (trade in shares, derivatives and bonds, for example). This
course offers the most immediate, obvious benefits, but Oceania members may
later negotiate a joint approach to portfolio investment.
No global precedent
There is currently no overarching global agreement governing investment. During
the Uruguay Round, there was discussion about the desirability of rules on
investment, but no comprehensive agreement was reached. Instead, Mode 3 of
GATS has rules on investment, but in services alone; so GATS does not go far enough,
in either promoting or regulating foreign investment. For example, under GATS Mode
3 a bank may set up a branch office in another country to provide banking services,

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but there is no general right for an investor to come in and, for instance, establish a
factory to produce goods. Nor is there an effective mechanism in GATS to ensure the
effective regulation of foreign investors so that they live up to their responsibilities.11
Rights and responsibilities
The Oceania common market should combine the rights and responsibilities of foreign
investors into a single binding instrument. Previous proposals for international
investment agreements—namely the OECD’s Multilateral Agreement on Investment
and the United Nations’ Draft Code of Conduct on Transnational Corporations—failed
because they separated the rights and responsibilities of investors (Goodman and
Ranald 1999; Graham 2000; Coonrod 1977; Robinson 1986; United Nations Centre
on Transnational Corporations 1988).12 Thus, the Oceania investment agreement
could provide a precedent for the global system. The time is ripe for such an agreement—
sensible governments accept the importance of foreign direct investment, and sensible
transnational corporations see the importance of the social agenda. The Oceania
investment agreement would provide increased market access opportunities for foreign
investors in the Pacific by ensuring fairer, more transparent regulations. They would
make more money, even though they would face heavier regulation.
Making rights work
An investment facilitation agreement rests on two core rights: the right of
establishment and the right to national treatment (UNCTAD 1999a, 1999b, 1999c).
A country seeking foreign investment will let investors enter the market and will
treat them in the same manner as domestic investors. In practice, this would mean
that Forum island countries could no longer stipulate that any foreign investment, or
a foreign investment over a certain amount, had to be approved before proceeding,
and there could be no more restrictions on repatriating profits. It would mean no
more requirements for foreign investors to
• enter into joint ventures with local partners
• be minority shareholders in their own business
• have a certain number of local directors on the company board

• jump through more bureaucratic hurdles than domestic investors
• employ certain people or have a certain number of local managers or a
certain number of local employees generally

• export a certain percentage of their output so as not to compete with the
domestic market

• purchase a certain percentage of their raw materials locally
• import a certain amount of new technology (Price Waterhouse 1999; South
Pacific Forum 1999c).
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To attract foreign investment a country should have an open investment regime
with no such requirements (OECD 1999). Understandably though, Forum island
countries have particular sensitivities about foreign investment, and it is vital that
regional trade integration mesh with political-community sentiment. A transparent
legal framework in step with local sentiment, even if it is not fully open initially, is
better than meaningless, unenforceable laws.
Having spoken to political figures and people on the street about foreign
investment in Bougainville, Fiji and Vanuatu, I have noted two common concerns:
the desire not to ‘lose control’ of any foreign investment, and the desire for clear
local benefits. The usual solution in the Pacific to address these concerns is to allow
foreign investment only in the form of joint ventures. However, these two goals can
be met through a more sophisticated response that would simultaneously facilitate
investment and meet Forum island country concerns.
Binding legal obligations on the responsibilities of foreign investors, backed up
by the institutional framework of the Oceania Community, would ensure that
developing countries do not lose control over their foreign investors.
In terms of ensuring clear local benefits, joint ventures are a poor vehicle (UNCTAD
2000b). They usually take the form of a contractual association between a domestic
investor and an overseas investor. Forum island countries typically specify that the
local investor has to be the majority owner in any joint venture. Consider a foreign
company that wants to establish a new business in a Forum island country. The
company estimates that it would take, say, A$1 million to establish the new business.
They have to find a local investor who can put up over A$500,000—unlikely in tiny
countries with low domestic savings, which is why foreign investment is needed.
Alternatively, the foreign company might seek out some amenable locals to establish
a front company to produce a local investor for the government approval process.
Thus, even though the foreign company might be providing the cash and the ideas,
they are not allowed to own their own company outright—they are limited to being
minority shareholders. That fact, plus the usually tedious approval process, is a
disincentive to overseas investors. In his Blueprint for the Protection of Fijian and
Rotuman Rights and Interests, Fijian Prime Minister Laisenia Qarase proposed joint
ventures to promote development, but only if majority controlled by indigenous Fijians
(Callick 2000b). In Fiji, not only does the foreign company need to find someone to
put up the money, the local investor has to be an indigenous Fijian as well.
The United Nations Committee on Trade and Development (UNCTAD 2000b),
typically sympathetic to the needs of developing countries, says that compulsory
joint ventures cannot achieve what developing countries want them to achieve, and
are rarely successful. A foreign investor may choose to enter into a joint venture with
a local investor to obtain expertise in the local market, but Forum island countries
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will not attract much overseas money if they limit investment to 49 per cent of a
joint venture with an impoverished local partner. The Oceania trade order should
phase out the requirement for foreign investors to participate in joint ventures. If
Forum island countries want some involvement in the oversight of foreign investors,
they could provide for one or two non-executive, non-voting local directors to sit on
the board.
The Oceania investment agreement should also address the issue of performance
requirements. Performance requirements are reasonable to encourage the
employment of locals, to encourage the hiring and training of local managers, and to
encourage the training of the workforce generally. It is hard to argue for foreign
investment if it does not create local jobs. These requirements are best set in
percentage terms: for example, 75–80 per cent of the investor’s workforce should
be employed from the local population; 15 per cent of the local workforce should
receive some form of training each year, and a further 5 per cent should be given
management training. These requirements are straightforward and easily audited.
The cost of labour and training in Forum island countries is low, so a relatively small
investment on the part of the transnational corporation would mean a great deal to
the local community and would ease the transition from communal land and
subsistence farming.
A more liberal Pacific investment regime also has implications for Australia and
New Zealand. Under the Foreign Acquisitions and Takeovers Act 1975, Australia
established a Foreign Investment Review Board in 1976. Any substantial foreign
investment in a business valued at over A$50 million needs to be approved by the
Board, as does any proposed new investment valued at A$10 million or more. Any
purchase of real estate by a foreign national has to be approved by the Board—to
ensure that foreign nationals are not purchasing real estate for speculation and
artificially inflating the Australian housing market. The approval process is
straightforward and few investments are rejected. Still, it is an impediment to
investment, and Australian monetary policy is more likely to cause inflation in the
housing market.
Australia should offer to remove these barriers for its Pacific partners—as it has
also liberalised its investment regulations with the US13—so that members of the
Oceania Community receive preferential access to the Australian investment market.
There are a number of reasons to take this step. If Australia wants to develop an
Australasian and Oceanian economy, it must allow for a free flow of investment
between these countries. Further, the Oceania investment agreement should assist
in resolving communal land issues in Forum island countries. Australia can hardly
tell Forum island countries to sort out their land problems without providing reciprocal
access to its own land market.
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Under the Act, Australia can also reject a proposed foreign investment if it is
against ‘the national interest’. Australia could retain this exemption in its commitments
under the Oceania investment agreement, but could tighten up both the definition
and those sectors to which it would apply. For its Pacific partners, Australia should
remove the blanket requirement that any investment over A$50 million needs to be
approved by the Foreign Investment Review Board. But an investment over A$50
million in the natural resources sector, or a defence-related sector (the two most
sensitive sectors), would still go through the approval process. This will not be much of
an issue for Australia in the first phase of the Oceania Community, but later expansions
of the Community may include members with much greater investment resources. If
a ‘national interest’ exemption is maintained in certain sectors, it should be a common
standard across all members of the Oceania Community, again, to promote
predictability and transparency. A tighter, more transparent test than ‘the national
interest’ might be ‘net economic benefit’ (Bora 1995:97).
Following Australia’s lead, New Zealand has a similar set-up to the Foreign
Investment Review Board—the Overseas Investment Commission. However, New
Zealand would probably welcome reform in this area, as Australia’s investment
approval process has been an irritant in the CER relationship.
Resolving communal land tensions
A ‘right to establishment’ for a foreign investor implies a right to be able to rent or
buy land to build a shop or factory or hotel. As discussed earlier, however, communal
land issues in the Pacific are problematic, and the lack of a comprehensive and
transparent system of property rights in the Pacific is frequently cited as a source of
tension and a constraint on economic growth (World Bank 1998; Larmour 1997a;
Cole 1986).
In the context of the Oceania investment agreement, therefore, the right to
establishment becomes fairly meaningless without non-discriminatory access to land.
What is needed is a system providing security of tenure and the ability to transfer land,
as well as transparent and predictable government regulations (Larmour 1998).
Theoretically, the easiest solution is to convert communal land into freehold
land. That, however, may be neither sustainable nor secure from Forum island
countries’ point of view, even if conversion should be a long-term goal. The Oceania
Community should be careful, too, in drawing a line between the legitimate business
of a regional organisation seeking to facilitate investment, and what national
governments should sort out for themselves. For example, Fiji’s Native Land Trust
Board is an inefficient, unwieldy enterprise from which ordinary Fijians are entitled
to expect more (Lawson 1991; Feizkhah 2001). But the aim of the Oceania
Community should be to facilitate foreign direct investment, not to target the Board.
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If the Board makes land available for investors, that is the concern of the Fiji national
government rather than the Oceania Community.
Any solution to the communal land issue as it relates to the Oceania investment
agreement must have the following elements.
• A community should be free to decide, following appropriate advice and
counselling, to do with its land what it sees fit, even if this involves converting
it to freehold land so as to attract investment.
• There must be clear benefits, facilitated by the Oceania Community, the
national government and the investor, for any community that chooses to
make its land available for investment. Likewise, there must be a safety net
to help tenants relocate after leases have expired, and to ensure adequate
compensation for their work.
• There must be a three-way commitment between a national government,
the relevant local community and the intending investor to sustainable
development. For example, once a decision is made by the local community,
they are bound by it. Likewise, the investor must act in a way that contributes
to the economic development of the community and protects its environment.
The solution would be for the Oceania Community to establish a system of
investment priority zones—areas where a community will make their land available
to investors, through rent or purchase, subject to a reasonable offer. National
governments would maintain a register of such zones. All the paperwork would be
resolved before a priority zone appeared on the national register, so an investor
could simply consult the register and negotiate a price with the local community. A
government would have to ensure that there was no less than, say, 10 priority zones
on the national register of larger Forum island countries at any given time (or five
priority zones for smaller Forum island countries), so an investor would always be
assured of access to land.
So that locals enjoy clear benefits from their decision, communities in the priority
zones would be given the first opportunity to participate in the Oceania Community’s
labour mobility programs. The employment performance requirements negotiated
with the foreign investor should be filled with locals from the relevant area in the
first instance. The Oceania Community and the national government should jointly
compensate tenants adversely affected by the decision to convert to freehold land.
Various safeguards should be built into the process, such as independent legal
advice to members of the community before a commitment is made, and an
independent environmental assessment before any investment commences.
It is difficult for non-islanders to understand the full meaning of customary title
to a Pacific islander. Communal land means different things to different people; and
it comes back to choice. Many islanders do seem prepared to embrace different
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approaches to managing communal. Are the proposed trade-offs and benefits of
the Oceania Community—greater economic growth, and the safety nets of more aid
and labour mobility—sufficient to encourage change in this area? Some Pacific
governments might say ‘no’, but under the Oceania Community’s single undertaking
treaty, countries would have to accept both the benefits and disciplines of regional
integration. Potential members would not be able to pick and choose, accepting the
parts of the treaty they like and rejecting those they do not.
This is a framework for those who wish to resolve the issue, within a supportive
regional order, which may be further refined by Pacific Islanders. Converting communal
land to freehold land may be a step too far initially. Forum island countries might
prefer to make land available through 50 or 99-year leases—this is a long enough
period for an investor to make a profit, without Forum island countries feeling they
are surrendering their land for good. Given common regional guiding principles,
each country could articulate its own legally transparent regime.
Investor responsibilities
Investors’ rights would be an important element of the Oceania common market.
Equally important would be investors’ responsibilities—the price for greater market
access, including streamlined bureaucratic procedures.
The biggest flaw in previous attempts to regulate foreign investors was the desire
to control every aspect of transnational corporations’ activities. Previous attempts
failed to distinguish fairly between what was properly a matter for regulation and
what should be left to the corporations, so they can get about creating economic
growth and providing employment opportunities. Take the issue of technology transfer.
Countries could reasonably expect to find an element of technology transfer in any
new foreign direct investment, as a transnational corporation brings new equipment
to the country to run its operations. New technology benefits both the country and
the corporation, and it is reasonable to put in a clause encouraging technology
transfer in the preamble of an investment agreement. But if this turns into a binding
legal commitment, the government and the transnational corporation would
theoretically have to negotiate about the appropriate level of technology the
corporation needs to run its business. The government would not know and it would
be a disincentive to investors. Such decisions are best left to the market, beyond
the purview of investment agreements.
It is better to have a realistic legal framework than pious non-binding principles
that are ignored by governments and investors alike. Rather than trying to control
every aspect of transnational corporations’ activities, binding regulations in the
Oceania investment agreement should focus on three core areas: labour standards,
environmental standards and respecting local laws.
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The International Labour Organization and the United Nations provide explicit
guidance on the labour standards that should be included in the Oceania investment
agreement. Transnational corporations should be legally bound to ensure
• a workplace that respects the right to freedom of association (that is, the
right to form and join unions) and to organise and bargain collectively14
• a workplace free from forced or compulsory labour15
• a workplace free from exploitative child labour16
• a workplace free from discrimination in employment (that is, all workers are
entitled to equal respect and treatment).17
Regulations should also ensure transnational corporations pursue ‘ecologically
sustainable development’, a phrase coined by the World Commission on Environment
and Development in 1987. The Brundtland Report defined it as ‘development that
meets the needs of the present without compromising the ability of future generations
to meet their own needs’ (Sands 1995:188). Many companies operating in the Pacific
currently violate the principle. Overseas companies have been strip-logging large tracts
of land in the Solomon Islands, and deep water fishing boats from Taiwan have been
allowed to take advantage of the Solomon Islands’ exclusive economic zone (Chevalier
2000; Fairbairn and Worrell 1996; Liloqula and Pollard 2000).
Again, the goal must be to translate these general concerns about sustainable
development into legal instruments specific enough to be useful and binding. Parts
of the United Nations’ Draft Code of Conduct on Transnational Corporations are
helpful. Various voluntary Australian codes are also instructive, particularly those
produced by the Business Council of Australia (1995) and the Australian
Manufacturing Council (1992).
Thus transnational corporations should be legally bound to
• adopt the International Standards Organization (ISO) standards on
environment management systems, environmental auditing, environmental
performance evaluation, and life cycle assessment18
• disclose information to host country governments and the public on the
characteristics of products, processes and experimental activities that may
harm the environment, including the measures and costs necessary to avoid
such harmful effects
• adopt a ‘cradle to grave’ approach to environmental management
• ensure hazardous industries have emergency contingency plans
• conduct forestry operations in a sustainable manner.
The Oceania Community would need to undertake an independent environmental
assessment of any major new investment to ensure it observes these principles,
and host governments should be able to invite the Community to undertake further
assessments of major investments at five-year intervals.
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A transnational corporation and its overseas staff should also respect the laws
of the host country, avoiding corruption and tax evasion. Transnational corporations
bribe bureaucrats to circumvent the law or to facilitate paperwork in a less than
transparent investment environment. The solution is two-pronged. Naturally, these
corporations should not offer bribes. To this end, the OECD guidelines on corruption
and bribery could be included in the Oceania investment agreement. However, it is
also incumbent on Oceania Community members to reduce bureaucratic hassle.
Tax evasion would be reduced through a double taxation agreement, whereby the
transnational corporation and its personnel are taxed only in one country, rather
than in both the host and the source country.
Including these core standards in the Oceania investment agreement would not
inhibit good investments. The Oceania investment agreement would conceivably
have a flow-on effect, in establishing best practice standards on labour and
environmental issues for Pacific citizens. Having an organisation above the nation–
state stipulating core labour and environmental standards could avoid the situation
that occurred in relation to the Ok Tedi mine. During the court proceedings, the
Papua New Guinea government and BHP lawyers were drafting legislation that would
have seen citizens fined 100,000 kina for initiating litigation against BHP anywhere,
plus a fine of 10,000 kina per day for continued legal action (Bhakti 1995–96). If
someone were successful in their case after these disincentives, the national
government would be a debtor to BHP for the amount of the judgment (Moshinsky
1995; Gordon 1995; Kaye and O’Callaghan 1995; Hawes and Stevens 1995). A
better investment climate generally, underpinned by the Oceania Community’s
regulations on labour and environmental standards, could avoid such situations in
the future.
Government responsibilities—tackling corporate welfare
The Oceania investment agreement should also aim to limit corporate welfare.19 It
is better for governments, particularly in developing countries, to spend their money
on improving their infrastructure—governance, roads, clean water, sewerage,
telecommunications—which benefits investors and locals alike, rather than giving
tax breaks to transnational corporations (UNCTAD 2000a; Forum Secretariat 2000c;
Price Waterhouse 1999; South Pacific Forum 1999c). Corporate welfare is the
ultimate zero sum game if it sets up tax competition between some of the world’s
least developed countries.
Corporate welfare is often offered to counter other disincentives to investors—
coups, tensions over communal land, and inefficient bureaucracy. A better strategy
is to tackle the underlying issues and leave government funds to do greater good
elsewhere. Investors themselves have told Forum island country officials that, rather
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than tax holidays, the best forms of corporate welfare are skilled human resources,
competitive telecommunication services, a clear legal framework and an efficient
bureaucracy (Forum Secretariat 2000c). The Oceania Community should aim to
create a uniform incentive, not through poor regulation and tax breaks, but through
an environment that welcomes and facilitates investment.

Labour
The final, crucial element of the Oceania trade order is labour mobility—it is this
initiative that is most likely to attract Forum island countries to the regional integration
project. Labour mobility is not the same as immigration, or allowing those seeking
welfare to move to Australia and New Zealand. Rather, it involves an entitlement to
look for work in other countries within a common market. The entitlement usually
lasts for a set period of time. If people cannot find work, they are expected to return
to their country of origin.
The benefits to Forum island countries from access to the Australian and New
Zealand labour markets are obvious: skills development, a wider perspective, and
better pay leading to higher and more secure remittances back home. Remittances
encourage business activity in Forum island countries (Brown and Connell 1993;
Brown 1994), as they increase domestic saving and investment in home countries.
Some Pacific economies are almost entirely dependent on remittances from their
overseas workers for their foreign exchange. In one study, 90 per cent of Tongan
households surveyed received remittances, making up 52 per cent of cash incomes
(Ahlburg 1996).20 Thus, labour mobility is a key vehicle for promoting sustainable
economic development in Forum island countries. Yet, as will be discussed, access
to recruits from the Forum island country labour market may be increasingly vital for
Australia and New Zealand in the decades ahead.
The case for labour mobility
The Oceania trade order demands significant Forum island country reform,
particularly of communal land tenure. In exchange, a significant trade-off or escape
valve is needed. Labour mobility is the big incentive that would make the common
market work, as well as consolidating the rest of the Oceania program. Dobell
(2003:3) states that ‘labour mobility is a cornerstone issue. It would be a vital
demonstration of Australia’s good intent…in return, we should demand some real
reforms from the Islands’.
Forum island countries have long sought access to the Australian labour market.
In 1971, Fijian Prime Minister Ratu Mara suggested Australia should establish a
guest-worker scheme (Committee to Advise on Australia’s Immigration Policies
1988). Forum island countries raised the issue of labour mobility at South Pacific
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Forum Labour Ministers’ Conferences throughout the 1970s and 1980s. In 1979,
the Conference noted its
…appreciation [of] the existing arrangements implemented by some
Governments to provide temporary employment for the nationals of other
countries as a commitment to the economic development of the region. It
now urges [other] countries…to consider establishing such short-term
employment schemes, noting that the earnings of workers on these schemes
are a very effective form of bilateral aid (Committee to Advise on Australia’s
Immigration Policies 1988:4).

During the PACER negotiations, the Forum Deputy Secretary-General said that if
labour mobility were included in any trade agreement, the Forum island countries
would sign up immediately. Papua New Guinea, Fiji, Samoa and Kiribati expressed
great interest in labour mobility with Australia and New Zealand. The symbolic
importance of such a program cannot be underestimated. Herily states that ‘such a
scheme would be a highly visible sign that Australia’s relationship with the Pacific
was changing’ (Australian Parliamentary Committee 2003:75); Dobell (2003:18)
believes it would ‘open up new vistas, give new hope and opportunity’.
In its 2003 report, the Australian Senate Foreign Affairs, Defence and Trade
References Committee recognised that labour mobility would be a key part of its
proposed Pacific economic and political community. The Committee believed such
a scheme ‘has the potential to provide meaningful and significant income and
assistance to Papua New Guinea and Pacific island countries at the same time as
being of benefit to the Australian economy’ (Australian Parliamentary Committee
2003:xviii). The Committee also believed such a scheme should include ‘adequate
mechanisms…for training and the transfer of skills’ (Australian Parliamentary
Committee 2003:xviii). The Committee’s proposal makes a welcome change in the
thinking of Australian policymakers; proposals for Pacific labour mobility programs
were previously rejected on the grounds that Australia maintained a nondiscriminatory migration program (Piper 1990; Australian Parliamentary Committee
2003). This somewhat disingenuous argument mistook temporary labour mobility
for permanent migration, did not admit that Australia maintained working holiday
programs with some but not all countries, and seemed somewhat naïve when
countries around the world were and are embarking on regional integration projects
that discriminate against Australia.
Pacific labour mobility is not a new idea. It has been proposed in different forms:
in 1984, by the Committee to Review the Australia Aid Programme (Commonwealth
of Australia 1984); in 1989, by the Australian Parliament Joint Committee on Foreign
Affairs, Defence and Trade (1989); and in the 1997 review of Australia’s aid policy.
This latter review stated that labour mobility ‘may prove to be more cost-effective
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than continuing high levels of aid in perpetuity. Limited access to Australia…has
been argued for as an effective way to assist the very small states whose only export
is labour services’ (Commonwealth of Australia 1997:166).
A labour mobility program is not that radical an innovation. New Zealand has had
full access to the Australian labour market since the 1920s. Because the Cook
Islands and Niue are states freely associated with New Zealand (they enjoy New
Zealand citizenship), they too already enjoy full access to the Australian labour
market and Medicare benefits. Under the Trans-Tasman Travel Arrangements, in the
1999–2000 financial year some 43,018 New Zealanders (and friends from the
Cook Islands and Niue) came to Australia for long-term or permanent stays. As at 30
June 1999, not counting temporary visitors like tourists, some 404,800 New Zealand
citizens were in Australia, and 226,200 had been in Australia for more than a year. 21
Australia also grants temporary residence visas to many others who enter the
Australian labour market. For example, in 2004–05 some 100,000 people entered
Australia on working holiday visas, a program which allows young people from
overseas to travel to Australia for a year and work during part of that time (Vanstone
2005). If we assume that each of the 100,000 people in Australia on working
holiday visas work at least three months of the 12 months they are in Australia, this
would be nearly the same as 25,000 people on Oceania work visas working for the
full twelve months.22 Under the working holiday program, young people from the
Netherlands can work and travel around Australia. On diplomatic and economic
grounds, Australia will benefit more by offering Forum island countries similar access
in exchange for trade liberalisation.
Already, Pacific islanders are vital workers in key sectors of the Australian economy,
filling jobs Australians or New Zealanders dislike (Larner 1990; Committee to Advise
on Australia’s Immigration Policies 1988). Australia is reliant, too, on the willingness
of temporary entrants into the Australian labour market to undertake difficult jobs.
Research into the working holiday visa program demonstrated that
• most on working holiday visas obtained work easily because of their flexibility
• they are an important source of temporary labour for some Australian
industries, including fruit growing, temporary clerical and labour agencies,
hotels, shops and restaurants
• because the work offered was temporary or seasonal, many employers had
difficulty attracting Australians to fill positions.
A number of business organisations and individuals made submissions to the
Senate Committee expressing ‘frustration’ at their inability to find workers at harvest
time, and proposing a Pacific labour mobility scheme to address these shortfalls
(Australian Parliamentary Committee 2003).
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The Australian Council of Trade Unions has likewise expressed support for Pacific
labour mobility, and has begun developing a proposal with the Fiji–Australia
Foundation for a trial scheme (Australian Parliamentary Committee 2003). If an
Oceania common market were created, unions could help to ensure those on
Oceania work visas enjoyed their entitlements, so they would have a pool of ready
recruits.
As long as basic minimum entitlements are in place, employers would not favour
a Pacific worker over an Australian or New Zealander. The dangers to the Australian
or New Zealand workforce would be minimal, because the productivity of Australian
and New Zealand workers is likely to be higher. When NAFTA was implemented,
there was concern that the United States would lose unskilled jobs to Mexico, but
research ultimately showed the average US worker was five times more productive
than the average Mexican worker (Federal Reserve Bank of Dallas 1993).
There is a further critical argument that suggests Pacific labour mobility would be
in Australia’s national interest. By 2020, Pacific labour mobility may be vital for
helping to sustain economic growth in Australia. A 2003 report by the Boston
Consulting Group found that Australia will face acute shortages in unskilled labour
over the next twenty years—by 2020, Australia will be short some 200,000 workers
annually (Boston Consulting Group 2003). Access Economics also warns that new
sources of labour ‘will dry up’ over this period, because of low fertility rates, the baby
boomer generation retiring and the move to a services economy (Access Economics
2001a, 2001b). Australia needs to start implementing a mechanism that will allow
it to address these shortfalls in 2020.
The law
Mode 4 of GATS provides for the temporary entry of professionals. During the Uruguay
Round many developing countries unsuccessfully sought to extend this to unskilled
labour; and it seems unlikely the situation at the WTO will soon change since Mode
4 was the mode that saw the least amount of commitments by WTO members.
Thus, the Oceania labour mobility agreement needs to surpass the Mode 4 provisions
if a true common market is to be realised.23
The European Union establishes totally free movement for workers, skilled and
unskilled. The relevant article states that ‘such freedom of movement shall entail
the abolition of any discrimination based on nationality between workers of the
Member States as regards employment, remuneration and other conditions of work
and employment’.24 This is a useful precedent for labour mobility between a group
of developed countries. It is of diminishing utility, perhaps, when it comes to labour
mobility between developed and developing countries, particularly when one
developed country is likely to be the hub for all the others.
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In this instance, it is Australia that needs ‘special and differential treatment’. To
give complete effect to non-discriminatory, unlimited free trade in labour would be
politically unsustainable for Australia, in the same way that giving complete effect to
free trade in investment would be politically unsustainable for Forum island countries.
Even the European Union has a period of transition for labour mobility after a new
country has joined, to prevent disruption to the existing labour market. The aim here
is to produce a workable framework that remains consistent with Australia’s national
interest. The key issues considered are the size of the intake, the length of the visas,
skills development, graduated commitments, safeguards and reciprocity. Some
further issues are considered briefly in Appendix 2.
Intake
The Oceania labour market scheme should be large enough to improve the Forum
island countries’ skills base significantly, to be politically appealing to Forum island
country governments, and to facilitate change through the Oceania Community when
it comes to issues like communal land. It should not be so large as to excite political
tensions in Australia and New Zealand, or to avoid the need for Forum island
countries to tackle their own problems of promoting economic development and
dealing with unsustainable population growth.
At the conclusion of the 20-year implementation period, Australia should be
accepting 20,000 individuals annually from Forum island countries under labour
mobility programs. New Zealand could contribute in proportion to its population, so
another 2,000–3,000 places may be available in New Zealand (New Zealand has
previously had limited labour mobility programs for Fiji, Samoa, Tonga and Tokelau;
and the Cook Islands and Niue have ongoing access to the New Zealand labour
market through their free association agreements).
Therefore I propose that, by 2025, there will be 40,000 individuals from Forum
island countries in Australia in the first or second year of their Oceania work visa.
This would not affect Australia much, except in a positive way (considering the pleas
by businesses who need seasonal workers), and given Australia’s existing openness
to New Zealanders and working holiday makers. It would, however, mean a great
deal to Forum island countries.
There would be debate about how to allocate these places between Forum
island countries. Larger countries like Papua New Guinea and Fiji could reasonably
expect to receive a greater proportion, as might least-developed countries, but the
figures can be worked out during the course of negotiations by Forum island countries
themselves, or the Forum Secretariat, subject to final approval by Australia. If there
are environmental refugees from low-lying countries, and such countries become
eligible for permanent migration, they need not participate in the Oceania labour
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market programs. The Federated States of Micronesia, Palau and the Marshall
Islands already have access to the US labour market through their Compact
arrangements, but it is reasonable for them also to expect access to the Australian
labour market, in return for their liberalising trade in goods, services and investment.
Length of visas
The key goals of the Oceania programs should be that Forum island country
participants gain skills and a wider perspective from a period of employment in
Australia and New Zealand (remittances would be an important benefit of the
program, but they are not the main reason for the program). Two years is an
appropriate period to achieve these goals, after which participants would return to
their own country. The purpose of the labour mobility program is not for participants
to establish long-term careers in Australia and New Zealand. They would not be
eligible to apply for extensions.
Temporary visas and labour mobility differ from permanent migration. A two-year
limit would avoid the brain drain and depopulation problems experienced by the
Cook Islands because of its permanent access to the New Zealand and Australian
labour markets (most of the Cook Islands’ population now lives in New Zealand—
between 1996 and 2001, the resident population in the Cook Islands shrank by 23
per cent) (Dusevic 2001b). Remittances decrease over time, so a regular turnover
in labour programs would ensure that a steady supply of overseas money returns to
Forum island source countries (Ahlburg 1991).
As with the European system, if individuals show no evidence of looking for work
(usually within three months), they would be obliged to leave. If individuals overstay
their visas, their country of origin should have their visa quota for the following year
reduced accordingly, until the over-stayers leave. One proposal to the Senate
Committee suggested that source countries themselves could take responsibility
for the return of Pacific workers, through bonds or other conditions (Australian
Parliamentary Committee 2003).
Program streams—the Business Skills Development Program
The bulk of the Oceania labour market participants would fall under a general Oceania
work visa program. They would be responsible for finding their own work, with
assistance from government employment agencies where needed, and would be
responsible for their own airfares.
However, the Oceania labour mobility agreement should also include a separate,
smaller stream focused more explicitly on skills development. Thus, Australia should
initiate a Business Skills Development Program, which would aim to improve the
Forum island countries’ skills base, and speed development in those countries.
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The Business Skills Development Program would cover only a small percentage
of the overall program, some 500 of the 20,000 entering Australia when the labour
mobility program is fully implemented, but substantial benefits would be attached
to the program. Through the Oceania Community, Australia and New Zealand should
pay for those selected to undertake internships over the two-year period of the
program. Participants, and their immediate families, would have their airfares
covered, and they would receive assistance in finding accommodation.
The Business Skills Development Program would be tailored to plug nominated
skills gaps in Forum island countries. So, rather than continually sending consultants
out to advise Forum island countries, which leads to frequent complaints of
‘boomerang aid’ (Australian Parliamentary Committee 2003:97), Forum island
country individuals would be invited to Australia to learn the skills they need.
Experience at state and federal government departments would help, but
participation in the private sector, particularly in tourism, would probably be more
important given the failure of many Forum island countries to facilitate a viable
private sector. Willie Rasmussen, a Cook Islands High Commissioner to New Zealand,
has said Cook Islanders need to be trained to Australian and New Zealand standards:
‘Cook Islanders in the tourism industry do not want to be cleaners all the time’
(Dusevic 2001b).
It would be for the national government of the relevant Forum island country to
suggest program participants, subject to final approval by Australia. However, the
principle of non-discrimination should apply—for example, Fiji should not favour
indigenous Fijians over Indo-Fijians.
Participants in the Business Skills Development Program would not be eligible to
apply for permanent migration to Australia for a period of 10 years after they have
returned to their source country. There is no point in them undertaking the program
unless they are committed to giving something back to their home country.
As discussed in the previous section, those who embrace communal land reform
should have initial access to the labour mobility programs. Therefore, quotas for the
Business Skills Development Program and the Oceania work visa would be filled in
the first instance from those living in the investment priority zones, where
communities have decided to open their land for foreign investment. This would
ensure there are significant incentives for reform, and an immediate pay-off for a
decision to move forward.
Graduated commitments
The labour mobility agreement would be the most important incentive for encouraging
Forum island countries to embrace the Oceania trade order, and its implementation
should be tied to the degree to which Forum island countries implement their own
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commitments. I welcome Australian Foreign Minister Alexander Downer’s expression
of willingness to at least consider a working holiday visa for Forum island country
citizens (Allard 2003),25 but there has been no mention of tying this benefit to
Forum island country trade liberalisation. A failure to reinforce this link would be a
serious strategic error: once given away, access to the Australian labour market
cannot be used for future leverage. During the PACER negotiations, Forum island
countries took for granted the duty-free access to the Australian and New Zealand
markets they had received for 20 years under SPARTECA. But this access is not a
natural right, and it should entail reciprocal rights. Likewise, access to the Australian
(and New Zealand) labour market should not be given away, and all the benefits of
such a program should not be front-loaded. Implementing the labour mobility program
over time would reassure Australians and encourage early implementation of the
rest of the common market in Forum island countries. Regular reviews should occur
to ensure all parties are meeting their obligations.
Table 6.6 provides an example of how Oceania labour mobility could be
implemented in Australia. The intake would obviously be subject to negotiation.
Notionally, however, at the conclusion of the implementation period, some 40,000
Forum island country workers would be in Australia, in the first or second year of
their visa; 1,000 of these would be on the Business Skills Development Program
(this compares to the unregulated 40,000-plus New Zealanders currently entering
Australia each year under the Trans-Tasman Travel Arrangements). On the above
figures, some 9,000 people would have participated in the Business Skills
Development Program over 20 years.
In her comments to the Senate Committee, Professor Helen Hughes argued
against a labour mobility scheme, fearing ‘welfare dependent ghettoes of Pacific
immigrants in Australian cities’ (Australian Parliamentary Committee 2003:74). I do
not believe this to be a realistic danger on these numbers and, again, this ignores
the distinction between permanent migration and labour mobility as part of a
common market: those who cannot find work would be ineligible for welfare and
expected to return to their home countries.
According to the Boston Consulting Group’s projections, it may be that Australia
requires far greater numbers of Forum island country workers to sustain its economy
(Boston Consulting Group 2003); so these figures may be re-negotiated at a later
time. Alternatively, a biennial program of 40,000 people might exhaust all of the
Forum island country individuals interested in the scheme. If the other provisions of
the Oceania common market are properly implemented, this would lead to improved
economic development. This may largely remove the incentive for coming to Australia
and New Zealand to look for work.
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Table 6.6

The Oceania labour mobility agreement—sample Australian intake

1
2
3
4
5
Review of Oceania common market
6
7
8
9
10
Review of Oceania common market
11
12
13
14
15
Review of Oceania common market
16
17
18
19
20

Intake from
business skills
development
program

Intake from
Oceania
working visa
program

Total

300
300
300
300
300

4,700
4,700
4,700
4,700
4,700

5,000
5,000
5,000
5,000
5,000

500
500
500
500
500

5,500
5,500
7,000
7,000
9,500

6,000
6,000
7,500
7,500
10,000

500
500
500
500
500

9,500
9,500
12,000
12,000
12,000

10,000
10,000
12,500
12,500
15,000

500
500
500
500
500

14,500
14,500
17,000
17,000
19,500

15,000
15,000
17,500
17,500
20,000

Safeguards
It would be inappropriate for Australia to use safeguard measures against Forum
island countries when it comes to trade in goods, services or investment. However,
safeguards are appropriate for labour mobility. In times of high unemployment in
Australia, there will not be any jobs for Forum island country individuals and they
may waste money travelling to Australia for no reason. Thus, there would be provision
for the Oceania work visa—as opposed to the Business Skills Development Program—
to be suspended if Australia is experiencing a recession; that is, two or more
successive quarters of economic contraction.
Reciprocity
Forum island countries would benefit from reciprocal labour mobility arrangements,
and Australian and New Zealand leaders should be able to sell benefits to their own
citizens. In Vanuatu, for example, a work permit for an Australian costs A$5,000. In
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Fiji, business visas for Australians are restricted to 14 days, an impediment to the
conduct of business (Australian Parliamentary Committee 2003). Forum island
countries do not want expatriates taking their jobs, but their approach robs their
companies of overseas expertise that would improve their skills base. The World
Bank sums up the situation thus
[t]here appears to be a widespread view in the [Forum island countries] that
employment of labour from high-income countries is a negative-sum game,
with such labour displacing local labour. However studies in the region have
shown that expatriate labour and local labour are complementary—
employment of skilled expatriate labour leads to increased employment of
local labour (World Bank 2002:iii; see also Duncan and Lawson 1997).

In addition, allowing skilled foreign nationals to enter the Forum island countries is
an efficient way of training up locals. An overseas manager and chef in the initial
phase of a hotel’s operations, for example, will quickly build specialised knowledge
amongst local workers.
There should be reciprocity, then, in the Oceania labour mobility agreement. As
with tariff reductions, Forum island country commitments could be small, and
implemented over time—a smaller Forum island country could work up to allowing,
say, 50 Australians and New Zealanders access to their labour market without a
work permit. Still, it would keep the focus on joint commitments to achieve shared
benefits, and would help sell the labour mobility agreement in Australia and New
Zealand.
The question of inter-Forum island country labour mobility could be resolved
separately. The prospect of individuals in small, more distant Forum island countries
travelling to Fiji and Papua New Guinea for work seems unlikely if they can travel to
Australia or New Zealand instead. If individuals are going to leave their homes, they
will go to where they can earn the best remittances and where there is not already
high unemployment. So the impact of inter-Forum island country labour mobility
would be small.

Implementation
An important threshold question in developing a common market is the length of
the implementation period. Forum island countries would be incapable, both
politically and economically, of implementing a comprehensive trade order within a
short timeframe—reform must be introduced gradually.
As discussed in Chapter Four, WTO members are bound by the stipulations in
GATT Article 24 and the Understanding to GATT Article 24 that a free trade agreement
dealing with goods must be implemented within 10 years, unless there are
‘exceptional circumstances’. Likewise, under Article 5 of the General Agreement on
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Trade in Services (GATS), a trade agreement dealing with services must be
implemented within a ‘reasonable timeframe’, presumably also 10 years (as
discussed, there is currently no dedicated international agreement dealing with
trade in investment or labour).
I continue to believe that the 20-year implementation period Australia proposed
at the PACER negotiations was appropriate and justifiable to the WTO Committee on
Regional Trade Agreements (as discussed earlier, Forum island countries may well
have accepted this implementation period had Australia’s proposal been more
refined and better sold). I also believe, however, that the Oceania common market
should largely be implemented by 2020, and fully implemented by 2025. Two of the
key factors here are the APEC Bogor goals of free trade and investment in Asia
Pacific by 2020, and ASEAN’s goal of implementing a comprehensive Southeast
Asian common market by 2020. Because the APEC Bogor goals are non-binding,
totally free trade will not be realised in the Asia Pacific by 2020, absent several
comprehensive WTO rounds. But 2020 provides a useful benchmark, and tariffs in
the region are steadily falling. Already, 69 per cent of goods entering APEC countries
face tariffs of only 0–5 per cent (APEC 2000). The prospect of the APEC and/or
ASEAN scenario being largely realised by 2020 represents a significant competitive
challenge for Forum island countries.
If negotiations for an Oceania common market commenced relatively shortly,
Forum island countries would have approximately 20 years to implement reform
gradually. 26 However, if such an initiative were delayed until 2011 or later, Forum
island countries would have less time to restructure to meet the 2025 deadline.
Utilising the PACER–PICTA framework, Australia should propose a major
conference as soon as possible, to initiate negotiations for the Oceania common
market. I suggest a 20-year implementation period for the Oceania common market,
which would allow Forum island countries to restructure their economies gradually
until 2025, by which time they would be globally competitive. But the implementation
period might be shortened once the benefits become clear to all parties, as the CER
partners start reaping the benefits of their agreement and seek to shorten the
process (Australian Department of Foreign Affairs and Trade 1996b).
It is incumbent on all Forum members to work together constructively to create
a regional common market as soon as possible. Yet this depends on a shared
strategic vision, whereby Forum island countries embrace necessary reform, and
Australia and New Zealand provide an attractive policy package to encourage and
support this process.

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Conclusion
Chapter Four reviewed the PACER–PICTA negotiations, and Australia’s inability to
persuade Forum island countries of the merits of its twenty-year plan. This led to a
sub-optimal outcome, but it should not end the quest for an Oceania trade order.
European integration was not an inexorable process, with one crowning success
following another. Its common market failed at the first attempt, necessitating a
new push for a comprehensive common market with the Single European Act of
1986. SPARTECA represents Oceania’s first faltering step towards regional economic
integration, in the same way that the initial New Zealand-Australia Free Trade
Agreement was a tentative step for Australia and New Zealand before their worldclass CER. The PACER–PICTA framework might go either way—it might ultimately fail,
or it might become the very model of economic integration between developed and
developing countries.
The Oceania common market would involve the following commitments
• free trade in goods, services, investment and labour to create an integrated
Oceania economy
• a Business Skills Development Program and an Oceania working visa as
features of the agreement on labour mobility

• agreements on e-commerce law and information technology, and an optional
protocol on liberalisation in telecommunications, to encourage e-commerce
throughout the region

• a framework for resolving communal land issues
• legal requirements for transnational corporations to uphold labour standards,
environmental standards and local laws, and agreements on double taxation
standards to reduce tax evasion
• more money for health and education as Community members phase out
corporate welfare
• a rules of origin threshold of 40 per cent, and Australia’s commitment not to
use emergency safeguards measures for goods, services and investment;
but provision for labour movement to be suspended after successive quarters
of economic contraction in Australia
• ongoing technical assistance to aid in implementation, in areas such as the
mutual recognition of standards and qualifications, as well as for improving
Forum island country quarantine standards.
Some additional institutional benefits are discussed briefly in Appendix 1.
The Community would give effect to global agreements—the World Trade
Organization framework, International Labour Organization core standards, related
human rights instruments, and the principles of equitable, sustainable development.
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However, the Community would innovate by providing new templates for investor
rights and responsibilities, tackling corporate welfare and implementing labour
mobility between developed and developing countries.
The advantages for Australia and New Zealand include increased exports in
goods, services and investment; access to the Forum island country labour market
as needed; and, more generally, a more strategic use of aid money and improved
Pacific security. The advantages for New Zealand specifically include better access
to the Australian market for its goods, because of a fall in the rules of origin threshold;
and more favourable access for investment, removing a long-term irritant.
The advantages for Forum island countries include increased exports, particularly
in services; increased access to the Australia–New Zealand labour market to improve
their skills base; increased credibility and more investment; a framework for resolving
communal land issues; improved telecommunications and prospects for ecommerce; better regulation of transnational corporations; and improved quarantine
standards that enable Forum island countries to sell products to a global market
more easily.
Thus, as formulated, the Oceania common market would successfully promote
sustainable economic development in the Pacific and alleviate the tensions caused
by lack of development. What should be clear is that focusing on trade in goods
alone considerably limits the potential benefits of Pacific trade liberalisation; that
focusing on liberalisation among sub-groups of the Forum likewise limits the potential
benefits, particularly in terms of investment flows, skills transfer and labour mobility
between the Forum’s richer and poorer members; and that all Forum members
have areas where they must do better by their regional partners to achieve an
Oceania common market.
This is the strategic plan that the Pacific needs to achieve a comprehensive
trade order. Given the region’s current challenges to sustainable economic
development, it is practical, important and urgent, and vital to the wider Pacific
regional order.
Yet further regional initiatives to promote sustainable economic development
are possible. The next chapter discusses how a regional approach to monetary
policy would provide additional benefits for Forum island countries.

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Notes
* Although we reached slightly different conclusions, special thanks to Justine Braithwaite
for extensive discussions in relation to her paper, Regulation of Transnational
Corporations: towards a Code of Conduct for Australian Businesses Operating Offshore
(1995).
1
See Chapter Two.
2
Hereafter ‘CER’. Available at http://www.austlii.edu.au [accessed 12 July 2001].
3
The garment industry in Fiji was created through various artificial Australian schemes
(namely SPARTECA–TCF and the Import Credit Scheme), not through comparative
advantage.
4
GATS divides services into twelve categories. The system largely follows the UN Central
Product Classification system. The sectors are business; communication; construction
and engineering; distribution; educational; environmental; financial (insurance and
banking); health-related and social; tourism and travel-related; recreational, cultural
and sporting; transport; and other. These sectors are then divided into a further 155
sub-sectors. For example, the tourism and travel-related services sector breaks down
into hotels and restaurants, travel agencies and tour operators, tourist guides, and
other. So ‘substantial sectoral coverage’ for the Oceania common market should involve
a broad range of commitments across all these sectors.
5
In terms of the volume of trade, there is no absolutely precise qualitative and quantitative
formula for measuring this, largely because there is as yet no agreed way of collecting
statistics on trade in services. Obviously, the larger the volume of trade covered, the
more useful an agreement will be.
6
I suggested above that a negative list approach is appropriate for the Oceania agreement
on trade in goods. However, because of the additional sensitivities surrounding trade
in services, a positive list approach to services liberalisation may be more acceptable
to Forum island countries.
7
A country can also list horizontal commitments, which are limitations the country
applies across all sectors. An example of a horizontal commitment in Mode 3,
commercial presence, is that all new investments over A$10 million have to be approved
by the government (which is Australia’s policy). An example of a horizontal commitment
in Mode 4, the temporary entry of professionals, might be to insist that managers have
an MBA from one of a select number of universities to qualify for entry. GATS also
allows countries to make most-favoured nation exceptions, but that would not be
relevant in the context of the Oceania common market.
8
In 1999, the Forum initiated a meeting of communications ministers to discuss these
issues. Ministers adopted the Vision for the Pacific Information Economy which stated
that ‘investment, job creation and trade within the information economy bring growing
and continuous benefits to the region’s economy, generating revenue, jobs and
economic efficiencies for the whole regional economy’ (South Pacific Forum 1999a:10).
Communication ministers adopted the goal of ‘Information and Communication
Technologies for every Pacific Islander’ (Pacific Islands Forum 2002c:1). Various Forum
Communiqués have also recognised the need for competitive telecommunication
markets. In the Forum’s 2000 Communiqué, leaders ‘recognised the vital role played

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9

10

11

12

13

14

15

16
17

18

19

20
21

by information technology in promoting improved trade, tourism and education and
expressed concern at the prohibitive costs of internet service in the region’ (Pacific
Islands Forum 2000: para 9).
Good telecommunications will result in cheaper phone calls and cheaper internet
service providers, basic requirements for e-commerce.
Many countries have given effect to the Model Law’s principles, and Australia passed
the Electronic Transactions Act in 1999. Available at http://www.austlii.edu.au
[accessed 13 November 2003].
See Article 9 of GATS, which focuses on the anti-competitive behaviour of service
suppliers.
Australia proposed a more constructive approach to the United Nations’ Draft Code, but
this was not accepted by other parties (Asher 1992).
See Chapter 11, ‘Investment’, of the Australia–United States Free Trade Agreement.
Available at http://www.dfat.gov.au/trade/negotiations/us_fta/final-text/
chapter_11.html; see also http://www.dfat.gov.au/trade/negotiations/us_fta/guide/
11.html [accessed 2 June 2004].
See Article 8 of the Covenant on Economic, Social and Cultural Rights; Article 22 of the
Covenant on Civil and Political Rights; International Labour Organization Convention
Concerning Freedom of Community and Protection of the Right to Organise (No. 87);
and International Labour Organization Convention Concerning the Application of
Principles of the Right to Organise and Bargain Collectively (No. 98).
See Article 8 of the Covenant on Civil and Political Rights; International Labour
Organization Convention Concerning Forced or Compulsory Labour (No. 29);
International Labour Organization Convention Concerning the Abolition of Forced Labour
(No 105).
See Article 32 of the Convention on the Rights of the Child.
See Articles 2 and 7 of the Covenant on Economic, Social and Cultural Rights; Articles
2 and 3 of the Covenant on Civil and Political Rights; Article 1 of the Convention on the
Elimination of Discrimination Against Women; the Convention on the Elimination of
Racial Discrimination; International Labour Organization Convention Concerning
Discrimination in Respect of Employment and Occupation (No. 100) and International
Labour Organization Convention Concerning Occupational Health and Safety and the
Working Environment (No. 111).
See International Standards Organisation standards 14001, 14010, 14031 and 14041.
Available at http://www.iso.org/iso/en/ISOOnline [accessed 20 June 2001].
The global system provides a little lead for a possible framework for the Oceania
investment agreement on this issue. The WTO Agreement on Subsidies and
Countervailing Measures goes some way in curtailing measures taken to distort the
investment market—banning governments from giving subsidies to companies
contingent on their export performance, or contingent on their using domestic instead
of overseas goods—but not far enough in tackling issues such as tax incentives.
Downer (2003a) notes that remittances comprise almost 40 per cent of Tonga’s GDP.
I should note that I regard the Trans-Tasman Travel Arrangements as a precedent for
their labour mobility provisions alone, not their welfare provisions. Following a 2001
agreement between Australian Prime Minister John Howard and New Zealand Prime

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22

23

24

25

26

Minister Helen Clark, the Arrangements make reciprocal provisions for the payment of
pensions. Prior to this agreement, New Zealanders were eligible in Australia for
unemployment benefits as well as pensions; New Zealand would then compensate
Australia for part of this cost. Since Forum island countries will not be able to fund
welfare for their citizens in Australia and New Zealand, nor to provide Australians and
New Zealanders with reciprocal welfare rights, the provision of welfare is a non-issue.
Working holiday-makers are not allowed to work more than three months in any one job,
but, technically, they could have four different jobs and work for the entire twelve
months.
GATS Article 5 gives WTO blessing to labour market integration requirements, so long
as citizens of participating parties are exempt from requirements concerning residency
and work permits.
Article 39(2), Consolidated Version of the Treaty Establishing the European Community
Available at http://europa.eu.int/eur-lex/en/treaties/dat/EC_consol.html [accessed 22
October 2001].
Mr Downer is quoted as considering ‘working holiday arrangements or something akin
to that’; but ‘more work needs to be done to explore what’s possible and what isn’t
possible’ (Allard 2003:6).
Under this proposal, Forum island countries would received forty-four years of duty free
access to the Australian and New Zealand markets—from the commencement of
SPARTECA in 1981, to 2025, the conclusion of the implementation period—before
being asked to reciprocate fully.

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7

Monetary
cooperation
and integration

The European Union has pursued monetary integration as an important element in
its efforts to promote sustainable economic development. A regional monetary
policy has been regarded as a vital means of combating inflation, increasing trade
and facilitating further economic reform (Yläoutinen 2001). This chapter outlines
how the Oceania Community could pursue monetary cooperation, then integration,
in a way that would likewise contribute to sustainable economic development.
Monetary policy has been the missing element from the Forum’s economic reform
agenda. This chapter proposes some practical initial steps to rectify the situation:
improving the standard of economic data across the region; initiating meetings of
Forum central bank governors, in addition to economic ministers; committing to
independent central banks; and adopting a commitment to maintain inflation levels
within a common band. Since some Forum members still suffer high inflation, inflation
targeting could have great benefits, but would be relatively simple to implement.
The chapter then explores the advantages and disadvantages of a common
currency for Oceania, and the question of whether Oceania is an optimal currency
area, with proposals for a common Oceania currency. The chapter concludes with a
consideration of whether an Oceania Monetary Fund would be a useful addition to
the region’s institutional architecture.
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Monetary cooperation and integration

First steps in the Oceania monetary order
As discussed in Chapter Four, in 1995 the Forum instituted a new annual meeting,
the Forum Economic Ministers Meeting (FEMM). According to the Forum Secretariat,
the FEMM ‘plays a key role in assessing regional economic developments, including
progress on economic reform and sustainable economic development’ (Forum
Secretariat 2000:4). In general, the FEMM is a useful vehicle for diagnosing common
problems across Forum island countries and discussing reform options. Yet the
Madang Action Plan, and the FEMM’s ambit, are limited to trade policy and fiscal
policy; monetary policy is not included (Pacific Islands Forum 2000b). Further, the
FEMM has displayed a reluctance to pursue binding, regional solutions to the
problems identified.
To promote sustainable economic development, Forum members need to commit
to developing the Forum’s sovereignty on economic issues generally, and to adopting
a joint approach to monetary affairs. Four initial steps are crucial.
First, the Forum should adopt regional standards for the reporting of monetary
and fiscal statistics. Forum island countries’ lack of detailed statistical information
is an impediment to national economic policymaking and regional cooperation. The
Australian Senate Foreign Affairs, Defence and Trade References Committee
identified the collection of a standard set of relevant economic and social statistics
as an early priority, given the ‘significant problems with estimating the size and
nature of the economies in the region’ (Australian Parliamentary Committee
2003:xiv).
There have been some efforts in this area already, with leaders in the 2001
Communiqué endorsing ‘the priority placed on improvements in regional statistics
and further development of a regional capacity to coordinate and enhance technical
assistance in this area’ (Pacific Islands Forum 2001: para 14). Yet proposals for a
regional financial intelligence unit have not progressed (Pacific Islands Forum 2001:
para 39), and closer integration demands a much more rigorous, common approach
to the collection of economic data.
Second, the Forum should initiate regular, at least annual, meetings of central
bank governors to facilitate the exchange of information and experience. This would
complement the FEMM, but would ensure the Forum has at least one meeting
devoted entirely to the region’s monetary affairs.
Third, Forum members should commit to allowing central bank governors to set
monetary policy independent of their governments, as occurred as part of the
European integration effort (Habvermeier and Ungerer 1992). Independence allows
a central bank to set monetary policy free of political considerations, with the ability
to ignore demands from the government to print money to fund debt, or instructions
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Pacific Regional Order

from a government to lower interest rates dramatically to promote a spurt of economic
growth just before an election (Persson and Tabellini 2000; Drazen 2000). When
this occurs the result is more likely to be a series of boom–bust cycles rather than
steady growth. States with independent central banks are better at promoting
economic growth (Burdekin et al. 1992), and central banks with the greatest
independence are all located in high-growth countries (Fry 1998).
Fourth, the Forum needs to develop a regional approach to tackling inflation.
Most agree that ‘the best contribution monetary policy can make to an economy is
to provide stable prices and damp down inflationary expectations’ (Yläoutinen
2001:18). As discussed in Chapter Two, many Forum island countries still suffer
from high inflation, so the pursuit of low inflation is an important area for joint
Oceania action. Tackling inflation would keep prices stable, allowing better planning
and economies for Oceania citizens, and further encouraging investment (Reserve
Bank of New Zealand 1998, 1999), all important elements of sustainable economic
development.
Thus, the Oceania monetary order should be founded on a joint commitment to
monetary stability. The question is how best to implement this policy. In developing
the Oceania monetary order, it is useful to take into account the European Union
experience.
In the 1970s, Europe began to explore the possibility of a regional system of
fixed exchange rates, eventually creating the European Monetary System in 1979
(Habermeier and Ungerer 1992). Under this system, members pegged their
currencies to within +/–2.25 per cent of each other, in an effort to limit currency
movements and promote low inflation, a stable environment for trade and
investment and, hence, economic development (Habermeier and Ungerer 1992).
The European Monetary System in its original form was, however, largely destroyed
by the 1992 currency crisis, which initially ‘seemed to derail…the cause of monetary
union in Europe’ (Salvatore 1997:224). German reunification saw the German
government embark on a borrowing and spending program to tackle East Germany’s
problems. To tackle high inflation and retain investment, the German central bank,
the Bundesbank, raised interest rates. Since the rest of the EC countries were tied
to Germany’s monetary policy through the European Monetary System, their interest
rates went up as well (‘Europe’s monetary future’, The Economist, 23 October 1993).
England was already experiencing a recession. To keep pushing interest rates up
would deepen the recession and ruin the domestic housing market, possibly spelling
the end of Margaret Thatcher’s government (Cobham 1995; Salvatore 1997).
England’s dilemma was whether to maintain high interest rates or to withdraw
from the European Monetary System and cut interest rates. George Soros and fellow
speculators bet that domestic political considerations would prevail, so started
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Monetary cooperation and integration

selling down the pound. The Bank of England spent around £20 billion defending the
value of the pound on ‘Black Wednesday’, 16 September 1992 (Cobham 1995). In
the end, England and Italy withdrew from the European Monetary System, and Soros
earned his reputation as the man who broke the Bank of England. The European
Monetary System currency band was subsequently widened to 15 rather than 2.25
per cent, which essentially defeated the point of the pact and occurred too late to be
useful (‘Europe’s Monetary Future’, The Economist, 23 October 1993).
The experience of the European Monetary System, particularly England’s defeat
by currency speculators, demonstrates that attempting to ensure monetary stability
by fixing exchanges rates within a narrow band is no longer feasible in the age of
globalisation. Countries can have two out of the three of a fixed exchange rate,
control over monetary policy and freedom of movement of investment, but not all
three (Salvatore 1997; Frankel 1999). If currency speculators were to attack an
Oceania currency band, Oceania members might spend considerable resources
defending a band to little or no benefit—funds that could be better spent in other
ways to promote sustainable economic development. So there is no point in the
Oceania members pursuing monetary cooperation through a currency band.
Rather than pegging exchange rates, countries wanting to pursue regional
monetary stability should commit to inflation targeting (‘On target?’, The Economist,
1 September 2001). Inflation targeting, first pioneered by New Zealand, involves a
government charging a central bank with achieving an inflation figure within a certain
band, for example 0–2 per cent. The government sets the figure, and the central
bank chooses the means for achieving it. A Deputy Governor of the Reserve Bank of
Australia has said that
…inflation targeting had been a successful model for monetary policy in
Australia…[because] it had been associated with lower, less-variable inflation
and better and less-variable economic growth. Inflation targeting allowed a
lot of short-term flexibility in monetary policy but imposed the appropriate
medium-term constraint on inflation (Wood 2004:13).

Thus, if Oceania members signed up to this system, they would be committing to
an inflation band rather than a currency band. The benefits from inflation targeting
are slightly different from those of currency targeting. Although businesses would
not know the exact exchange rate between Oceania members from week to week,
they could be assured of operating in a region with a stable monetary policy. Investors
could be confident of committing funds to a substantial investment, knowing that
inflation would not wipe out their returns.
Even if all Oceania members did not sign up for monetary union, all members
should commit to a common inflation target of, say, 0–5 per cent over the medium
term (individual members, like Australia and New Zealand, could still establish a
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narrower band for themselves of 0–3 per cent). Nevertheless, inflation targeting
would assist in paving the way for, and later reinforcing, a common currency. This is
because Oceania members would need to develop a common approach to inflation
for monetary union to work.
These measures—improving regional economic data, initiating meetings of central
bank governors, committing to central bank independence and inflation targeting—
are important steps that the Forum could institute immediately to rectify the gap in
the Forum’s reform agenda on monetary policy and to lay the foundations for Oceania
monetary order. These measures, however, should represent the starting point of
Oceania monetary order, not the end-point. The following sections consider the
existing degree of Pacific monetary integration, and the advantages and
disadvantages of developing a common Oceania currency.
Existing monetary integration
A common Oceania currency is not that radical a step, as a degree of Pacific monetary
integration already exists. As discussed earlier, Kiribati, Tuvalu and Nauru use the
Australian dollar, and the Cook Islands and Niue use the New Zealand dollar. If,
hypothetically, New Zealand adopted the Australian dollar tomorrow, seven Forum
members would be using the Australian dollar.
The Marshall Islands, Palau and the Federated States of Micronesia use the US
dollar, and their terms of trade heavily favour the United States. Of the Marshall
Islands’ imports, 61 per cent are from the United States, compared to 3 per cent from
Australia. Similarly, 44 per cent of the Federated States of Micronesia’s imports come
from the United States, compared to 20 per cent from Australia (Australian Department
of Foreign Affairs and Trade 2004a). Thus, it does not make much economic or political
sense to promote the use of the Australian dollar in those states.
Thus, of the proposed initial Oceania members, the countries of interest in
discussing monetary union are Papua New Guinea, Fiji, Vanuatu, Solomon Islands,
Samoa and Tonga. Fiji, Vanuatu, Samoa and Tonga currently peg their exchange rates
to a basket of their major trading partners’ currencies. Australia features prominently,
so there is a degree of integration between the Australian dollar and these countries’
currencies already. Solomon Islands used the Australian dollar until 1978, when illadvised Australian officials instructed their counterparts that this would not be desirable
(Central Bank of Solomon Islands 2002). As a result, the Solomon Islands currency is
modelled quite closely on the Australian dollar. In August 2002, Solomon Islands
Finance Minister Laurie Chan announced he was discussing dropping the Solomon
Islands dollar for the Australian dollar as part of an economic recovery plan (Duncan
2002; ‘Solomons want to use $A’, The Age, 6 August 2002). Papua New Guinea has
its own floating currency, but used the Australian dollar until 1975, as did Tonga.
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Advantages and disadvantages of a common Oceania currency
The advantages of a common Oceania currency include increased trade, investment
and tourism, various gains in efficiency and potentially large savings for Forum
island country governments. The disadvantage is that the loss of national control of
monetary policy could exacerbate a recession in an individual Forum island country,
if that Forum island country ’s business cycle is out of sync with others.
Advantages
The advantages of a common Oceania currency suggest it could make an important
contribution to sustainable economic development in the Pacific. Rose estimates
that a common currency can lead to a trebling of trade between the parties to a
monetary union (Rose 1999). It is too early to assess the long-term gains that will be
made in Europe as a result of the introduction of the Euro, but, as Rose (1999)
suggests, even if his predictions are indicative rather than precise, it still represents
a major increase in trade and hence economic growth.1
A common Oceania currency would also lead to increased direct investment
between the participating countries, through a more efficient allocation of capital
and more efficient financial markets (Expert Working Group on European Monetary
Union in Yläoutinen 2001; see also Duncan 2002).
Trade and investment would be promoted in part through eliminating the costs
of exchange rate volatility. 2 Traders can insure against currency fluctuations, adding
to the cost of the transaction. But many Pacific traders, including New Zealanders,
cannot or will not arrange this hedging (Grimes et al. 2000). This makes Pacific
traders vulnerable to losses from exchange rate fluctuations. These risks would be
eliminated by a common currency, ensuring a constant rate of return to traders and
investors, not to mention those in Forum island countries receiving remittances.
Developing countries in particular need also to consider the opportunity cost of
maintaining separate national currencies. With a common Oceania currency, poorer
Oceania members would no longer need to maintain large foreign reserves to ensure
their national currency trades at a particular rate. The Reserve Bank of Fiji maintains
foreign reserves of F$800 million (US$352 million), but would need far less under
a common currency, thus freeing up money for other government spending (Economist
Intelligence Unit 2000). Further, considerable resources are needed to maintain a
national central bank. It takes skilled staff, and a great deal of information, to make
accurate determinations in monetary policy. The Reserve Bank of Fiji’s operating
budget in 2001, for example, was F$9.2 million, and the bank currently employs
146 staff; the Bank of Papua New Guinea employs 242 staff.3 Arguably, the expertise
tied up in running a Forum island country central bank could be better employed
elsewhere in the public or private sector (Duncan 2002).
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Pacific Regional Order

A common Oceania currency would also facilitate tourism and business travel,
cutting down on exchange rate costs for travellers. A common Oceania currency
alone may not lead to a surge in tourism, but it could encourage Australians and
New Zealanders to travel throughout Forum island countries. Over time, a common
currency, together with the Oceania common market, could lead to the development
of regional companies, with Forum island country companies feeling more
comfortable about developing cross-border links.4
A common currency also acts to limit government deficits. Since governments
entering a monetary union lose their individual control over monetary policy, they
can no longer direct a national central bank to print out more money to finance
government deficits (Duncan 2002). Poor economic governance saw the Central
Bank of Solomon Islands continually instructed to print money (‘Truth often the first
casualty of war’, Canberra Times, 17 June 2000; Angiki 2001).5 Likewise, after the
first coups, the Reserve Bank of Fiji was, in effect, printing money with no backing
(Knapman 1990). A common currency also removes the danger of wild fluctuations
in a national currency because of a political crisis (de Brouwer 2000).
A common currency can also stimulate economic reform, as occurred in Europe. As
has been argued in the Finnish context, ‘responsibility for necessary structural changes
and the improvement of the employment situation still remain at the national level. But
the [euro] framework has helped to achieve these goals by providing the necessary
degree of stability’ (Yläoutinen 2001:20; Gros and Thygesen 1992; Copeland 1994).
These various advantages combine to generate clear gains in efficiency; in the
European context it was argued that the efficiency gains exceeded any direct costs
caused by the changeover to the euro (Yläoutinen 2001). Further, though, a common
currency will declare the Pacific’s regional identity. Implicit in a common currency is
a joint commitment to each country’s economic welfare and to a shared regional
future. The political assurance this implies may well overcome some of the economic
considerations.
Disadvantages
The main disadvantage of a common currency is the loss of national control of
monetary policy (Kwan 1998). National governments and/or national central banks
can no longer raise and lower interest rates at will. What might be an appropriate
interest rate and rate of inflation for one state in the currency union might not suit
another, as happened under the European Monetary System in 1992 when German
interest rates ran inappropriate for England (‘Europe’s Monetary Future’, The
Economist, 23 October 1993). A regional approach to monetary policy involves a
utilitarian approach to raising and lowering interest rates, but this can strain the few
states for which the common interest rate is unsuitable.
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If a Forum island country experienced a recession, the normal response would
be to lower interest rates, to inject more money into the economy and promote
growth. Forum island countries would lose this option on joining the Oceania currency
union. This does not matter if most members of the currency union experience a
recession at the same time—the Oceania central bank would lower interest rates to
promote growth accordingly—but becomes more complicated when an individual
country experiences a recession. The central bank would not lower regional interest
rates to benefit just one state, because doing so would raise inflation in all members
and risk initiating a boom–bust business cycle. Whether or not countries are likely
to be experiencing growth or a recession at the same time—that is, the degree to
which their business cycles are largely synchronised or not—depends on the degree
to which the countries are economically integrated to begin with. But even a high
degree of integration could not prevent a devastating cyclone causing a recession in
a single Forum island country. This suggests that a common Oceania currency may
indeed carry risks for sustainable economic development in individual Forum island
countries at particular times in the business cycle.
It is questionable, however, whether small open economies are able to pursue
dramatically different economic policies from their neighbours. In reality, the degree
of monetary independence enjoyed by small economies is already modest
(Yläoutinen 2001).
The loss of control of national monetary policy in turn puts greater pressure on
national fiscal policy. Usually a government has two tools at its disposal to fight a
recession: it can inject more money into the economy either by lowering interest
rates or by increasing government spending. Governments in a currency union have
lost the first capacity, and must rely entirely on government spending—a potential
problem issue for Forum island countries, which have few resources to begin with.
This is a typical difficulty with currency unions, but it does not matter so much in
federations like Australia and the United States, where a federal government can
transfer funding to disadvantaged regions. It is more of a disadvantage in the
European Union, and with the proposed Oceania Community, if there is no central
body that can coordinate fiscal transfers.

Is Oceania an optimal currency area?
The success of a monetary union rests on whether the countries forming the union
are an ‘optimal currency area’, a theory developed by economist Robert Mundell
(1961). According to Mundell and his successors, an optimal currency area will exist
when its constituent countries have

• a high degree of trade integration between them
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• complementarity between their economies
• business cycles that are largely synchronised
• mechanisms to deal with asymmetrical economic shocks (Ishiyama 1975;
Krugman 1990; Emerson et al. 1992; Wyplosz 1997).
Trade integration
Prior to monetary union, 70 per cent of European Union members’ trade was with
one another (Information Program for the European Citizen 1997). Australia is a
hub country for much Pacific trade, but the degree of integration is not that high.
However, the fact that Oceania members are not doing 70 per cent of their trade
with each other is not fatal—it reflects the current level of trade barriers in the
Pacific. This would change if the Oceania common market were implemented.
European monetary union was a long process, dependent on the completion of a
high standard, viable common market in the first instance (Emerson et al. 1992).
The degree of trade integration throughout Oceania would improve further into the
Oceania Community, as it did in Europe (Information Program for the European
Citizen 1997).
In the context of monetary integration, it is particularly important that the Oceania
common market promote the free movement of investment funds and the integration
of financial services (Pinder 1996; Duisenberg 2001). The Oceania common market
would have provisions on foreign direct investment from the outset, though provisions
on portfolio investment need not be tackled immediately. However, Oceania
members would need to remove capital controls progressively, perhaps starting at
the five or ten-year point of the Community, to realise the full benefits of a monetary
union (European Union members had to ensure the free movement of all types of
investment in the first stage of preparations for the Euro) (Pinder 1996). The Oceania
services agreement would encourage integration of financial services, and there is
already a high degree of financial integration throughout the Pacific private sector
because Australian banks are prominent in all these countries.
Table 7.1

Australia
New Zealand

Economic growth in Australia and New Zealand: real growth in gross
domestic product, 1996–2002 (percentage change year on year)
1996
3.5
3.1

1997
5.4
–0.7

1998
5.4
–0.2

1999
4.4
3.9

2000
3.0
4.0

2001
2.7
2.6

2002
3.3
4.4

Source: Australian Department of Foreign Affairs and Trade, 2004a. Country Fact Sheets,
Commonwealth of Australia, Canberra.

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Complementarity
The degree of complementarity between economies forming a monetary union is
important. Consider two hypothetical countries: financial services are the main export
of the first country; coconuts the main export of the second. Coming up with a
common monetary policy for these two countries would be difficult, because the
factors affecting growth and contraction of trade in financial services, and the growth
and contraction of trade in coconuts are likely to be quite different. The problem in
Oceania is that the proposed initial membership consists of two highly developed,
sophisticated economies and some of the least developed economies in the world.
There is also a lack of diversification within Forum island countries. A diversified
national economy can better withstand asymmetrical shocks, or unusual impacts,
on its economy. If a Forum island country produces only one commodity and a
cyclone destroys most of the crop, the economy will suffer more than one that lost a
similar crop but also had, for example, a tuna-exporting business, hotels, a financial
services centre and a garment industry. Diversification is important because those
joining a common currency lose monetary policy as an instrument for dealing with
these asymmetrical shocks. Therefore the built-in ability of a national economy to
bounce back becomes more important. Currently most Forum island countries have
narrow economic bases dependent on a few commodities. Properly implemented,
though, the Oceania common market would facilitate greater diversification in Forum
island economies, particularly in the services sector, leading to more sophisticated
economies generally. This would in turn facilitate a more viable monetary union.
Business cycles
It is also helpful if the business cycles of the proposed members of the currency
area are largely synchronised. A common monetary policy is more effective if
countries experience periods of growth and contraction at roughly the same time. A
common monetary policy can be dysfunctional if monetary policy is tightened when
one or more members of the currency area are already experiencing a recession. If
we consider the business cycles of Australia and New Zealand, we can see a high
degree of convergence, except for 1997 when different responses to the Asian
financial crisis led to a marked contrast.
Longer-term studies show that the Australian and New Zealand cycles are
synchronised 80 per cent of the time—a high degree by world standards (Hartcher
2000b; Grimes et al. 2000). However, there are greater periods of divergence in
Forum island countries’ business cycles (see Table 2.3).
The divergences can largely be explained by the fact that Forum island economies
are more susceptible to asymmetrical shocks, some due to cyclones, some to
political instability. Fiji’s economy contracted by 2.8 per cent in 2000 following the
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country’s third coup, and the Solomon Islands economy contracted by 14 per cent
following the coup there (Asian Development Bank 2002). The Oceania Community,
if successful in promoting the five goals of integration, would minimise political
instability. However, if political instability occurred, a common currency would mean
that Forum island countries would not have to spend foreign reserves to maintain a
stable national currency in the wake of a crisis. A common currency would eliminate
the effect of political disasters on the exchange rate (de Brouwer 2000).
Mechanisms to deal with asymmetrical economic shocks
Finally, Community mechanisms for dealing with an asymmetrical shock are vital. If
a country has given up the possibility of using its monetary policy to fight a recession,
other tools are needed: labour mobility and fiscal transfers (de Brouwer 2000). If
one member is experiencing a recession, it is important that people in that low
growth area can find employment in a high growth area. There is already a high
degree of labour mobility between Australia and New Zealand. The Oceania labour
mobility agreement would ensure a degree of labour mobility throughout the rest of
Oceania as well.6
The handling of fiscal transfers is more difficult. Europe, for example, has been
largely unsuccessful in coming up with a system of fiscal transfers, because almost
50 per cent of the European Union’s budget is instead spent on agricultural subsidies
(European Commission 2000). European Union Commissioner Romani Prodi has
predicted that European monetary union among such diverse countries means that
‘some day there will be a crisis and new economic-policy instruments will be created’
(‘Europe’s big idea’, The Economist, 5 January 2002).
Politics and economics
These are the important economic considerations, and, taken together, can build up
a useful picture as to whether a potential currency area is viable or not. There is no
perfect currency area. Some economists argued that the European Union was not
an optimal currency area prior to monetary union, but the further economic integration
that would occur as a result of union might make it an optimal currency area
afterwards (Frankel and Rose 1998). De Grauwe argues that ‘not a single monetary
union in the past came about because of recognition of economic benefits of the
union. In all cases it was drive by political objectives’ (de Grauwe 1993:653, 661).
Monetary union comes down to politics as much as economics. Many national
economies would fail the test of whether or not they are optimal currency areas.
Economists figure that the United States is made up of three or more optimal currency
areas, but no one suggests abandoning the US dollar (Salvatore 1997). Likewise,
Tasmania might be better off with a different currency from Queensland, and the
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North Island of New Zealand might be better off with a different currency from the
South, but no one proposes smaller currency areas in these instances either.
The most comprehensive study about monetary union between Australia and
New Zealand, An ANZAC Dollar?, concluded that the static economic arguments are
fairly evenly balanced: the authors found those arguing for or against union could
find figures to support either case (Grimes et al. 2000). Nevertheless the authors
favoured a common currency because of the potential dynamic benefits and its
implicit commitment to a shared future as an economic entity. Further, the dynamic
economic benefits might be considerable in terms of increased trade and investment.
A constituency in Australia and New Zealand—mostly in business circles—continues
to be interested in a common currency. Monetary union between Australia and New
Zealand occasionally makes it out of business and academic circles to feature on the
political agenda. In 2000, the issue appeared briefly to be building up some momentum.
Helen Clark said that New Zealand was ‘not on the radar screens of big institutions and
investors’, so it might be time to consider a common currency with Australia (Dore and
Henderson 2000). This followed the release of An ANZAC Dollar?, which found 80 per
cent of New Zealand businesses favour monetary union with Australia. Service sector
firms, the region’s future, were most strongly in favour (Grimes et al 2000).
The discussion ran in newspapers for 10 days until Australian Treasurer Peter
Costello stated that any country was welcome to discuss the adoption of the
Australian dollar, but Australia was ‘not interested in any new currency, any third
currency’ (‘Costello: No new money’, The Australian Financial Review, 14 September
2000). Ms Clark responded that New Zealand was not interested in giving up its
currency without a new currency and a joint central bank in return (Henderson and
Dore 2000). But this may be an ambit claim rather than a veto. Ms Clark had
previously been adamantly opposed to any form of currency union (Dore and
Henderson 2000). Times change.
In terms of a wider union, during his tenure as Australian Foreign Minister, Gareth
Evans requested a study of the pros and cons of a Forum island country common
currency, but not an Australasian-Forum island country currency union. Thus, the
Australian Senate Foreign Affairs, Defence and Trade References Committee’s 2003
report marks the first political exploration of Pacific monetary integration. The
Committee recommended that the Australian government should not discourage
those Forum island countries who wished to adopt the Australian dollar (a small
step, perhaps, but a progression from the situation mentioned above, when Solomon
Islands was discouraged from continuing with the Australian dollar) (Australian
Parliamentary Committee 2003).
The issue we return to, then, is whether the proposed currency is viable and will
contribute to sustainable economic development. The rest is a matter of political
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will. I believe the economic arguments for monetary union amongst many, though
not all, of the Oceania members are favourable, or at least evenly balanced. Beyond
the economic considerations, though, a common currency would send an important
signal to the region itself, and the rest of the world, about how the Pacific views its
shared future. If the will can be found for the Oceania Community generally, it can be
found for a common currency. The question is how to do it.

A common Oceania currency
In the first phase of the Oceania Community, it is not in Australia’s interest to adopt
a new common currency. Even if Oceania currently accounts for 8 per cent of
Australia’s exports, that still leaves 92 per cent of Australia’s exports going elsewhere.
The benefits of a new common currency would only flow to Australia if the level of
Australian exports going to the common currency area were much higher. For example,
if, further down the track, Japan joined the Oceania Community, some 30 per cent
of Australia’s exports would be covered by the Oceania Community, and it might
make economic sense at that point to start the debate about a new currency.
Promoting a new currency in Australia would require an investment of political
capital comparable to that required to introduce the goods and services tax (GST).
Where the economic benefits from a proposal are marginal, it becomes an obvious
area for partisan point-scoring. Since the economic benefits for Australia from a new
common currency in the first phase of the Oceania Community are marginal, this
political capital may be better directed elsewhere—for instance, toward promoting
an Oceania labour mobility agreement.
It is in the region’s interest to use the Australian dollar as the Oceania common
currency, and to begin establishing the conditions for wider union. Thus, Australia
should promote Australian dollarisation in the first phase of the Oceania Community.
Pursuing monetary integration through the use of the Australian dollar, rather than
the creation of a new currency, would avoid the delays and long negotiations over
convergence criteria and post-integration stability that characterised European
monetary integration (thirty-three years elapsed from the time of the first substantive
discussions about monetary union to the appearance of the euro notes and coins)
(Apel 1988).
There are many advantages to the region from Australian dollarisation. Since
1993, Australia’s low inflation regime has been a key component of a long period of
economic growth. Consider its inflation record between 1996 and 2002 (Table 7.2)
Following New Zealand’s lead, Australia has adopted inflation targeting, with the
target set at 2–3 per cent. However, Australia has used a smoother method to
achieve its target than has New Zealand. The Reserve Bank of Australia has to
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Figure 7.1

Real effective exchange rates, 1980–99

180

140
120
100
80

Fiji
Papua New Guinea

60

Samoa

40

Solomon Islands
Australia

20

Jan-99

Jan-98

Jan-95

Jan-94

Jan-93

Jan-92

Jan-91

Jan-90

Jan-89

Jan-88

Jan-87

Jan-86

Jan-85

Jan-84

Jan-83

Jan-82

Jan-81

Jan-80

Jan-97

New Zealand

0

Jan-96

index, average 1980 to 1999 = 100

160

Source: Gordon de Brouwer, 2000. ‘Should Pacific island nations adopt the Australian dollar?’,
Pacific Economic Bulletin, 15(2):161.

achieve the target over the course of the economic cycle (Reserve Bank of Australia
1996), in effect, over the medium term. This gives the Reserve Bank of Australia
more flexibility in achieving the target—it need not suddenly raise interest rates if
inflation looks like going over 3 per cent; instead, it can tighten monetary supply
gradually (de Brouwer 2000). Until recently, the New Zealand Reserve Bank had to
achieve its inflation target of 1–2 per cent annually, meaning it had to raise rates
more quickly to meet its target within the time frame. New Zealand’s system,
combined with its use of a ‘monetary condition index’ to set policy (which Australia

Table 7.2

Australia

Australian inflation rate, 1996–2002 (percentage change year on
year)
1996
0.3

1997
0.9

1998
0.9

1999
1.5

2000
4.5

2001
4.4

2002
3.0

Source: Australian Department of Foreign Affairs and Trade, 2004a. Country Fact Sheets,
Commonwealth of Australia, Canberra.

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did not use) sent the New Zealand economy into recession following the Asian
financial crisis, whilst the Australian economy continued to grow (‘G’day Goldilocks’,
The Economist, 6 March 1999:78). New Zealand’s interest rates at the time were
10 per cent, whilst Australia’s remained below 5 per cent. New Zealand has now
abandoned the monetary condition index and annual inflation targeting, and now
has practically the same system as Australia, with the New Zealand Reserve Bank
aiming for inflation of 0–3 per cent over the medium term (‘From Brash to Bollard’,
The Economist, 31 August 1999:21).
Australia’s central bank is independent of the government of the day, to the
extent that the government sets the inflation target and it is then for the bank to
decide how to achieve it. Thus, Australia offers the region a stable monetary policy,
given the importance of central bank independence discussed above. Duncan
believes that one of the key benefits of Australian dollarisation in the Pacific would
be central bank independence; a related benefit would be lower interest rates in the
Pacific (Duncan 2002).
Australian and Forum island country currencies track each other relatively closely.
The following figure shows movements in the real exchange rate between Australia
and five other Forum members from 1980 to 1999 (de Brouwer 2000).
Although the currencies of the proposed partners do not track each other exactly,
the degree of convergence increases over the period.7 There would be no point in
more Forum island countries adopting the US dollar, for example, given Forum
island countries’ reliance on commodity exports. The US dollar is not a commodity
currency, and the peso–US dollar link in Argentina, for example, caused considerable
difficulty, because it has made Argentina’s commodity exports uncompetitive and
ultimately caused considerable economic and social turmoil (‘Argentina: flirting with
anarchy’, ‘Between the creditors and the streets’ and ‘No good options’, The
Economist, 5 January 2002; Duncan 2002). Notwithstanding the importance of the
services sector in the Australian economy, international currency traders largely
regard the Australian dollar as a commodity currency. Thus, the Australian dollar is
largely compatible with Forum island countries’ interest in a competitive commodity
currency (Duncan 2002; de Brouwer 2000). The Australian dollar may be of lower
value than the US dollar, but this makes Australian exporters more competitive, as
it would also assist Forum island country exporters. Further, as a floating currency,
the Australian dollar would respond to commodity shocks effectively.
Use of the Australian dollar would also facilitate the flow of tourists and
remittances around the region, two goals of the Oceania common market. Forum
island country individuals working in Australia and sending remittances home would
know that the value of their money would hold constant. Use of the Australian dollar
would also recognise the reality that much of the trade in the region is denominated
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Monetary cooperation and integration

in Australian dollars already (importers are billed in Australian dollars rather than
the local currency).
Thus, Australian Treasurer Peter Costello was correct in his approach when he
suggested that Australia should promote Australian dollarisation rather than a new
currency. He was incorrect, though, when he said that Australia should not
contemplate any changes at all to its monetary arrangements. Australia can take
certain steps to encourage other countries to use the Australian dollar, all of which
are consistent with the national interest.
First, there is the issue of representation on the Reserve Bank of Australia board.
The board has six representatives, in addition to the Governor, Deputy Governor and
Secretary to the Treasury. To promote the use of the Australian dollar as the Oceania
currency, it would be appropriate to increase the number of representatives from six
to ten. Seven representatives should be drawn from Australia, one from New Zealand,
one from Papua New Guinea, with the final representative rotating around other
Forum island countries (representation would only be drawn from those countries
that adopted the Australian dollar). Clearly Australian representatives would form
the majority of the board, but the proposed break-down is roughly in proportion to
population and still gives other Community members a voice in Australian monetary
policymaking. The Reserve Bank of Australia’s Governor or Deputy Governor should
be made available for parliamentary appearances in Forum island countries. Forum
island country representatives already undertake secondments at the Reserve Bank
of Australia; it would also be useful to appoint staff from other Oceania countries on
a permanent basis.
Seigniorage is the income that the Australian government earns from the use of
its currency. The currency is worth more than it costs to print, so the owner of the
printing machine generates revenue (Hausmann 1999). If more countries use the
Australian dollar, Australia would start making more seigniorage. One appeal of the
euro, as opposed to just adopting the deutschmark, was that a common central
bank would share seigniorage. To promote wider use of its currency, Australia could
return the seigniorage it makes from other Community members using its currency
(minus costs) (Duncan 2002). Countries could use the Australian dollar at its cost
price. Given the many other advantages Australia would enjoy from promoting the
use of its currency—better economic performance among Forum island countries,
more trade, and so on—sharing the seigniorage profits would remove an obstacle on
the voyage to monetary order. The US Senate is considering proposals for the United
States to return seigniorage profits to South American states that pursue US
dollarisation (McLeod 2000; Hausmann 1999).
It would also be appropriate to make some changes to Australian notes and
coins. Australia could have a map of the Pacific on the back of its coins, instead of
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the English monarch. The European Union chose bridges as the motif for its notes; a
linking theme for Oceania could be beaches and the sea. An Australian note—preferably
a lower domination note used frequently by Pacific islanders—could become the
‘Oceania note’ with a beach on one side and prominent islanders on the other side.
The issue of fiscal transfers in the event of a recession in one Forum island
country is more difficult. One test of monetary union is whether compensatory
fiscal mechanisms make up for the loss of national control of monetary policy. The
Oceania Community would not be a form of the fiscal federalism that exists between
the Australian federal and state governments. Australia already makes substantial
fiscal transfers to Forum island countries through its aid program (de Brouwer
2000), but for those adopting the Australian currency, Australia should establish
two ‘fiscal transfer’ trust funds to assist Oceania members suffering significant
shocks to their economy. A ‘natural disaster fund’ could help when a cyclone, for
example, sends an economy into recession. The Forum already has a Regional
Natural Disaster Relief Fund, which provides members with immediate assistance
up to a maximum F$20,000 following natural disasters. This existing fund could be
enlarged, so that more generous payments are possible, better reflecting the impact
of a disaster on a member’s fiscal position. Thus, the Oceania monetary order could
modify the ill effects of natural disasters.
A second fund could help those countries that have followed sound economic
policies, but experience some other sort of shock that sends their economy into
recession. Australia could provide A$65 million each to establish the two funds.
Other Oceania members and aid donors could also contribute, so the funds may
total around A$100 million each. Invested wisely, the two funds could eventually
provide substantial fiscal transfers to Forum countries that suffer disasters.
The Oceania Community should be put in charge of the two funds. Thus, all
members would be collectively responsible for how the funds are disbursed, as
occurs already with the Regional Natural Disaster Relief Fund. Contributing states
would have a say in how the funds are disbursed, but no state should enjoy a veto
over the disbursement of funds.

Supervision
If the Reserve Bank of Australia were to assume responsibility for regional monetary
policy, there may be calls for it also to assume responsibility for supervising the
Oceania financial system and to become the lender of last resort for Forum island
countries.8 For the foreseeable future, however, Forum island countries should
maintain their own national regulatory regimes. Over time, as trust and confidence
build in the other institutions of Oceania, Forum island countries may see the merits
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Monetary cooperation and integration

of regional regulation, but it is not an early priority. Forum island countries themselves
need to display greater responsibility for tidying up their financial systems, as the
willingness of many Forum island countries to tolerate money laundering, and the
1997 collapse of the National Bank of Fiji, indicate (Chand 1998b; OECD 1998).9
There is no absolute rule that a central bank should be responsible for financial
system regulation as well as monetary policy. Central banks following the English
model combine the two roles; those following the German model usually separate
them, as does the European Central Bank (Haubrich 1996). Taking on the regulatory
function might involve an assumption that the Reserve Bank should bail out a
Forum island country in a financial crisis. This would involve the Reserve Bank
injecting liquidity when a banking crisis threatened a country’s financial stability. The
national government would then have to repay whatever money the Reserve Bank
committed to ensure financial stability.
There are two problems with the Reserve Bank assuming such a role. First, the
image of the Reserve Bank pursuing sovereign debt from a Forum island government
makes for some unfortunate presentational issues. It would be hard, too, convincing
Australian taxpayers that their tax dollars are best spent bailing out poorly regulated
Forum island country banks.
Second, it encourages ‘moral hazard’—individuals, businesses or governments
may behave recklessly when they know they will be bailed out (Sharma 2000).
Forum island country banks may back more risky loans if their risk were so minimised.
It also lessens the impetus for Forum island country governments to tidy up their
banking sectors. Further, the Reserve Bank’s bail-out role is not spelled out in detail
anywhere in the relevant Australian legislation. This is designed to limit the moral
hazard problem: because the Reserve Bank is not obliged to act in any particular
circumstances unless there is a threat to general financial stability, a bank cannot
rely on a bail-out. If the Reserve Bank performed this role on a regional basis,
however, the relevant considerations would need to be spelt out in detail, so all
countries would know what protection their financial systems enjoyed. The downside
of this certainty of Reserve Bank action in particular circumstances would be a
greater risk of moral hazard.
Thus, the Reserve Bank of Australia should adopt a no bail-out rule, as the
European Central Bank has done.

An Oceania Monetary Fund
If the Reserve Bank of Australia does not take on the supervisory role and bail-out
function, there may be some debate about whether an Oceania Monetary Fund
should be created to perform these tasks. The idea of regional monetary funds, to
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complement or replace the International Monetary Fund, gained momentum following
the Asian financial crisis.
The International Monetary Fund currently performs the role of international
lender of last resort (Sharma 2000). A regional monetary fund thus becomes the
lender of second-last resort. This may encourage moral hazard, because banks and
governments know they have the chance to be bailed out not just once, but twice
(‘Converging Hopes’, The Economist, 13 February 1999).
The International Monetary Fund is an imperfect institution (Li Lin and Rajan
2001; Sharma 2000). But the answer is to reform the global system, not set up
competing regional monetary funds. Instead of establishing an Oceania Monetary
Fund, the Oceania Community could add value to the global system by promoting
information sharing and peer reviews of financial system stability. Under Article 4 of
its mandate, the International Monetary Fund conducts annual reviews of its
members’ economic, financial and banking performance (International Monetary
Fund 1992: Article 4). Oceania Community reviews of its members may produce
more feasible recommendations for reform through a better appreciation of local
conditions (Herman 1999).

Conclusion
Forum members are yet to explore the potential of a common regional approach to
monetary policy. This denies them an important vehicle for promoting sustainable
economic development. Along with trade policy and fiscal policy, the region must
include monetary policy as an essential part of the FEMM reform process. The
current situation could be rectified through such practical measures as improving
the availability and standard of economic data, instituting meetings of central bank
governors, committing to independent central banks, and adopting a regional
approach to tackling inflation. Inflation targeting would contribute to sustainable
economic development by stabilising prices, steadying the national business cycle,
and promoting a sustained, even rate of economic growth. Thus, a regional approach
to inflation should be a key feature of the Oceania monetary order.
Sustainable economic development would also be facilitated by a common
currency among those countries that enjoy a high level of integration with Australia,
and judge their business cycles to be sufficiently synchronised to justify a common
monetary policy. Australia should promote the use of Australian dollarisation, and
provide the necessary funds and expertise to ensure a smooth transition for Oceania
members that adopt it. However, as Argentina’s experience demonstrates,
inappropriate currency arrangements can produce disorder (‘Argentina: flirting with

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anarchy’, ‘Between the creditors and the streets’ and ‘No good options’, The
Economist, 5 January 2002). For some members (say, the Marshall Islands, Palau
and the Federated States of Micronesia), adopting the Australian dollar may cause
economic turmoil. In other members, there may be a risk of political turmoil through
the loss of a symbol of national identity (de Brouwer 2000). Obviously, monetary
integration would not contribute to sustainable economic development in these
cases.
So it is appropriate for Australia to promote Australian dollarisation, but not to
insist on it. As in Europe, where England and Denmark elected not to pursue monetary
integration at the outset, monetary union should be an optional protocol to the
Oceania single undertaking treaty. Some countries may elect to take this step from
the outset of the Oceania Community. For others, it may be more appropriate at the
fifteen to twenty-year mark. By this stage, the degree of integration between members
would be much higher. Australian dollarisation might be a non-issue by then. Members
may even be debating the merits of a new common currency among a bigger Oceania
grouping. Meanwhile, Australia’s efforts would have prepared the way for the promise
of the wider regional order.
A common market, complemented by a regional approach to monetary policy, is
the most important step a regional community can take to promote sustainable
economic development. Yet sustainable economic development also depends on a
benign security environment, and the next chapter proposes a new security
architecture for the Pacific to prevent and manage security issues better.

Notes
1

2

3
4

5

The large benefits shown by Rose seem to highlight the importance of establishing an
economic union in addition to a monetary union, as much of his research was based
on economic and monetary unions, rather than monetary unions alone. For example,
part of his analysis was based on the Australian dollar union of Australia, Christmas
Island, Norfolk Island, the Cocos Islands, Kiribati, Nauru and Tuvalu.
For example, a Fijian exporter might make a deal with a Samoan importer to import a
particular product; the contract is in Fijian dollars. If the Fijian dollar drops relative to
the Samoan tala, the Samoan importer makes a profit on the transaction and the Fijian
exporter misses out. If the Fijian dollar rises relative to the Samoan tala, the Samoan
importer must find more tala to convert into Fijian dollars to fulfil the contract.
Email from Public Relations Officer, Reserve Bank of Fiji, 1 July 2002.
Such developments would be consistent with the Caribbean experience (Fairbairn and
Worrell 1996).
Duncan (2002:145) notes that the Solomon Islands central bank ‘has fought tooth
and nail against various administrations over the past decade or so to maintain its
independence and prevent the government from profligate deficit financing’.

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6

7

8

9

Because of differences in language and culture, Europe was judged to have low labour
mobility before monetary union, even where the entitlement existed. But countries
participating in the first phase of the Oceania Community have English in common,
thus overcoming this first hurdle, and those entering the developed country labour
markets would have a strong desire to succeed.
De Brouwer (2000:164) notes that the differences can be explained in part by ‘large
idiosyncratic shocks, often political in particular countries’.
Although the Australian Prudential Regulation Authority has direct supervision of the
banks, the Reserve Bank of Australia is responsible for the overall stability of the
Australian financial system.
The OECD and the G7’s Financial Action Task Force expressed concerns about Nauru,
Vanuatu, Samoa, the Cook Islands, the Marshall Islands, Tonga and Niue (Cornell
2000; Randall 1999).

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Security

8

Security

Since security is such a wide-ranging topic, this chapter is delimited in three respects.
First, I do not dwell on issues where work is already taking place. Second, I do not
consider every single security issue in the Pacific; rather, my focus is on measures
where the need can be reasonably anticipated, and that it is appropriate to include
in the Oceania security agreement as part of the single-undertaking treaty. For
example, a high-impact peace enforcement action, should it be required, is most
likely to be handled through UN mechanisms. It is therefore unnecessary (and,
arguably, inappropriate) for the Oceania Community to assume responsibility for
such actions. Third, the focus is on internal disputes, in the belief that these represent
the most likely challenges to Pacific security;1 but there is a brief consideration of
external threats and mutual defence at the conclusion of the chapter.

The Forum and security
As discussed in Chapter Four, the Forum’s approach to security issues has evolved
gradually, culminating in the Aitutaki Declaration of 1997 and the Biketawa
Declaration of 2000.
The Aitutaki Declaration anticipated the development of various preventive
diplomacy initiatives, utilising the Forum Secretary-General’s good offices, the Forum
Regional Security Committee, eminent persons, fact-finding missions and third-party
mediation (South Pacific Forum 1997b: para 11).2 Under the Biketawa Declaration,
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the Forum Secretary-General may consult with Forum Foreign Ministers in the event
of a security crisis, who in turn may
• make a statement
• create a Ministerial Action Group
• establish a fact-finding or similar mission
• convene an Eminent Persons Group
• institute third-party mediation
• support institutions or mechanisms that would assist a resolution
• convene a special meeting of the Forum Regional Security Committee, or of
Forum Ministers
• if the crisis persists, convene a special meeting of Forum Leaders to consider
other options (Pacific Islands Forum 2000a: para 2).
Using the authority of the Biketawa Declaration, the Forum deployed its first Election
Observer Mission to the 2001 Solomon Islands elections (Pacific Islands Forum
2002b: para 15); deployed an Eminent Persons Group to the Solomon Islands in
2002 to consider areas of Forum assistance (Pacific Islands Forum 2002a: para
15); and, in 2003, deployed a regional intervention force to the Solomon Islands.
These are encouraging developments, but the Forum remains limited in terms
of its standing mechanisms.3 For a long time the Solomon Islands government,
encouraged by Australia, looked to the Commonwealth, rather than the United Nations
or the Forum, for assistance to prevent the spread of conflict. This is an indictment
of the Forum: it currently lacks a permanent institution, with dedicated staff, devoted
to preventing or ameliorating conflict. This is crucial, because early detection and
prevention is the most humane, least complex and inexpensive method for managing
conflict (Evans 1996:61).4 As will be discussed below, this is particularly pertinent
when considering the development of conflict in the Solomon Islands.
In response to the terrorist attacks of 11 September 2001, Forum Leaders
passed the Nasonini Declaration on Regional Security in 2002. In it, Leaders
expressed their concern about international terrorism and underlined their
commitment to global efforts to combat terrorism (Pacific Islands Forum 2002b:
paras 3, 4). The focus of the Declaration, however, was on national initiatives—
chiefly the implementation of particular national legislation suggested by the Honiara
Declaration in 1992—rather than on the creation of regional mechanisms (Pacific
Islands Forum 2002b: paras 7, 8). The Honiara Declaration itself identifies areas of
‘possible’ cooperation—in intelligence gathering, training and joint exercises for
dealing with serious incidents—but there has been little progress (South Pacific
Forum 1992). This represents a missed opportunity, particularly for Australia, whose
citizens, among Forum members, are the most likely target of a terrorist attack (as
was demonstrated by the two Bali bombings).
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Security

It must be acknowledged, though, that the Forum is already working on three
important security issues: the flow of small arms into the region,5 money laundering,6
and improving police training to address the Pacific’s law enforcement issues.7 My
interest here is to address the need for new mechanisms to promote the goal of
security generally, but particularly to prevent and ameliorate the loss of life from
armed conflict.
To demonstrate why this is so vital, and the potential benefits of a Pacific security
order, I next consider how the region handled, or failed to handle, its two greatest
security challenges in recent years, in Bougainville and Solomon Islands.

Bougainville
In an attempt to arrest the vicious cycle of violence in Bougainville (outlined in
Chapter Two), a peace conference was planned for October 1994 in Arawa. The
conference was a failure—the Bougainville Revolutionary Army (BRA) and Resistance
leadership feared a trap, and did not show up—but there was one historic
development: Australia, New Zealand, Fiji, Vanuatu and Tonga came together to
provide the South Pacific’s first peacekeeping force, which consisted of 400
personnel (Regan 1998; McCarthy 1995). The contributing countries notified the
UN Secretary-General of their initiative (Allen 1995).
Ensuing attempts at peace allowed a moderate BRA /Resistance leadership to
emerge which, though supporting independence, believed ordinary people were
suffering too much because of the fighting and that a peaceful accommodation had
to be reached (Regan 2002, 1997, 1998). In a final effort to end the conflict by
force, however, Papua New Guinea Prime Minister Julius Chan engaged the
mercenaries, Sandline International, ultimately bringing down his own government
and almost precipitating a military coup (Australian Parliament Joint Standing
Committee 1999; Dorney 2000; O’Callaghan 1999; Dinnen 1999; Fry 1999). A
consensus was emerging among many of the parties to the conflict that force alone
could not solve the problem (Regan 1997; Fry 1999).
The Burnham Agreement of 1997 and the Lincoln Agreement of 1998
established a permanent ceasefire, and a framework for Bougainville and the
national government to resolve the outstanding issues of independence, autonomy
and weapons disposal.
The agreements also established the Truce Monitoring Group and its successor,
the Peace Monitoring Group. The Truce Monitoring Group and the Peace Monitoring
Group were to be unarmed, neutral peace monitoring forces, drawn from Australia,
New Zealand, Fiji and Vanuatu, made up largely of military personnel, but with some
police and civilian monitors. Their main goals were to give the Bougainville factions
the political space to conclude an agreement between themselves and the national
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government, and to restore confidence at the grass-roots level (Regan 1999). It was
believed a supranational monitoring group would keep all parties to the agreement
honest (Australian Parliament Joint Standing Committee 1999).
Because of the suspicion with which many Bougainvilleans regarded Australia,
New Zealand took the lead with the Truce Monitoring Group and many of the early
peace initiatives. The Truce Monitoring Group consisted of 120 New Zealanders,
90–110 Australians and 20 Fijians and ni-Vanuatu (Australian Parliament Joint
Standing Committee 1999). Under the Burnham Agreement, the Truce Monitoring
Group’s mandate was to
• monitor and report on compliance with the truce
• instil confidence in the peace process through its presence, good offices and
interaction with the local community
• provide information on the truce and peace process.8
The Truce Monitoring Group was replaced five months later by the Peace
Monitoring Group, established under the Lincoln Agreement. Its mandate was similar
to the Burnham Agreement, but allowed the Peace Monitoring Group to provide
further measures to assist with a democratic resolution, as determined by the parties
to the Lincoln Agreement.9
The Peace Monitoring Group was led by an Australian Commander and an
Australian Chief Negotiator. At its peak, the Peace Monitoring Group consisted of
around 245 Australians, 29 New Zealanders, 15 ni-Vanuatu and 12 Fijians
(Australian Parliament Joint Standing Committee 1999). Papua New Guinea notified
the UN Security Council of developments and sought endorsement for the Peace
Monitoring Group. A two-person UN observer mission was established as a result.
It was envisaged that the Peace Monitoring Group would be in place for only a
short time before a final settlement. But three years of frustration and tension
followed for all parties during the negotiations on independence, the level of
autonomy in the interim, and weapons disposal. Francis Ona, who had initiated the
secessionist struggle, did not participate in the peace process. He remained hidden
within the Panguna no-go zone with his Me’ekamui army, and maintained an
undercurrent of support throughout Bougainville.
By November 2000, discussion between Bougainville and the national
government had deadlocked.10 There was open talk of a return to warfare, and the
return of Francis Ona. In December 2000, Australian Foreign Minister Alexander
Downer proposed that the parties consider a non-binding referendum on
independence for Bougainville in 10–15 years’ time.11 This proposal involved each
side making significant concessions.12
The agreement on a referendum for independence was formalised between the
Minister for Bougainville Affairs, Moi Avei, and the President of the Bougainville
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Security

People’s Congress, Joseph Kabui, on 26 January 2001.13 The referendum agreement
was the catalyst for resolving the other difficult issues that had stalled the negotiations,
leading to an agreement on weapons disposal,14 followed by an agreement on
autonomy. 15 These three agreements were then gathered into the Bougainville Peace
Agreement, which was signed on 30 August 2001. The Papua New Guinea parliament
passed the necessary legislation in early 2002 (Regan 2002).
The final undertakings in the Bougainville Peace Agreement were that a
referendum be held 10–15 years after the election of the autonomous Bougainville
Government; that the timing of the referendum would take into account standards
of good governance and the implementation of weapons disposal; that the
referendum would include an option of separate independence for Bougainville;
and that the result would have to be ratified by the national parliament.
As a result of these developments, and a successful start to the weapons disposal
process, the Peace Monitoring Group slimmed down,16 then finally withdrew in June
2003 (Australian Parliamentary Committee 2003).17 A Transition Team, consisting
of 17 civilians from the Peace Monitoring Group contributor countries, remained in
place to support the UN observer mission and ‘further advance the peace process’
(Australian Parliamentary Committee 2003:183–84; Downer 2003f).
Although the Peace Monitoring Group consisted of four Forum members, neither
the Forum collectively, nor its bureaucrats, had a role in the resolution of the
Bougainville crisis.

Solomon Islands
Efforts to bring peace to Solomon Islands had two distinct phases: the smaller,
ultimately unsuccessful International Peace Monitoring Team, which was followed
by the Forum’s comprehensive intervention, the Regional Assistance Mission to
Solomon Islands (RAMSI). Each is considered below.
Phase One: the International Peace Monitoring Team
Ongoing violence forced the Prime Minister of the Solomon Islands, Bartholomew
Ulufa’alu, to submit his resignation on 13 June 2000. He was succeeded on 30
June 2000 by Manasseh Sogavare, who had previously been Opposition Leader.
Australia and New Zealand backed Sogavare’s efforts to broker a peace, with
both providing naval boats to allow the factions to meet, leading to a ceasefire in
August. In October, Australia flew 130 Solomon Islanders to Townsville to facilitate a
comprehensive settlement. The Townsville Agreement was signed on 15 October
2000, with the aim of promoting disarmament, restructuring the police force and
decommissioning militias. 18 The Townsville Agreement also provided for
compensation for individuals and areas affected by violence.19
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The Agreement established an International Peace Monitoring Team (IPMT), to
support the Solomon Islands Peace Monitoring Council. The IMPT was mandated to
• oversee weapons disposals
• conduct regular inspections of the weapons after they were stored
• monitor the implementation of the agreement and report on breaches.20
The IMPT was to submit a fortnightly report to the Peace Monitoring Council on these
issues.
The IPMT was led by Australia and consisted of 49 personnel. These IPMT
personnel were occasionally joined by representatives from the Commonwealth
Secretariat, Tonga and the Cook Islands. Six teamsites were established, in addition
to the IPMT headquarters in Honiara.
New elections were held in December 2001, in which Sir Allan Kemakeza was
elected Prime Minister. Some 90 election monitors attended, including many Forum
representatives, following the Forum’s decision under the Biketawa Declaration
(Australian Department of Foreign Affairs and Trade 2003a).21
Unfortunately, the IMPT was only partially successful. Comprehensive
disarmament and weapons disposal did not occur (approximately 2020 weapons
were recovered, but most were homemade); the compensation-for-grievances
process established in Townsville became corrupted; and ethnic conflict ‘evolved
into a broader pattern of criminality’ (Wainwright 2003:488; see also Nicholson
2002). Ex-militias formed criminal gangs, and the police were involved in corruption
and criminal activity. It became impossible to re-establish the rule of law (Wainwright
2003; O’Callaghan 2003d). A former Police Commissioner was assassinated; ten
people were killed in an attempt to arrest the most notorious warlord, Harold Keke,
and a cabinet minister was assassinated (Keke claimed responsibility) (Nicholson
2002; O’Callaghan 2003b, 2003e; Kemakeza and Warner 2003).
The IPMT departed Solomon Islands in June 2002, four months early, following
agreement by Solomon Islands, Australia and New Zealand that it had done all it
could to assist the peace process (Australian Department of Foreign Affairs and
Trade 2003a; Nicholson 2002).
Phase Two: the Regional Assistance Mission to Solomon Islands
In April 2003, Kemakeza wrote to John Howard again seeking assistance to address
the Solomon Islands’ security crisis. Howard arranged for Kemakeza to be flown in
for urgent talks on 5 June (O’Callaghan 2003d). The Australian government
responded by announcing its new policy of ‘cooperative intervention’ (Kelly 2003a).
The Australian government provisionally agreed to an intervention force, provided
such an undertaking had backing from the Pacific Islands Forum, that there was a
formal request from the Solomon Islands, and that the Solomon Islands parliament
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passed enabling legislation (Howard 2003b). The Forum Foreign Ministers endorsed
the proposal on 30 June. On 4 July, the Solomon Islands Governor-General made the
formal request, acting on the advice of the cabinet; on 11 July, the Solomon Islands
Parliament provided its endorsement, passing the necessary legislation on 17 July
(Howard 2003b).
RAMSI commenced on 24 July, and consisted of 2,250 police, military and civilian
personnel, drawn from Australia, New Zealand, Papua New Guinea, Tonga and Fiji.
The police component consisted of 325 personnel, and the military component
some 1,800 personnel, which included 450 combat troops, as well as logistics,
engineering and medical personnel (Wainwright 2003; Howard 2003b).
RAMSI’s mission was twofold, incorporating
• a police and military operation to restore law and order by removing weapons
from gangs and militias
• a nation-building program—involving the insertion of foreign advisors into key
positions—to improve economic management, the delivery of essential
services, policing and the administration of the legal system, and to promote
an effective democratic process (Australian Department of Foreign Affairs
and Trade 2003b).
The initial phase of RAMSI has been a success. Over 3,400 weapons, including
670 high-powered guns, were surrendered during a three-week amnesty period,
some of which had been held illegally by police (Australian Department of Foreign
Affairs and Trade 2003c). Six hundred arrests were made and 1,000 charges laid in
the first five months of the operation (Australian Department of Foreign Affairs and
Trade 2003e). Harold Keke also surrendered (Wainwright 2003).
As can be appreciated, the Forum played a far more dynamic role in addressing
the Solomon Islands crisis, with its deployment of election monitors in December
2001, and approval of the intervention force in June 2003. The election monitors
and RAMSI are the most encouraging signs of a nascent Pacific security order, and
Australia’s leadership in the case of RAMSI was commendable. RAMSI was more
successful than the IPMT because it addressed the underlying causes of the Solomon
Islands’ difficulties, not just the manifestations, and the necessary resources and
degree of intervention were better aligned with the nature of the problem.
Yet a key issue is whether earlier intervention by the region could have reduced
tensions, saved lives and prevented the country bankrupting itself. The national
police force was so heavily identified with one ethnic group—70 per cent of the force
was Malaitan—that it could not resolve the conflict (O’Callaghan 2000c). As Amnesty
International noted, ‘there is no one to create order’ (Smellie 2000:58).
For a long time, Australia resisted early intervention (Dobell 2003; Daley 2000c;
Wainwright 2003). Yet leaders of the various militia groups told Australian Foreign
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Minister Alexander Downer in June 2000 that ‘only a neutral force could save the
country from civil war’ (O’Callaghan 2000d:1). As he resigned, Ulufa’alu said
[i]n our Melanesian culture, when two brothers are fighting you need a
third party. And I will keep saying this until Australia and New Zealand
listen. Because two fighting brothers—you cannot ask them to resolve their
problem. You need a third person that is of status, that is of integrity, that
is of repute, to intervene to bring these two to a peaceful solution (Maher
and Dorney 2000:38).

Andrew Miriki, who as late as 1999 had been Francis Ona’s chief of intelligence,
also told me that Australia was regarded as a father figure that occasionally needed
to step in and sort out its children, Papua New Guinea and Bougainville.
In Solomon Islands, it is difficult to avoid the conclusion that the need for a
supranational, neutral force was apparent, and firm, early action would have saved
lives and the economy, and avoided the need for a greater intervention force later. It
would also have been less of a burden for the intervening states, particularly Australia.22

The Oceania Security Centre
The first step in developing the Oceania security order would be for the Pacific
Islands Forum, or the Oceania Community, to establish an Oceania Security Centre.
Such a centre would focus on preventive diplomacy and conflict resolution, promoting
humanitarian law and combating terrorism.
The centre is modelled in part on the Organisation for Security and Cooperation
in Europe (OSCE 1999).23 The OSCE has 180 staff and is geared to be active ‘in all
phases of the conflict cycle, from early warning and conflict prevention to conflict
management and post-conflict rehabilitation’ (OSCE 1999:2, 33). At any given time,
it will be conducting a number of field missions (OSCE 1999). Like the OSCE, the
Oceania Security Centre should have the capacity to deploy election monitors to
help promote democracy. 24
Some activities that Australia is already undertaking—election monitoring,
workshops on small arms and humanitarian law—could be subsumed into the
Oceania Security Centre. This has the advantage for Australia of burden sharing, but
other Forum members may more readily access these services if provided by a
neutral, regional body in the Oceania Community, rather than as a form of bilateral
assistance from Australia.
Preventive diplomacy
Preventive diplomacy has been defined as consensual diplomatic and political action to
• prevent disputes from arising between parties
• prevent disputes escalating into armed confrontation
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• limit the intensity of violence and humanitarian problems resulting from such
conflicts and prevent them from spreading.25
Thus, the key goal of the Oceania Security Centre would be early prevention.
Evans argues that ‘disputes rarely develop into full-blown conflicts overnight, at
least for those who understand the situation and have been following its
development’ (Evans 1996:64). Early prevention, moreover, has a number of
advantages
• parties are more likely to accept assistance while issues are still specific,
before grievances accumulate, issues and parties have multiplied, positions
have hardened and the desire for retribution becomes paramount
• since the goal is resolution rather than containment, it is more likely that the
dispute will be resolved and will not recur
• early prevention is likely to be more cost-effective in both financial and human
terms (Evans 1996).26
Therefore, the Oceania Security Centre would monitor developing situations, generate
risk assessments, examine causes of conflicts, track existing disputes, conduct
fact-finding missions, give early warning to the Oceania Community, and, through
trained negotiators, engage in negotiation, mediation, arbitration, reconciliation and
crisis management.27 As can be appreciated, these activities are consistent with
the goals and proposed activities in the Biketawa Declaration.
Post-conflict settlement and rebuilding—The Oceania Peace Fund
The Oceania Security Centre would also be the lead regional agency managing postconflict settlements. Thus, it would be responsible for activities ‘designed to reduce
the risk of a resumption of conflict, and contribute to creating the conditions most
conducive to reconciliation, reconstruction and recovery’ (Griffin 1999:1).
The Oceania Security Centre should have sufficient funds at its disposal for
when financial aid is a necessary part of any peace settlement.28 One of the biggest
impediments to resolving the Solomon Islands’ conflict was the government’s lack
of funds for a compensation package. Presently, there is an expectation that Australia
will fund peace dividends or compensation packages in the region. Australia, however,
risks being seen to adopt a partisan position depending on how the compensation
is disbursed. It makes Australia, with its theoretically unlimited funds, the potential
creditor for peace any time there is a dissatisfied group within the Pacific that wants
to stir up trouble (‘Solomons compensation package the first step towards ending
its ethnic conflict’, The Canberra Times, 9 July 2000:6).
Further, one ongoing problem during the Bougainville peace process was a
reluctance on the part of the Papua New Guinea government’s Office of Bougainville
Affairs to disburse the funds provided by Australia to further the peace process. This
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tended to damage the national government’s cause unnecessarily, because it only
served to antagonise the Bougainville leaders. In future operations, it would be
better if such funding were disbursed by the Oceania Community. It may speed
negotiations—and would certainly remove a source of antagonism—if a neutral body,
rather than a party to the negotiations, were releasing the funds.
Thus, Forum members should establish an Oceania Peace Fund, which would
be managed by the Oceania Security Centre. Properly invested, the Oceania Peace
Fund would enable the Community to disburse a significant amount of aid in the
event of a negotiated end to future conflicts, for the purposes of compensation,
reconstruction and weapons disposal. This would demonstrate an immediate,
tangible peace dividend to the local population.
Promoting international humanitarian law
One of the Oceania Security Centre’s most important tasks would be to promote greater
regional adherence to the Geneva Conventions.29 These conventions seek to limit the
forms of armed conflict, and to restrain state violence even in situations of emergency.
The conventions amplify the principles of a just war: military necessity, proportionality,
and protection for non-combatants (de Preux 1987). 30 The importance of the conventions
was reaffirmed in the Statute of the International Criminal Court 1998.31
Greater adherence to the conventions will contribute to more professional
behaviour by military and paramilitary forces in the Pacific. This is particularly
important in countries such as Papua New Guinea and Fiji, which have large armed
forces, but is just as relevant in many other Forum island countries, given that their
police forces perform quasi-military functions. The Australia Defence Force approach
to the conventions is that they ‘usually reflect best practice and that compliance
with them, where relevant, is the appropriate expectation for force standards’ (Kelly
et al. 2001:114–15).32
The 1977 Protocols to the Geneva Conventions33 extend the protection granted
to civilians in the initial conventions and regulate non-international armed conflict,
with provisions covering non-state actors. Protocol II covers armed conflicts within a
state’s territory ‘between its armed forces and dissident armed forces or other
organised armed groups which, under responsible command, exercise such control
over a part of its territory as to enable them to carry out sustained and concerned
military operations’.34 Non-state actors gain combat status under the Protocols—
and hence prisoner of war status if captured—provided they distinguish themselves
from civilians in the lead-up to, and during, an attack, and provided they are part of
an organised force, subordinate to a command structure.35
The Pacific region unfortunately has one of the lowest ratification rates for the
Geneva Conventions. Yet the behaviour of all parties to the Bougainville conflict
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shows the need for the Oceania Community to promote acceptance of these
conventions (Regan 1999).
The Papua New Guinea Defence Force, for example, prevented medical supplies
reaching civilians in Bougainville, precipitating thousands of deaths. The blockade
was, in part, reinforced with Australian-supplied patrol boats (Australian Parliament
Joint Standing Committee 1999). Under common Article 3 of the four conventions
(which applies to both international and non-international armed conflicts), ‘persons
taking no active part in the hostilities…shall in all circumstances be treated humanely’
and ‘the wounded and sick shall be…cared for’. The blockade’s military goal was to
prevent further weapons reaching Bougainville, but blocking food and medicine as
well was, in the words of Protocol I, ‘excessive in relation to the military advantage
anticipated’. Article 54 of Protocol I bans the starvation of civilians as a method of
warfare. In general, Protocol I provides for the protection of vehicles carrying medical
equipment (extending the provisions of the second Geneva Convention) and Protocol
II affords special protection to the sick and wounded in the context of a civil war.
Bougainvillean forces were equally unprofessional. It was difficult at times to tell
the difference between the BRA, Resistance forces and criminal raskol gangs. Many
fighters were motivated by family or community factors, rather than group ideology
(Regan 1997, 1998, 1999). As a result, many did not belong to any sort of
organisation with a command structure, and failed to distinguish themselves from
the civilian population.36 With command structures so obviously lacking, few groups
had the capacity to implement the provisions of Protocol II, as required in Article 1.
The violent extremists on all sides, particularly those indistinguishable from the
criminal element, did little to observe the spirit or letter of the Geneva Conventions,
given the random murders and rapes that occurred, not to mention the BRA’s targeting
of educated people (Regan 1998, 1999). Thus, few who regarded themselves as
combatants would have qualified for the status of ‘lawful combatant’ as defined in
the conventions, and for the protections of prisoners of war.
In Solomon Islands, the militia groups, even if they had identifiable commanders
or spokesmen, demonstrated little knowledge of, or interest in, the Geneva
Conventions. In one incident, three militiamen killed two members of a rival militia
while the latter were recovering from wounds in their hospital beds (‘Gunmen kill
pair in hospital’, The Sydney Morning Herald, 11 July 2000:8). The Solomon Islands
police force used the Australian-supplied patrol boat to shell civilians on several
occasions (O’Callaghan 2001d, 2001f).
Given the grave transgressions of the law of war that have occurred in the region,
the Oceania Security Centre needs to encourage ratification of the Geneva
Conventions, their protocols, and the Statute for the International Criminal Court,
and to facilitate education about their provisions. The Oceania Security Centre could
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establish training programs for the armed forces, and the police forces. As an example
of how this may work in practice, the Australian Defence Force and an Australian
university have established the Asia Pacific Centre for Military Law, which aims to
‘increase respect for the law of armed conflict throughout Asia and the South Pacific’
(University of Melbourne 2002).37 Further, Australia currently runs workshops in
Papua New Guinea on the need to observe international humanitarian law whilst
using small arms (Australian Department of Foreign Affairs and Trade n.d.).
The Oceania Security Centre has the potential to make a unique contribution to
the promulgation of the Geneva Conventions. As Bougainville demonstrated, the
conventions fall down in the absence of a formal military chain of command,
particularly in the case of ‘an anarchic conflict involving loosely organised clans and
other “units”, which may be parts of a “private army” or perhaps just bands of
plundering, pillaging killers, none of them bound by a professional code’ (Thurer
1999:731).38
New measures are needed in these circumstances, beyond just educating
military and civilian élites. In such cases, the Oceania Security Centre could
disseminate information via radio and relate the conventions to existing cultural
norms (Thurer 1999).
Combating terrorism
The Oceania Security Centre would also be a vehicle for closer cooperation to combat
terrorism. It should be charged with three main areas: generating financial
intelligence, facilitating general intelligence sharing, and developing contingency
plans in the event of a terrorist attack.
Most Forum island countries have an interest in developing greater financial
intelligence, but lack the resources to create effective national-level units. In any
event, it makes more sense to have a regional mechanism to track money laundering,
to develop a broader, and more comprehensive, picture. Thus, the Oceania Security
Centre would also serve as the region’s financial intelligence unit. One option would
be to expand the work of the Australian Transaction Reports and Analysis Centre
(AUSTRAC) so that it becomes a regional mechanism for financial reporting and the
dissemination of information about money laundering.39 AUSTRAC has stated that it
regards the Pacific as a priority area; it has already signed a memorandum of
understanding with Vanuatu, and is developing them with the Cook Islands and the
Marshall Islands (Australian Parliamentary Committee 2003).
The Oceania Security Centre would also be a mechanism for sharing general
intelligence on terrorism-related issues among Community members (Australian
Strategic Policy Institute 2002). This could involve creating facilities to share timesensitive information quickly and instituting meetings of representatives from
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Community members’ intelligence and security services, in addition to the current
meetings of law enforcement officials (the Forum did establish a Regional Security
Information Exchange in 1988, but the exchange has not been mentioned in recent
Forum Communiqués in relation to terrorism, and doubts have been expressed
about its efficacy) (Findlay 1992).
Given the likelihood of a terrorist attack against Australian citizens, even on the
Australian mainland, is thought to be high (Australian Strategic Policy Institute 2002),
it is sensible to develop regional contingency plans for dealing with the aftermath of
such an attack (Babbage 2002; Australian Strategic Policy Institute 2002). This is
an area where Australia is likely to be the main beneficiary of regional cooperation,
yet this is entirely appropriate, since the Oceania Community should benefit all
members, not just Forum island countries.
The Oceania security agreement should develop the law enforcement cooperation
provisions in the Honiara Declaration and the Nasonini Declaration. Thus, police
from Australia (or another Community member that has been attacked) should be
able to participate in any investigations that need to occur in other Community
members following an attack (as the Australian Federal Police worked in cooperation
with the Indonesian authorities following the Bali bombing). By this, I do not mean to
suggest such an attack would have been executed by Forum island country citizens,
but it is certainly possible that one of the Pacific’s offshore banks may have assisted
in financing an attack, and that the perpetrators may have lived in, or travelled
through, another Community member.
The Oceania Security Centre should also be charged with developing plans for
regional assistance following a terrorist attack. For example, if a terrorist attack
occurred in Australia, military personnel from New Zealand, Fiji and Papua New
Guinea may be able to assist in managing the aftermath. It may be that Australian
interests overseas are targeted, in which case there should be plans for the rapid
deployment of medical personnel to assist local authorities (Australian Strategic
Policy Institute 2002).

The Oceania Peace Monitoring Group
To complement the Oceania Security Centre, the Oceania Community should also
establish a standing Peace Monitoring Group. The Oceania Peace Monitoring Group
would be permanently available when the efforts of the Oceania Security Centre
alone are not enough, when a substantial supranational presence is needed to
prevent the escalation of conflict and promote its resolution.
The Oceania Peace Monitoring Group should have the ability to deploy rapidly. As
the OSCE has found, ‘the decisive point for the effectiveness of any conflict
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management is how to move smoothly and judiciously from early warning to early
action’.40 Early intervention may speed resolution and build confidence in a peaceful
outcome. Conflicts stand the greatest chance of being resolved at their inception—
before positions harden and the main players demonise their opposites—or in their
later stages, when combatants are exhausted or killed, rather than in the middle
when violence is most rampant (Evans 1993). A standing peace monitoring group,
immediately available, may limit the spread of violence, saving lives and avoiding
the need for a peacekeeping or enforcement operation.
Lessons learned from previous operations
Other regions do not provide an obvious model for the Oceania Peace Monitoring
Group.41 The ad hoc Bougainville Peace Monitoring Group provides the best precedent,
and it is worth considering the factors that combined to make it a successful operation.
First, Bougainville was a ‘mature’ conflict. The general population and many
combatants were sick of the violence. They were ready to negotiate a peace, realising
that continued armed conflict would, at best, result in a pyrrhic victory (Regan 1999).
The Bougainville Truce Monitoring Group/Peace Monitoring Group was the
culmination of attempted peace initiatives over preceding years (Australian
Parliament Joint Standing Committee 1999; Regan 1998). Thus, parties to a conflict
have to be ready to deal.
Second, the Bougainville peace process benefited from sustained Australian
interest. Australia provided substantial funding, for the Peace Monitoring Group
itself and for AusAID projects, so that Bougainvilleans saw an immediate peace
dividend.42 Australia was also patient, allowing the parties the space to negotiate
the issues themselves, only intervening when other options had been exhausted
(Regan 1999; Regan 2002). Likewise, New Zealand remained actively engaged
throughout, having initiated the peace process when many combatants were still
dubious about Australia. New Zealand led the initial Truce Monitoring Group, and
cooperated closely with Australia through the Peace Monitoring Group.
Third, the Peace Monitoring Group’s neutrality was vital. The key to winning the
trust of the Bougainvillean factions and the national government was to convince
them that the Peace Monitoring Group was not taking sides. Thus, the Peace
Monitoring Group was an observer rather than a participant in negotiations. By
contrast, in the Solomon Islands, the IPMT was criticised for supposedly breaching
the terms of its mandate under the Townsville Agreement. It was claimed that the
IPMT had opened up its own discussions with some military forces over weapons
disposal, and planned to ‘allow the coup-makers continued access to hundreds of
high-powered weapons’ (O’Callaghan 2001c:11; O’Callaghan 2001e:14). There
was a perception, right or wrong, that the IPMT was not neutral.
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One factor in promoting the neutrality of the ad hoc peace monitoring groups
was their limited mandates. The Burnham and Lincoln Agreements for Bougainville
and the Townsville Agreement for the Solomon Islands specified that the groups
were to monitor the peace through building confidence, facilitating weapons disposal
and reporting on ceasefire violations. The ad hoc Peace Monitoring Groups did not
get involved in aid delivery, for instance, because ensuring aid reached one area
may have been misinterpreted as favouring one faction (Australian Parliament Joint
Standing Committee 1999). Limited mandates also help to avoid the problem of
mission creep.
Fourth, the contribution of Fiji and Vanuatu to the Bougainville Peace Monitoring
Group, particularly at the teamsites, was critical. The ni-Vanuatu members of the
teamsites served as translators, and the Fijians and ni-Vanuatu were a point of
Melanesian identification for the local people. Bougainvilleans felt they could open
up to the Fijians and ni-Vanuatu, and receive a sympathetic understanding of their
issues. Liaison Team Buka, arguably the most important of the five teamsites, was
always headed by a Fijian commanding officer.
Fifth, the Bougainville Peace Monitoring Group was unarmed, subduing tensions
and encouraging Bougainvilleans to go about their business unarmed. The presence
of civilians at each teamsite also contributed to the atmosphere of normality. These
civilians liaised with the local community and investigated ceasefire violations.
Civilian presence indicated that the Peace Monitoring Group contributing countries
regarded the situation as safe for their own civilians, giving the Bougainvilleans
further confidence.
Even though Peace Monitoring Group personnel were unarmed, no Peace
Monitoring Group member was attacked. The parties to the peace process
understood that the Peace Monitoring Group would be evacuated immediately if
targeted in any way. As Foreign Minister Alexander Downer said when shots were
fired in the direction of two IPMT members in the Solomon Islands, ‘[t]he IPMT’s
mandate was agreed by the parties, who at the same time provided guarantees of
the safety of IPMT personnel…The IPMT will stay in the Solomon Islands only as long
as it is welcome and its neutrality is respected’ (Polglaze 2001).43
Sixth, the Peace Monitoring Group went to considerable effort to win over the
local population and restore confidence. It provided medical assistance in emergency
situations, and made the fleet of Peace Monitoring Group Iriquois helicopters available
for medical emergencies. It established a small publishing industry, publicising
progress in the peace process and various community events (Australian Parliament
Joint Standing Committee 1999). Particularly in the early stages, Peace Monitoring
Group personnel facilitated and attended reconciliations, a key factor in restoring
peace at the community level.
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It must be acknowledged that there was an element of good luck in the success
of the Bougainville Peace Monitoring Group—it is important to remain realistic about
the prospects for success in future operations, as the failure of the Solomon Islands
IPMT’s efforts to secure a permanent peace demonstrate. The key advocates for
peace amongst the Bougainville political leaders managed to carry on, despite poor
health. Though violence did occur after the peace accords, it was quickly contained.
Alexander Downer’s intervention in December 2000 occurred at precisely the right
time; Australia did not intervene any earlier, although no doubt it would have been
tempting to do so. Moi Avei was a very able Minister for Bougainville Affairs,
determined to solve the problem and sell the hard decisions (Regan 2002).44
Thus, good management and good luck combined to produce a successful
outcome in the Bougainville peace process. Nonetheless, there are areas where
improvements could have been made. More work could have gone into disarmament,
by developing a process for weapons disposal prior to a final settlement. The UN
observer mission undertook some efforts in this regard, but made little progress
(Australian Parliament Joint Standing Committee 1999). The IPMT also struggled to
secure comprehensive weapons disposal (Wainwright 2003). It may be that full
weapons destruction cannot take place until a final settlement is negotiated, but
this should not prevent efforts at weapons containment. The effort is as important
for its symbolism—encouraging non-combatants to believe that life is returning to
normal and that they can go peacefully about their business—as for its substance.
Further, the Peace Monitoring Group exit strategy could have been clearer. Many
Bougainvillean leaders assumed that the Peace Monitoring Group commitment
was open-ended, or that the group would maintain its initial high numbers. A defined
exit strategy may have provided further impetus to the negotiations.
In sum, the Bougainville Peace Monitoring Group was successful because of
parties who were ready to deal, sustained Australian interest, its neutrality and its
limited mandate, Forum island country involvement, its unarmed nature, and its
efforts to win over the local population. These factors should be replicated in the
creation and deployment of the Oceania Peace Monitoring Group to the extent
possible.
Features of the Oceania Peace Monitoring Group
The Oceania security agreement could not spell out the numbers, composition and
resources that would be required in any given operation. At its peak, the Bougainville
Peace Monitoring Group involved around 300 personnel; the Solomon Islands IPMT
involved 49; and RAMSI involved 325 police and 1,800 supporting peacekeepers.
Similarly, the composition will depend on the circumstances. The Oceania Security
Centre could request election monitoring, which would most appropriately comprise
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Table 8.1

Proposed minimum commitments for the Oceania Peace
Monitoring Group

Australia
New Zealand
Papua New Guinea
Fiji
Vanuatu
Other

Minimum commitment
(persons)
40
15
15
15
10
5

Total

100

civilian monitors from all Community members, together with officials from the
Australian Electoral Commission. If there were a high likelihood of violence in a
particular situation, it would be appropriate to utilise defence personnel and federal
police, even if they are unarmed.45 Thus, it would be inappropriate and impossible
to detail the composition and nature of future operations.
Instead, the Oceania security agreement should spell out a minimum
commitment of personnel that would be permanently available for deployment as
part of the Oceania Peace Monitoring Group. The Community should be able to field
a Peace Monitoring Group of at least one hundred in any given operation. In the first
phase of the Oceania Community, the breakdown could be as shown in Table 8.1.
Members could contribute more to a given operation, and circumstances may
require it. Forum island countries would share responsibility for such regional
operations—all Oceania members should be prepared to contribute to an operation,
even if smaller countries’ contribution is limited to only one or two police personnel
or civilian monitors.
The circumstances of an operation might suggest likely participants—it would
have been inappropriate, for instance, for the Papua New Guinea Defence Force to
have participated in the Bougainville Peace Monitoring Group—but it would be
advisable for the Oceania Peace Monitoring Group to draw on personnel from at
least one country in the same sub-region as the country experiencing the security
crisis. In Bougainville, for example, it was useful for the Bougainville Peace Monitoring
Group to have representatives from Vanuatu, a fellow Melanesian country. Ensuring
this occurs in future would help the local populations to identify and communicate
with the Oceania Peace Monitoring Group.
The Oceania Peace Monitoring Group should be neutral, to win the trust of all
parties and the safety of the group itself. It should be unarmed, and it should be
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made clear to the parties to a conflict that the Oceania Peace Monitoring Group
would withdraw if attacked. The Oceania Peace Monitoring Group should serve a
limited, defined purpose. For example, it could supervise Bougainville’s referendum
on independence in 10 years’ time, but it would be inappropriate for it to oversee
nation-building efforts if Bougainville elects to become independent.
Any Oceania operation needs a defined exit strategy, to maintain the pressure on
the parties to negotiate a settlement. Obviously, leaving a conflict zone within six
months, when the parties are still negotiating major issues, would be an abrogation
of responsibility. The Oceania Peace Monitoring Group could be committed for an
initial two-year period (subject to the safety of its personnel and ongoing weapons
disposal). At the end of the initial two-year period, the Oceania Community could
review progress, and elect to keep the Oceania Peace Monitoring Group in place for
a further two-year period, but at a reduced size. At the end of the four-year period,
the Oceania Community may elect to leave the Oceania Peace Monitoring Group in
place for a fifth and final year, but, again, at a much reduced size. Thus, parties to a
dispute would have five years to resolve their key differences.46
The ongoing presence of the Oceania Peace Monitoring Group would be tied to
ongoing weapons disposal. Some of the peace dividend—the development
assistance from aid agencies—could also be tied to weapons disposal. Disposal
need not mean destruction. The emphasis could be on confidence-building measures
like placing weapons in containers.
The UN Security Council should be informed any time the Oceania Peace
Monitoring Group is deployed, as required by Article 54 of the UN Charter, and the
Council would be regularly updated on progress.47 It would be appropriate for a
small UN observer mission to operate alongside any Oceania Peace Monitoring
Group deployment, to highlight to the conflicting parties the regional and global
interest in ensuring a peaceful outcome.
Deployment
Defined mechanisms in the Oceania security agreement would allow the Oceania
Peace Monitoring Group to be deployed; for example, on the recommendation of
the Oceania Security Centre or Community foreign ministers. Before the Oceania
Peace Monitoring Group is deployed, all, or almost all, significant players in the
conflict should express their commitment to a peace process. The relevant
government should agree to the deployment. If a player in a conflict refuses to
participate in a peace process, their absence should not represent a significant
threat to the process. The fact that Francis Ona did not participate in the Bougainville
peace process did not prevent the deployment of the Peace Monitoring Group or the
successful outcome there. The IPMT went ahead even though Harold Keke did not
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support it (Roberts 2001a). This is a matter of judgment in each case, but the
presumption should be in favour of deployment. The idea is to ensure that the
Oceania Peace Monitoring Group faces minimal risk, but zero risk would be unrealistic.
Limitations
The Oceania Peace Monitoring Group would not be a cure for all possible security
issues. For example, if the Oceania Peace Monitoring Group had existed at the time
of any of the three coups in Fiji, it would not have been called into operation. Although
the democratically elected government may have requested assistance, the Oceania
Peace Monitoring Group would not have enjoyed the consent of all parties to the
dispute. Of course, non-involvement would not have been an option if there had
been massive, systematic human rights violations—if, for instance, the Fijian army
had started to kill Indo-Fijians rather than ejecting them from government—but such
extreme circumstances would (theoretically) have been handled through a UN peace
enforcement operation.

Peacekeeping
Papua New Guinea Prime Minister Julius Chan first suggested a Pacific peacekeeping
force in 1980. This followed the ‘coconut war’ in Vanuatu, when Australia and Papua
New Guinea provided logistical support to the government to put down a separatist
rebellion (Smith 1996). Chan found no support from fellow Forum members at the
time (Fry 1990). Chan tried again in 1988, arguing, ‘[t]he initiative must come from
the developed nations, because they will be expected to follow it with their cheque
books, and it must be something bolder and entail firmer commitments than just
simply handing out aid or patrol boats’ (Warner 1988:36). During a subsequent
term as Prime Minister, Chan felt so constrained by his options that he sought to hire
mercenaries to resolve the Bougainville crisis. Perhaps the Sandline debacle may
not have occurred if a regional mechanism had been available.
Chan seemed to envisage a regional peacekeeping force that would supplement
domestic military or paramilitary forces—it differs from the UN peacekeeping model.
In a prescient 1990 article, Australian academic Greg Fry examined the issues
involved in establishing such a force (Fry 1990). He correctly predicted that ad hoc
forces were more likely than a standing peacekeeping force, that an intervention
would be designed to assist in the resolution of an internal security problem, and
that Australia and New Zealand would seek Forum endorsement for an intervention
(Fry 1990). Yet he feared such a force could be misused, for example, to aid a
government to suppress internal dissent (Fry 1990). As he envisaged it,
[a] South Pacific force would be involved in…a ‘police action’ despite the
use of soldiers to carry it out. Coercive action would be involved and the

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force would not be neutral. This is not peacekeeping as it is generally known…
The essence of international peacekeeping is that the peacekeeping force
should be neutral; that it should not be making the peace between conflicting
parties but rather should be assisting in the implementation of agreements
between them; and that the force should not be involved in coercive action...Its
weapons are only for self-defence (Fry 1990:119).

Fry (1990) did not reject the possibility of a worthwhile Pacific peacekeeping force,
but his concerns certainly raise issues about the standing of any Pacific peacekeeping
force, and the appropriate circumstances for its deployment.
Apart from the brief use of a Pacific peacekeeping force at the 1994 Bougainville
peace conference, the Solomon Islands intervention in 2003 represents the first
major Pacific regional peacekeeping operation. Any future peacekeeping initiative is
likely to have many of the features of RAMSI. It will be an ad hoc operation designed
to provide an overwhelming presence at the start of a peace effort, to ensure an
immediate sense of security and encourage adherence to the law and/or the terms of
a peace agreement.48 It will most likely be a short-term operation, given the resources
involved, giving way to a core, longer-term peace monitoring or police operation.49
Even though RAMSI provides a worthwhile precedent, I believe it is unrealistic to
attempt to negotiate standing peacekeeping resources as part of the Oceania security
agreement. Individual states are unlikely to surrender their discretion when it comes
to peacekeeping commitments, since the commitment of forces to peacekeeping
missions requires greater deliberation on the part of national governments. Lives
may be lost and such operations may require a larger commitment of resources.
Individual states may also fear compromising their national security by overcommitting resources to a regional operation. In contrast, Oceania Community
members are more likely to commit to a Peace Monitoring Group in advance, because
fewer resources are involved and personnel are at less risk.
Instead, the Oceania security agreement should focus on measures that will assist
in the creation of ad hoc peacekeeping missions as required. Such measures could aim
to increase inter-operability between members’ defence forces, through common planning
doctrines, standardised communications and command and control procedures (Ryan
2000). The Community could also facilitate joint training among members.
The Oceania security agreement, addressing the concerns raised by Fry, also needs
to develop a framework for when ad hoc peacekeeping operations will be deployed.
As discussed, the Australian government’s three prerequisites prior to its
intervention in Solomon Islands were
1. a formal invitation from the relevant government, and enabling legislation
2. Forum approval
3. implicitly, general support from the population of the relevant state.50
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Although the Solomon Islands intervention was welcome, this is an inadequate
framework for future reference. If, hypothetically, Papua New Guinea had requested
a peacekeeping force in the past to blockade Bougainville and hunt down
Bougainvillean criminals, the request would most likely have met these three criteria.
Papua New Guinea would obviously have provided the formal invitation; and the
initiative would probably have enjoyed general support from the rest of Papua New
Guinea’s population, and would most likely have won Forum approval (recall that in
these exact circumstances, Australia provided Papua New Guinea with defence
training, patrol boats and Iriquois helicopters, which were used to perpetrate
breaches of human rights and humanitarian law) (Fry 1991:25; Bergin 1994). To
avoid this situation, UN authority and observers should be additional features of any
framework for Oceania Community intervention. Importantly, any intervention should
uphold the five goals of regional order, which include upholding the rule of law and
avoiding human rights violations.
Opinions differed as to whether Australia and other contributing nations should
have sought UN Security Council approval for RAMSI prior to its deployment (the
Security Council was notified after the operation had commenced) (Wainwright
2003).51 Kelly argued that the legal authority for the operation flowed from the
consent of the Solomon Islands government and the legislation it passed (Kelly
2003b). Griffin suggests that ‘legally, consensual, non-offensive peace operations
can be undertaken on an ad hoc, collective basis, by a regional organisation or
indeed by an individual state without authorisation by the Security Council’
(1999:21).
Consideration of the relevant provisions of the UN Charter, however, suggests a
more ambiguous situation. The UN Charter encourages regional arrangements, going
so far as to state that regional institutions should ‘make every effort to achieve
pacific settlement of local disputes…before referring them to the Security Council’
(UN Charter, Chapter 8). But Article 53 states that ‘no enforcement action shall be
taken under regional arrangements or by regional agencies without the authorisation
of the Security Council’ (italics added).
A prima facie argument could be made that RAMSI had at least some of the
features of a peace enforcement operation: it involved an external intervention
force, whose personnel were given the authority to use lethal force in the discharge
of their duties.52 Further, Australia committed naval assets to interdiction, to prevent
weapons entering Bougainville from the Solomon Islands (RAMSI 2003). This differs
from traditional peacekeeping operations, where the emphasis is on neutrality and
impartiality, as outlined by Fry (1990). The United Nations has defined peacekeeping
operations as those ‘involving military personnel, but without enforcement
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powers…based on consent and cooperation. While they involve the use of military
personnel, they achieve their objectives not by force of arms, thus contrasting them
with the “enforcement action” of the UN under Article 42’ (United Nations 1990:4–
5). In contrast, peace enforcement operations have been defined as ‘coercive in
nature…undertaken under UN chapter VII when the consent of any of the major
parties is uncertain. They are designed to maintain and re-establish peace or enforce
the terms specified in the mandate’ (Rikhye 2000:69). RAMSI is arguably closer to
an East Timor-style enforcement operation, where the intervention force was granted
Security Council authority to ‘take all necessary measures’ to restore peace and
security. 53
UN involvement was certainly contemplated as part of the Solomon Islands
operation,54 but was complicated politically by the Solomon Islands’ diplomatic
recognition of Taiwan rather than China.55 Some suggested that Australia and others
did not seek a Security Council resolution for fear of a Chinese veto (Kelly 2003b),
but the conservative Australian government’s scepticism about multilateral
institutions (Wesley 2002; Flitton 2003; Howard 2003a ) may also have played a
part. These are difficult issues and it is important to be pragmatic—Australia, and
the people of the Solomon Islands, would have been placed in an invidious situation
if China had indeed vetoed a Security Council resolution prior to deployment (when
faced with a Russian Security Council veto, NATO members argued that the need for
humanitarian intervention justified the use of force in Kosovo, but the existence of
a principle of humanitarian intervention in international law is disputed) (Wheeler
2001; Thomas 1999; O’Connell 2000).
There should, however, be a presumption in favour of UN approval and
involvement in future operations. This would provide a more secure legal basis for
an intervention, but is also important for political reasons.
RAMSI involved a large external security force, authorised to use lethal force, as
well as foreign personnel assuming responsibility for key parts of the Solomon Islands
government apparatus: finance and economic management, the judicial and prison
system, and law enforcement (Australian Department of Foreign Affairs and Trade
2003a; Forum Foreign Affairs Ministers Meeting 2003b). This represents a surrender
of a considerable part of the Solomon Islands’ sovereignty. The Australian Strategic
Policy Institute has argued that in such instances a higher degree of intervention
and a deeper long-term commitment is necessary because of the depth of the
institutional decline in failed states.56 Operations involving such a high degree of
intervention have typically been conducted under UN auspices, such as the United
Nations Transition Assistance Group (UNTAG) in Namibia, the United Nations
Transitional Authority in Cambodia (UNTAC) and the UN Transitional Administration

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in East Timor (UNTAET). Although Solomon Islands was not surrendering its sovereignty
as completely as occurred in these earlier UN operations, there are advantages for
Community members, particularly Australia, in sharing the burden and responsibility
for future high-level interventions with the United Nations. McCarthy argues that
regional organisations generally ‘lack the experience, mandate and neutrality’ to
undertake higher-level interventions (McCarthy 1995:25).
The addition of UN impartiality, credibility and standing to any regional operation
assists Australia (and, indeed, any other Community member which has a substantial
role in future interventions) politically. 57 Wainwright has argued, for example, that
the Solomon Islands mission is ‘vulnerable to the fluctuations of political alignment
in Honiara…this remains a delicate basis for such an operation, and might present
problems in the longer term’ (Wainwright 2003:493). In future operations, if
resentment builds over the loss of sovereignty, it will not be directed solely at one
Community member if the United Nations is involved. Further, burden-sharing avoids
one Community member being blamed when setbacks occur.
It is worth re-considering, too, Australia’s first prerequisite for RAMSI’s
deployment—an invitation from the Solomons Islands government, and enabling
legislation. Given that the reason for the deployment was that Solomon Islands was
a failing state, Australia was fortunate that there was a government with sufficient
authority to make these arrangements . 58 In the future, though, there may be a need
for an intervention in a failed state where the government is incapable of commanding
sufficient legitimacy to make such an invitation. When a state is failing or failed it
may be increasingly difficult, too, to determine the general will of the population. In
such a case, Australia would surely be wise to call on the authority of the United
Nations, as well as regional institutions. This would be even more compelling in the
case of Papua New Guinea, where Australia would be intervening as the former
colonial power.
In anticipation of the need for high-level interventions in the future, and to avoid
an inappropriate Security Council veto over an individual operation, the Oceania
Community should establish a framework agreement with the United Nations.59
The Oceania security agreement should state that the Oceania Community is a
regional organisation within the definition of Chapter Eight of the UN Charter, as the
treaties establishing the Organisation of American States and the OSCE do (OSCE
1999). The framework agreement between the United Nations and the Oceania
Community would then delineate the Community’s areas of responsibility, specifying
those instances where the Community would act, the type of action, the notification
and reporting requirements, and the degree of assistance that could be expected
from the United Nations in any future intervention (the UN observer mission in

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Bougainville was small, but it usefully reinforced to the parties that the ‘eyes of the
world’ were watching). The Community could then seek Security Council approval
for this framework.
Thus, in addition to an invitation from a democratic government, general support
from the population and Forum approval, I suggest a fourth consideration for any
Oceania peacekeeping/ enforcement intervention should be included in the Oceania
security agreement
4. UN authority from a standing framework agreement, recognising the Oceania
Community as a regional body with the sovereignty to manage Pacific disputes,
in accordance with Chapter Eight of the UN Charter.
As a final fail-safe, a fifth general consideration could be added
5. the intervention will promote human rights and be in accordance with
humanitarian law.
These added protections would increase the authority and neutrality of any future
regional intervention force, and would avoid the dangers identified by Fry (1990,
1991). For example, Oceania peacekeepers would not be involved in a Bougainvillestyle situation should it arise in the future, with a national government requesting
assistance to blockade a wayward province. Such an action would be unlikely to win
UN approval, and would clearly not promote human rights, nor would it be in
accordance with humanitarian law.

Peace enforcement
It can be appreciated that there is a continuum of security initiatives, ranging from
those, such as the Oceania Security Centre, which may involve a mild degree of
intervention, to those, such as RAMSI, which involve a high degree of intervention. I
have expressed caution about solely regional initiatives, such as RAMSI, which seem
to rest on the borderline between peacekeeping and peace enforcement operations,
and suggested that it is more appropriate for the region to act in concert with the
United Nations when a high degree of intervention is involved. McCarthy argues, for
example, that regional organisations face ‘numerous legal, operational and political
barriers which will generally render them unwilling and unable to undertake effective
enforcement measures’ (McCarthy 1995:24).
It may be that, unfortunately, there is a need for an explicit peace enforcement
action in the Pacific at some future point, where an external fighting force is needed
to intervene between warring parties, or to prevent mass killings. This obviously
involves the highest possible degree of intervention, and I believe in such a case the
United Nations, rather than the Oceania Community, should manage the response.
Such an intervention would require an explicit Security Council mandate, and a UN
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rather than a regional force. Representatives from Oceania members could form
part of a UN operation, but the Oceania force would not be operating in its own right.
Thus, such high-level peace enforcement goes beyond what should be considered
in the Oceania security agreement.

Mutual defence
This chapter has focused on internal security issues, in the belief that these represent
the most likely threats to Pacific security, and the risk of external aggressors is low
(Commonwealth of Australia 2000). This has clearly been the more recent pattern.
It would be appropriate, however, for the Oceania security agreement to include
provisions on mutual defence arrangements for handling other issues.
Australia has made explicit and implicit commitments for the mutual defence of
all Forum island countries. According to the 2000 Defence White Paper, Australia
would want to be in a position to help Forum island countries defend themselves
against unprovoked armed aggression, and would be very likely to provide substantial
support to any Southwest Pacific country in these circumstances (Commonwealth
of Australia 2000). Forum island countries may be concerned at times about
Australian interference in their internal sovereignty, but they look to Australia (with
New Zealand) to guarantee their external security. Whilst I was in Bougainville,
senior Fijian members of the Peace Monitoring Group were very interested in the
Defence White Paper, because, as one officer said, ‘[w]e would look to Australia if
ever we were in trouble’ (personal communication).
Given the low risk of external aggression, Australia should formalise a mutual
defence commitment with other Forum island countries as part of the Oceania
security agreement, as it has done bilaterally with Papua New Guinea. This would
further engender a regional perspective on security issues. Australia’s commitment
to the Pacific Patrol Boat program could also be formalised in the Oceania security
agreement,60 as could its commitment to assist Forum island countries in the
aftermath of natural disasters.61
Such commitments would further encourage Forum island countries’ adherence
to the regional security order, and could be used by Australia and New Zealand as
leverage to ensure greater Forum island country commitment to, for example, the
principles of humanitarian law in their military and paramilitary training.

Conclusion
The Pacific has faced a number of security challenges in recent years, with internal
conflicts in Fiji, Papua New Guinea and Solomon Islands, as well as the supranational
threat of terrorism. Australia’s intervention in Solomon Islands was predicated on
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the assumption that Solomon Islands risked becoming a failed state, and that such
interventions might be required in other Pacific states in the future.
Addressing these conflicts requires a multi-faceted approach. Clearly the
promotion of sustainable economic development, the rule of law and democracy
are part of this approach, in terms of addressing their origins and developing a
climate that eschews internal conflict. Yet promoting these goals will not be enough.
For example, Bougainville will conduct its referendum on independence by 2020,
which will probably lead to a new state. Yet many in Bougainville will resist
independence, preferring autonomy within Papua New Guinea. Given Bougainville’s
past violence, the referendum and its aftermath will need supervision, to avoid
risking all that has been achieved so far. 62
Thus, promoting the goal of security necessarily involves improving the Pacific’s
security architecture. The key new institution would be the Oceania Security Centre.
The Centre would engage in preventive diplomacy initiatives, assist in post-conflict
resolution through the administration of a peace fund, promote cooperation to
combat terrorism, and ensure greater adherence to the Geneva Conventions to lift
the professionalism of the region’s military and paramilitary forces.
This chapter proposed a standing Oceania Peace Monitoring Group, consisting
of 100 personnel drawn from all Community members. A permanent mechanism
available for rapid deployment might contain disputes, and obviate a larger
commitment later. This would have been true in the Solomon Islands, and possibly
in Bougainville. I have also suggested that the Oceania security agreement should
include measures to improve interoperability between the region’s military and
paramilitary forces, in anticipation of the need for ad hoc peacekeeping operations.
Finally, to win Forum island countries’ adherence to the Oceania single undertaking
treaty, it is suggested that Australia should formalise its arrangements for mutual
defence, the Pacific Patrol Boat program and disaster relief.
A distinction is drawn between initiatives requiring a mild level of intervention,
such as election monitoring, and those requiring a high level of intervention, such as
peacekeeping and peace enforcement operations. The higher the level of
intervention, the greater the need for UN authority and involvement. Thus, in the
case of peacekeeping operations, there would be shared authority between the
United Nations and the Oceania Community, whereas peace enforcement operations
would be within the purview of the United Nations alone.
Preventing and limiting conflict will continue to be a difficult undertaking, and
failures will most likely still occur. Yet an improved Pacific security architecture would
help realise one of the key goals of regional order, and its successes could potentially
save many lives.

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The next chapter proposes a regional human rights commission. Such a
commission could also assist in addressing some of the underlying causes of conflict
in the region, by promoting better local adherence to the supranational rule of law.

Notes
1

2

3

4

5

6

7

8

9

The Australian parliamentary inquiry concluded that ‘It is likely that Pacific island
countries, particularly in Melanesia, will continue to suffer political, ethnic and social
tension intensified by continuing economic decline and poor governance’ (Australian
Parliamentary Committee 2003:xxviii).
The Forum Regional Security Committee consists of representatives from Forum
members’ law enforcement agencies, including police, customs and immigration
officials.
Forum Foreign Ministers meet annually (but not Defence Ministers, nor AttorneysGeneral); the Forum Regional Security Committee meets twice a year; and the Forum
Secretary-General may use his or her good offices in an effort to address a conflict.
The Aitutaki Declaration recognises that ‘it is best to avert the causes of conflict’, so
‘the Forum is committed to reducing, containing and resolving all conflicts by peaceful
means’ (South Pacific Forum 1997b: para 10).
Australia has hosted workshops on the small arms problem, and all Pacific Islands
Forum members are adopting the same legislation to control the use of such arms.
Further, a comprehensive study has been undertaken into the flow of arms in the
Pacific. The South Pacific Police Chiefs Conference and the Oceania Customs
Organisation have examined ways to control the flow of weapons. See Pacific Islands
Forum (2000a: para 60). See also Australian Department of Foreign Affairs and Trade
(n.d., 2001b, 1999d); Roberts 2001b; Australian Parliamentary Committee (2003).
The United Nations, World Bank, OECD and Commonwealth are all working with the
Forum and individual members to tackle the problem of money laundering (see OECD
1998; Cornell 2000; Randall 1999).
Australian Prime Minister John Howard has proposed that a regional police training
centre be created in Fiji, involving Australia training 200 regional police a year; this
would be a noteworthy addition to the region’s current security architecture. Through
the Enhanced Cooperation Program, officers of the Australian Federal Police began
assuming in-line positions in Papua New Guinea to assist in addressing that country’s
law and order difficulties, but the program later foundered. Perhaps eventually a pool of
officers from Australia and New Zealand will be available to assist other Forum island
countries as needed. Encouragingly, a regional transnational crime team has been
established following a workshop in Tonga in 2002 (Australian Parliamentary Committee
2003; Lewis and Harvey 2003).
See Article 5, Agreement between Australia, Papua New Guinea, Fiji, New Zealand and
Vanuatu concerning the Neutral Truce Monitoring Group for Bougainville. Available at
http://www.austlii.edu.au [accessed 27 August 2003].
See Protocol concerning the Peace Monitoring Group made pursuant to [and amending]
the Agreement between Australia, Papua New Guinea, Fiji, New Zealand and Vanuatu

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10
11

12

13

14

15

16

17

18

19

20

21

22

concerning the Neutral Truce Monitoring Group for Bougainville. Available at http://
www.austlii.edu.au [accessed 27 August 2003].
This followed the collapse of the ninth round of negotiations in eleven months.
This represented a considerable change from Australia’s previous policy which was
that such matters ‘were entirely for the Papua New Guinea government to decide, in
conjunction with the Bougainvillean leaders’ (Australian Parliament Joint Standing
Committee 1999:59).
The national government was formalising a process that may lead to independence for
Bougainville, which it had previously resisted; and Bougainville was deferring the
referendum on independence, which many Bougainvilleans wanted immediately, and
accepting that the result of the referendum would not be binding.
Agreed Principles on Deferred Conditional Referendum on Independence, initialled at
Kokopo on 26 January 2001.
Australia facilitated a meeting in Townsville in February 2001 between Bougainville
leaders and the Papua New Guinea government to negotiate the deal on weapons
disposal. Formal agreement was reached on 9 May, and the Townsville meeting allowed
Bougainvilleans to agree on a plan for weapons disposal between themselves, and to
hold reconciliation ceremonies between various combatants. See Regan (2002:122–
24) for details of the final agreement on weapons disposal.
An agreement on the level of autonomy that Bougainville would enjoy prior to the
referendum on independence proved difficult. The national government feared the
precedent it would set for other provinces, but for some Bougainville factions autonomy
was more important than the referendum on independence. Agreement was reached in
June 2001. Again Australia facilitated agreement by holding workshops demonstrating,
for instance, that it was possible to have federal and state police forces. See Regan
(2002:120–22) for details of the final agreement on autonomy.
Peace Monitoring Group numbers had fallen to 75 personnel by December 2001, and
the number of teamsites had been reduced to two.
1,700 weapons had been placed in containers by mid 2003 (Australian Department of
Foreign Affairs and Trade 2003c).
Part 2, Townsville Peace Agreement Available at http://www.vanuatu.usp.ac.fj/
pactreaties/Treaties_etc/Townsville_Peace_Agt.html [accessed 27 August 2003].
Part 3, Townsville Peace Agreement Available at http://www.vanuatu.usp.ac.fj/
pactreaties/Treaties_etc/Townsville_Peace_Agt.html [accessed 27 August 2003].
Annex II Townsville Peace Agreement Available at http://www.vanuatu.usp.ac.fj/
pactreaties/Treaties_etc/Townsville_Peace_Agt.html [accessed 27 August 2003].
Australia and other donors fully funded these elections (Australian Strategic Policy
Institute 2003).
Wainwright usefully illustrates the financial implications of early intervention, from
Britain’s role in the former Yugoslavia: ‘Britain became involved in Bosnia after several
years of civil war; Britain spent at least £1.5 billion on this involvement. Kosovo, which
saw a quicker British response, cost Britain in the order of £200 million. The preventive
action taken in Macedonia, however, meant that Britain spent just £14 million’
(Wainwright 2003:487). In the Solomon Islands context, the IPMT cost around A$8
million, and Australia spent A$22 million in total on the peace process during the IMPT

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23

24

25
26

27

28

29

30

31

phase. RAMSI, however, will cost A$200–300 million a year for 10 years (Australian
Strategic Policy Institute 2003; Australian Department of Foreign Affairs and Trade
2003a; Nicholson 2002).
The idea for an Oceania Security Centre also draws on earlier Australian and New
Zealand proposals for regional conflict prevention mechanisms. Gareth Evans proposed
that the United Nations should establish Regional Peace and Security Resource Centres.
In 1995, Australia proposed that the ASEAN Regional Forum create a ‘regional centre
for conflict prevention’, to be known as the ‘Regional Risk Reduction Centre’, which
would gather and analyse information, monitor and report on specific issues and
provide an early warning function; the proposal was not taken up. New Zealand has
previously proposed a Pacific conflict resolution and mediation service. The list of
proposed activities also draws on Article 33 of the UN Charter (Evans 1999; McCarthy
1995; Ball 1999; Findlay 1992).
The Australian Electoral Commission, through the Pacific Islands, Australia and NZ
Electoral Administrators’ Network (PIANZEA) already regularly provides election monitors
to the region; this could be subsumed into the Oceania Security Centre. See http://
www.aec.gov.au/_content/how/international/index.htm [accessed 27 September
2005].
This definition draws on Boutros-Ghali (1992) and Ball (1999b).
McCarthy also believes early prevention can be successful because ‘the tactics used
to persuade the other party are still largely rhetorical and do not yet involve large-scale
violence with its attendant changes in motivation and perceptions. Communication is
usually still possible and relations between the parties may be ongoing in a broad
range of other areas’ (McCarthy 1995:18).
The list of proposed activities draws on Article 33 of the UN Charter (see Ball 1999b;
Acharya 1999; Evans 1999).
In 1998, the Forum Secretariat proposed a special fund be created to support the
development of preventive diplomacy mechanisms, but the proposal was not taken up
at that time.
First Geneva Convention for the Amelioration of the Condition of the Wounded and Sick
in Armed Forces in the Field; Second Geneva Convention for the Amelioration of the
Condition of the Wounded, Sick and Shipwrecked Members of Armed Forces at Sea;
Third Geneva Convention relative to the Treatment of Prisoners of War; Fourth Geneva
Convention relative to the Protection of Civilian Persons in War. Available at http://
www.austlii.edu.au [accessed 27 August 2003].
Under the Conventions, parties in armed conflict can only attack military personnel
and targets. The First and Second Conventions protect sick and wounded troops on
land and sea, as well as medical personnel and medical establishments during armed
conflict. The Third Convention protects prisoners of war, and the Fourth Convention
protects civilians in war.
Article 8 of the Statute covers war crimes, and defines war crimes as grave breaches of
the Geneva Conventions. Article 8 then summarises some of the Conventions’ key
provisions. The Conventions provide more detail on appropriate conduct (although
some sections are outdated), so they remain useful standards for the Oceania
Community to promote.

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32

33

34
35

36

37

38

39

40
41

42

43

44

An important element of INTERFET’s success in East Timor, and the reputation of
Australia’s soldiers, was the Australian Defence Force’s strong commitment to acting
within the bounds of the Geneva Conventions (Kelly et al. 2001).
Protocol I Additional to the Geneva Conventions, and relating to the Protection of
Victims of International Armed Conflicts; Protocol II Additional to the Geneva Conventions,
and relating to the Protection of Victims of Non-International Armed Conflicts. Available
at http://www.austlii.edu.au Accessed 27 August 2003.
Para 1(1), Protocol II.
An individual cannot kill people, and then claim prisoner of war status when captured
because of a notional association with a guerrilla force.
Regan notes that the BRA ‘high command’ did not have much control over BRA fighters.
He also notes that the Papua New Guinea Defence Force had ‘poor command and
control systems and often idiosyncratic officers’ (Regan 1998:280).
The Centre has organised presentations around the region on topics such as rules of
engagement, peacekeeping and civil–military cooperation. The Centre also runs one to
two week courses on military operations law for commanders, legal advisers and training
managers. The latter is specifically designed to aid the interoperability of regional
forces.
In such circumstances, crimes against humanity could apply, even when the situation
in relation to war crimes is unclear—see Article 7 of the Statute of the International
Court of Justice.
AUSTRAC is Australia’s specialist financial intelligence unit, and anti-money laundering
regulator. See Australian Parliamentary Committee (2003).
Organisation for Security and Cooperation in Europe (1999).
Other regions seemingly have under-developed security mechanisms, or focus on
peacekeeping rather than peace monitoring (again, the OSCE’s field operations come
closest). The European Union is yet to develop a clear role for its defence body, because
of uncertainties between European Union members about priorities, and its relationship
to NATO. The OAS has occasionally been involved in peacekeeping activities, but more
to support US interests. The Economic Community of West African States (ECOWAS)
has occasionally taken on peacekeeping/enforcement action. The Organisation of
African Unity attempted a peacekeeping mission, in Chad, with little success. The
Organisation of East Caribbean States’ standing regional force supported the United
States in Grenada (Fry 1990; Dobson 1999; Ofuatey-Kodjoe 1994; Gordon 2000).
Amongst other activities, Australian aid funded an 84 bed hospital in Buka, 50 first aid
posts and 70 classrooms in remote areas; trained 100 community police workers;
employed 4,000 Bougainvilleans; and reconstructed Radio Bougainville, an important
tool in the peace process. In total, Australia committed A$100 million in aid in the first
five years of the reconstruction effort (Nugent 2000; Australian Parliament Joint
Standing Committee 1999).
Likewise, factional leaders guaranteed the safety of Peace Monitoring Group personnel
from the outset of the Group’s operations (Australian Parliament Joint Standing
Committee 1999).
I was able to see Avei’s effectiveness for myself, at the informal talks on Buka on 5
January 2001, and at the Kokopo talks on 26 January 2001.

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45

46

47

48

49

50

51
52

53
54

55

56

57

Particularly in the early stages of the Bougainville Peace Monitoring Group there were
many representatives from the Australian special forces, albeit unarmed. Their numbers
dwindled as the dangers lessened.
This would avoid the situation that has occurred in Cyprus, where the UN peacekeeping
force has been in place since 1964. An Australian conference on peacekeeping noted
the problem of open-ended commitments, and suggested ‘mandates could include
sunset clauses or signpost a process of transition’ (Clements and Wilson 1994:5).
Article 54 states that ‘[t]he Security Council shall at all times be kept fully informed of
activities undertaken or in contemplation under regional arrangements or by regional
agencies for the maintenance of international peace and security’. This article
reinforces the complementary link between the global and regional systems, and was
why the Security Council was informed of the initial 1994 Pacific peacekeeping operation
for the Bougainville peace conference, and the later Peace Monitoring Group (McCarthy
1995).
In the Solomon Islands context, Wainwright argued that the ‘size and nature of the
intervention force convinced Solomon Islanders that it “meant business”…[it] served
to pierce the climate of violence and impunity that had existed, by making it clear that
the circumstances had profoundly changed’ (2003:493).
The number of military personnel involved in RAMSI, for example, fell from 1,500 to
600 within six months (Shanahan 2003).
Australian Foreign Minister Alexander Downer referred to ‘broad community support’
and ‘wholehearted support in the Solomon Islands for an intervention’. Australian
Prime Minister John Howard referred to ‘overwhelming support from the people of the
Solomon Islands’ (Downer 2003e, Downer 2003d; Howard 2003b; Wainwright 2003).
Both the UN Security Council and Secretary-General expressed support for the initiative.
The Australian Defence Minister, Robert Hill, said that he had permitted the use of
lethal force under the rules of engagement. This was confirmed by Australian Prime
Minister John Howard (Karvelas 2003; Howard 2003c).
UN Security Council resolution 1264/99.
The Solomon Islands Governor-General anticipated that intervention may be under the
‘umbrella’ of the United Nations, in case there was a need for ‘the UN to take charge of
the administration of the country for a short time’; and the Australian Strategic Policy
Institute, whose report provided impetus and a blueprint for the intervention, suggested
the intervention ‘should be endorsed by the UN Security Council…It is in Australia’s
long-term interests for the UN to become increasingly engaged in the South Pacific,
and it should be encouraged to play such a role’ (Australian Strategic Policy Institute
2003:36).
Solomon Islands receives grants from Taiwan in return for its diplomatic recognition of
Taiwan (Australian Strategic Policy Institute 2003).
The Institute believes the following elements are required in such an intervention:
‘restoration of security, the creation of a rule of law, the construction of robust and
durable institutions, economic reform and development, and reconciliation after any
conflict’ (Australian Strategic Policy Institute 2003:30).
For example, in the Bougainville context, Regan argued that ‘the involvement of the UN
undoubtedly helps to create confidence in the process on the part of the groups with

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58

59

60

61

62

the highest level of suspicion of Australia, and which might therefore have been concerned
by the “dominant” Australian role in the PMG’ (Regan 1999:30).
In 2002, for example, the Australian Strategic Policy Institute noted that the
governments of Papua New Guinea, Solomon Islands and Vanuatu are ‘weak, transient
and hard to deal with’ (Australian Strategic Policy Institute 2002:29).
The Organisation of American States, the Organisation of African Unity, the Organisation
of the Islamic Conference and the Arab League have such framework agreements with
the United Nations (Evans 1996).
As also discussed in Chapter Four, Australia underwrites a significant element of
Forum island country defence capabilities, their Pacific Patrol Boats, meeting the cost
of the vessels, as well as the cost of ongoing maintenance, logistics, Australian advisors,
and in some cases, fuel (Australian Department of Defence 2002).
See Australian Parliamentary Committee (2003) for a discussion of the disaster
management activities that Australia already undertakes for Forum island countries.
There is also a formal arrangement between Australia, New Zealand and France on
coordination in the event of a natural disaster in the Pacific (the FRANZ Joint Statement
on Disaster Relief Cooperation in the South Pacific 1992). Australia and New Zealand
have also worked on an ad hoc basis to assist Forum island countries suffering droughts
and cyclones.
The Bougainville Peace Agreement already anticipates international observers being
invited to the referendum process (Regan 2002).

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9

Human rights

Two institutions are crucial if the Oceania Community is to address, at the regional
level, the Pacific’s challenges to the rule of law. This chapter considers the first of
these institutions, the Oceania Human Rights Commission, which would be governed
by the Oceania Human Rights Charter. The companion institution, the Oceania Regional
Court, will be considered in Chapter 10.
The rate of ratification or accession to the key UN human rights instruments is
extremely low in the Pacific—a significant challenge to the rule of supranational law
(see Table 2.9). The human rights environment in the Pacific is not benign, and lack
of regard for UN human rights law has contributed to Pacific disorder. The treatment
of Indo-Fijians following the coups in 1987 and 2000 by the Fijian government (see
Chand 1997; Howard 1991; Lal 1998; Lal and Larmour 1997; Nanda 1992;
O’Callaghan 2001),1 Papua New Guinea’s response to the security crisis in
Bougainville (see Joint Standing Committee 1999) and the challenges to democracy
in Tonga (see James 1997; Helu 1992; Lawson 1997; Montgomery 2000), discussed
in previous chapters, demonstrate the need for an integrated approach to human
rights in the Pacific. Amnesty International’s 2004 annual report noted the following
human rights issues in the Pacific: Australia’s treatment of asylum-seekers; ethnic
violence, police brutality and deteriorating prison conditions in Papua New Guinea;
impunity for human rights abuses in Fiji; and measures to restrict media freedom in
Tonga (Amnesty International 2004).
Obviously, finding better ways to promote and protect human rights represents a
broad challenge for the Oceania Community. Yet it is essential if the Community is to
tackle some of the underlying causes of disorder in the region.
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The chapter commences by outlining the shortcomings in the Forum’s approach
to human rights, and the previous and current efforts to create a formal human
rights mechanism. This includes the United Nations’ disappointing efforts to promote
a ‘regional’ human rights organisation in the Asia Pacific, an area which covers half
the world (and which just happens to include Pacific states).2
An Oceania Human Rights Charter is proposed, to form part of the Oceania single
undertaking treaty. A regional expression of the global human rights agreements
would strengthen regional order, winning local commitment and adherence to human
rights law. The Charter should also detail the education activities that the Oceania
Human Rights Commission would undertake to promote human rights, and the
enforcement mechanisms needed to protect the rights of individuals and
communities at critical times.

The Forum and human rights
The Forum has done little explicitly to promote human rights in the Pacific. Following
the first Fijian coup most Forum members refused to discuss the situation as a
formal agenda item. The Forum statement simply noted the ‘complexity of the
problems’ and hoped ‘for a peaceful and satisfactory solution’ (South Pacific Forum
1987: para 3). The Forum also made no comment on the human rights abuses
occurring in Bougainville.
In Forum Communiqués and other documents, members do express
commitment to ‘good governance’ (see, for example Pacific Islands Forum 2002:
para 2). Good governance does have some parlance in human rights terms—for
example, Australia initiated a resolution on good governance at the UN Human
Rights Commission in 1999. But the human rights connotations of good governance
are more implicit than explicit in its use in Forum documents, and largely relate to
economic management. Wickliffe notes that Forum members made no mention
of the fiftieth anniversary of the Universal Declaration of Human Rights in 1998’s
Forum Communiqué, let alone reaffirming their commitment to its principles
(Wickliffe 1999).
Encouragingly, Forum Leaders do express commitment to the ‘defence and
promotion’ of human rights in the 2004 Auckland Declaration (Pacific Islands Forum
2004a). They also note their desire to encourage the development of national
human rights machinery (Pacific Islands Forum 2004a: para 9). These developments
may represent the start of a new era of engagement with human rights issues for the
Forum.
The United Nations Development Programme (UNDP) has, until now, attempted
to address the Forum’s shortcomings by working directly with Pacific states on human
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rights issues rather than through the Forum. The philosophy of its Governance for
Livelihoods and Development in the Pacific (GOLD) initiative is that
Pacific island countries are fully committed to implementing principles of
good governance for sustainable growth, equitable development, lasting
peace and social cohesion. However, it will be difficult for Pacific countries
to achieve these goals unless aspects of human rights are integrated into
their development policies and legislative framework. Rights violations in
the Pacific are common yet there are very few organisations to monitor
rights-based violations across society.3

GOLD has organised various sub-regional and national seminars to encourage the
ratification of the core UN human rights instruments.4 Participants at one workshop
recommended that ‘the Pacific Islands Forum lift the profile of human rights in the
region’ and that a ‘forum be established addressing human rights-related questions
and the importance of ratification of international treaties’.5 The UNDP also has a
Regional Rights Resource Team, which aims to help policymakers adopt human
rights conventions.6
The Commonwealth Secretariat has also been active. It has held a Workshop on
Human Rights Education and Training, which recommended a Pacific Charter of
Human Rights and the establishment of a South Pacific Centre for Human Rights.
This institution, primarily designed as an education centre, was located within the
Port Vila campus of the University of the South Pacific (Wickliffe 1999).
These are all worthy initiatives, but are not the same as a permanent
intergovernmental mechanism affording protection to individuals. Ideally, the Forum
would have the commitment to human rights to initiate the type of activities
conducted through the GOLD program. Those involved with the South Pacific Centre
for Human Rights see it as providing impetus toward a Pacific Human Rights Charter
and intergovernmental mechanism, rather than as an end in itself.

Previous and current efforts towards regional mechanisms to
promote human rights
Addressing the Forum’s lack of an intergovernmental human rights mechanisms is
vital; the lack of such an institution is evidence of the Forum’s immaturity as a
regional organisation. The advanced regional systems have found regional order to
be incomplete without a human rights institution (CARICOM is an exception). The
European Human Rights Commission commenced operations in 1954, the year after
ratification of the European Convention on Human Rights and Fundamental Freedoms.
The Inter-American Commission started its work in 1959, and the African Commission
in 1987, the year after ratification of the African Charter on Human and Peoples’
Rights.7 The American Convention on Human Rights entered into force in 1978.
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There is, however, a flaw in the European system of regional order—it is actually
two systems rather than one. The Council of Europe, handling human rights, is
separate from the common market, the European Court of Justice and the European
Parliament. There is a disappointing subtext here, perhaps, that human rights are
not important enough to be integrated into the main game. The European Union
attempted to rectify this with the EU Charter of Fundamental Rights, which drew on
the Council of Europe’s convention and the state of national law in European Union
members. The EU Commission said it would be guided by the Charter in all its work;
but the two systems continue separately. 8 The Oceania Community should improve
on the European Union model, by including its human rights machinery as an integral
part of its regional order from the outset.
Despite facilitating the creation of the African Commission, the United Nations
has done little to facilitate an intergovernmental human rights mechanism in the
Pacific (D’Sa 1981–83; Tucker 1983).9 Commencing in 1990, the United Nations
held a series of workshops in an attempt to provide some impetus toward regional
arrangements in the Asia Pacific. So far they have failed, and they will continue to
fail. The reason is simple. Some forty countries—from Afghanistan to Yemen to
Bhutan to Fiji, with Palestine also represented—have attended the various
workshops.10 It is impossible to come up with a ‘regional’ mechanism that covers
half the globe. The problems of the Middle East are not the problems of the Pacific,
so a ‘regional’ organisation covering the United Nations’ definition of the Asia Pacific
adds little value to the global system itself.
Some at the workshops have recognised the essential folly of the United Nations’
efforts, noting that ‘a first step could be the setting up of subregional machinery for
human rights information dissemination’ and that ‘the usefulness of working at a
subregional level…must also be stressed’ (United Nations 1996:71). It is
questionable whether the various regions of the Asia Pacific, given their size—in
both population and geographic terms—constitute ‘sub-regions’ or are, like the Pacific,
more properly regions in their own right.
Australia has attempted to add some momentum to the creation of a regional
human rights commission. Former Foreign Minister Gareth Evans suggested the
creation of such a mechanism in 1995, but was criticised by those who thought he
was proposing to pursue a lowest common denominator approach to rights, rather
than a regional institution seeking to promote universal rights (Hill 1995; Evans
1995). Australia had more luck when, together with the UN Centre for Human
Rights, it proposed an Asia Pacific Regional Workshop of National Human Rights
Institutions. The first workshop was held in Darwin in 1996, attracting Fiji, India,

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Indonesia, Mongolia, Nepal, New Zealand, Pakistan, Papua New Guinea, the
Philippines, Thailand, Solomon Islands and Sri Lanka. The workshop issued the
Larrakia Declaration, agreeing to establish an informal Asia Pacific Forum of National
Human Rights Institutions.
Despite having few staff and little funding, the Forum of National Human Rights
Institutions has done much to promote the establishment and strengthening of
independent national human rights institutions. Members must subscribe to the
United Nations’ Paris Principles on the Status of National Institutions,11 which include
criteria such as having a broad mandate based on global human rights law, with the
independence of the commission guaranteed by statute or constitution. It would be
a mistake, however, to attempt to create a formal mechanism based on the Asia
Pacific Forum of National Human Rights Institutions.
The UN Workshops and the Asia Pacific Forum of National Human Rights
Institutions can serve as worthwhile catalysts for dialogue, but they should not be
mistaken for concrete steps to a regional arrangement, comparable to the existing
institutions in Europe, the Americas and Africa. The countries participating in the
Asia Pacific initiatives are too many, too large and too remote to allow for a local
human rights order to function effectively.
LAWASIA, a non-government organisation, has proposed workable regions as
the basis for regional human rights commissions. It divided the Asia Pacific into
four smaller regions, concentrating its initial efforts on the South and Western
Pacific Region, consisting of Australia and the other Pacific countries (see LAWASIA
1997). In 1985 the LAWASIA Human Rights Standing Committee sponsored a
conference on ‘Prospects for the Establishment of an Intergovernmental Human
Rights Commission in the South Pacific’ (Deklin 1992). Participants ‘requested
LAWASIA to press for the establishment of a small secretariat, attached for
administrative purposes to the South Pacific Commission or the South Pacific
Forum, to initiate the establishment of the regional inter-governmental human
rights body’ (Leary 1990:325). A Pacific Charter was drafted, largely based on the
African model, but with some unique features reflecting the region’s character.
The Charter envisaged a Commission that would assist governments and also
receive petitions from individuals (see LAWASIA 1992).
Despite the rigour of the LAWASIA proposals, the requisite political will was lacking
at that time. At that stage, the newly independent Forum members were largely
focused on resisting any perceived interference with their internal sovereignty. But
the region’s security and economic crises since then have changed the situation, as
evidenced by the Forum’s Biketawa Declaration.

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Advantages and disadvantages of regional human rights systems
The most obvious potential advantage of the Oceania Human Rights Commission is
that a regional human rights order may lead to a meaningful local expression of
rights (see Tucker 1983; Hyden 1993; Okoth-Ogendo 1993; Leary 1987; United
Nations 1996; Tibi 1994; Donoho 1991). Parker argues that ‘although the principles
of human rights are universal in character, the most direct and effective route to the
protection of these universal ideals is via regional systems’ (1983:239). Corbera
believes ‘[u]nique cultural, political, and economic factors justify the regionalisation
of human rights systems’ (1993:939).
An Oceania Human Rights Commission would allow members to feel a sense of
ownership of the human rights issues confronting the region, rather than feeling
they are having something imposed on them by the global system. Buergenthal, an
academic and judge on the Inter-American Court of Human Rights, has argued that
‘the problems of our Hemisphere are more unique to the Americas than they are
universal or European. They can only be solved within the framework of our own
legal, cultural, political, and social traditions’ (Buergenthal 1981:166). Tamata
believes the advantage of using the Pacific Islands Forum to promote human rights
would be member states’ closeness in terms of cultural affinity, political
understanding, historical involvement, trade, and the movement of people between
the island countries (2000).
The Oceania Human Rights Commission would allow members to feel that their
issues are receiving sympathetic consideration, that differences of philosophy and
priorities could be worked through to produce local solutions. The Commission
could help narrow the gap between local customs and the rule of law in Fiji and
other members. It might have a greater capacity than the United Nations to provide
well-informed advice, and early warnings of security and economic crises.
The great potential disadvantage of regional arrangements, so far unrealised in
the other regional systems, is that a regional expression of rights could corrupt the
global law. This fear of undue deference to regional norms is usually a reaction to
cultural relativists, who argue that there are no universal standards and that any
cultural practice is as valid as any other (Tamata 2000; Afshari 1994; Donoho
1991; Monshipouri 2002; Poe 2002; Goodhart 2003; Binder 1999). Although
theories of cultural relativism may have started off with worthy aims—the theory was
initially developed by anthropologists concerned about Eurocentric superiority (AnNa’im and Deng 1990)—it is misplaced in the human rights debate. Those who
promote cultural relativism (or variations like Asian values or the Pacific Way) when
it comes to human rights law typically do so to cover up their own interests (see
Henningham 1995; Howard 1991; Ghai 1993; Thio 2000; Englehart 2000). A related
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argument, that giving effect to human rights law impedes economic development,
is also nonsense, because economic growth is dependent on the rule of law and a
stable macroeconomic environment (see, for example, Messick 1999; Donnelly
1999; Harvey 2002; Sengupta 2002; Hamm 2001; Sano 2000; Udombana 2000),
not human rights violations.
UN involvement would ensure the Oceania human rights order remains connected
with, and responsive to, the global system. UN backing would give the Oceania
Commission a legitimacy and credibility that it might otherwise lack, and would
avoid the potential disadvantages of regional human rights arrangements. There
may at times be creative tensions between regional and global concerns, but this
should be welcomed as evidence of constructive dialogue.

The Oceania Human Rights Charter
Rights
The Oceania Human Rights Charter should promote human rights, humanitarian
law and labour rights. The Charter might also introduce new rights and a creative
balance between rights and duties.
The European, American and African regional organisations all negotiated their
own regional human rights conventions with minor variations on the rights detailed
in the UN instruments (the European Convention follows the Universal Declaration
of Human Rights, but precedes, and may have been a precedent for, the 1966
Covenant on Civil and Political Rights, and the Covenant on Economic, Social and
Cultural Rights). Rather than negotiating a new instrument, it would be better to
incorporate the relevant UN human rights law into the Oceania Human Rights Charter.
Giving effect to the global agreements would be easier and quicker than negotiating
a new text. Further, adopting pre-existing agreements would ensure the Oceania
Charter avoids the dangers of cultural relativism.
However, it is the rights and programs for implementing those rights that should
be adopted from each of the proposed instruments, not necessarily the procedures
for international monitoring. The monitoring and enforcement powers for the Oceania
Human Rights Commission would be negotiated separately.
The key rights to be included in an Oceania Human Rights Charter are listed in
the Covenant on Civil and Political Rights (CCPR) and the Covenant on Economic,
Social and Cultural Rights (CESCR).12 Although ideological conflict dictated the
division of these core rights into two Covenants in 1966, the global community
unanimously recognised in the Vienna Declaration 1993 that ‘all human rights are
universal, indivisible and interdependent and interrelated’ (Vienna Declaration and
Program of Action, Part I.5). Australia, to its credit, has promoted both civil rights and
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economic rights, and thus performs a bridging role between developed and developing
countries in negotiations over human rights instruments and resolutions.
The CCPR regulates the power of the state. Many of the rights relate to the use
and misuse of the state apparatus: freedom from torture, freedom from arbitrary
arrest and detention, the right to a fair trial; freedom of thought, conscience and
religion; and the right to peaceful assembly (CCPR, Articles 4, 7, 9, 14, 18 and 21).
Article 4 allows certain rights to be suspended in a public emergency threatening the
life of the nation. Such a derogation clause, however, would not have excused the
actions that Rabuka took after the first and second coups in Fiji, because the
manufactured emergency did not threaten ‘the life of the nation’. The CESCR contains
the ‘positive’ or ‘distributive’ rights, such as the right to an adequate standard of
living, the rights to adequate housing, clothing, food, education, health care and
social protection (CESCR, Articles 9, 11, 12 and 13).
Although these two ‘first generation’ Covenants list the most important rights,
many ‘second generation’ single-issue instruments amplify particular rights, and
strategies for their promotion and protection.13 Thus the following five instruments
should be included in the Oceania Human Rights Charter.
The Convention Against Torture 14 defines torture as any act, not lawfully sanctioned,
by which severe pain or suffering, whether physical or mental, is intentionally inflicted
on a person in order to obtain information or a confession, or to intimidate or coerce
(Convention Against Torture, Article 1.1). The Convention focuses on state actions—to
fit within the Convention definition, the torture must be inflicted by a public official or
person acting in an official capacity, or occur with their acquiescence (Convention
Against Torture, Article 1.1). Psychological forms of torture—when a victim fears that a
relative will be tortured or killed—are also prohibited.
The Convention on the Elimination of All Forms of Racial Discrimination15 has
been widely ratified. States must ‘prohibit and bring to an end, by all appropriate
means, including legislation as required by circumstances, racial discrimination by
any persons, group or organisation’ (Convention on the Elimination of All Forms of
Racial Discrimination, Article 2.1d). The Convention has an emphasis on preventive
measures, and combating structural discrimination. Fiji and other Oceania members
need not be too concerned about genuine measures to promote the welfare of their
indigenous peoples—the Convention provides for positive discrimination ‘for the
sole purpose of securing adequate advancement of certain racial or ethnic groups
or individuals’, but such measures are subject to a sunset clause (Convention on
the Elimination of All Forms of Racial Discrimination, Article 1.4, 2.2).
Including the Convention’s substantive provisions in the Oceania Human Rights
Charter would be a significant symbolic step. The region, long troubled by race issues,
would be demonstrating its recognition of the need for promoting religious and
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racial tolerance, including through the education systems. Every country has scope
to do more to eliminate discrimination, to ensure all people enjoy the same rights in
law and practice. Thus, all states in the region should engage in dialogue to produce
improved measures to combat racial discrimination.
The UNDP’s Pacific Human Development Report discussed the difficulties
confronting women in the Pacific, particularly in Melanesian countries (UNDP 1999).
Including the Convention on the Elimination of Discrimination Against Women16 in the
Oceania Human Rights Charter would be an important step in addressing this situation.
The Oceania Human Rights Commission could then contribute to the vital Pacific
debate about traditional values and lifestyles and women’s rights (see Deklin 1992).
The Convention on the Rights of the Child17 is the world’s, and the region’s, most
widely ratified instrument (see Office of the UN High Commissioner for Human
Rights 2002). Thus, it provides a good basis for initial dialogue. The Convention
covers the range of economic, social, cultural, civil, political and humanitarian rights
(Bolton 1990). This Convention and the Convention on the Elimination of
Discrimination Against Women are the first enforceable treaties with an integrated
approach to these rights, moving beyond traditional divisions of economic and civil
rights (Hammarberg 1990).
The Oceania Human Rights Charter could also usefully adopt language from the
Declaration on the Right to Development,18 perhaps in its preamble. The Declaration
is not in the same class of global law as the six instruments above—it is a General
Assembly resolution, rather than a treaty open for ratification—but it has great moral
authority and many developing states are, naturally, concerned about a right to
development. Including the Declaration in the Oceania Charter would recognise
these concerns. The African Charter—which LAWASIA followed in its Draft Pacific
Charter of Rights and Duties—recognises the right to development.
Many states, though, misconstrue the right to development, limiting it to economic
development. This right encapsulates economic security, but also the ideal of
democratically sharing this economic growth.19 Development is a holistic process,
encompassing all human rights, not just economic development.20 The Vienna
Declaration makes it clear that lack of development in a country does not justify the
violation of civil and political rights (Vienna Declaration Part I.10).
Though the Oceania Human Rights Charter would largely draw on the existing
global human rights law, there is still scope to innovate. Pacific states have advanced
the right to a clean and safe environment through a number of agreements. The
concern with the environment is understandable given the region’s experiences
with nuclear weapons testing and nuclear waste disposal, and the potential impact
of global warming, and it would be appropriate to recognise this in the Oceania
Human Rights Charter. The African Charter refers to the need for a ‘general[ly]
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satisfactory environment’. The LAWASIA Draft Charter puts it better, stating that ‘[a]ll
peoples shall have the right to a clean, healthy and safe environment favourable to
their development’ (Article 24) (other parts of the Oceania single undertaking treaty
would also protect the environment).
The Oceania Human Rights Charter could usefully develop the right to privacy
(Article 17 of the CCPR), given the integral role that the internet and e-commerce
would serve in the Oceania common market. Article 8 of the European Union’s
Charter of Fundamental Rights is instructive.
Everyone has the right to the protection of personal data concerning him or
her…Such data must be processed fairly for specified purposes and on the
basis of the consent of the person concerned or some other legitimate
basis laid down by law. Everyone has the right of access to data which has
been collected concerning him or her, and the right to have it rectified.

The Oceania Human Rights Charter should also encompass humanitarian law. The
Oceania Human Rights Commission should promote the Geneva Conventions and
their protocols. As part of this body of law, the Oceania Commission should also
include UNESCO’s Convention for the Protection of Cultural Property in the Event of
Armed Conflict.
The Oceania Charter should also encompass core labour rights. Labour rights
were discussed in Chapter Six in the context of the Oceania investment agreement
on the responsibilities of transnational corporations. Oceania members should see
that labour standards are implemented by domestic businesses, as well as
transnational corporations (the proposed Oceania investment agreement would
only cover transnational corporations). Thus, the Oceania Human Rights Commission
should work with members to ensure
• workplaces respect the right to freedom of association and to organise and
bargain collectively21
• workplaces are free from forced or compulsory labour22
• workplaces are free from exploitative child labour23
• workplaces are free from discrimination in employment24
• safe and healthy working conditions.25
In 1998, the International Labour Organization (ILO) drew these five core rights
together into a new Declaration on Fundamental Principles and Rights at Work.
To complement the agreements establishing the Oceania common market,
particularly the Oceania labour mobility agreement, the Oceania Human Rights
Charter could adopt language from the UN Declaration on the Human Rights of
Individuals Who Are Not Nationals of the Country in Which They Live, and the
Convention on the Rights of Migrant Workers 1990.

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Duties
Article 29.1 of the Universal Declaration states that each individual has a duty to the
community, ‘in which alone the free and full development of his personality is
possible.’ Yet the concept of duties of individuals has not been amplified in any
subsequent UN human rights instruments. The American Convention and the African
Charter include sections on duties. Forum island countries would most likely insist
on some expression of duties given the importance of the interrelationship between
rights and duties in their communal lifestyles (Powles 1992).
The InterAction Council, chaired by former Australian Prime Minister Malcolm
Fraser, produced a Draft Universal Declaration of Human Responsibilities, hoping it
would become a companion instrument to the Universal Declaration of Human
Rights (InterAction Council 1997). The draft was endorsed by a number of high
profile ex-politicians and other leaders, and some may suggest that this document
should form the basis of a statement of duties in the Oceania Human Rights Charter.
Such a suggestion should be resisted as the language it uses could potentially
undermine the strength of the Charter’s human rights provisions. For example,
Article 12 on ‘Truth and Tolerance’ includes the line ‘[n]o one is obliged to tell all the
truth to everyone all the time’. Whilst technically true, such an understanding is
open to abuse by politicians and others, and does not deserve to be codified in a
human rights instrument. Article 14 provides ‘[t]he freedom of the media to inform
the public and to criticise institutions of society and governmental actions, which is
essential for a just society, must be used with responsibility and discretion’. This is
also open to abuse if governments choose to emphasise the media’s responsibility
to act with discretion, instead of fearlessness.
Those provisions demonstrate that the concept of duties can be misused. Human
rights should not depend on the performance of duties to a particular power or
institution, and duties should not be a facade for cultural relativism (Saul 2001).
Duties to people generally—for instance, a duty to the community as in the Universal
Declaration of Human Rights—are to be welcomed, but duties to individuals—chiefs,
for instance—or to the state are best avoided. It is not that such duties never exist,
but including them in a human rights charter institutionalises them and imbues
them with a political power that may be misused or misinterpreted.
An appropriate formulation for the Oceania Human Rights Charter would be to
follow Article 32 of the Inter-American Convention, which, in the section on the
Relationship Between Duties and Rights, strikes an appropriate balance.
• Every person has responsibilities to his family, his community, and mankind.
• The rights of each person are limited by the rights of others, by the security of
all, and by the just demands of general welfare, in a democratic society.

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It does not include a duty to the state, and the fact that limitations must take
place in the context of ‘a democratic society’ is a necessary check. A duty to the
community is quite different from a duty to the state, which can be mistaken for a
duty to the government of the day. The duty to the family is likely to find resonance in
Forum island countries, and usefully complements Article 23 of the CCPR and Article
10 of the CESCR, which recognise that ‘the family is the natural and fundamental
group unit of society and is entitled to protection by society and the State’.
As with many other aspects of the values and commitments that should be included
in the Oceania single undertaking treaty, there is a distinction to be drawn between
what belongs in the preamble and what belongs in the agreement proper. Since duties
are not legally enforceable, the statement on duties should be left in the preamble.

The margin of appreciation
Drawing on the rights created by the global system does not remove the need for
regional initiative in their interpretation and implementation. Amnesty International,
for example, says that the challenge in the Pacific is to marry global human rights law
with local cultural systems (‘Pacific nations urged to marry traditional and modern
laws’, Australian Broadcasting Corporation, 5 January 2001).26 A framework is needed,
though, to guide regional creativity so as to preserve the integrity of the global law.
The ‘margin of appreciation’ doctrine attempts to reconcile differences between
UN human rights law, and the domestic practices, norms and the needs of individual
states. The doctrine allows states a margin of discretion in the implementation of
rights. Under the European Convention the margin of appreciation refers to the
‘discretion left to domestic legislators, courts, and executives in creating, interpreting,
and applying the laws of their own society’ (Andrews 1984:495).
The extent to which the provisions of the European Convention allow for a margin
of appreciation varies. In a case on censorship the European Court of Human Rights
found that ‘it is not possible to find in the domestic law of the various Contracting
States a uniform European conception of morals’.27 Views will vary ‘from time to
time and from place to place, especially in our era which is characterised by a rapid
and far-reaching evolution of opinions on the subject’ (Handyside Case, para 48).
However, the Court emphasised the importance of freedom of expression as an
essential foundation of a democratic society (Andrews 1984). Therefore restrictions
on the right ‘must be proportionate to the legitimate aim pursued’ (Handyside Case,
para 49). In a subsequent freedom of expression case, the Court found that the
same state (the United Kingdom) had exceeded the margin of appreciation.28 On
the relevant issues there was a high degree of consensus amongst the party states,
so the acceptable margin of appreciation was not as great.
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Thus, the degree of margin may vary depending on the right involved. For instance,
there is not much room for interpretation when it comes to rights like freedom from
torture and slavery. Traditional practices that result in violence should not be condoned
under the margin of appreciation. Greater discretion is possible, however, when
deciding how to implement the right to a good education, or the right to freedom of
expression, as the European cases on censorship demonstrate. An example from
Fiji may be instructive. Indigenous Fijians, naturally, have the right to freedom of
religion and, as part of their commitment to the Methodist religion, may themselves
choose to keep the Sabbath holy. However, enforcing the Sabbath for the rest of the
population through army decree and roadblocks, as occurred after the second coup,
would be going too far (Nanda 1992).
The margin of appreciation rule should be included in the Oceania Human Rights
Charter. However, there should be a proviso that the margin should not be interpreted
in a way that undermines other rights. The Inter-American system has produced an
appropriate formulation. It found that the Inter-American Convention must ‘be
interpreted in favour of the individual, who is the object of international protection’.29
The CCPR also includes a clause standard to many instruments, that nothing in the
Covenant may be interpreted so as to justify the destruction of any of the rights and
freedoms in the Covenant.
The Oceania human rights order should ensure that universal standards are
reflected through local concepts and norms. The alternative is an arrangement that
unduly defers to regional norms at the expense of global law. By allowing a degree of
deference to domestic practice where a right is less absolute—and a common regional
practice on its implementation has not emerged—the margin of appreciation
recognises this tension and provides a framework for reconciling universal norms
and cultural diversity.

Oceania Human Rights Commission functions
Education and promotion
In the first phase of the Oceania Community, the bulk of the Oceania Human Rights
Commission’s work should focus on education and promotion activities, that is,
those activities that do not have an explicit enforcement function. (The American
and African Commissions have a mandate to undertake a range of education and
promotion efforts. The European Commission, in contrast, is geared almost entirely
to dispute resolution.)
Human rights education is the key to a successful human rights order—raising
awareness about rights is the first step to ensuring they are respected and
implemented in the domestic context. The educative function of the Oceania
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Commission would be a crucial and enduring contribution to regional order. Prevention
is better than cure, and conferences, seminars and meetings of government ministers,
policymakers and policy implementers, all help the cause. The Commission should
also offer scholarships for courses in human rights law, especially to those who could
have an influence over the protection and promotion of rights.
The Commission’s grassroots work should be regarded as just as essential as its
work with government ministers and officials. The Commission should translate the
basic human rights instruments into native languages, and explore ways to make
them culturally relevant. Developing programs for schools and universities should
be an integral component of any education strategy. The Commission should develop
libraries and databases accessible to Pacific citizens through publications and the
internet (although the latter is less viable for developing countries in the immediate
future).
The Commission should create specialist programs to educate police and armed
forces about human rights and humanitarian law, as required by the Convention
Against Torture and the Geneva Conventions.30 The crises in Bougainville, Fiji and
Solomon Islands highlight the need for such training, and the Oceania Commission
should assist domestic institutions to produce seminars and manuals for police and
armed forces.
An important extension of the Oceania Commission’s education and promotion
work would be to encourage national human rights institutions and press councils:
assisting existing bodies and providing the resources and expertise to create national
commissions and press councils in those states that lack them. This would help
embed human rights law in the domestic sphere (see Reif 2000). Following
Australia’s efforts, the United Nations has made national institutions a high priority.
Much like regional commissions, national commissions have a vital role to play in
advising and educating, disseminating information, reviewing legislation and
practices, and seeking remedies (Vienna Declaration, para 36), and press councils
assist to secure freedom of speech, from which many other rights flow.
Of the countries proposed for the first phase of the Oceania Community, Australia,
New Zealand and Fiji have national human rights commissions. Given other Forum
island countries’ size and fiscal constraints, they may not wish to create national
commissions; they may prefer to allocate officers in legal departments to these
activities. Such an arrangement would not conform to the Paris Principles—that is,
national human rights institutions should be independent of the rest of the
government—but this may be the extent of the resources that Forum island countries
can allow and it is preferable to having no staff devoted to human rights issues. Given
their size, many Forum island countries may accept the Oceania Commission

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performing the tasks a national commission would otherwise undertake, such as
reviewing legislation and assisting with the preparation of United Nations treaty reports.
Establishing effective consultation mechanisms with non-government
organisations would be essential for the Commission’s education and promotion
work. Much of its information would come from non-government organisations,
who would often have more developed networks and access to information than
the Commission itself (Reisman 1995). However, since the Oceania Commission
would place as much emphasis on economic, social, cultural and development
rights as on civil and political rights, it should establish links with non-government
organisations beyond those, such as Amnesty International, associated with
libertarian rights. The Oceania Commission should also build relationships with
trade unions and aid agencies, to reflect its wider concerns.
Although regional commissions can enjoy many advantages from liaising with
non-government organisations, there are disadvantages. The Inter-American
Commission, for example, has had to work to maintain the appearance of neutrality
despite the large input of non-government organisations (Pasqualucci 1995). Further,
non-government organisations are often focused on tactical issues, whereas the
Oceania Commission should contribute equally to the tactical and strategic pursuit
of human rights. Some non-government organisations attempt to marshal public
support to prompt the release of a particular prisoner, or stop the torture of an
individual. As vital as this work is, instituting the programs to prevent these situations
initially occurring is equally necessary. Pursuing structural change may at times
necessitate a different emphasis from non-government organisations.
To measure the effectiveness of its education and promotion work, the InterAmerican Commission frequently conducts country and regional studies and, where
appropriate, makes recommendations to the relevant governments (United Nations
1996). This could prove an effective model for the Oceania Commission. Under
the Inter-American Commission procedures, the relevant country is given the
opportunity to respond following an investigation and preparation of a draft report.31
The Commission may decide to modify the report as a result, or indeed, not to
publish it. A country report is always prepared following consultation with
government officials and after giving opportunities to the government to express
its views (United Nations 1996).
Governments have not always agreed with the conclusions the Inter-American
Commission has reached in its various reports; some react badly; others see it as an
opportunity for dialogue (United Nations 1996). Yet on the whole, Oceania member
states would most likely respond better to a report prepared by an Oceania
Commission sympathetic to the regional context, instead of the United Nations.

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On occasion, the Inter-American Commission has considered that particular
violations, or widespread political, technological or social changes, justify the
preparation of general, regional studies (American Convention, Article 41c; United
Nations 1996). This is also a useful precedent for the Oceania Commission, as a
broad, thematic approach would have the advantage of making individual members
more receptive to findings and recommendations, rather than feeling they have
been singled out. During the PACER–PICTA negotiations there were plans for a social
impact study; the Oceania Commission could undertake this task. Such an endeavour
would simultaneously instil accountability in the Oceania Community for its efforts
in promoting economic reform, and in Forum island countries, for their efforts in
promoting the right to development.
As part of its country reports, the Inter-American Commission also makes on-site
visits. There are obvious advantages to an on-site visit from the perspective of those
suffering human rights abuses—the presence of a supranational organisation can
act as a check on governments. But there are also advantages for governments
from on-site visits (Reisman 1996). Governments can better explain a situation,
highlight difficulties in implementing policies, ask for training assistance, and request
help from other members of the Oceania Community (as Prime Minister Bartholomew
Ulufa’alu might have done during the Solomon Islands ethnic tensions; see Maher
and Dorney 2000). A regional organisation is better able to appreciate the local
dynamic than the United Nations, possibly resulting in better fact-finding,
understanding and interpretation.
The UN Human Rights Commission’s theme rapporteurs provide a useful
precedent for the Oceania Commission’s on-site visits (see Australian Department
of Foreign Affairs and Trade 1993; Kirby 1996; Weissbrodt 1986). Unsurprisingly,
an individual working behind the scenes can achieve more than a larger working
group—and do it more efficiently and cheaply (Weissbrodt 1986). Oceania
Commission rapporteurs could assist governments in the areas corresponding to
the instruments included in the Oceania Human Rights Charter. Thus, there could be
rapporteurs on gender equality, racial equality, children, development and the
environment. In the first phase of the Community, the rapporteurs’ focus would be
on educative and preventive strategies; this may later develop into an investigative
mandate.
Ultimately, the success of the Oceania Commission’s education and promotion
efforts would rest on the informal relationship it established with members of the
Community. The Commission should proceed slowly, gradually building consensus
on the appropriate expression of rights, mechanisms and functions. The Oceania
Commission would be tackling sensitive issues: for instance, racism in Fiji; democracy

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in Tonga; indigenous issues and the treatment of asylum seekers in Australia. This
calls for diplomacy; the Inter-American Commission has stressed it
…never loses sight of the fact that it is not and cannot be institutionally
antagonistic to governments. The Commission is created and sustained by
governments that voluntarily assumed human rights obligations and is
structured to help those governments realise such obligations by highlighting
inconsistent behaviour, indicating when remedies are appropriate and helping
governments institutionalise new normative arrangements. A Commission
must have the courage to speak out critically and forcefully when necessary,
but it should always try to avoid polarisation, seeking to work with governments
whenever possible or appropriate (Reisman 1995:96).

One Commissioner has admitted the Commission ‘has not always been
successful. However, it regularly examines its performance, carefully heeds OAS’
annual review of its activities and studies responsible non-governmental appraisals’
(United Nations 1996:40). Overall, though, the Inter-American Commission has
made a considerable contribution to advancing the observance of human rights in
the region. Farer argues that ‘exposure, or the threat thereof, has accomplished a
mitigation of barbarity…It cannot be doubted that the prospect or consequences of
a Commission inquiry has saved lives, averted torture, terminated arbitrary detentions,
and ameliorated conditions of detention’ (Farer 1987:403).
Thus, the Oceania Commission should not display restraint and deference to
domestic authorities, to the point of being rendered meaningless (Hovius 1985); at
times the Commission would need to confront oppressive conduct openly. Like the
Inter-American Commission, though, the Oceania Commission would need to strike
a sensible balance between publicity and behind the scenes work.
Enforcement
The capacity to enforce rights directly presents more difficulties than education and
promotion activities. Nonetheless, the Oceania Human Rights Commission must be
able to intervene in critical situations.
Two methods of enforcement are outlined here: allowing individuals to petition
the Commission directly; and implementing a reporting regime. The European, InterAmerican and African commissions allow individual petitions. Petitions from
individuals would reinforce the Oceania Commission’s education and promotion
activities. Such petitions may make the Commission aware of problems which
otherwise would not have been known. If a petition is indicative of a larger problem,
the Commission could then focus its attention on developing structural remedies.
In considering a petition, the European, American and African Commission
procedures emphasise ‘friendly settlement.’ This may have particular resonance

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amongst Oceania members, and has the advantage for individuals of being cheap
and accessible (United Nations 1996). Thus, the Oceania Commission should adopt
a low-key, confidential approach in liaising with government representatives.
Suggestions and recommendations may resolve an issue; but there should be scope
for the Commission to ask a government to undertake provisional measures pending
an investigation or report.
Successes would most likely come through negotiation rather than application
of the rule of law. Commission members would need to view the chances of success
realistically, especially in the first years of operation. As the Inter-American
Commission found, ‘because the Commission has not avoided the hard cases, its
“scorecard” is less impressive than it might have been if the Commission had carefully
selected easier cases for its docket’ (Reisman 1995:96).
Pacific citizens should have the right to petition the Commission on breaches of
economic, social and cultural rights, as well as civil and political rights. However,
since progress on economic, social and cultural rights is more likely to come about
through efforts over many years, a government reporting regime would usefully
complement the right to individual petition.
Such government human rights reports typically include interviews with officials,
statistics and a review of common practices. A reporting system would work if the
state reported frankly and the Commission responded critically. The UN Human
Rights Committee has found that the state must have a constructive view of the
procedure, which requires tact on the part of the United Nations as well (O’Flaherty
1994). A reporting system is more helpful when the right concerned, such as the
right to development and the right to a clean environment, is as much a matter of
facilitating international cooperation as resolving complaints (Harvey 1987). As with
the European system, the Oceania Human Rights Commission should also allow for
disparities in economic conditions, which influence a state’s capacity to implement
economic, social and cultural rights. 32
The other regional human rights commissions also offer a third possibility for
enforcement, allowing member states to submit complaints about other members.
However, the inter-state complaint has never been utilised in the American and
African systems, and very rarely in the European system (see Leckie 1988). Since its
usefulness is doubtful, it would be better to omit this option from the Oceania
Human Rights Charter. This would reassure states, and still leave scope for informal,
confidential approaches from members to the Commission, which could then pursue
its own inquiries.

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In the event of mass human rights violations, complaints could be made to the
United Nations. Even with the creation of a regional human rights order, it is still
appropriate to bear in mind an appropriate division of responsibilities between the
global and regional systems. The United Nations has the authority and resources to
handle widespread, ongoing violations.

Conclusion
The Pacific needs new mechanisms to promote better adherence to the
supranational rule of law, because the lack of adherence to supranational law in
many Pacific states is one of the prime causes of regional disorder. An Oceania
Human Rights Commission would have vital work to do in closing the gap between
supranational human rights law and the values and practices of many Pacific
states. A regional commission would have the local representation, dynamism
and relevance to encourage a shift in the region’s approach to human rights, and
to secure greater adherence to the rule of law. It would also cure the United
Nations’ pursuit of inappropriate regional human rights organisations, covering
countries from the Middle East to the Pacific, in an unsuitable definition of the
Asia Pacific which can add little value to the global system’s efforts to promote
human rights.
In developing its list of rights, the Oceania Human Rights Charter would draw on
the United Nations’ instruments, Geneva Conventions and ILO Conventions, as
detailed in the following diagram, as well as innovating in areas such as environmental
protection and privacy. The Charter would propose a wide range of promotional
activities for the Oceania Human Rights Commission, and ensure the Commission
has the capacity to enforce rights through a combination of individual complaints
and a thorough reporting regime (Figure 9.1).
The Oceania Human Rights Commission’s role in promoting regional order is
critical. It would be the only regional institution explicitly considering, and
safeguarding, all four of the ‘deepening’ goals of regional order—sustainable economic
development, security, the rule of law and democracy—in an integrated fashion.
Further, it would demonstrate the Community’s institutional integrity to Pacific
citizens. Pacific regional order would be incomplete without it.
The next chapter considers the Oceania Court, which, together with the Human
Rights Commission, is designed to address the Pacific current challenges to the rule
of law.

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Figure 9.1

The Oceania Human Rights Charter

PREAMBLE
Language from the Declaration on the Right to Development
Duties

RIGHTS
Drawing on the
Covenant on Civil and Political Rights
Covenant on Economic, Social and Cultural Rights
Convention Against Torture
Convention on the Elimination of All Forms of Racial Discrimination
Convention on the Elimination of Discrimination Against Women
Convention on the Rights of the Child
New/expanded rights:
A right to a clean and healthy environment
A right to privacy
Geneva Conventions
Core International Labour Organization rights:
Freedom of association
Freedom from forced labour
Freedom from child labour
Freedom from discrimination in employment
Right to safe and healthy working conditions

THE OCEANIA HUMAN RIGHTS COMMISSION’S WORK
Education/promotion functions
Enforcement/protection functions:
Individual petition
Reporting regime

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Notes
1

2

3
4

5

6
7

8
9

10

11
12
13

14
15
16
17
18
19

I refer here to the ‘government’ because Fiji’s initial government maintained communal
electoral rolls; the chief rebel who committed the first two coups, Sitiveni Rabuka,
subsequently became the leader of the government; and many parts of the government
apparatus—the army, some judges—were used to facilitate the removal from power of
the democratically elected government in the third coup; and the subsequent government
continued to discriminate against Indo-Fijians (as in its Blueprint for the Protection of
Fijian and Rotuman Rights and Interests).
The United Nations’ definition of the ‘Asia Pacific’ includes Middle Eastern and Central
Asian countries; any ‘regional’ organisation based on this broad membership could add
little value to the United Nations’ efforts to promote human rights.
See http://www.undp.org.fj/gold/human_rights.htm [accessed 9 December 2002].
See http://www.undp.org.fj/gold/human_rights_wkshs.htm, http://www.undo.org.fj/
gold/national_workshops.htm [accessed 9 December 2002].
See http://www.undp.org.fj/gold/micro_human_rights_wkshs.htm [accessed 9
December 2002].
See http://www.undp.org.fj/Governance.htm [accessed 26 July 2002].
Like Pacific states, African states have often resisted measures that would impact on
their internal sovereignty. However, the African human rights order has steadily, albeit
slowly, evolved, and a human rights court was recently established (see Udombana
2001; Essien 2000; Odinkalu 1998, 2001; Mutua 1999; Murray 2003).
See http://www.europarl.eu.int/charter [accessed 19 June 2003].
This initiative followed the General Assembly’s request to the UN Commission on
Human Rights in 1966, to study establishing regional institutions to promote human
rights (Vasak and Alston 1982).
Countries that have attended the various workshops include Afghanistan, Australia,
Bangladesh, Bahrain, Bhutan, Brunei Darussalam, Cambodia, China, Fiji, India, Indonesia,
Iran, Iraq, Japan, Jordan, Kuwait, Lebanon, Malaysia, Maldives, Micronesia, Mongolia,
Myanmar, Nepal, New Zealand, North Korea, Oman, Pakistan, Papua New Guinea, the
Philippines, Saudi Arabia, Singapore, Solomon Islands, South Korea, Sri Lanka, Syria,
Thailand, United Arab Emirates, Vietnam, Yemen, with Palestine also represented.
Available online at http://www.unhchr.ch/html/intlinst.htm [accessed 27 August 2003].
Available online at http://www.unhchr.ch/html/intlinst.htm [accessed 27 August 2003].
See http://www.undp.org.fj/gold/human_rights_in pacific.htm [accessed 9 December
2002].
Available online at http://www.unhchr.ch/html/intlinst.htm [accessed 27 August 2003].
Available online at http://www.unhchr.ch/html/intlinst.htm [accessed 27 August 2003].
Available online at http://www.unhchr.ch/html/intlinst.htm [accessed 27 August 2003].
Available online at http://www.unhchr.ch/html/intlinst.htm [accessed 27 August 2003].
Available online at http://www.unhchr.ch/html/intlinst.htm [accessed 27 August 2003].
According to Forsythe, ‘[d]evelopment is a comprehensive economic, social, cultural
and political process, which aims at the constant improvement of the well-being of the

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20

21

22

23
24

25
26
27

28

29

30

31

32

entire population and of all individuals on the basis of their active, free and meaningful
participation in development and in the fair distribution of the resulting
benefits’(1989:82). See also Alston 1985, 1991.
The Preamble to the Declaration on the Right to Development states: ‘[t]he right to
development is an inalienable human right by virtue of which every human person and
all peoples are entitled to participate in, contribute to, and enjoy economic, social,
cultural and political development, in which all human rights and fundamental freedoms
can be fully realised’.
See CESCR, Article 8; CCPR, Article 22; International Labour Organization (ILO)
Convention Concerning Freedom of Association and Protection of the Right to Organise
(No. 87); and ILO Convention Concerning the Application of Principles of the Right to
Organise and Bargain Collectively (No. 98).
See CCPR, Article 8; the ILO Convention Concerning Forced or Compulsory Labour (No.
29); the ILO Convention Concerning the Abolition of Forced Labour (No 105).
See Convention on the Rights of the Child, Article 32.
See CESCR, Articles 2 and 7; CCPR, Articles 2 and 3; Convention on the Elimination of
Discrimination Against Women, Article 1; the Convention on the Elimination of Racial
Discrimination; ILO Convention Concerning Discrimination in Respect of Employment
and Occupation (No. 100) and ILO Convention Concerning Occupational Health and
Safety and the Working Environment (No. 111).
CESCR, Article 7.
Available online at http://www.abc.net.au/ra [accessed 5 January 2001].
Handyside v United Kingdom in (1976) Year Book on the European Convention on
Human Rights 506 European Court of Human Rights, Series A, No. 24, 1 E.H.R.R. 737.
The Sunday Times v United Kingdom in (1979) Year Book on the European Convention
on Human Rights 402, European Court of Human Rights, Series A, No. 30.
In the Matter of Viviana Gallardo, Government of Cost Rica, Decision of 13 November
1981, Inter-American Court of Human Rights, 12 OEA/Ser. L/V/III. 7 doc. 13, Ser. A and
B. No. G.101/81 (1982) paragraph 16.
Convention Against Torture, Article 10; Article 1 of the Geneva Conventions, requires
parties ‘to ensure respect for’ humanitarian law. This is complemented by Articles 83
and 19 respectively of the two Protocols, which require adherents to include
humanitarian law in their military and, where relevant, civilian instruction programs.
Regulations of the Inter-American Commission on Human Rights Article 63 reprinted
in Handbook of Existing Rules Pertaining to Human Rights in the Inter-American
System (1980), Articles 59–63.
The European Social Charter was designed by the Council of Europe to complement the
European Convention. Unlike the European Convention, though, the Charter establishes
a reporting rather than a judicial regime (Davidson 1993).

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10

The rule
of law

Pacific regional order would be incomplete without a mechanism for interpreting
the single undertaking agreement and its protocols, to allow members to enforce
their rights and peacefully settle disputes. Therefore, the Oceania Community should
have a Court, with four chambers dealing with human rights, common market,
environmental and constitutional issues. The development of a regional
jurisprudence, and the interplay between the Oceania Court and national courts,
would assist in addressing the challenges to the rule of law currently constraining
the Pacific.
This chapter considers the Pacific Island Forum’s current approach to dispute
settlement, and contrasts it with CARICOM. The European Court of Justice is examined
as the most relevant precedent for the Oceania Court. The operations of each
chamber of the Oceania Court are outlined, as well as how the relevant sections of
the Forum’s current agreements should be developed, and who should have standing
to bring cases to the Court.

The Forum and dispute resolution
The Forum’s institutional architecture currently does not include a standing dispute
settlement mechanism. Some Forum agreements do include dispute settlement
provisions, but, as will be discussed below, these are underdeveloped.1 These ad
hoc provisions are insufficient for a more advanced model of regional integration,
and for promoting the rule of law throughout the Oceania Community.

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One possible objection to an Oceania Court is that Forum island countries might
be reluctant to embrace legally binding dispute settlement at the regional level,
because ‘the Pacific Way’ emphasises informal dispute resolution (Henningham
1995). However, the Forum has previously discussed a regional court of appeal
(South Pacific Forum 1974), and it has previously endorsed the establishment of a
Regional Panel of Appellate Judges (South Pacific Forum 1988).
During the PACER–PICTA negotiations there was much discussion about the
form of the dispute settlement mechanism that should be included in the agreement.
One delegation asked ‘[w]hy can’t we just sit around and talk about things—isn’t that
the Pacific Way?’ The Deputy Secretary-General of the Forum gently advised Forum
members, though, that ‘[w]hen we haven’t had these things we’ve got into trouble in
the past and been caught with our pants down’. Without the rule of law and formal
dispute settlement mechanisms there is no safety net when the Pacific Way fails, as
the war in Bougainville demonstrates.
A contrast with CARICOM is again useful. The Preamble to CARICOM’s Dispute
Settlement Protocol states that members are
…convinced that an efficient, transparent, and authoritative system of
dispute settlement in the Caribbean Community will enhance the economic,
social and other forms of activity in the CARICOM Single Market and
Economy, leading to confidence in the investment climate and further
growth and development (CARICOM, Protocol IX).

There is no ambivalence like that seen in the Forum; rather, there is a clear
understanding that regional integration depends on, and benefits from, authoritative
dispute settlement. In 2003, the Caribbean Court of Justice entered into force
(Carrington 2003). This is what the Forum must work towards if it is to achieve
substantive regional integration.
During the PACER–PICTA negotiations, Forum island countries did become
interested in a dispute settlement mechanism when it came to the level and type of
technical assistance Australia should provide. Forum island countries will accept
dispute settlement, then, when there is something in it for them. However, dispute
settlement is about rights and obligations. Australia rightly blocked that particular
mechanism because it did not involve reciprocal obligations.

Precedent
The European Court of Justice has been central to the development of the European
Union, speeding economic integration, promoting democracy and protecting individual
citizens. European regional order is as much the result of case law as treaty law
(Tridimas 1996).

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The Treaty of Rome declared that the European Community was to be based on
free trade in goods. Yet it was the Court of Justice that converted principle into
practice, in the 1963 landmark case Van Gend en Loos,2 rejecting the argument
that the Treaty was only about governing relations between nation-states. Rather, it
found the Treaty was about establishing a community legal order, where the rule of
law covered individual citizens as well as national governments. The Court held that
the importer who challenged a customs assessment in their national court could
rely on the Treaty provision prohibiting increases in customs duties (Keeling and
Mancini 1994).
The European Court of Justice has often rescued the integration effort in Europe
from the bureaucrats. At one point, the European Commission was bogged down in
establishing technical regulations to facilitate exports. The Court of Justice trumped
this laborious procedure by establishing that any good that could be legally sold in
one Community member could be legally sold in any other Community member
(Laursen 1999).
The European Court’s body of law rests on two doctrines. The first is the doctrine
of supremacy, that, where there is a conflict, Community law overrides national law.
The second, an extension of supremacy, is that any form of Community law, whether
intergovernmental treaty or European Commission directive, can create citizens’
rights, which must then be upheld by national courts (see Rinze 1993).
The European Court’s decisions have provided an evolving, but largely consistent,
body of law to give effect to the Treaty. In doing so, the Court has attempted to
extrapolate from members’ national constitutions, as well as being guided by such
catch-all principles as ‘the requirements of sound justice or good administration’
and ‘the common legal heritage of Western civilization’ (Kakouris 1993:542). Given
the diversity of members’ legal systems, it is interesting that the Court’s efforts to
develop a European jurisprudence have been accepted by members.
Through its rulings, the European Court has developed a normative structure
that balances the rights of national governments, companies and citizens. Its work
suggests the importance of a legal institution in sustaining regional order. It has
ensured that protectionist tendencies did not undermine the Treaty, and, at times,
has provided a much-needed impetus towards regional order.

The Oceania legal order
The creation of the Oceania Court would be vital for embedding the rule of law
throughout the Oceania Community. Based on the European Union experience, it
would create a regional legal order, and may assist in promoting better national
regulatory environments. Judges for the Oceania Court would be drawn from all

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members of the Community, and the interplay between the regional and domestic
courts—in terms of referrals and precedents—may help instil a greater commitment to
the rule of law (see Cox 2003). The Agreement Establishing the Caribbean Court of
Justice states, for example, that the Court ‘will have a determinative role in the further
development of Caribbean jurisprudence through the judicial process’ and that
members are ‘convinced of the desirability of entrenching the Court in their national
Constitutions’ (Agreement Establishing the Caribbean Court of Justice, Preamble).
The Oceania legal order would usefully develop existing legal links. Members in
the first phase of the Oceania Community are fortunate to have similar legal
traditions—most are based on the British common law system. Judges from Pacific
countries often sit on the Courts of Appeal of fellow Pacific countries, as occurred
with the Court of Appeal in Fiji following the third coup.3 In effect, Fiji accepted the
judgment of a ‘regional court’ when the Court of Appeal declared the interim
government after the third coup was illegal. Another example of the movement of
judicial personnel around the Pacific is that a retired South Australian judge has
served as Kiribati’s chief justice.
Judicial cross-links are to be welcomed, but the Oceania Community requires a
Court to be the promoter and guardian of the regional integration effort. Proponents
of the Caribbean Court of Justice argued that, given the significance and breadth of
the Caribbean integration agreements,
…it is only to be expected that disputes will arise and it is therefore essential
that the rules of the game be interpreted by one impartial tribunal rather than
by separate courts throughout the fifteen member states (Carrington 2003:6).

To ensure the development of the Oceania legal order and respect for its
decisions, member states of the Oceania Community should enact domestic
legislation ensuring that decisions of the Court can be enforced locally and serve as
precedents for domestic courts. The Oceania Court should also make its judges
available to domestic courts.
The Oceania Court could serve as a Court of Appeal for those countries requesting
it to perform this role, much as the Court of Appeal functioned in Fiji after the third
coup. The Caribbean Court of Justice will perform this function for CARICOM members,
as the Eastern Caribbean Supreme Court has already done for a number of Caribbean
states (see Agreement Establishing the Caribbean Court of Justice, Article 12; and
Rules of Court of the Caribbean Court of Justice (Appellate Jurisdiction), Article 10).4
The Oceania Court would be the first regional court to combine specialist human
rights, trade and environmental chambers in one court, as well as a general
constitutional chamber. 5 Nonetheless, there could potentially be a delineation
between the human rights chamber and the other chambers. In terms of the

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commitments in the initial compulsory single undertaking treaty, Community
members should agree that the judgments of the trade, environmental and
constitutional chambers would be binding. However, an allowance could be made
that the judgments of the human rights chamber would be advisory. As will be
explained below, an advisory human rights jurisdiction can still make an important
contribution. I believe, however, that this compromise may be necessary to make
the Court politically saleable, because of the additional sensitivities about human
rights issues in the Pacific.
I turn now to a consideration of the individual chambers.

Human rights chamber
The American and European human rights courts have both contentious and advisory
jurisdiction. Under the contentious jurisdiction, individuals or states petition the
court for a binding judgment on whether a violation has occurred, and, if so, what
remedies are appropriate. To invest the Oceania Court with a contentious human
rights jurisdiction may be a step too far in the initial phase of the Oceania Community,
even if it is the model for the longer term. The combination of adversarial dispute
settlement (which Forum island countries may be reluctant to engage in) and human
rights issues (sensitive in all states) may imperil the creation of the Court. As
mentioned earlier, it is preferable to start off with a more limited human rights
jurisdiction, in the expectation that it will develop over time.
Thus, the better option would be to invest the Oceania Court with an advisory
human rights jurisdiction. The Inter-American Human Rights Court demonstrates
how an advisory jurisdiction can make a critical contribution to promoting human
rights, and it best exemplifies the approach the Oceania Court should adopt6 (the
International Court of Justice’s rulings are likewise advisory and non-binding). Those
members interested in developing the Court’s contentious jurisdiction could sign an
optional protocol to the compulsory single undertaking treaty.
Under the Inter-American Human Rights Court’s advisory jurisdiction, states may
request a non-binding opinion on the interpretation of the Inter-American Human
Rights Convention, or on the compatibility of any domestic laws with the international
human rights instruments (American Convention on Human Rights, Article 64).7
Additionally, the Organisation of American States (OAS) may consult the Court. The
OAS may only request opinions on matters within its sphere of competence, and
must be able to demonstrate a ‘legitimate institutional interest’ in the matter (InterAmerican Court of Human Rights 1982: para 14). The Inter-American Human Rights
Commission, however, enjoys an absolute right to request advisory opinions (InterAmerican Court of Human Rights 1982).

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The Inter-American Court has a wide ambit in considering requests for advisory
opinions. Like the European Court of Human Rights, the Inter-American Court allows
itself a ‘margin of appreciation’ in order to weigh the circumstances in each case,
with a presumption in favour of exercising its advisory jurisdiction (Dwyer 1990).
The Court ‘must have compelling reasons…before it may refrain from complying
with a request for an opinion’ (Inter-American Court of Human Rights 1981a: para
30) (However, the Court will not accept a matter under its advisory jurisdiction if to do
so will undermine its contentious jurisdiction) (Inter-American Court of Human Rights
1981b). A ruling under the Court’s advisory jurisdiction is not binding on the parties
(see De Abranches 1980; Frost 1992). This is the main point that distinguishes an
advisory judgment from a contentious one, since all the other procedures remain the
same (Dwyer 1990; Inter-American Court of Human Rights 1992).
Inter-American advisory opinions have been accepted willingly by states, possibly
because they recommend action rather than dictate it. The advisory jurisdiction
allows members to make inquiries about human rights law without the stigma of
being declared a violator (Dwyer 1990), diminishing the domestic political cost of
complying with the Court’s judgment. In addition, if a state refuses to follow an
advisory opinion, there is less damage to the regional system than if a binding
decision is ignored (Corbera 1993).
The Oceania advisory jurisdiction may be closer to the ideal of consensual
decision-making favoured by many Pacific states. The experience of other bodies
has demonstrated that states will typically follow advisory opinions, even though
technically they are not legally binding (see Parker 1983; Buergenthal 1982, 1985).
One advantage of an advisory jurisdiction is that it may allow a court to consider
a broader range of issues, and so establish more general normative standards, than
may be possible in a contentious case focusing on the circumstances of one individual
(Peddicord 1984). A judge of the Inter-American Court has written that advisory
opinions allow the Court to ‘deal with many questions that are of great theoretical
importance for the development of human rights law…resulting in a much more
extensive development of the law’ (Frost 1992:194).
Members of the Asia Pacific Forum of National Human Rights Institutions have
already taken a small step towards the creation of a body with advisory jurisdiction,
with their establishment of an Advisory Council of Jurists (Asia Pacific Forum of
National Human Rights Institutions 2004). The Council will provide, on request,
non-binding legal opinions on human rights issues of concern to Asia Pacific Forum
members. Each Forum member nominates a suitably qualified person to serve on
the Council for a once-renewable period of three years (former Chief Justice of the
High Court Sir Anthony Mason was Australia’s first nomination to the Council). Opinions

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provided by the Council remain confidential unless otherwise stipulated by the
relevant Forum member/s.
This model could be transferred to the Oceania Court, although decisions of the
Court, even under its advisory jurisdiction, should be made public. Confidential
procedures are appropriate for the Oceania Human Rights Commission to facilitate
its political work, but public rulings are crucial to the development of a transparent,
credible legal order.
Some states in the region may be suspicious about the Oceania Court if it is
invested with a human rights jurisdiction at all. These fears may be alleviated by
emphasising that only states and the Oceania Community itself would have access
to the Oceania Court’s advisory jurisdiction. A human rights court limited to an advisory
jurisdiction is not the ideal, but it would be a substantial first step in developing a
Pacific human rights jurisprudence. It shifts the focus from political negotiation to
legal procedure, which would in turn reinforce the legitimacy of the Oceania Human
Rights Commission’s political work.

Common market chamber
The normative effect of a common market chamber cannot be underestimated. In
the Caribbean context, it was argued that
…an efficient Caribbean Court of Justice will be the backbone of an efficient
CARICOM Single Market and Economy. Confidence in the court is
indispensable to the proper functioning of the Single Market and Economy
(Carrington 2003:6).

Further, the Caribbean Court would be ‘the custodian of predictability and stability’,
ensuring a uniform application of the regional regulatory framework, and contributing
to a stable regional economic environment (Cox 2003:13). This is consistent with
Adam Smith’s centuries-old argument that a ‘tolerable administration of justice’ is
essential for economic development (Messick 1999:121).
The Oceania Court’s common market chamber would be chiefly responsible for
adjudicating disputes about the agreements on trade in goods, services, investment
and labour. A fifth area is important, however, to ensure that the Oceania trade order
leads to the maximum benefits for citizens—competition law, also known as antitrust or anti-monopoly law.
The creation of the Oceania common market would lead to greater linkages
between companies as they learn to operate on a regional basis.8 This is vital for
Forum island countries’ survival and competitiveness. Nonetheless, large companies
may become monopolies that abuse their dominant position in the market, shutting
out the small to medium enterprises that are a feature of Forum island country

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private sectors. The Oceania Community needs a mechanism to limit the possibility
of abuse. Competition law is the appropriate vehicle for promoting consumer
protection and ‘economic democracy’ (see Gibbons and Mina 1995).
The Pacific presents various national competition issues, given Forum island
country governments’ involvement in their domestic economies. My concern,
however, is not to tackle these national issues in the initial phase of the Oceania
Community. Forum island country governments will be sensitive about any threat to
government-run businesses, and negotiating resources are best directed elsewhere
(although the Oceania Community could usefully offer technical assistance to those
Forum island countries that wish to establish a national competition policy).9
Rather, my aim is to ensure the Oceania Community has jurisdiction over
transnational corporations operating in two or more Oceania members and abusing
their regional market power. Thus the Oceania Court would have a relatively narrow
competition jurisdiction over regional instead of national competition matters. The
European Union draws a similar distinction in its competition jurisdiction between
transnational corporations, which are regulated by the European Union, and smaller
enterprises, which are left to national competition regimes (Jacobs and StewartClark 1990; Gibbons and Mina 1995). CARICOM’s Competition Commission is also
focused on regulating cross-border behaviour (Competition Policy, Consumer
Protection, Dumping and Subsidies, Protocol Amending the Treaty Establishing the
Caribbean Community, Article 30e, Protocol viii).
Since individual Forum island country markets are so small, there is a critical
need for Forum island country companies to band together to achieve greater
efficiencies and, in turn, greater exports. One key example is the situation with
Forum island country national airlines. Maintaining separate national airlines has
often been a costly business for the smaller Forum island countries (Pacific Islands
Forum 2003). Although code-sharing arrangements have rationalised the system
somewhat, there is still an obvious need for a regional airline to achieve greater
efficiencies (Pacific Islands Forum 2003)—hopefully leading to more flights at lower
costs. Nonetheless, such a regional airline would have a monopoly on air transport
in most Forum island countries. Granting the Oceania Court a limited competition
jurisdiction would not prevent such mergers, but would provide a protective
mechanism to ensure the mergers worked in favour of Pacific citizens.10
A monopoly, in itself, is not the problem; the problem is a monopoly abusing its
dominant market position through price fixing, collusive tendering, market or
customer allocation and refusals to purchase or supply goods and services (UNCTAD
2000). Such abuses result in higher prices, less product choice and poorer services,
for consumers and other businesses (Fels 2001b). It is this behaviour that the
common market chamber should be given jurisdiction to deal with.
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The Oceania competition jurisdiction would also streamline one aspect of the
Oceania goods agreement. A country can impose an additional duty where it believes
that overseas producers are exporting at a price lower than what it would have cost
them to produce the good. Australia is a frequent instigator of these anti-dumping
measures, and Forum island countries have often complained about the possibility
of Australia using such measures against them. However, Hosli and Saether state
that anti-dumping investigations and duties tend to protect domestic (in this case
Australian) firms, whereas competition law better targets the anti-competitive
behaviour of foreign firms (Hosli and Saether 1998). In the Oceania Community,
members should forgo anti-dumping investigations against their regional partners,
and instead utilise the Oceania Court to prevent genuinely anti-competitive behavior.
In addition to competition matters and trade in goods, services, investment and
labour, the common market chamber could also be made responsible for dealing
with disputes over customary land, if members would prefer to have a supranational
body rather than a local one adjudicate such disputes.
Environment chamber
The Oceania Community would be incomplete without mechanisms for promoting
environmental care and diversity. An environment chamber would demonstrate
that regional integration is compatible with environmental protection, and would
also demonstrate the Oceania Community’s commitment to sustainable
development.
A trio of agreements provides the Pacific with a reasonably good level of
environmental protection, at least as far as statements of principle and legal
infrastructure go. In 1985, the Forum created the Treaty of Rarotonga, which
established the South Pacific Nuclear Free Zone. The Treaty, entering into force in
1986, dealt with Forum concerns to prevent nuclear testing, storage or dumping in
the region, whilst still allowing nuclear-armed US warships to visit ports in the region.
The same year, the Forum created the Convention for the Protection of the Natural
Resources and Environment of the South Pacific in an effort to control pollution. The
Convention entered into force in 1990, and was further refined in 1995 by the
Waigani Convention, which aims to regulate and minimise transboundary movements
of hazardous and radioactive wastes. The Waigani Convention entered into force in
2001.
With the exception of global warming, these three conventions cover the key
environmental concerns of Forum island countries: nuclear testing, pollution and
waste dumping. Given the number of new agreements that would need to be
negotiated to establish the Oceania Community, there is little point in creating new
environmental agreements. Instead, these agreements should be subsumed into
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the Oceania single undertaking treaty (with some minor amendments to reflect the
fact that the agreements would no longer just cover the South Pacific).
The chief failing of these agreements is in their dispute settlement procedures.
Annex 4 of the Treaty of Rarotonga outlines the complaints procedure in the event of
a dispute. The director of the treaty’s ‘consultative committee’ (which meets only
occasionally) will consider a complaint about, for example, the dumping of radioactive
waste. First, the director must send special inspectors to consider the matter. Second,
the inspectors must report to the consultative committee. Third, the consultative
committee must decide on the truth of the report. Only after this has occurred will
the parties to the convention meet at the Pacific Islands Forum. That is all—there is
no legal muscle; no remedies that can be imposed. Any action will come after political
negotiation at the Pacific Islands Forum. Given the Forum is a meeting of heads of
government, it is reasonable to assume that such a meeting would take some time to
organise, if it occurred at all outside the Forum’s regular annual meetings. This is
hardly appropriate when time is critical in preventing or containing environmental
damage. These provisions do not seriously police breaches of the Convention.
The dispute settlement procedures in the Convention for the Protection of the
Natural Resources and Environment of the South Pacific are slightly more developed.
Under Article 26, and the annex on arbitration, parties can submit a dispute to a
tribunal of one to three arbitrators if alternative dispute resolution has failed. The
tribunal can order interim measures and a final award, but the dispute can only go to
arbitration if both parties agree.
The Waigani Convention on the transboundary movement of hazardous wastes
has similar provisions to the Convention for the Protection of the Natural Resources
and Environment—parties can go to arbitration if they all agree to it. Parties can also
take their dispute to the International Court of Justice—again, if they all agree. Liability
and compensation remains an underdeveloped area of the treaty—Article 12 simply
suggests that the parties should consider appropriate arrangements in these areas.
Under the dispute settlement proceedings in both the latter Conventions, the
tribunals can take up to 10 months to give a final decision. This is unfortunate, given
that environmental damage typically needs to be addressed immediately, not in 10
months’ time when the funds from a tribunal award may become available. Forum
island countries are unlikely to have the resources to address the damage before an
award is made. A more streamlined, standing system is needed to resolve
environmental disputes quickly and effectively.
To raise the profile of these three environmental treaties and give them teeth,
the Oceania Court’s environment chamber should be charged with settling disputes
under the agreements. Quick action is needed in the event of pollution or dumping,

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not long drawn-out procedures to establish an arbitration panel. The environment
chamber of the Court would hear a dispute immediately, and decide on action,
including injunctions. Where environmental damage has occurred, the Court would
be empowered to order remedies and damages.
Investing the Oceania Court with jurisdiction over these three Conventions would
make them powerful instruments to protect the environment. As with the human
rights chamber, the environment chamber’s jurisdiction has the potential to evolve.
In time, for example, it could resolve disputes between Community members over
ocean management, as members become more comfortable with its jurisdiction.

Constitutional chamber
The final chamber of the Oceania Court would be the constitutional chamber, dealing
with those issues that arise from the Oceania single undertaking treaty and its
protocols that are not covered by the other, specialist chambers. The constitutional
chamber would typically deal only with major issues, such as government-togovernment disputes about the nature of their respective obligations. An example
of such a dispute would be if a richer member of the Community failed to meet the
contributions it had promised in the single undertaking treaty. Matters before the
constitutional chamber would involve a sitting of the full Oceania Court.
The Oceania legal order would be incomplete without an appellate mechanism,
so the constitutional chamber would also function as an appellate chamber for
disputes from the specialist chambers, and referrals from national courts.

Standing
The European Court of Justice has developed an impressive body of jurisprudence,
perhaps because such a wide range of institutions and individuals can bring cases.
The European Community, European Community employees, members, national
courts and individual citizens can all approach the Court. Granting standing to a
similarly broad range of institutions and individuals would greatly increase the
Oceania Court’s relevance and its benefit to Pacific citizens.
There are, however, limits, or at least there would be initially. As discussed above,
granting individuals standing to bring human rights complaints through a contentious
jurisdiction may be a step too far in the initial stages of the Community. Granting
standing to transnational corporations to bring cases to the common market chamber
might also be too big a step for some time. NAFTA currently grants investors standing
to commence dispute settlement proceedings against member states, but the image
of a large transnational corporation dragging a small Forum island country to the

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Oceania Court might undermine support amongst Forum island countries for the
Court and even the Community itself. Member states should be able to bring cases
on behalf of transnational corporations, where transnational corporations’ interests
would be subject to wider foreign policy considerations. Thus, transnational
corporations would be permitted to make submissions to the Court in a relevant
case, but would not be able to launch a case in their own right.11
Non-government organisations should also be able to make submissions to the
Court. Conducting open proceedings and providing channels for non-government
organisations to participate would allow civil society to engage the Court in its work.
The Oceania legal order should be big enough to accommodate various briefs and
points of view—after all, the aim of a legal order is to resolve competing points of
view peacefully.
Nonetheless, the Oceania Court should insist that non-government
organisations themselves be transparent in their dealings with the Court. The UN
Conference on Environment and Development, or Earth Summit, set a constructive
standard in this regard. Non-government organisations could participate if they
registered their interest, established their relevance, verified their non-profit and
non-governmental status and provided a copy of their annual report (Burns and
Kakabadse 1994). Non-government organisations should also disclose their
sources of funding, even if they have a non-profit status.12 Where the Court is
considering labour rights, it would be appropriate to relax the non-profit rule so
that governments, unions and businesses could contribute briefs, as occurs at the
International Labour Organization.
The Oceania Court could also take an additional step to ensure the Court reflects
public concerns, rather than just relying on non-government organisations. Four
advocates-general are attached to the European Court of Justice, and their sole
brief is to represent the public interest. This model is drawn more from the continental
system rather than the Commonwealth system, but could be adapted for the
purposes of the Oceania Court. ‘Friends of the court’ might also be needed to assist
individuals in bringing claims against governments.
In keeping with the positive aspects of the Pacific Way, not to mention good legal
practice, potential litigants in most disputes would be required to submit their cases
to alternative dispute resolution before being accepted by the Oceania Court (this is
less appropriate in cases dealing with imminent environmental damage or human
rights problems). Conciliators should be attached to the Court for this purpose.

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Conclusion
An Oceania Court would be essential for promoting the rule of law throughout the
Oceania Community, developing a regional jurisprudence and providing members
with a mechanism for the peaceful settlement of disputes. As the European Court of
Justice demonstrates, and proponents of the Caribbean Court of Justice have argued,
a regional court is the essential guardian of the integration effort. The initial Treaty of
Rome was kept simple, but the European Court of Justice has been able to provide
the detail needed to make the original treaty work.
The human rights chamber, through its advisory jurisdiction, would begin the
process of developing a Pacific human rights jurisprudence. Over time, this may
evolve into a contentious jurisdiction, which would allow individuals standing to
bring their human rights complaints. The common market chamber would assist in
facilitating a stable economic environment in the Pacific through its regulation of
the Oceania common market. Its competition jurisdiction would protect the integrity
of the market by targeting those regional companies that seek to abuse their market
power. The environmental chamber would give teeth to the Forum’s current
environmental agreements, ensuring members could quickly obtain interim
measures to contain environmental damage, and, later, compensation for such
damage. The constitutional chamber would remain the overall custodian of the
integration process, as well as providing the safety of an appellate mechanism.
The reluctance of Forum island countries to embrace formalised, supranational
dispute settlement proceedings will have to be overcome (although their domestic
courts are hardly idle). But this reluctance would change when Forum island countries
appreciate the benefits that the Oceania Community offers them, and appreciate
that the Oceania Court enables them to enforce their rights against stronger and
richer members of the Community. This is entirely realistic: at the global level, the
World Trade Organization allows even its smallest member to take on the United
States and win.
Thus, along with the Oceania Human Rights Commission, the Oceania Court
would play a vital role in fostering the rule of law among member states. Further, it
would interpret and enforce the commitments made in the Oceania agreements, to
the benefit of members and their citizens.
The next chapter considers the complementary measures needed to promote
democracy in the Pacific.

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Notes
1

2

3

4

5

6

7

8
9

10

11

12

The FEMM process has identified the need to improve dispute settlement mechanisms
within Forum island countries (particularly in relation to investment matters), but this
is not the same as proposing a regional mechanism. The 2000 FEMM did propose,
though, that the Forum Secretariat investigate providing Forum island countries with
dispute resolution training (see Forum Economic Ministers Meeting 2000, 2003).
Case 26/62, Van Gend en Loos v Nederlandse Administratie der Belastigen, 1963 ECR
1. The case concerned the tariff re-classification of chemicals.
The Court of Appeal hearing one of the important post-coup cases involved three New
Zealand judges, one Australian judge and one British judge, who was also the Chief
Justice of Tonga (O’Callaghan 2002).
The Eastern Caribbean Supreme Court, established in 1967, is the superior court for
Antigua and Barbuda, Dominica, Grenada, St Kitts-Nevis, St Lucia, St Vincent and the
Grenadines, and three British overseas territories: Anguilla, the British Virgin Islands
and Montserrat.
The Oceania Court should not seek jurisdiction over serious international crimes,
such as breaches of the Geneva Conventions. These matters are more appropriately
handled by the International Criminal Court.
Although the European and Inter-American human rights courts both have an advisory
jurisdiction, the European Court of Human Rights has never issued an advisory opinion,
perhaps because of its advanced contentious jurisdiction and the limited circumstances
in which its advisory jurisdiction can be utilised. The Inter-American advisory jurisdiction
is a better precedent, and its political setting more relevant to the Oceania Community
(Jensen 1983).
A state which is not party to the Inter-American Convention may also consult the Court.
Although a non-party state is yet to take advantage of this measure, such a mechanism
increases the scope for including states not prepared to be part of the regular, formal
mechanisms.
This has been the experience in the Caribbean (see Fairbairn and Worrell 1996).
An optional protocol to the single undertaking treaty should provide incentives to
Forum island countries to liberalise their telecommunications monopolies, as part of
the Oceania e-commerce strategy (see also Chapter Six).
In contrast, the European Union has the power of veto over mergers that may create
monopolies.
In any event, Oceania members and transnational corporations can always utilise the
World Bank’s International Centre for the Settlement of Investment Disputes if they
wish to deal with each other directly.
If this standard of establishing relevance proved too elastic and led to a flood of nongovernment organisations making submissions, the standard could be raised to the
UN Economic and Social Council one of technical expertise.

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11

Democracy

Democracy has proven a consistent force for security and sustainable, equitable
development. Democracy should be an integral part, then, of Pacific regional order.
An institution is needed that engages Oceania citizens in their regional polity,
demonstrating the benefits of collective political action in tackling the challenges
confronting the Pacific. Ensuring democratic values are embedded in the Oceania
political order from the outset would produce a transparent, sustainable regional
order (World Bank 1994; Iqbal and Jong-Li You 2001; Gradstein and Milanovic
2002; Dethier and Hafez Coli 1999; Garton-Ash 1998; Dettke 1994; Elman 2000).
This chapter outlines the issues surrounding the creation of an Oceania
Parliament. After considering the rationale for an Oceania Parliament, the European,
Nordic and Caribbean models for a regional parliament are considered, as well as
two previous proposals for a Pacific Parliament. The proposal for the Oceania
Parliament is then put forward, and consideration given to the issues of powers,
voting rights, the level of representation from each country and topics for deliberation.

Oceania democracy
An Oceania Parliament, and the creation of a democratic regional polity, would offer
a number of advantages.
First, if Pacific regional order is to work, Pacific citizens have to feel directly
engaged in their polity, even if that polity is beyond the nation-state. Citizens have to
feel they can influence the Oceania Community’s direction. Supranational
organisations need to have a direct connection with ‘the person on the street’, but
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many citizens currently regard international bodies and their representatives as
overly distant (Kerr 2001; Nordic Council of Ministers 2000). In contrast, a regional
parliament would ensure that the various Oceania Community institutions are publicly
accountable for their actions.
Second, there is the need to address the challenges to democracy in various
Pacific states. Huntington predicted in 1968 that ‘if the social conflicts and problems
facing a society grow but their political institutions prove unable to adapt, the result
may be political instability and even degeneration’ (Huntington 1968; Berman
1997). One of the key problems in the Pacific, especially in Forum island countries,
is that national political institutions are often seen as weak and unresponsive
(Berman 1997). This may be due to a lack of national cohesion (Henningham 1995),
the effects of economic globalisation,1 or the inherent limitations of size. The Pacific
needs new structures, then, to overcome scepticism about the capacity of the
democratic process to produce solutions (Latham 1998). New forms of citizenship
are needed and a vote in a supranational organisation may be part of the answer.
Third, the Oceania Parliament should also play a vital part in ensuring the Oceania
Community successfully reflects the concerns of civil society (Carrington 2000).
Strong democratic political institutions are important for a viable civil society—they
channel conflict, and provide a forum for the oppressed and their representatives
from non-government organisations (Berman 1997). In 2004, Forum Leaders noted
the need to ‘strengthen Forum engagement with civil society…One option could be
for civil society to organise a forum just prior to the Leaders’ meeting’ (Pacific Islands
Forum 2004a: para 12). A regional parliament would be a better mechanism for
increasing engagement.
Some non-government organisations, such as trade unions and business
organisations, have a considerable impact in the domestic sphere. Some, such as
Amnesty International and the World Economic Forum, have a considerable impact
at the global level. The Oceania political order would create a ‘shared space’ where
domestic and international non-government organisations could operate,
simultaneously taking a broader view than is possible at the national level, and a
more intimate view than is possible at the global level. The Oceania Parliament
would give these organisations a forum to channel their concerns, or to seek direct
representation. The environmental movement, for example, has made effective
use of the European Parliament to voice its concerns (Smith 1999). Former New
Zealand Prime Minister and WTO Director-General Mike Moore has compared the
movement toward regional structures to the creation of trade unions in the nineteenth
century: ‘[j]ust as citizens get together on a national basis to elect governments,

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form trade unions, establish consumer and civil rights, we must now move forward
in a quantum jump and think regionally’ (Moore 1982:60).
Fourth, the links between Australia and Forum island countries are currently
largely centred on aid and economic issues. To establish an Oceania community,
this needs to broaden out into social issues and the sharing and merging of cultures.
The Oceania Parliament, as a voice for local concerns and interests, would be a
mechanism to promote substantive cross-cultural dialogue. Perceptions of neocolonialism in the Oceania Community would be avoided, too, if Forum island country
representatives shared authority with representatives from richer countries in a
democratically governed regional institution.
Fifth, the Oceania Parliament would have an important role to play in explaining
how some of the Oceania Community’s other mechanisms—such as the common
market, monetary integration and security mechanisms—would affect citizens. As
Edwin Carrington, the CARICOM Secretary-General, exhorted representatives of the
Caribbean Assembly
…you are a vital conduit to the people of this region in whose name we
make decisions. You understand their concerns, you reflect their views
and you take back to your constituencies an understanding of the main
workings and issues of CARICOM and how these affect the daily lives of
people (Carrington 2000).

Finally, the Oceania Parliament would provide a mechanism for constructively
managing frustrations and conflicting points of view. It may be that the Parliament
produces reactionaries who are not in favour of the Oceania Community and will
actively campaign against it. Likewise, Indo-Fijians and Australian Aborigines might
be elected and voice concerns about their respective national governments. Such
input is vital. The Oceania Community must be able to demonstrate the institutional
morality and maturity to deal with difficult issues in non-violent ways.
These potential advantages are beyond what the Pacific Islands Forum is capable
of providing at the present, with its low profile and ministerial delegates. As it currently
functions, the Forum does not provide the political guidance necessary to ensure
the success of the Oceania Community. Nor does it provide a political space for its
citizens. Its meetings take place behind closed doors; it issues Communiqués rather
than resolutions; and it excites little interest among Pacific citizens. Few Pacific
citizens would be aware of the Forum. In contrast, 91 per cent of Nordic citizens are
aware of the Nordic regional parliament (Nordic Council of Ministers 2000). If the
Oceania Community is to promote democracy and win the support of its citizens, a
new structure is needed.

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The European model
The father of European regionalism, Jéan Monnet, was not concerned about popular
opinion. Indeed, he sought to avoid it, and to instead establish and maintain an élite
consensus around the need for economic integration (Holland 1993; Ball 1996).
Democratic participation was not a consideration, and so began the seeds of Europe’s
current democratic deficit.
Even if creating a democratic regional polity has never been at the forefront of
the European integration effort, the European Parliament has nonetheless continued
to evolve. The initial treaty created a Consultative Assembly, with membership drawn
from national parliaments. The first direct elections for the Assembly occurred in
1979, and the Single European Act of 1986 renamed the Assembly the European
Parliament. European citizens have also been granted the right to petition their
Parliament directly, giving them a stake in their governing body.
The Maastricht Treaty granted the European Parliament the power of co-decision
with the Council of Ministers over many of the issues involved in the integration
process (Mancini and Keeling 1994). Two readings of legislation occur, by both the
Parliament and the Council, with the effect being that the ‘assent’ of Parliament is
required to pass new legislation (Cussick 1989). Yet co-decision does not give
Parliament the final say in the legislative process—all legislation must still be approved
by the Council (Raworth 1994). Perhaps the Parliament’s greatest current power is
to refuse to endorse a new European Commission (those who head the European
Union bureaucracy). In mid 1999, the Parliament was able to force the Commission’s
resignation, demonstrating it had at least one powerful mechanism for protest (The
Economist, 27 March 1999; Graff 1999). Thus, the co-decision and endorsement
procedures ensure the European Parliament can make a more substantive
contribution to the European debate.
There has been a healthy tension between the Council of Ministers, the Council
of Heads of Government and the European Assembly-Parliament throughout the
European integration effort. This is understandable—members of the Councils are
responsible to democratically elected national governments, and their constituents
have not always been in favour of transferring more sovereignty to regional
institutions. Nonetheless, the Council of Ministers has arguably been overly zealous
in limiting the powers of the European Parliament through much of its history.
Introducing direct elections from the outset of the integration effort and calling
the Assembly a ‘Parliament’, might have done much to involve the peoples of Europe
in the integration process, and assured them of a voice in their regional polity. Since
this did not occur, the turn-out for elections in many countries has been low (Smith
1995), and election results largely reflect how individual national governments are
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tracking in the political cycle rather than a concern to establish a regional polity
(Smith 1999).
The European model demonstrates that the powers of a regional parliament can
evolve (or not) over time, but it is important to allow citizens a direct role in choosing
their regional representation to ensure their engagement and participation.

The Nordic model
The current powers and functions of the European Parliament are representative of
an advanced model of regional order. The Nordic Council provides an alternative
precedent. The Nordic Council is the apex of cooperation between the Scandinavian
countries. The Council was created in 1952 and was the successor to the more
informal Interparliamentary Union. Perhaps similarly to Pacific countries, ‘the
Scandinavians were not interested in setting up a political union as envisaged by the
early federalist members of the Council of Europe’ (Solem 1977:41). The main
purposes of the Council are to further Nordic unity, by facilitating a regional approach
to problem solving; to ensure Nordic integration has parliamentary oversight; and to
promote political cooperation with ‘strong popular anchorage’ (Nordic Council of
Ministers 2001:8).
In many respects, the Nordic Council has the functions and form of a national
parliament, but not the powers, because its motions perform a normative, but not a
binding, function (Solem 1977). The Council has 87 members, drawn from members
elected by the parliaments of member states, following nomination by their respective
political parties (Nordic Council of Ministers 2001). Delegates from national
parliaments serve a one-year term, and can be re-nominated.
The Council meets annually for 7–10 days, and also arranges theme sessions
for a comprehensive treatment of selected issues (Nordic Council of Ministers 2001).
The Council has five standing committees: the Culture and Education and Training
Committee (specifically designed to promote Nordic community), the Welfare
Committee, the Citizens’ and Consumer Rights Committee, the Environment and
Natural Resources Committee, and the Business and Industry Committee (Nordic
Council of Ministers 2001). These meet several times each year, and are designed
to relate to the committees in members’ domestic parliaments (Nordic Council of
Ministers 2001). The prime ministers of the member states meet frequently
throughout the year to plan the main sessions and to coordinate foreign and security
policy.
A motion at a session of the Nordic Council passes through the familiar legislative
stages: first reading, consideration by a committee, and second reading. Sessions
are open to the public, in contrast with those of the Pacific Islands Forum. The
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Council has extensive follow-up procedures once a motion has been passed—
governments report to the next session on the action they have taken on the motion,
and the Council may continue to raise a matter until satisfied that it has been
resolved. The Nordic Council’s inability to pass binding legislation has not
undermined its effectiveness. Regardless of their status in law, there is considerable
media interest in the Council’s resolutions, and governments are potentially exposed
to parliamentary and interparliamentary criticism (Solem 1977). In a comment with
resonance for the Oceania political order, Solem suggests that
…it could well be that the positive spirit with which the Nordic Council generally
operates is partly caused by the fact that the organisation is not equipped
with what would seem to be the needed supranational authority…the present
careful, step-by-step functional method of cooperation and coordination has
added to its positive spirit (Solem 1977:49).

This coincides with my vision for the Oceania Parliament—its strengths would be in
its profile, powers of persuasion and normative value, but it would not be invested
with the power to override democratically elected national governments.

The CARICOM model
The Assembly of Caribbean Community Parliamentarians was created in 1994, to
ensure the achievement of a viable Caribbean Community (Carrington 2000). Its
goals are ‘to provide a forum for people of the Community to make their views
known through their representatives’ (CARICOM 1989: Article 4b) in order to
stimulate greater public awareness in the regional integration process (Carrington
2000); and to encourage common policies on foreign affairs, and economic, social,
cultural, scientific and legal matters (CARICOM 1989: Article 4).
Each member state has four representatives, and representatives are drawn
from government and opposition members of national parliaments (CARICOM 1989:
Article 3). The Assembly can make recommendations to any CARICOM institution and
adopt resolutions on any matter related to CARICOM’s key treaty (CARICOM 1989:
Article 5). The Assembly may not consider matters that are exclusively within the
domestic jurisdiction of members (CARICOM 1989: Article 5.4). The Assembly’s
resolutions are not legally binding; but its deliberations follow the form of a domestic
parliament (CARICOM 1989: Articles 5.3, 6 and 7) and its resolutions have normative
force. Assembly meetings are meant to occur at least annually, and the Assembly can
establish various committees to advance its work (CARICOM 1989: Article 6, 5).
The Caribbean model usefully demonstrates the commitment of a group of small,
developing states to the ‘democratisation of the regional integration movement’
(CARICOM 2000)—a vital precedent for Pacific states.

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Previous Pacific models
The New Zealand Labour Party first proposed a Pacific Parliament as part of its election
platform in 1969 and 1972 (Moore 1982). In 1979, Jack Ridley, a New Zealand
parliamentarian, developed the first detailed proposals for a South Pacific federation
and parliament; these were further refined in 1989. Ridley argued a federation was
needed ‘to resist a likely economic takeover by Australia, to protect New Zealand’s
national identity, to unify and protect the South Pacific area and to ensure its orderly
development’ (Ridley 1989:13–14). Ridley believed there was ‘a need for executive
authority at the highest level’ and this would not come about ‘without bringing together
the South Pacific nations in an orderly manner’ (Ridley 1989:26). New Zealand was
being ‘swamped’ by Australia, so new structures were needed to enhance New
Zealand’s sovereignty in a wider structure (Ridley 1989:14). It is easy to imagine
Forum island countries empathising with this fear of being swamped.
Mike Moore advocated a Pacific Parliament in 1982, taking up Ridley’s theme:
‘it will be to New Zealand’s advantage to politically dilute what could be economic
dominance from Australia’ (Moore 1982:26). Moore’s model was for a parliament
that would consider any issue of economic, social and political significance to the
region. He believed it would be an improvement, too, on the Pacific Islands Forum,
which represents governments, not parliaments (Moore 1982). Such a parliament
would be ‘an investment in closer economic, political and social relations between
the Pacific Islands, Australia and New Zealand’ and would facilitate better use of
scarce resources (Haas 1982:5).
Moore largely followed the Nordic Council precedent in producing his model for
a Pacific Parliament. He believed that membership of a national parliament should
be a prerequisite for Pacific Parliament membership because it committed each
parliament and each political party. Moore argued that the ‘commitment of the
various political forces to this regional entity is fundamental, otherwise the Pacific
parliament would stay, as far as the people were concerned, a remote club without
accountability to the people, and then not directly accountable to each Parliament’
(Moore 1982:43). Although concerned about accountability to the people, Moore
did not propose direct elections.
Ridley and Moore worked from different assumptions in deciding on the number
of representatives each member of the regional polity should enjoy. Ridley’s 1979
proposal consisted of a federation made up of 62 representatives: five from each
state of Australia and the North and South Islands of New Zealand; three from
Papua New Guinea; two from Fiji, Solomon Islands, Samoa, French Polynesia and
New Caledonia, and one from Vanuatu, Tonga and the Cook Islands (Ridley 1989).

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His 1989 proposal consisted of 49 representatives: 24 from Australia; seven from
New Zealand; five from Papua New Guinea; two from Fiji, Solomon Islands, Samoa
and New Caledonia; and one from Vanuatu, French Polynesia, Tonga, Kiribati and
Cook Islands.
Ridley’s models lead to inconsistencies. If his first proposal were implemented
today, Papua New Guinea, with a similar population to New Zealand, would have
only one-third of the representatives of New Zealand. His second proposal involves
calculations about representation based in part on economic weight (including aid
levels). Ridley’s models basically involve various contortions to justify giving New
Zealand as many seats as possible. In both models, he did not consider the very
smallest nation-states worthy of representation—a precedent unlikely to gain
widespread support among Forum island countries. In contrast, Moore proposed a
model with numbers of representatives for each country based on population size
(Moore 1982:45).

The Oceania Parliament
Voting
The Oceania Parliament should combine features from the European Parliament
and the Nordic Council. Perhaps the most critical question is the method of selection
for the Oceania Parliament’s representatives. There are many possible options for
selecting members. Members could be chosen, for example, by national
governments, or as a delegation of parliamentarians.
The most appropriate course for the Oceania Parliament, however, would be for
citizens of Pacific states to elect their representatives directly. In terms of offering
democratic legitimacy, the European Parliament model currently represents the
best example. Direct election would provide the sense of legitimacy needed to
promote democracy and engage Oceania citizens in the Oceania political order.
Pacific citizens are more likely to trust the institutional integrity of the Oceania
Community if they have a direct influence on its direction.
Direct elections would engage citizens in a way that appointment of delegates by
national governments would not. Unlike Europe, the Pacific obviously consists of a
series of islands. One effect of this, from the largest island to the smallest, is that
citizens have not had to think overly much about their neighbours, a luxury not
enjoyed by the many neighbouring countries in Europe. Direct elections for the Oceania
Parliament would help to change this, increasing media interest and engaging citizens
far more deeply in regional issues.2
This focus on a bigger picture is especially important for Forum island countries.
This is because voting in the Oceania Parliament may, conversely, reinforce national
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Democracy

identity in the more fragmented Forum island countries. For example, Liloqula has
argued in relation to Solomon Islands that, ‘[i]f our nation is to remain intact, it must
work hard at uniting people for a common cause…At present, this aspect of nation
building is missing’ (Liloqula 2000:14). In countries where national identity and
cohesion are weak (Henningham 1995), participating in a larger body may force
citizens to think about where their interests lie as a country. This may encourage
citizens to greater identification with their home states, and perhaps also encourage
democratic tendencies at the national level.
One problem with the European political order is that each member state
determines different voting rules for electing representatives to the European
Parliament. This is not a useful precedent for the Pacific, since Pacific states have
many different electoral systems, not all of them appropriate. Consider Fiji. Prior to
independence, a European vote was worth considerably more than an indigenous
Fijian vote (Lawson 1991). Under the 1990 Constitution, an indigenous Fijian vote
was worth considerably more than an Indo-Fijian vote, and the vote of a rural, Eastern
indigenous Fijian considerably more than an urban Fijian or rural Western Fijian
(Lawson 1993).
The Oceania political order should therefore improve on the European model by
having uniform electoral procedures across the region for elections to the Oceania
Parliament. The method for electing national representatives to the Oceania
Parliament should be based on the principle ‘one vote, one value’.3 There should be
no discrimination on the basis of gender, ethnicity, race, social status, wealth or
location. To allow such discrimination would be to betray the principles on which the
Oceania Community, and the Oceania Parliament, should be founded. Although
voting procedures for national elections would remain the business of national
governments, these regional standards (combined with the work of the Oceania
Human Rights Commission) may help, over time, to address the Pacific’s current
challenges to democracy.
It follows from these suggested principles that, unlike some Forum island
parliaments, seats would not be set aside for chiefs in the Oceania Parliament.
Chiefs may run for election along with other Pacific citizens, though, and the
Parliament may over time establish various consultative mechanisms with chiefs.
Voting for the Oceania Parliament should be compulsory. The right to vote should
come with the responsibility to engage in the electoral process and the regional
polity. Compulsory voting would also put the pressure on the Oceania Community
and national governments to ensure that citizens have the opportunity to participate
in the regional elections.
To contain costs, the elections for regional candidates could be held concurrently
with national elections, with the successful regional candidates ‘held over’ until the
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relevant term of the Oceania Parliament commences. Over time, too, the cost of
elections should come down with advances in technology. 4
Oceania citizenship
A critical issue in holding elections is deciding who is eligible to vote. In Europe, only
those who are citizens of the member states are entitled to vote. One problem in
Oceania is that Forum island countries often have stringent and complicated means
of determining citizenship. In Vanuatu, for example, applications for citizenship are
considered by a Citizenship Commission. The applicant needs the testimony of two
chiefs and citizenship may be refused on character grounds, if a member of the
commission knows the applicant’s private affairs are not in order (Hassal 1999).
This means that there may be many people who reside in Pacific states but do not
have national citizenship.
Oceania citizenship should be simpler, and seek to establish a direct relationship
between the Oceania Community and as many citizens within its sphere as possible.
Anyone with the status of a permanent resident in a member state, even if not a
citizen there, would be entitled to vote. National electoral rolls do not list all residents,
but permanent residents could register on a regional roll.
Representation
In the initial phase of the Oceania Parliament, the system of electing national
representatives is to be preferred, so Oceania member states feel a sense of
ownership of the process (the fact that the European Union and the Nordic Council
consist of national representatives has not stopped members forming regional
coalitions along social democrat and conservative party lines) (Nordic Council of
Ministers 2001).
Any method to work out appropriate representation among countries of such
different population sizes will have an element of arbitrariness. I propose
• each member of the Oceania Community, no matter how small, is entitled to
representation in the Oceania Parliament

• a member’s population should guide the amount of representation they enjoy
• members with larger populations should not be granted so many
representatives as to make the size of the Oceania Parliament unworkable.
This means, of course, that representation cannot be in direct proportion to
population. The formula used is as shown in Table 11.1. Thus, in the first phase of
the Oceania Community, representation would be allocated as shown in Table 11.2.
This leads into the issue of length of terms. Nordic Council representatives,
appointed by their respective parliaments, have a term of one year; European
Parliament representatives, directly elected, have a five-year term. The cost of annual
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Democracy

Table 11.1

Formula for representation in the Oceania Parliament

Population

Representation

1–20,000
20,001–100,000
100,001–500,000
500,001–1,000,000
1,000,001–5,000,000
5,000,001–10,000,000
10,000,001–20,000,000
20,000,001–50,000,000
50,000,001–100,000,000
Over 100,000,000

Table 11.2

1
2
3
4
5
6
10
15
20
25

Levels of representation in the Oceania Parliament in the first phase
of the Oceania Community

Member
Niue
Tuvalu
Nauru
Cook Islands
Palau
Marshall Islands
Kiribati
Tonga
Federated States of Micronesia
Samoa
Vanuatu
Solomon Islands
Fiji
New Zealand
Papua New Guinea
Australia
Total

Population
(‘000)
1.65
10.20
12.10
17.80
20.30
54.00
88.10
100.00
112.60
180.00
200.00
500.00
800.00
3,900.00
5,100.00
19,800.00

Representation
1
1
1
1
2
2
2
3
3
3
3
4
4
5
6
10 (soon 15)
51 (soon 56)

Source: Population figures are from Australian Department of Foreign Affairs and Trade, 2004a.
Country Fact Sheets, Commonwealth of Australia, Canberra. Figures are for 2002, or nearest
available year.

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direct elections throughout the Oceania Community cannot be justified, but five
years between elections is too long a period to sustain the necessary sense of direct
involvement and accountability the Oceania Parliament should inspire. A fixed term
of three to four years would be appropriate.
Deliberation
The European Parliament model of year-round deliberations is beyond what is initially
needed for the Oceania Community. The Nordic Council, bearing an element of the
Pacific Way that should resonate with Forum island countries, is the more useful
model, at least in the early stages.
Thus the Oceania Parliament would have an advisory and supervisory role initially—
its value would be normative, coming from publicity and discussion, rather than an
ability to overrule national parliaments or the decisions made by national government
ministers. In the European context, centralists seek binding powers; but, in the
Pacific context, a regional parliament chosen by direct election is a sufficient
beginning, and may evolve over time.
The Nordic Council’s work is grouped around five main areas: culture, education
and training; welfare; citizens’ and consumer rights; the environment; and business
and industry development (Nordic Council of Ministers 2001). At times, the Council
has also considered questions of foreign and security policy and aid assistance. A
similar indicative list for the Oceania Parliament could include trade, particularly
tourism; development, particularly the place of women in traditional societies;
monetary management; the environment; fisheries; legal issues; communications
and technology; regional services (including airlines); and human rights.
Initially, the Oceania Parliament might meet three times a year, for a week or two
at a time, with other work continued in the interim. The Parliament, at least in its
early years, could sit in Australia’s Old Parliament House. Parliamentary committees
and inquiries could be established reflecting each facet of the Oceania Community.
Such select committees could provide a model for sharing regional experience on,
for example, managing public accounts. The Parliament could establish mechanisms
to ensure the proper involvement of civil society in its deliberations, and citizens
could petition the Parliament with their concerns.
The Oceania Parliament would elect a President, who would be a key figure for
promoting the Oceania Parliament within and without the region, and for assisting
with dispute resolution. The Parliament would elect the President with the
understanding that the Presidency would be held by a Forum island country member
of the Parliament at least once every three terms.
The combined effect of these measures would be to establish a viable, dynamic
regional polity, with the potential to promote democracy throughout the Pacific.
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Conclusion
The Maastricht Treaty reaffirms ‘the principles of liberty, democracy and respect for
human rights and fundamental freedoms and the rule of law’.5 To promote these
same values, Pacific states might need to look to establishing political institutions
and structures beyond their borders. An internal focus will not reinvigorate the
faith of citizens in democratic governance and will not forge the social consensus
necessary to preserve the benefits of regional economic integration.
Further, Monnet’s approach to European integration would not work today.
Supranational institutions need to demonstrate institutional integrity from the
outset, and mechanisms for participation. A regional order lacking democratic
legitimacy is less likely to be sustainable, and is certainly more likely to be
controversial. Democratic legitimacy must be a manifest part of a responsive
integration process from the outset. There is a need to increase ‘stakeholdership’,
to involve the public, and not just perceived élites. The Oceania Parliament would
ensure that the Community is seen as having legitimacy and integrity by those it is
meant to serve.
To give effect to these principles, I have proposed that the Oceania Parliament
follow the European Parliament’s system of direct elections, but that its
deliberations should follow the Nordic Council model, where the emphasis is on
normative authority rather than binding legal authority. This will preserve the
legislative powers of democratically elected national governments and ministers.
In terms of representation, I have been guided by Mike Moore’s proposals for a
Pacific Parliament, where the consideration was on population numbers alone,
rather than Jack Ridley’s proposals, which also took into account economic factors.
The Oceania Parliament, particularly if it has direct elections, would engage
the hearts and minds of Oceania citizens and the media, and raise interest in
Oceania issues. It would promote regional democracy and would have the potential
to encourage change in those Pacific states where democracy is challenged.
As absolutely free trade will not commence from year one of the Oceania
Community, so the Oceania Parliament will not be the pinnacle of democracy from
year one. The allocation of legislative power between national and regional bodies
will be a necessary and continuing debate. But the creation of the Oceania
Parliament would signal a commitment to the combined evolution of political and
economic regionalism. The Oceania trade, monetary and political orders would
mutually reinforce each other. With the Oceania Court, the Oceania Parliament
would provide an important normative building block for the Community’s direction.
Deepening the Pacific integration process through the agreements and
institutions needed to promote sustainable economic development, security, the
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Pacific Regional Order

rule of law and democracy is vital if the Pacific is to address its challenges. Yet
widening the integration process will also have a critical role in securing prosperity in
the Pacific, and promoting the Community’s dynamism. The Community’s evolution
is the subject of the next chapter.

Notes
1

2

3

4

5

Reinicke (1997) believes that as globalisation impacts more and more on the internal
sovereignty of nation-states, citizens may feel that the value of their domestic vote is
declining. The power of a domestic vote to shape public policy declines with
globalisation’s impact on internal sovereignty.
See Moore (1982) for a discussion of the European Parliament’s influence in this
regard.
It is not possible to be strictly faithful to the standard of ‘one vote, one value’ across the
region: vastly different population sizes mean that there is necessarily an element of
arbitrariness in determining the sizes of national delegations to the Oceania Parliament.
But this standard must be applied in each national election for the Oceania Parliament.
In twenty years’ time internet or text messaging voting could be a feature of the
Oceania political order, as the rate of internet and mobile telephone penetration in
Forum island countries increases.
Preamble, Maastricht Treaty. Available at http://europa.eu.int [accessed 29 May 2002].

242

Evolution

12

Evolution

Previous chapters have considered the measures needed to deepen the Pacific
integration process to promote the first four goals of regional order successfully.
This chapter discusses the steps needed to widen the integration process to realise
the fifth goal—integration with the wider region.
This chapter first considers the Forum’s current efforts to establish wider relations,
suggesting that a more dynamic approach is needed to address the concerns of
Forum members about being isolated and excluded from other regional groupings
in the Asia Pacific region. A commitment to attracting new members to the Oceania
Community would win the benefits of a larger market and a more secure region, as
well as increasing the Community’s bargaining power within other international
organisations.
Three possible phases in the development of the Oceania Community are
proposed, as well as considering the impact the Community could have in
organisations such as APEC, the World Trade Organization and the United Nations.

The Forum and wider relations
The Forum’s main vehicle for managing relations with non-Forum members is the
Post-Forum Dialogue, created in 1989 to increase the Forum’s international standing
(Tarte 1998). The Dialogue is held immediately after the Forum Leaders’ meeting,
and involves meetings with senior representatives from select non-Forum
governments. Canada, China, France, Japan, the United Kingdom and the United
States attended the first Dialogue. Since then, the European Union (1991), Korea
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Pacific Regional Order

(1995), Malaysia (1997), the Philippines (1999), Indonesia (2001) and India (2002)
have been admitted to the Dialogue process (Australian Department of Foreign
Affairs and Trade 2003b). In 1992, the Forum decided to institute a dialogue process
with Taiwan, but these meetings are held in a different location, and participating
Forum countries do not represent ‘the Forum’ as such (Australian Department of
Foreign Affairs and Trade 2003b).
A dynamic Community
During the PACER–PICTA negotiations, Forum island country representatives
expressed concern about their isolation and the risks of being left behind. Yet the
Forum’s current emphasis on limiting membership to small Pacific islands, rather
than seeking integration with large Pacific islands such as Indonesia, the Philippines
or Japan, is self-defeating. Tsakaloyannis argues that the European Union’s capacity
to enlarge ‘was the most irrefutable proof of its vitality, openness and dynamism’
(1992:184). Rather than limiting their external relations to dialogue and requests
for aid,1 the Forum should confidently seek out integration with the wider Pacific. A
proactive approach to integration would place current Forum members in the centre
of Pacific integration, addressing a key strategic challenge confronting Forum
members, that of isolation from the nascent Asian regionalism.
Wider integration would further promote sustainable economic development,
through secure access to larger markets. Further, it was argued in the European
context that enlargement was necessary to ensure ‘the lasting peace and stability of
the European continent and neighbouring regions’ (Hama 1996:91). This is equally
valid in the Pacific, because the security of the broader region clearly impacts on
current Forum members, as the operations of terrorists in Indonesia and the
Philippines and the movement for self-determination in West Papua demonstrates.
Thus, promoting the goals of sustainable economic development, security, the
rule of law and democracy in the wider Pacific is as important as promoting them in
the parts of the Pacific covered by the Forum. As well, all current Forum members
need the added negotiating weight that is only possible through regional integration
with bigger states. A larger organisation makes for a more powerful sovereignty:
bringing greater resources to solve the problems of members, as well as winning a
more prominent position in the world.
This, then, is why the Oceania Community needs to be a dynamic organisation,
actively pursuing new members. The European Union provides a useful template in
this regard, with its expansion from six to 25 and possibly more members. Table 12.1
lists the current population and gross domestic product (GDP) of the original six European
Union members. Table 12.2 lists the population and GDP of all current European
Union members, highlighting the difference that wider integration has made.
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Table 12.1

Current population and GDP of countries from the first phase of the
European Union
Population
(‘000)
10,300
59,900
82,400
58,100
500
16,100
227,300

Belgium
France
Germany
Italy
Luxembourg
Netherlands
Total

GDP
(US$ billion)
246.4
1,438.8
1,992.1
1,189.0
21.1
419.6
5,307.0

Source: Australian Department of Foreign Affairs and Trade, 2004a. Country Fact Sheets,
Commonwealth of Australia, Canberra. Figures are for 2002.

Table 12.2

Population and GDP of countries from phases one to six of the
European Union

Belgium
France
Germany
Italy
Luxembourg
Netherlands
Denmark
Ireland
United Kingdom
Greece
Portugal
Spain
Austria
Finland
Sweden
Cyprus
Czech Republic
Estonia
Hungary
Latvia
Lithuania
Malta
Poland
Slovak Republic
Slovenia
Total

Population
(‘000)
10,300
59,900
82,400
58,100
500
16,100
5,400
3,900
60,100
10,600
10,000
40,500
8,200
5,200
8,900
700
10,200
1,400
10,100
2,400
3,500
400
38,200
5,400
2,000
454,400

GDP
(US$ billion)
246.4
1,438.8
1,992.1
1,189.0
21.1
419.6
172.9
122.2
1,564.1
132.8
122.2
655.7
204.7
132.0
240.7
10.1
69.5
6.4
65.8
8.4
13.9
3.9
189.3
24.0
22.0
9,067.6

Source: Australian Department of Foreign Affairs and Trade, 2004a. Country Fact Sheets,
Commonwealth of Australia, Canberra. Figures are for 2002.

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Four times as many countries, twice the population and 70 per cent greater GDP
make for a formidable bloc, with considerably more potential to influence
international affairs. Table 12.2 suggests a further point. The combined population
and GDP of the original six members is still considerable. Yet if these countries
recognised the need to pursue a larger market, the security benefits of wider
integration and the advantages of increased bargaining power, how much more
imperative is the need for integration for current Forum members?
The next sections discuss possible phases in the development of the Oceania
Community.
Phase One
In the first phase, the focus would be on transforming the Forum into the Oceania
Community. The Australian Parliamentary Committee (2003), in its proposal for a
Pacific economic and political community, implied that such an organisation could
develop independently of the Pacific Islands Forum. This is always a possibility if a
minority of Forum members or the Forum’s bureaucrats wish to obstruct deeper
and wider integration, but it would be preferable for the Oceania Community to build
on existing Forum institutions and agreements. Any major new international
undertaking will involve vigorous negotiations, but I believe the benefits of integration
outlined in previous chapters should facilitate a constructive approach on the part
of Forum members and officials.
Thus, the Oceania Community should begin life with sixteen members. In addition,
Timor-Leste (East Timor) has already indicated its intention to pursue membership
of the Forum rather than ASEAN. Given its high profile, Timor-Leste would usefully
focus attention on the Oceania Community. Timor-Leste, along with New Caledonia,
has already been granted observer status at the Forum (Australian Department of
Foreign Affairs and Trade 2003b).
This first phase should also include membership offers to the United States’ and
French territories in the region. Forum membership has been understood to be
limited to independent or self-governing small Pacific islands. However, the question
should not be whether a territory has full independence or not. Rather, the issue
should be whether potential new members can take on the obligations of Oceania
Community membership and make a meaningful contribution. For example, if a
territory can run an independent trade policy and accept the disciplines of the Oceania
common market then it should be permitted to do so (for this reason, I do not
propose Tokelau, because it is a non-self-governing territory under New Zealand
administration) (see Secretariat of the Pacific Community 2004). These territories
need to be encouraged to join region-building efforts, in preparation for their possible

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independence. The initial modelling for PACER demonstrated, too, that there would
be substantial benefits from including these territories in any regional trade
agreement (Scollay 1998).
Perhaps the most substantive test of the dynamism of the Oceania Community
would be whether, after this first phase, it could continue to expand. But a road map
of sorts is starting to form for phase two.
Phase Two
Former Indonesian President Wahid initiated the idea of a West Pacific Forum, or
Dialogue, in frustration at ASEAN intransigence (‘Forum offers progress for West
Pacific’, The Australian, 9 December 2000). Wahid’s vision was for a Forum covering
Australia, Brunei, Indonesia, New Zealand, Papua New Guinea, the Philippines and
Timor-Leste (of course, more than half of these countries are already currently
members or are proposing to join the Pacific Islands Forum). According to Wahid,
Australia was to be Indonesia’s key partner in the Forum, assuming joint responsibility
for promoting development in the region (Callick 2001). Wahid also believed the
West Pacific Forum should complement the Pacific Islands Forum. Indonesian
Foreign Minister Alwi Shihab said the Forum would encompass economic, political,
cultural and social cooperation, and would be a good device for ‘face saving’ and
avoiding misunderstandings (‘A welcome thaw’, The Sydney Morning Herald, 9
December 2000; Garran 2000). The idea survived Wahid’s political demise and the
West Pacific Dialogue commenced in 2002, with a meeting of the relevant foreign
ministers (Australian Department of Foreign Affairs and Trade 2004b).
Arguably, the members of the West Pacific Dialogue already have enough
mechanisms for dialogue, through APEC and the ASEAN Regional Forum and various
bilateral initiatives. However, a commitment to pursue meaningful integration beyond
what these existing bodies allow would prevent the West Pacific Dialogue from
falling into disuse. An agenda should be developed for regional integration between
the countries of the West Pacific Dialogue and the Oceania Community. Expanding
the Oceania Community to this degree may be a medium-term prospect, but it is a
worthy goal and would invest the West Pacific Dialogue with substance and energy.
Singapore should also be invited to join the Oceania Community during this second
phase. Singapore already has free trade agreements with Australia and New Zealand,
a general commitment to free trade, and has often expressed interest in deeper
integration than its ASEAN partners are willing to pursue (‘Minister says Asia needs its
own EU’, The Australian, 9 September 2001; James 2000). Singapore’s Senior Minister,
Lee Kuan Yew, has previously expressed support for including Australia and New
Zealand in wider regional groupings (Parkinson 2000; Sheridan 2000).

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Phase Three
Beyond Singapore and the countries participating in the West Pacific Dialogue, the
key remaining country is Japan. Ideally, Japan should join the Oceania Community at
the outset. This would reflect Japan’s constructive commitment to the Pacific since
the 1980s, its desire to be seen as a regional leader, and its aid partnership with
Forum island countries.
In 1987, then-Foreign Minister of Japan, Tadashi Kuranari, visited Fiji to announce
an evolution in the relationship between Japan and Forum island countries. Kuranari
declared
…Japan has sought a post-war new deal. It realises that it cannot be
indifferent to the problems facing the Pacific island nations in the region
it belongs to and therefore seeks…to work with them in contributing to
their development (Tarte 1998:1).

Thus, Japan, along with Australia, is now the leading donor to the region (AusAID
2002). Japan has attended the Post-Forum Dialogue since its inception in 1989,
(Tarte 1998) and has previously expressed interest in membership of the Pacific
Community (Tarte 1998) (the Pacific regional organisation, which is focused primarily
on development assistance: it includes all of the smaller Pacific islands, as well as
former and current colonial powers). It has established a Pacific Islands Centre in
Tokyo, to promote trade, investment and tourism between Japan and Forum island
countries, and hosts regular summits of leaders from Japan and Forum members.2 At
the 2003 summit, leaders signed the Okinawa Initiative committing Japan to deeper
engagements in the areas of security, the environment, education, health and trade.3
Since the 1960s, ‘Japanese scholars and business leaders have led debates
about and proposals for a pan Pacific community’ (Tarte 1998:151). Former Japanese
Prime Minister Masayoshi Ohira promoted a ‘Pacific Basin Cooperation Concept’,
because it would
• promote a wider Pacific view
• promote the well-being of the wider region for the prosperity and peace of
participants, but it would also defuse and prevent future political and economic
problems
• prevent sub-regionalism, and the forming of closed shops among South Pacific
and ASEAN countries (Moore 1982).
The key stumbling block to Japan’s initial participation in the Oceania Community,
however, is its reluctance to embrace completely free trade, particularly in its
agricultural sector (see de Brouwer and Warren 2001; Mulgan 2000). Ensuring
more liberal trade in agriculture with Japan would be of interest to most Forum
members, and any free trade agreement with Japan must include a timetable for

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agricultural liberalisation to comply with WTO rules on free trade agreements. Thus,
Japan could not participate in the Oceania common market from the outset. This
situation should change over time, though, through a succession of WTO rounds and
internal pressures within Japan.
Even if full membership for Japan is a longer-term prospect, commencing
discussions with Japan now would inject greater dynamism into Japan–Forum
relations, and to the prospects for the Oceania Community as a whole. A Japanese
report in 2001 on the Australia–Japan relationship, for example, warned that
‘relations between the two countries may be stable, but there is a possibility the
relationship will become one where both are satisfied with maintaining the status
quo, while having no real interest in each other’ (‘Growth with Japan’, The Sydney
Morning Herald, 1 May 2001). Fukui believes that ‘the last time Japan got excited
about Australia was during the formative years of APEC…Japanese politicians and
academics took great interest in Australia’s role in promoting the new regional body’
(Fukui 2001).4 New proposals for integration would ensure ongoing Japanese
interest and engagement in the region. The prospect of Japan joining may also lead
to heightened Forum island country interest in the Oceania Community proposals,
as they would enjoy greater economic benefits from a larger, developed country
participating alongside Australia and New Zealand.
Some countries, such as Japan, may be interested in joining the Oceania
Community, but be unable to make the necessary commitments from the outset. In
these cases, the Oceania Community should develop a form of associate membership
until such countries join the Oceania Community as full members. This would be
similar to the relationship between the European Union and the Central and Eastern
European countries before these countries became full members of the European
Union. Such associate members could sign ‘Closer Economic Partnerships’ with the
Oceania Community to facilitate trade in goods, services and investment.5 Associate
members would not be represented in the Parliament or the Oceania Forum of Heads
of Government, but could participate in a more substantive form of the Post-Forum
Dialogue: discussions with potential Oceania Community members would obviously
be more dynamic and advanced than discussions with those countries whose role is
limited to donating aid. Associate membership would be a vital first step towards fully
integrating Japan and other potential members into the Oceania common market
and Community in the future.
Table 12.3 provides an overview of the countries proposed for phases one to
three of the Oceania Community, while Table 12.4 lists the population and GDP of the
countries proposed for the first phase of the Oceania Community. The combined
population of the Community in its first phase is over 32 million, and its combined

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Table 12.3
Phase
1

2
3

Possible phases in the development of the Oceania Community

Australia
Cook Islands
Timor-Leste
Fed. States of Micronesia
Fiji
Kiribati
Marshall Islands
Nauru
Brunei
Indonesia

New Zealand
Niue
Palau
Papua New Guinea
Samoa
Solomon Islands
Tonga
Tuvalu
Philippines
Singapore

Vanuatu
American Samoa
French Polynesia
Guam
New Caledonia
Northern Mariana Islands
Wallis and Futuna

Japan

Table 12.4

Current population and GDP of countries proposed for phase one of
the Oceania Community

Australia
Cook Islands
Timor-Leste
Federated States of Micronesia
Fiji
Kiribati
Marshall Islands
Nauru
New Zealand
Niue
Palau
Papua New Guinea
Samoa
Solomon Islands
Tonga
Tuvalu
Vanuatu
American Samoa*
French Polynesia
Guam*
New Caledonia
Northern Mariana Islands*
Wallis and Futuna*

Population
(‘000)
19,800.0
17.8
800.0
112.6
800.0
88.1
54.0
12.1
3,900.0
1.7
20.3
5,100.0
180.0
500.0
100.0
10.2
200.0
70.3
245.4
163.9
200.0
80.0
15.7

GDP
(US$ billion)
398.69
0.08
0.37
0.23
1.60
0.05
0.01
..
58.20
..
0.12
2.90
0.28
0.24
0.14
0.01
0.21
0.50
3.90
3.20
2.70
0.90
0.03

Total

32,473.0

474.36

Source: Australian Department of Foreign Affairs and Trade, 2004a. Country Fact Sheets,
Commonwealth of Australia, Canberra. Figures are for 2002, or nearest year. The source for
figures for countries marked with an asterisk is Central Intelligence Agency, 2004. The World
Factbook, Central Intelligence Agency, Washington, DC.

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GDP is US$474 billion. Table 12.5 lists the same criteria for the countries that have
been proposed for phases one to three of the Community.
Thus, if all these countries became members, the potential population of the
Community (based on today’s figures) is 461 million, and its combined GDP is over
US$4,800 billion. In population, the Oceania Community would be similar to the
European Union, though its GDP is only a little over half that of the European Union.
Nonetheless, such a Community would have considerable negotiating weight.

Table 12.5

Current population and GDP of countries proposed for phases one
to three of the Oceania Community

Australia
Cook Islands
Timor-Leste
Federated States of Micronesia
Fiji
Kiribati
Marshall Islands
Nauru
New Zealand
Niue
Palau
Papua New Guinea
Samoa
Solomon Islands
Tonga
Tuvalu
Vanuatu
American Samoa*
French Polynesia
Guam*
New Caledonia
Northern Mariana Islands*
Wallis and Futuna*
Brunei
Indonesia
Philippines
Singapore
Japan

Population
(‘000)
19,800.0
17.8
800.0
112.6
800.0
88.1
54.0
12.1
3,900.0
1.7
20.3
5,100.0
180.0
500.0
100.0
10.2
200.0
70.3
245.4
163.9
200.0
80.0
15.7
340.8
214,200.0
83,000.0
4,200.0
126,900.0

GDP
(US$billion)
398.69
0.08
0.37
0.23
1.60
0.05
0.01
..
58.20
..
0.12
2.90
0.28
0.24
0.14
0.01
0.21
0.50
3.90
3.20
2.70
0.90
0.03
4.00
173.30
77.90
87.00
3,986.30

Total

461,112.9

4,802.86

Source: Australian Department of Foreign Affairs and Trade, 2004a. Country Fact Sheets,
Commonwealth of Australia, Canberra. Figures are for 2002, or nearest year. The source for
figures for countries marked with an asterisk is Central Intelligence Agency, 2004. The World
Factbook, Central Intelligence Agency, Washington, DC.

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These are, of course, long-term plans. Yet the European Union, with its expansion
from six to 25 to possibly more members, demonstrates what can be achieved
when guided by a clear strategic vision from the outset. Baldwin, for example, has
advanced a domino theory of regional integration, arguing the initial formation of a
bloc will increase the willingness of outsiders to join (Andriamananjara and Schiff
1998; Baldwin 1993).6 What is needed in the Pacific context is the initial strategic
vision, and the ongoing commitment to realising it.

The Community and APEC
APEC was created in 1989, following a proposal from Australian Prime Minister Bob
Hawke (Evans and Grant 1995). It involves meetings of heads of government,
ministers and senior officials. APEC’s main goals are to promote business facilitation,
technical cooperation and trade liberalisation (Australian Department of Foreign
Affairs and Trade 2004c). Its headline achievement in this third area is the Bogor
Declaration (1994), a non-binding commitment by members to work towards free
and open trade and investment in the Asia Pacific by 2010 for developed economies,
and by 2020 for developing economies.7
Having the leaders of all the APEC countries meet annually is useful for international
diplomacy, as the APEC Leaders’ Meeting in 1999 demonstrated when the great
powers of the region settled on an approach to Timor-Leste (Ravenhill 2000). On
current indications, APEC is an effective mechanism for dialogue and trade facilitation,
and for maintaining some normative pressure for trade liberalisation.8
However, initial hopes that APEC would develop into a European Union-type body
were misplaced (see Watson 2002).9 European Union-style integration depends on
legally binding commitments. Yet the APEC Secretariat states that ‘APEC is the only
intergovernmental grouping in the world operating on the basis of non-binding
commitments’ (APEC 2004:1), a curious boast. Further, ‘unlike the WTO or other
multilateral trade bodies, APEC has no treaty obligations required of its
participants…commitments are undertaken on a voluntary basis’ (APEC 2004). The
inclusion of the United States, important for security reasons, meant that APEC
would always be limited to shallow integration. APEC’s initial membership—Australia,
Brunei, Canada, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines,
the United States, Singapore and Thailand—already made it too large and diverse for
deep integration. Since then, Chile, China, Hong Kong, Mexico, Papua New Guinea,
Peru, Russia, Taiwan and Vietnam have also joined.10
The problem for Forum members is that they are currently not engaged in, nor
creating, an organisation that answers the question of ‘what next?’ after APEC’s
shallow integration. The contrast with other APEC members, and their efforts to
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pursue deeper integration in addition to the APEC process, is marked. ASEAN is
pursuing the ASEAN Free Trade Area, as well as attempting to develop more
substantive cooperation with China, Japan and Korea through the ‘ASEAN Plus Three’
initiative; the United States, Mexico, Chile and Peru are pursuing their Free Trade
Area of the Americas; Russia pursues its Commonwealth of Independent States
with former Soviet republics.11 While others are moving forward, it seems naïve for
Forum members to be relying solely on APEC for integration with the region.
I suggest Forum members view APEC as a feeder organisation for those states
that wish to pursue deeper integration through the Oceania Community. This would
be analogous to the relationship between the Council of Europe and the European
Union. The Council of Europe is a wider body, covering some 45 countries. Its chief
achievement is its human rights jurisprudence, but it is also a mechanism for dialogue
on other issues, such as social cohesion, education, culture and the environment.
Its role continues to be important because it covers a wider membership than the
European Union—in the same way, arguably, that APEC is currently important for
involving most Asia Pacific countries in dialogue. Both the Council of Europe and
APEC are useful organisations for states to establish the initial processes of dialogue
and cooperation before committing to greater integration.
Forum members need to create and promote the Oceania Community to other
APEC members as a dynamic, attractive organisation, with sufficient sovereignty to
deliver substantive outcomes for aspiring members. The Community needs to position
itself as the logical next step countries can take when they wish for more than APEC
can provide. Such a situation would bring greater focus to APEC, but would also
increase the chances of the Community integrating with the wider region.

The Community and the world
From its first phase on, members of the Oceania Community should use the organisation
to achieve benefits in global institutions. This is important as a means of addressing
the power imbalances that Forum members, particularly Forum island countries, suffer
in their international relations. Andriamananjara and Schiff argue that
…because of their weak bargaining power and high fixed costs of negotiation,
microstates are at a severe disadvantage in dealing with the rest of the
world. They do not have the human and physical resources to unilaterally
conduct the various bilateral and multilateral negotiations a developing
nation typically conducts (Andriamananjara and Schiff 1998:i).

They suggest two key advantages of regional integration to address these issues—
reduced negotiating costs and increased bargaining power in dealing with the rest of
the world, in part through increased market power. They further suggest that
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integration between developing countries may also attract more aid, because the
donor community can ‘deal with the group as one entity rather than deal individually
with each single country’ (Andriamananjara and Schiff 1998:4).
CARICOM again provides a useful model in this regard. Integration was ‘intended
to equip the region, an English-speaking enclave in a largely Spanish-speaking area,
with a more powerful voice and presence to defend its interests in international
affairs’ (a situation not dissimilar to the position of the Forum in the wider Asia Pacific)
(Andriamananjara and Schiff 1998:28). Andriamananjara and Schiff believe that by
pursuing regional integration, CARICOM countries have ‘succeeded in making their
voices heard on a variety of issues in a way none of them could have done alone’
(Andriamananjara and Schiff 1998:i). CARICOM has been particularly active in
• negotiating preferential access to the European and North American markets
• obtaining more aid
• winning a heightened profile for the Caribbean in multilateral institutions, to
voice the concerns of CARICOM members on economic, environmental and
security issues (Andriamananjara and Schiff 1998; Byron 1994).
By trading support, CARICOM countries have also succeeded in having their nationals
elected to leadership positions such as the Commonwealth Secretary-General and
ACP Secretary-General (the group of developing countries that negotiates with the
European Union on trade access and aid) (Andriamananjara and Schiff 1998).
Other regional organisations have also found benefit in developing common
positions. The Nordic Council, for example, has found regional cooperation assists in
‘achieving influence at the international level while at the same time safeguarding
national interests’ (Nordic Council of Ministers 2001:8). In the European Union context,
the Single European Act of 1986 emphasises the ‘responsibility upon Europe to aim
at speaking ever increasingly with one voice and to act with consistency and solidarity
in order more effectively to protect its common interests and independence’ (Single
European Act, Preamble; see also Article 30.2d). The European Union’s common
commercial policy makes it the world’s largest trade bloc (see European Commission
1999; Fontaine 1995). Thus, along with the United States, it is one of the two major
players in the WTO. Its bargaining power gives it the ability to demand new liberalisation
of other WTO members whilst maintaining protection of its own market, in a way that
would be unachievable for any individual European Union member. 12 Although
individual European Union members maintain their own aid programs, the size of the
European Union’s common aid program gives it considerable scope to exercise soft
power among the world’s developing countries. 13 Notwithstanding the
encouragements in the Maastricht Treaty, the European Union does not yet have a
common foreign policy, as its divisions over the 2003 war in Iraq demonstrated.14

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This, however, should not disguise the fact that European Union members work to
develop common positions on many UN issues (see Brückner 1990).
Thus, the Oceania Community should develop joint positions in international
fora, and support each other in having representatives elected to international
bodies.15 This has advantages for Forum island countries. As is apparent from the
CARICOM experience, Forum island countries would collectively have a more
powerful voice in international settings through the Oceania Community than any
individual member would enjoy. In 1999, the Deputy Prime Minister of Vanuatu,
Willie Jimmy Tapaga Rarua, said
[t]here is a growing conviction among Forum island countries that regional
economic integration will form a sounder basis for the negotiation and
promotion of regional interests in multilateral trade fora. This is not to
mention that such a collective grouping would simultaneously act as a
vehicle, which ensures that our voices are heard clearly and in a more
acceptable fashion at international meetings (Rarua 1999:3).

This would avoid the situation that occurred at the first APEC meeting—the Pacific
Islands Forum was invited to send an observer, but no individual Forum island
countries were invited (South Pacific Policy Review Group 1990).
Yet larger members such as Australia and New Zealand would also enjoy
advantages through the exercise of a wider sovereignty. New Zealand’s Ministry of
Foreign Affairs states
[t]he total number of Pacific states in the UN (including Australia and New
Zealand) now numbers 14...their support in multilateral organisations is
often of key importance in achieving our objectives. We cannot take this
support for granted, but we can continue to develop a tradition of partnership
and of shared interests which are likely to be conducive to securing this
support when it is required (New Zealand Ministry of Foreign Affairs and
Trade 2001).

Thus, all Forum members would benefit from developing common positions in the
United Nations. However, Australia and New Zealand are currently hamstrung in the
United Nations by their membership of the Western European and Others electoral
group. Appendix 4 suggests various UN reforms to address this situation and further
promote the interests of the Oceania Community.
The Oceania Community could also work to develop common positions among
members in the WTO. Even if the Oceania Community does not have the weight of
the European Union in its first phase, the Uruguay Round of global trade negotiations
presents a good example of coalition-building among less powerful nations. Australia
established the Cairns Group of 17 agricultural trading nations, which became the
third force in the trade negotiations behind the European Union and the United

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States (Keating 2000; Evans and Grant 1995). The group succeeded in having
agriculture included in GATT negotiations for the first time, resulting in a significant
reduction in the barriers to trade in agricultural products (Keating 2000; Evans and
Grant 1995). Since the WTO operates on a consensus-basis, a committed bloc of
countries can do a great deal to advance their mutual interests.

Conclusion
This chapter has considered the steps that should be taken to widen the Pacific
integration process, suggesting that ultimately the South Pacific, West Pacific and
North Pacific integration processes should be merged. Widening the integration
process would signal the dynamism and confidence of the Oceania Community, as
well as winning the benefits of larger markets, a more secure region, and a greater
presence in international fora such as APEC, the WTO and the United Nations. If fully
realised, the Oceania Community would be promoting a secure and prosperous
region for some 460 million people.
In terms of the impact of these proposals on the single undertaking treaty, there
should be a provision stating that a majority of Community members can approve
the accession of a new member, provided the new member can meet the terms of
the treaty. The treaty would also express the desirability of members working together
in other international fora.
It may be that the Oceania Community does not evolve in the way proposed
here; or that some other Asia Pacific structure evolves where members finally
embrace binding legal commitments, and the Oceania Community becomes a subset of this wider structure. The Oceania Community would still be a worthwhile
initiative if it successfully promoted the first four goals of sustainable economic
development, security, the rule of law and democracy among the current 16 members
of the Pacific Islands Forum. The Nordic Council, for example, is a vibrant, active
regional grouping, even though three of its members belong to the wider European
Union.
Yet, for as long as other regional groupings in the Asia Pacific exclude Forum
members, the Oceania Community should pursue a dynamic agenda designed to
attract new members, so that the Community comes to cover more and more of the
Pacific. Thus, the fifth goal of Pacific regional order—integration with the wider region—
will remain a vital one for the foreseeable future.

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Notes
1

2
3

4

5

6

7

8

9

See the Sixteenth to Eighteenth Forum Communiqués (South Pacific Forum 1986–
88), where the emphasis is on establishing ‘a dialogue with Japan with a view to
obtaining further assistance’. See also Tarte (1998).
This is the Pacific Islands Leaders Summit (PALM), held every three years.
The security initiatives, for example, will include efforts to reduce regional tensions,
combat terrorism and address internal instability, through the collection of small arms,
infrastructure rebuilding, vocational training for ex-combatants and involuntarily
displaced people, and law enforcement programs (Australian Parliamentary Committee
2003).
Shanahan suggests that ‘Japan wants Australia to be more active in the region, less
hesitant and to take a longer-term view. Specifically, the Japanese want Australia to put
more effort into making existing groups, particularly APEC, more effective and to
enliven the Australian-Japanese relationship’ (Shanahan 2002).
To comply with the WTO rules on free trade agreements, such partnership agreements
could not contain schedules for liberalisation.
In addition to the European Union, Baldwin cites the example of integration between
Argentine and Brazil, which Uruguay and Paraguay then wanted to join; and integration
between the United States and Canada, which Mexico joined (and this latter arrangement
may yet become the Free Trade Area of the Americas). Dent refers to ‘the magnetic pull’
of the European Union. He believes countries are motivated to join the European Union
to win: improved access to European Union markets; membership of the world’s largest
trading bloc; the opportunity to directly influence European Union policy and law; and
economic assistance. This latter factor is further discussed in Dent (1997).
Beeson questions how politically realistic this scenario is: ‘for ten years—and two US
electoral cycles—the “developing nations” [particularly China] will have free access to
the markets of the US without the necessity or the guarantee of immediate or even
eventual reciprocity…in the event of this fairly unlikely scenario being realised, there is
no guarantee that such exemplary conduct will be repaid as none of the APEC
commitments are binding or subject to sanctions in the event of non-compliance’
(Beeson 1995:11).
Even APEC proponents have noted that reductions in trade barriers by APEC members
‘are principally a result of individual APEC member economies choosing, through both
multilateral trade negotiations and unilateral action, to liberalise their trade and
investment regimes’ (Australian Department of Foreign Affairs and Trade 2000:14). A
former chair of the APEC Eminent Persons Group admitted that there was ‘no hard
evidence to date that any APEC country has taken additional liberalisation steps solely
due to APEC’ (Ravenhill 2000:323).
ASEAN and other participants made it clear that APEC was not to develop into a
negotiating forum, and that any agreements would be informal: there would be no
legally binding commitments. Further, APEC’s ideal of ‘open regionalism’, whereby
reductions in trade barriers by APEC members are passed on to all WTO members, is a
distinct contrast to European Union-style integration (Elek 1996b; Rudner 1995).

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10

11

12

13

14

15

Notwithstanding this membership, the APEC Ministerial Statement on Membership
(1997) suggests that APEC ‘will remain limited in size both on account of its Asia
Pacific character and because of the need for the group to remain manageable and
effective’.
Given such developments, Ravenhill’s description of APEC ‘as a trans-regional rather
than a regional body’ seems apt (Ravenhill 2000:329).
Through much of the Doha Round, for example, the European Union demanded the
negotiation of new rules on competition and investment, whilst resisting the reduction
of its agricultural subsidies.
As discussed in Chapter Three, the impetus for a free trade agreement among Forum
island countries came about because of the dictate of the distant but powerful European
Union.
Article I(B) of the Maastricht Treaty encourages ‘the implementation of a common
foreign and security policy including the eventual framing of a common defence policy’.
Available at http://europa.eu.int [accessed 29 May 2002].
Already, Forum Communiqués do occasionally note support for Forum nationals’
campaigns in efforts to win, for example, a place on the UN Security Council, or the
position of President of UN General Assembly.

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13

Forging
regional order

Any change effort involves three essential steps (Backhard and Pritchard 1992).
The first involves identifying the need for change. The second involves creating an
attractive alternate vision of the future, promulgating the guiding philosophy of the
vision and the detailed plans required to realise it (Collins and Poras 1991). The
third step is implementing those plans.
This concluding chapter begins by re-considering the first step, namely identifying
the need for change in the Pacific context, by revisiting some of the salient features
of the present state of the Pacific. Next, I return to the importance of a strategic
vision for the Pacific, and the need for a guiding philosophy that will enable the
Pacific to address its challenges and realise an attractive alternative future. The
chapter reviews the detailed plans that have been proposed and how they meet the
five goals of regional order, promoting sustainable economic development, security,
the rule of law, democracy and integration with the wider region.

Identifying the need for change—the present state of the Pacific
Chapters Two to Four considered various aspects of the present state of the Pacific.
Chapter Two analysed some of the Pacific’s current challenges to regional order: the
failure in most Forum island countries to implement the policy settings needed to
realise sustainable economic development; the dangers of failing states, internal
conflicts and transnational actors taking advantage of states with weak central
authority; the failure amongst most Forum island countries to commit to the rule of
supranational law, notably the key human rights instruments, and the egregious
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breaches of domestic law in some Forum island countries; the challenges to
democracy in some Forum island countries; and the failure of Forum members to
address adequately their isolation from regional integration around the world,
particularly in the wider Pacific region.
Abraham Lincoln once said that ‘if we can know where we are and something
about how we got there, we might see where we are trending—and if the outcomes
which lie naturally in our course are unacceptable, to make timely change’ (quoted
in Thompson and Strickland 2003:328).
After some years of researching and working on Pacific issues, I do not know of
anyone who is arguing that the Pacific’s present trends are acceptable. There may
rightly be disagreement on the solutions, on the role Australia can usefully play in
encouraging change, and on where the responsibility for fixing the problems lies
between individual states and the international community, but there is widespread
recognition of the need for change.
It is particularly noteworthy that two key actors have recognised the need for
change: Australia, and the Pacific Islands Forum, as discussed in Chapters Three
and Four. A third key actor, New Zealand, has long been a fruitful source of ideas for
promoting Pacific integration.
In 2003, Australian policymakers realised that the ‘hands-off’ approach to Pacific
policymaking was no longer working, and, indeed, constituted a threat to Australia’s
substantial Pacific interests. Prime Minister John Howard said ‘[a] number of our
friends in the Pacific are experiencing economic collapse, corruption and lawlessness
to a degree which threatens their very sovereignty…Our friends and neighbours in
the Pacific are looking to us for leadership and we will not fail them’ (Howard
2003a:1). The most obvious manifestation of Australia’s new approach was its
Solomon Islands intervention. After previously resisting any Australian role in
Solomon Islands, under the new policy of cooperative intervention, 2,250 Australian
police, military and civilian personnel were deployed.
Yet, throughout various phases of its Pacific relations, Australia has been focused,
often solely, on promoting the goal of security. This narrow approach has risked
antagonising Forum island countries, and has mostly failed to address the internal
causes of instability and regional disorder. These dangers are apparent in the current
cooperative intervention phase. Australia is the key actor in the Pacific, and the
pursuit of regional order requires Australian leadership and resources. Australia
cannot, however, lead change from ‘outside’ the region. It can be a catalyst for
change in the Pacific, but it must be an integral, intimate partner in the change
effort, and this demands a new phase in Australia’s Pacific relations.

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For much of its history, the Forum has avoided regional initiatives that would
impact on members’ internal sovereignty, as some members have ignored or resisted
the possibilities of deeper and wider integration. A key example is the PACER–PICTA
negotiations, where the Forum Secretariat was able to pursue a sub-optimal
outcome—trade integration between Forum island countries alone—for political
reasons, rather than providing a fair analysis of the costs and benefits of wider
integration. Ultimately, the Forum’s resistance to developing shared sovereignty has
proven unsustainable in light of the region’s challenges. As a result, the Forum’s
attitude has begun to change, as evidenced by the Biketawa Declaration and the
region’s high-level intervention in Solomon Islands, and the Forum Leaders’ Auckland
Declaration.
Thus, the first requirement for change, recognition of the need for change, has
largely been met. What the Pacific currently lacks is a shared, strategic vision of how
to accomplish change.

A strategic vision—the guiding philosophy
The preamble to the European Union’s founding treaty reads that members are
…resolved to substitute for historical rivalries a fusion of their essential
interests; to establish, by creating an economic community, the foundation
of a broad and independent community among peoples long divided by
bloody conflict; and to lay the bases of institutions capable of giving direction
to their future common destiny (Treaty of Paris, Preamble).

In the preamble to CARICOM’s founding treaty, members announced their ‘common
determination to fulfil the hopes and aspirations of their peoples for full employment
and improved standards of work and living’ (CARICOM Treaty, Preamble). Thus,
CARICOM’s key objective was ‘the economic integration of the Member States through
the establishment of a common market regime’ (CARICOM Treaty, Article 4).
The Forum, in contrast, was established without a founding treaty or strategic
vision. Thompson and Strickland argue that the general disadvantages of a lack of
strategic vision include organisational drift, mediocrity, internal wheel-spinning and
lacklustre results (Thompson and Strickland 2003). It should be unsurprising, then,
if the Forum has often seemed directionless, not working toward specific goals.
Differences in size and capacity between the Forum and other regions can always
be identified, but these should not be excuses. Both the European Union and
CARICOM, two very different regions, had a clear idea of what they were working
towards, and have consequently been far more successful in promoting the five
goals of regional order.

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The creation of a comprehensive strategic vision would have a number of
advantages for the Pacific. It would
• crystallise Pacific leaders’ views about the region’s long-term direction
• reduce the risk of rudderless decision-making

• help the region prepare for the future
• convey purpose to Forum members, the wider region and the world
• provide a beacon, and hope, for Pacific citizens.1
The beginnings of such a strategic vision are evident in the Australian Parliamentary
Committee’s report, A Pacific Engaged: Australia’s relations with Papua New Guinea
and the island states of the south-west Pacific and the Forum Leaders’ Auckland
Declaration (Pacific Islands Forum 2004). The Committee’s key recommendation
was that ‘the idea of a Pacific economic and political community…is worthy of
further research, analysis and debate’ (Australian Parliamentary Committee
2003:xiii). The Committee envisaged that such a community would involve, over
time, establishing a common currency, a common labour market and common
budgetary standards (Australian Parliamentary Committee 2003:xiii). As discussed
in Chapter One, though, neither the Committee nor the Forum Leaders presented
a holistic vision. However, a Pacific economic and political community is precisely
the vehicle needed to realise the Auckland Declaration’s vision of a peaceful,
harmonious, secure and prosperous Pacific (Pacific Islands Forum 2004). Such
an integrated vision would energise Pacific policymakers, and provide a beacon of
hope for its citizens.
Collins and Porras suggest that there should be two components to any new
vision: a guiding philosophy, and the detailed plans, or tangible images, of the vision
(Collins and Porras 1991). This book has proposed that the Pacific’s guiding
philosophy should be the pursuit of regional integration through the Forum, so that
the Forum follows, and improves on, the European Union model of regional order. To
reflect this development, the Forum should be renamed the Oceania Community.
To realise this guiding philosophy, current Forum members need to embrace the
legally binding commitments, and shared sovereignty in certain critical areas, that
they have often resisted. Giving effect to regional integration will involve a number
of agreements covering trade, monetary policy, security, human rights, the rule of
law and democracy, bound up in a single undertaking treaty that all Community
members would have to accede to. Figure 13.1 summarises the key features of the
single undertaking treaty.
The following section summarises the key plans needed to promote the goals of
regional order.

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Figure 13.1 Structure of the Oceania single undertaking treaty

OCEANIA SINGLE UNDERTAKING TREATY
Common Market Agreement
Sub-agreement on Trade in Goods
Sub-agreement on Trade in Services
Sub-agreement on Trade in Investment
Sub-agreement on Labour Mobility

Inflation Targeting and Monetary
Cooperation Agreement
Security Agreement
Human Rights Charter and Human
Rights Commission Agreement
Regional Court Agreement
Regional Parliament Agreement

Optional Protocol on
Telecommunications Liberalisation

Optional Protocol on Monetary Union

Optional Protocol on Additional
Jurisdiction for the Regional Court

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A strategic vision—the detailed plans
The Oceania Community and goal one: sustainable economic development
The promotion of free trade is the most vital contribution that regional integration
can make to sustainable economic development, to facilitate the development of
competitive, prosperous economies. A comprehensive Oceania common market
has therefore been proposed, to facilitate free trade in goods, services, investment
and labour.
There is no doubt that the Oceania common market would demand substantial
reform of Forum island economies. In return though, their goods would receive
improved access to Australia and New Zealand through a lowering of the rules of
origin threshold, and assistance to improve the quality of the goods they export.
They would enjoy the benefits of more productive, profitable service industries. They
would attract the foreign investment needed for their economies to grow and to
improve the employment prospects of young islanders. They would win access to
the Australian and New Zealand labour market through a labour mobility program
that would include a specific stream devoted to skills development. The Oceania
Community would offer a number of carrots to Forum island countries, but labour
mobility is arguably the key one. As Dobell argues, it would ‘open up new vistas, give
new hope and opportunity’ (Dobell 2003:18).
Former New Zealand Prime Minister and WTO Director-General Mike Moore has
said that ‘countries preparing for entry to the EU and the WTO do better than those
without such objectives. The economic discipline brings with it growth, social progress
and better governance’ (Feizkhah 2003:31). This is the contribution the Oceania
common market would make in the Pacific context.
Yet further regional measures are possible to promote sustainable economic
development. A regional commitment to inflation targeting would stabilise prices,
steady national business cycles, and promote a sustained, even rate of economic
growth. Many Forum island countries would benefit, too, from monetary integration
with Australia. This would contribute to sustainable economic development by
encouraging trade, investment and tourism, and freeing up money and expertise in
Forum island countries for other areas of government services, as well as avoiding
currency instability.
The Oceania Community and goal two: security
There is much that the Oceania Community could do to promote the goal of security.
The key new institution should be the Oceania Security Centre, which would be charged
with preventing, limiting and resolving conflict in the Pacific. It would also promote

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cooperation to combat terrorism, and work to ensure greater adherence to the Geneva
Conventions, to lift the professionalism of the region’s military and paramilitary forces.
The creation of an Oceania Peace Monitoring Group would also make a substantial
contribution to Pacific security. Its deployment would aim to contain disputes, or assist
in securing the peace when parties to a conflict are ready to negotiate.
When higher-level interventions are required, security would best be promoted
through joint action between the Community and the United Nations. This would
usefully share responsibility in the event of future interventions in a failing or failed
state. Thus, a framework agreement between the Community and the United Nations
would be an important addition to the Pacific’s security architecture.
Regional integration cannot guarantee a benign security environment; but these
security measures represent a comprehensive regime for preventing and limiting
conflict, and have the potential to save many lives.
The Oceania Community and goal three: the rule of law
The Oceania Community would be a vital promoter of the rule of law in a number of
respects.
The single undertaking treaty establishing the Oceania Community would establish
an overarching legal order, governing relations between Pacific states and securing
the rights and responsibilities of all states, large and small.
The Oceania Human Rights Charter would give local expression to key human
rights instruments, and the Oceania Human Rights Commission would have the
local representation, dynamism and relevance to encourage a shift in the Pacific’s
approach to human rights. Thus, the Charter and Commission would together secure
greater adherence to the supranational rule of law.
The Oceania Court would be an important normative model, peacefully resolving
constitutional, trade, human rights and environmental disputes between Forum
members and, in some instances, assisting Pacific citizens directly.
The Oceania Community and goal four: democracy
The Oceania Parliament, featuring direct elections and the opportunity to deliberate
over a number of essential regional issues, would be an effective mechanism for
promoting democracy and engaging Pacific citizens in the regional integration effort.
Establishing such an institution from the outset of the Community would avoid the
democratic deficit that has occurred in the development of the European model of
regional order.
Thus, the Oceania Community would be a model of transnational democracy
between its members. However, addressing the challenges to democracy within

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states is vital. The European Union’s Copenhagen criteria insisted that Central and
Eastern European states hoping to join the European Union had to be democracies.
In contrast, the Oceania Community’s promotion of democracy within states would
be more normative. Since I have proposed that the Oceania Community should
proceed from the Forum, the Community would commence with some members
with existing challenges to democracy. Over time, the example of the Oceania
Parliament, the work of the Oceania Human Rights Commission and the economic
development that would occur as a result of the common market would be a
persuasive normative framework for correcting democratic deficits within members.
Nonetheless, there should be more direct mechanisms in the event of a coup. In
such instances, the benefits of Community membership—such as aid and participation
in labour mobility programs—should be suspended for the relevant member.
The Oceania Community and goal five: integration with the wider region
A commitment to a wider and more powerful sovereignty is vital if Forum members
are to address their isolation from the regional integration occurring around the
world. The European Union, as an attractive model of regional order, has proven a
magnet for further members and as a result has become an increasingly powerful
global actor. The Oceania Community should be aiming to emulate its success.
This requires a change in mentality on the part of Forum members and the
Secretariat to embrace the dynamism needed to pursue integration with the wider
region. Once this initial barrier is overcome, there are possibilities for expansion. A
strategic vision of wider integration would revitalise the West Pacific Dialogue, and
ensure dynamic relations with Japan.
In many respects, the success of this fifth goal of widening the integration process
is dependent on the success of the efforts to deepen the integration process through
the first four goals. A prosperous and secure Oceania Community would attract new
members. Further, a legal order guaranteeing fairness for all states, and a democratic
order involving individual citizens, would be attractive to states and citizens in the
wider Pacific.
Ultimately, a commitment to ensuring the realisation of the first four goals of
regional order, combined with a commitment to widening the integration process,
would enable the Oceania Community increasingly to project soft power into the
region and the world.
A regional community and its citizens
The aim of this book has been to identify the minimum regional integration necessary
to address the Pacific’s challenges, rather than proposing ‘ever closer union’ with
the goal of creating a unified Pacific state (see, in contrast, the Treaty of Rome and
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the Maastricht Treaty). Thus, the goal is an effective confederation—‘a union of
states (and secondarily of peoples) that locks together carefully specific sovereign
functions under an intergovernmental treaty-constitution’—rather than a federation—
‘a union of peoples in a single state’ (Lister 1996:106).
Even if the union of peoples is a secondary aim of a confederation, this is not to
undersell the benefits of what the Oceania Community would offer the people of the
Pacific. In the initial phase of the Oceania Community, Oceania citizenship would
convey the following rights
• the right (and responsibility) to vote in regional elections for the Oceania
Parliament
• the right to stand for election to the Oceania Parliament
• the right to petition the Oceania Parliament directly
• the right to human rights protection through the Oceania Human Rights
Commission and Oceania Court, with support from the Oceania Peace
Monitoring Group
• the right to enforce economic rights through the Oceania Court
• for citizens in developing countries, a qualified right to seek work in developed
countries.
More generally, citizenship in the Oceania Community would imply a right to rising
standards of development. A small list to start off with, perhaps, but one with the
potential to evolve over time.
Epeli Hau’ofa (1993:8) usefully distinguishes between ‘the Pacific islands
region’ which he says denotes ‘small areas of land surfaces sitting atop submerged
reefs or seamounts’, and ‘Oceania’ which he regards as ‘a sea of islands with their
inhabitants’ (see also Thynne 1996). In pre-colonial times, this ‘sea of islands’
concept meant that ‘Oceania was a large world in which peoples and cultures
moved and mingled unhindered by boundaries of the kind erected much later by
imperial powers’ (Hau’ofa 1993:8). We need to return to this concept of Oceania,
the idea that the Pacific is neither small, nor deficient in resources or potential
(Hau’ofa 1993). A common Oceanian citizenship is part of this quest. As Hau’ofa
states,
Oceania refers to a world of people connected to each other…This view
opens up the possibility of expanding Oceania progressively to cover larger
areas and more peoples than is possible under the term Pacific Islands
Region. Under this formulation the concepts Pacific Islands Region and
Pacific Islanders are as redundant as South Seas and South Sea Islanders.
We have to search for appropriate names for common identities that are
more accommodating, inclusive and flexible than what we have today
(Hau’ofa 2000:36).

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Conclusion
In recent years, there has been growing concern about the present state of the
Pacific, and Pacific leaders and policymakers have recognised the need for change.
Thus, this first essential step in the change effort, identifying the need for change,
has largely been accomplished.
The second step, creating an attractive alternative vision of the future, has proven
more problematic, although the Forum’s Auckland Declaration is an encouraging
development. As a rule, a strategic vision should have a long-term time horizon
(Thompson and Strickland 2003). This book has presented a vision of what is
needed for the Pacific to be a prosperous, dynamic region in 2020. The vision is
vital, timely and optimistic, and eminently achievable if all Pacific states commit to
a new phase in their relations.
The third part of any change effort, indeed the most difficult part, is implementing
a new vision. A strategic vision must become a shared vision amongst the Pacific’s
leaders, policymakers and people. This is where the ultimate challenge lies.
The book builds on the previous work of Pacific scholars and policymakers. It
has presented an overall strategic vision, and the detailed plans needed for each of
the necessary elements of high-impact Pacific regional integration. It is an integrated
vision, including proposals for overcoming difficult issues. Movement on communal
land tenure, for example, will only come through the offer of labour mobility to
developed countries. The Forum’s richer and poorer members will only be able to
resolve the region’s challenges when they embrace the shared future, and the
mutually binding legal commitments, represented in the Oceania Community.
It is my conviction that this detailed strategic vision answers the Australian
Parliamentary Committee’s challenge when it stated that it was
…putting forward the idea of an economic and political community for
public debate…because insufficient evidence and analysis has been
received by our inquiry to enable us to be categorical about all of the likely
issues such a community raises (Australian Parliamentary Committee
2003:7).

It also provides a basis for the planning process that Forum Leaders are currently
engaged in as a result of the Auckland Declaration. This vision provides something
to work towards, focusing debate and avoiding arguments in the abstract.
Although the voyage will not be easy, the promise of regional order awaits the
Pacific and its citizens.
It is time to begin.

Note
1

Adapted from Thompson and Strickland (2003:41).

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Appendices

Appendices

Appendix One
Key facilitation measures for the Oceania common market
A number of measures are needed to provide institutional support to the Oceania
common market; this appendix briefly outlines some of the more important
measures.
First, the Oceania Community should create a dynamic framework for dealing
with e-commerce. It should launch an Internet portal, Oceania Online, to showcase
Oceanian businesses, and allow consumers to order Forum island country goods
and services online. The Community’s development program should help Forum
island country businesses get computers and get them online, and support Forum
island countries that are committed to overcoming the digital divide by ratifying the
optional protocol on telecommunications liberalisation.
Second, the existing Pacific Islands Trade and Investment Commissions in Sydney
and Auckland should be expanded to exploit the opportunities that the Oceania
common market should provide. These trade promotion offices currently have no
facility for e-commerce for Forum island country businesses. The offices should
integrate their efforts with the proposed Oceania Online to showcase Forum island
country businesses and facilitate e-commerce throughout the common market and
beyond.
Third, a regional stock exchange also needs to be developed to facilitate
investment into, and within, the region, otherwise Forum island countries will not
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reap the full benefits of the Oceania common market. Papua New Guinea and Fiji
have stock exchanges, but both are small—in 1997 the Fiji exchange had only four
listings (AusAID 1997). The key test of an effective market is its level of liquidity,
which is measured by
• width—the spread of buy–sell prices
• depth—the volume of buyers and sellers
• immediacy—how quickly trades can be done
• resiliency—how quickly prices respond to a large imbalance (Australian
Securities Institute 2002).
Clearly, an exchange with only four listings is a very thin market that will have
little activity (Australian Securities Institute 2002). In contrast, the Australian Stock
Exchange (ASX) is the tenth largest in the world, with a market capitalisation of
US$379 billion in 2001 (Australian Securities Institute 2002). Thus, the ASX is the
obvious vehicle through which the Oceania stock market should be developed.
The challenge here is to establish a system that does not demand overly onerous
levels of market capitalisation for Forum island companies and can be easily
accessed throughout the region. A solution could be to establish Oceania Online as
an adjunct to the Australian Stock Exchange. Having Oceania Online also function as
an online stock exchange would encourage Forum island companies, with
appropriate technical assistance, to publicly list and raise capital throughout the
region.
The ASX has previously sponsored an internet-based capital market for unlisted
businesses, but it did not attract enough interest (Australian Securities Institute
2002). However, suitable promotion of the Oceania Community generally, and the
Oceania stock market specifically, should generate sufficient interest to make
Oceania Online successful as an exchange. For instance, the ASX already has a
Trans Tasman 100 Index (the top 100 companies from the Australian and New
Zealand exchanges), and an Asian Index (Australian companies that base more
than 75 per cent of their operations in Asia) (Australian Securities Institute 2002).
The ASX could also initiate an Oceania 200 Index, which could include companies
from Oceania that have 25 per cent or more of their operations in Oceania, as a way
of promoting Oceania Online.
Australia and New Zealand also need to encourage Forum island countries to
adopt International Accounting Standards to improve the transparency of Forum
island companies, and further attract investment to those countries (Bazley et al.
2001).

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Appendix Two
Further features of the Oceania labour mobility agreement
This appendix briefly outlines some additional features of the Oceania labour mobility
agreement.
The immediate families of those individuals who receive an Oceania work visa
should be eligible to travel to Australia with the primary worker for the duration of
the visa. Partners of Business Skills Development Program (BSDP) participants would
be eligible for an Oceania work visa, which would be part of their source country’s
quota for that year. For non-BSDP participants, partners should be helped to get
Oceania work visas, should they wish.
In the European Union, individuals can access training and unemployment services
in any participating country, without discrimination. As part of Australia’s aid program,
these services should be available to those participating in the Oceania work visa
program. Unemployment services would be important in the initial period after arrival.
Additional training should be available at Australian prices—that is, an individual on an
Oceania work visa should pay the same fees as an Australian (fees for Australian
education and training programs are typically higher for overseas customers).
Under the European system, temporary workers are responsible for their own
health costs (they must have health insurance). As additional aid, Oceania workers
should be able to access the Australian public health system for emergency, nondiscretionary healthcare (those with pre-existing illnesses would not have met
Australia’s visa requirements). Australia grants this assistance to New Zealanders,
and to citizens of other countries with which it has Reciprocal Health Care
Agreements.
Beyond these benefits, individuals and their families would not be entitled to
Australian and New Zealand welfare payments, such as unemployment benefits.
Participants in the labour mobility programs should pay income tax to the host
country. Otherwise they would put little into the host economy, because much of
their salary would be sent home. This is consistent with the approach Australia
takes to other holders of temporary residence visas.
Only those aged 45 and under should be eligible for the BSDP. To ensure their
home countries enjoy the benefits of the skills they have developed in Australia,
participants should not be eligible to apply for permanent migration to Australia for
a period of 10 years after they have returned to their source country. There is less of
a need for age restriction on those with a regular work visa. These participants
should not be eligible to apply for permanent migration to Australia for three years
after they have returned to their source country.
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Appendix Three
Tourism—the Oceania trade order in action
The travel and tourism industry is already the world’s biggest employer (World Tourism
Organization 1995). The Forum’s 1997 Communiqué states that private sector
development ‘should include the development of tourism, particularly in the FICs
with limited or no exploitable resources’, with Leaders noting the potential for tourism
in the region in the 21st century (South Pacific Forum 1997). Tourism is an important
driver of economic growth in the Caribbean (Worrell and Fairbairn 1996), and the
Australian Senate Committee noted its potential to replace development assistance
in the Pacific (Australian Parliamentary Committee 2003).
But, despite having some of the world’s most beautiful locations, Fiji and Papua
New Guinea’s global exports of travel services have grown by only small amounts
since 1970 (Levantis 1998). Much of the poor performance of Forum island countries
is due to sociopolitical factors—coups in Fiji, the security situation in Papua New
Guinea. Opportunities must be seized to improve the economic framework, so as to
increase the performance of this sector.
To consider how the Oceania trade order may work in practice, and growth in
tourism could be achieved, I present the following scenario, which assumes that, 20
years from now, the Oceania Community agreements on free trade have been fully
implemented.
A transnational hotel chain is interested in establishing a major new hotel complex
in a Forum island country. One of the country’s 12 investment priority zones is
identified as the site of the hotel. The local community offers to convert parts of
their communal land to freehold land, subject to compensation, employment
opportunities and skills development. Those in the priority zones have the right of
first access to the Business Skills Development Program and Oceania work permits.
Through the performance requirements negotiated between the government
and the company, the company commits to hiring 300 people from the local area,
and to meeting the cost of 10 people undertaking a private sector Business Skills
Development Program in its overseas hotels. The hotel will remain owned by the
chain. The government offers it no investment incentives.
Planning for the hotel commences. Following an independent assessment of
the environmental implications by the Oceania Community, the plans are modified.
The hotel starts operations. Its general manager is an Australian, but she has not
paid for a work permit. Many other managers in the hotel are local graduates of the
Business Skills Development Program. Other people in the area have worked in
hotels in Australia and New Zealand on Oceania work visas, and so become eligible
for early promotion.
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Over the last 20 years, the telecommunications infrastructure in Forum island
countries has improved, leading to a surge in e-commerce and to increased interest
from overseas consumers in attractive holiday packages. Using the tourism gateway
on the Community’s internet portal, Oceania Online, overseas consumers easily
combine holidays in Australia or New Zealand with the relevant Forum island country,
or combine holidays between Forum island countries. Since the Forum island country
is committed to the Oceania Community’s rules on e-commerce, customers know
their transactions are secure.
The development of e-commerce and the reduction in tariff barriers also means
that the hotel can source the freshest food from a number of Forum island countries
at short notice.

Appendix Four
UN reform to aid the Oceania Community
Chapter Twelve considered the impact that the Oceania Community may have on other
international organisations. This appendix briefly considers the reform that would be
necessary for Community members to maximise their impact within the United Nations.
Australia and New Zealand are currently hamstrung within the United Nations by
their membership of the Western European and Others electoral group. Table A4.1
lists the countries proposed for phases one to three of the Oceania Community, and
the UN electoral group to which they belong. As can be appreciated, Australia and
New Zealand are divorced from neighbours with which they share vital interests.1
The Asian Group is itself an impractical configuration, comprising 54 members as
diverse as Saudi Arabia, Mongolia and Tonga. A new Oceania, or Pacific, group would
represent a fairer division of countries, as well as reinforcing a sense of regional
identity and allowing Australia and New Zealand to work with their neighbours.
The United Nations’ unfortunate regional division is also reflected in its Economic
and Social Commission for Asia and the Pacific (ESCAP). ESCAP’s goal is to promote
‘economic and social development through regional and subregional cooperation
and integration’.2 It is an ineffective vehicle for promoting integration, however,
given its membership, which covers 52 countries, from Azerbaijan to Palau to the
United States.3 As with the United Nations’ regional human rights efforts, discussed
in Chapter Nine, ESCAP can add little value to the United Nations itself, or to the
assistance provided by global UN bodies such as the United Nations Development
Programme. A UN regional organisation reflecting the potential membership of the
Oceania Community would provide a more useful focus, and would better enable
the United Nations to contribute to the development of the Oceania Community.
This too would usefully reinforce the link between the global and regional systems.
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Notes
1

2
3

Brückner (1990) notes that Australia and New Zealand have expressed misgivings
about joint positions being developed by European Union members of the Western
Europe and Others Group, before they have been discussed with the entire membership
of the Group.
See UNESCAP website, ‘About Us’.
See UNESCAP website, ‘Members and Associate Members’; and Arndt (1993).

Table A4.1

Proposed Oceania Community members—membership of current
UN electoral groups

Country
Australia
Cook Islands
Timor-Leste
Federated States of Micronesia
Fiji
Kiribati
Marshall Islands
Nauru
New Zealand
Niue
Palau
Papua New Guinea
Samoa
Solomon Islands
Tonga
Tuvalu
Vanuatu
American Samoa
French Polynesia
Guam
New Caledonia
Northern Mariana Islands
Wallis and Futuna
Brunei
Indonesia
Philippines
Singapore
Japan

Group
Western European and Others
Asian
Asian
Asian
Asian
Asian
Western European and Others
Asian
Asian
Asian
Asian
Asian
Asian
Asian
Asian
Asian
Asian
Asian
Asian

Source: Willetts, P., 2002. Division of the 189 Members of the United Nations into Regional
Groups, Department of Sociology, City University of London, London (unpublished). Available
online at http://www.staff.city.ac.uk/p.willetts/UN/UN-GRPS.DOC [accessed 15 December 2002].

274

Appendices

Disclaimer

The Australian Department of Foreign Affairs and Trade was of
assistance with the thesis on which this book is based. Nonetheless,
the views and conclusions I reached are my own, and do not reflect
Australian Government or Departmental policy, unless otherwise
explicitly indicated.

275

Pacific Regional Order

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314

Index

Index

Aeroflot 47
African Charter on Human and Peoples’
Rights 195, 201, 203
African Human Rights Commission 195,
196, 205, 209
African Union 39
aid 23–24, 40, 45,51, 53, 54, 55, 96–
100, 135, 156
Aitutaki Declaration 63, 161
Amnesty International 193, 204, 207,
230
anti-dumping 110
APEC 39, 95, 243, 247, 249, 252–53
Bogor goals 134, 252
ASEAN 19, 246, 247, 253
ASEAN Plus Three 39, 253
ASEAN Regional Forum 40, 247
Asia-Europe summit 39
Asian Monetary Fund 39
Asia Pacific Forum of National Human
Rights Institutions 40, 197, 220
associate membership 249
Auckland Declaration 3, 5, 6, 9, 10, 68,
81, 100, 194, 261, 262, 268
Australia 2, 11, 13, 19, 26, 27, 28, 44–
56, 59, 70, 71, 72, 73, 97, 104, 106,

108, 109, 110, 124, 125, 128, 131,
133, 148, 151, 154, 163, 168, 173,
179, 185, 193, 196, 216, 223, 247,
249, 255, 260
Australian Council of Trade Unions 127
Australian Department of Defence
Cooperation Program 45
Australian Department of Defence White
Paper 2000 52
Australian dollarisation 152–56, 158,
159
Australian Foreign Affairs, Defence and
Trade References Parliamentary
Committee Report, A Pacific Engaged
3, 4, 9, 10, 100, 125, 129, 141, 151,
246, 262, 268
Australian Foreign Minister Alexander
Downer 48, 49, 50, 131, 164, 168,
175, 176
Australian Foreign Minister Bill Hayden
48
Australian Foreign Minister Gareth Evans
48, 151, 196
Australian Minister for Pacific Island
Affairs Gordon Bilney 48
Australia-Pacific relations 46–54

315

Pacific Regional Order
Phase one: Colonial period 46–47, 55
Phase two: Strategic denial 47–48, 55
Phase three: Constructive
commitment 48–49, 55
Phase four: Cooperative intervention
49–50, 55, 166
New phase: Regional integration 50–51
Australia-Papua New Guinea Joint
Declaration of Principles
Guiding Relations 52
Australian Prime Minister Bob Hawke 65
Australian Prime Minister John Howard 6,
48, 49, 50, 51, 166, 260
Australian Prime Minister Malcolm Fraser
203
Australian Prime Minister Paul Keating
48, 59
Australian Strategic Policy Institute
(ASPI) 49, 50, 51
Banking (offshore) 31
BHP 21
Big Brother 75
Biketawa Declaration 9, 63, 64, 66, 67,
81, 95, 161, 162, 166, 169, 197, 261
Boomerang aid 130
Bougainville 2, 18, 21, 26–27, 63, 67,
117, 170, 177, 181, 186, 193, 194,
206
Bougainville Copper Limited 21, 26
Bougainville Peace Agreement 165
Bougainville Revolutionary Army 18,
26, 28, 163
Bougainville Resistance Force 27,
163
Burnham Agreement 163, 164, 175
civilian monitors 163, 175
currency 45
Kabui, Joseph 165
Liason Team Buka 175
Lincoln Agreement 163, 164, 175
Ok Tedi Mine 21
Ona, Francis 26, 164, 178
Panguna Mine/no-go zone 18, 21,
26, 164
Peace Monitoring Group 2, 45, 163,

164, 165, 174–179, 185
raskol gangs 26, 27, 171
Republic of Me’ekamui 26, 164
Transition Team 165
Truce Monitoring Group 55, 163,
164, 174
Valentines Day Massacre 27
Care Centres 27
Brain drain 129
Brunei 247
Business Skills Development Program
129–130, 135
Cairns Group 255–256
Caribbean 25, 68–69
Caribbean Community and Common
Market (CARICOM) 4, 5, 8, 11, 33,
39, 58, 68–69, 77, 102, 195, 215,
216, 221, 254, 255, 261,
Caribbean Assembly 231, 234
Caribbean Court of Justice 216, 218,
227
central banks 140, 141, 151, 153–55,
157, 158
central bank governors 140, 141
Chiang Mai Agreement 39
China 53
civil society 230
civil wars 2
Closer Economic Relations Agreement
(CER) 71, 104, 107, 110, 135
common currency (including ‘Oceania
common currency’) 140, 144, 145–
46, 152–56, 158, 262
common market (including ‘Oceania
common market’) 9, 11, 68, 91, 92,
99, 102–36, 148, 159, 231, 246
competition 110, 221, 227
communal land 40, 63, 118, 119–21,
123, 128, 135, 268
Compact Agreements 18, 129
comparative advantage 19
confederation 10, 267
constitutional issues 92
Cook Islands 2, 23, 38, 45, 55, 59, 128,
129, 130, 144, 166, 235, 236

316

Index
corporate welfare 123, 135, 136
corruption 30, 123
OECD Guidelines on Corruption and
Bribery 123
Cotonou Agreement 18
Council of Europe 196, 253
Council of Regional Organisations of the
Pacific (CROP) 60
coups 2, 163, 179, 194
Cuba 28, 39
cultural relativism 198
Customs Union 109

European Union 4–7, 10, 11, 18, 19, 39,
53, 54, 70–73, 77, 81–100, 102,
128, 140, 147, 148, 150, 217, 222,
243, 244, 249, 251, 252–54, 256,
261, 262, 264, 266
Central and Eastern European
Candidate Countries 85, 86, 90, 91,
99, 249, 266
Copenhagen Criteria 86, 89, 266
EU Charter of Fundamental Rights 196
European Central Bank 157
European Court of Justice 87, 92,
196, 215, 216–17, 225, 227
European Monetary System 142–3, 146
European Parliament 196, 230,
232–33, 236, 237, 238, 241
exclusive economic zones 65, 95, 122
Executives Meeting of East Asia Pacific
Central Banks (EMEAP) 39

democracy 2, 7, 9, 10, 11, 12, 13, 36–
39, 48, 55, 65–66, 81, 86, 87–89,
91, 186, 211, 227, 229–41, 244,
256, 259, 260, 262, 265
chiefs and traditional authority 38
transnational democracy 89
Westminster democracy 36, 40
distant-water fishing nations
see ‘Fisheries’
domestic law 34–36, 40, 121
drug trafficking 31, 64
Dutch Disease 23
duties 203–4
East Asia Community 39
e-commerce 19, 111, 113–15, 135, 202
Eminent Persons Group 63
Enhanced Cooperation Program (ECP) 50
environmental issues 59
Convention for the Protection of
Natural Resources and Environment of
the South Pacific Region 65, 223–24
environmental refugees 128
environmental standards 121
South Pacific Regional Environment
Programme 60, 96
Waigani Convention 65, 223, 224
European Convention on Human Rights
and Fundamental Freedoms 195
European Court of Human Rights 204
European Human Rights Commission
195, 205, 209

failed, failing states 1, 2, 3, 29–30, 50,
51, 183, 259
Federated States of Micronesia 2, 15,
18, 29, 37, 38, 45, 129, 159
Fiji 2, 15, 117, 125, 128, 130, 133, 144,
163, 167, 173, 175, 193, 196, 198,
206, 218, 235, 236, 237
communal land tenure 21, 38
coups 2, 18, 34, 63, 65, 67, 218
democracy 36–38
Deuba Accords 35
domestic law 34
garment industry 19, 111
George Speight 35
Great Council of Chiefs 35, 37, 38
National Bank of Fiji 157
Native Land Trust Board 21–22, 119
Qarase Government Blueprint for the
Protection of Fijian and Rotuman
Rights and Interests 23
Prime Minister Mahendra Chaudhry 35
Prime Minister (also Chief Minister,
President) Ratu Sir Kamisese Mara
34, 35, 36, 66, 124
Prime Minister Sitiveni Rabuka 23,
28, 34, 35

317

Pacific Regional Order
Reserve Bank of Fiji 145, 146
South Pacific Forum Membership 59
WTO trade commitments 33
Finland 84
fiscal transfers 150, 156
fisheries 1, 15, 59
Convention for the Prohibition of
Fishing with Long Driftnets in the
South Pacific 65
Convention on the Conservation and
Management of Highly Migratory Fish
Stocks in the Western and Pacific
Ocean 65
distant-water fishing nations 17, 65
Forum Fisheries Agency 96
Kiribati / Soviet Union Fishing
Agreement 47
South Pacific Forum Fisheries Agency
60
Treaty of Niue 65
Forum Economic Ministers’ Meeting
(FEMM) 62, 70, 141, 158
Forum island countries (FICS) 13, 15,
21, 27, 36, 37, 38, 40, 41, 44, 45, 46,
47, 50, 51, 52, 53, 61, 62, 70, 72,
73, 74, 75, 76, 96, 104, 114, 116,
118, 124, 125, 126, 128, 129, 130,
131, 133, 134, 135, 145, 149, 154,
156, 176, 185, 216, 222, 227, 230,
231, 236, 237, 253, 255, 259, 261,
262
free trade 11, 82, 102–36, 248
French Polynesia 235–36
Geneva Conventions 170, 171, 172, 186,
206, 211, 265
Germany 85
good governance 9, 64, 165, 194
goods 69, 102, 104, 110, 135, 264
Governance for Livelihoods and
Development in the Pacific (GOLD) 195
hard power 89–90
HIV/AIDS 1, 17
Honiara Declaration on Law Enforcement
Cooperation 8, 62, 63, 64, 162, 173

human rights 5, 12, 81, 89, 91, 135,
161, 184, 193–212, 218, 259, 262,
265, 266, 267
Asia Pacific Forum of National Human
Rights Institutions 40, 197, 220
margin of appreciation 204–5, 220
humanitarian law 168, 170–72, 184, 202
import substitution 18
Indonesia 31, 244, 247, 252,
Indonesian President Wahid 247
inflation 24–25, 84, 91–92, 140, 158
inflation targeting 99, 140, 143,
152, 158, 264
integration (with the wider region) 2, 7,
10, 12, 50–51, 55, 66–68, 89–90,
243–56, 259
Inter-American Human Rights
Commission 195, 205, 207, 209,
210
Inter-American Human Rights Court 198,
219, 220
International Court of Justice (ICJ) 47
International Criminal Court 170, 171
International Labour Organization (ILO)
94, 122, 135, 202, 211
International Monetary Fund (IMF) 39,
158
International Peace Monitoring Team
(IPMT) 165–66, 174
International Standards Organization
(ISO) 122
investment 8, 19–21, 69, 72, 84, 94,
102, 115–24, 135, 148, 264
Australian Foreign Investment Review
Board 118
Investment and Communal land 21–
22
Investment and Corporate Welfare
22–23
Investment Priority Zones 120, 130
New Zealand Overseas Investment
Commission 119
OECD Multilateral Agreement on
Investment 116
Ireland 83

318

Index
Japan 152, 243, 244, 248–49, 252, 266
joint ventures 116, 117
Kiribati 2, 5, 15, 45, 47, 125, 144, 218,
236
labour mobility 3, 5, 69, 94, 99, 102,
120, 124–33, 135, 150, 152, 262,
264, 267, 268
labour standards 121, 135, 202
Lae Rebellion 59
leadership 44, 48
legally binding commitments 92, 100
Libya 47
logging 1, 15, 122
Lomé Agreement 18
Madang Action Plan 8, 48, 141
Marshall Islands 2, 17, 18, 45, 129, 159
Mauritius 19
Melanesia 1, 19, 29, 168, 175
monetary integration 3, 11, 45, 69, 82,
84, 85, 91, 140–59, 231, 264
money laundering 40, 52, 64, 163
Moore, Mike 3, 55, 67, 230, 235, 241,
264
moral hazard 156–58
mutual defence 161, 185
NAFTA 39, 127, 225
Nasonini Declaration on Regional
Security 63, 64, 162, 173
Nauru 2, 45, 47, 59, 144
phosphate mining 47
New Caledonia 235–36, 246
New Zealand 2, 13, 15, 19,
27, 45, 47, 54–55, 59, 70, 71, 72, 73,
92, 97, 104, 106, 109, 110, 118,
124, 125, 126, 128, 131, 133, 143–
44, 145, 151, 152, 154, 163, 167,
168, 173, 174, 179, 185, 207, 235,
247, 249, 252, 255, 260
Reserve Bank of New Zealand 24,
153, 154
Niue 2, 45, 55, 126, 128, 144

non-government organisations 226
non-state actors 31, 86, 95
Nordic Council 229, 231, 233–34, 235,
236, 238, 240, 241, 254, 256
nuclear testing, France 58, 59
Oceania Community 11, 23, 77, 82, 90–
100, 259–68
Oceania Court 215–27, 241, 265, 267
common market chamber 221–23,
227
constitutional chamber 225, 227
environmental chamber 223–25, 227
human rights chamber 219–21, 227
standing 225
Oceania Human Rights Commission 12,
67, 91, 92, 193–212, 237, 265–67
Oceania Human Rights Charter 92,
93,193, 194, 199–205, 265
Oceania Monetary Fund 140, 157–58
Oceania Parliament 229–41, 249, 265,
266, 267
Oceania Peace Fund 169
Oceania Peace Monitoring Group 91,
174–79, 186, 265, 267
Oceania Security Centre 91, 168–73, 186
Oceania Single Undertaking Treaty 92,
93, 114, 159, 161, 186, 194, 204,
215, 256, 262–63, 265
OECD Multilateral Agreement on
Investment 116
optimal currency area 140, 147–52
Organisation of American States 4, 39,
219
Organisation of Eastern Caribbean States
51, 69
East Caribbean Supreme Court 218
Organisation for Security and
Cooperation in Europe (OSCE) 168
Pacific 2010 1
Pacific Closer Economic Relations
Agreement–Pacific Islands Country
Trade Agreement Framework (PACER–
PICTA) 9, 11, 48, 51, 58, 62, 66, 69–

319

Pacific Regional Order
76, 102, 103–4, 110, 131, 134, 135,
208, 216, 244, 261
Pacific Common Market 9
Pacific Community 60
Pacific economic and political
community 3, 4, 6, 7, 10, 55, 125,
262
Pacific Islands Forum 2, 11, 13, 44, 58–
77, 96, 162, 166, 168, 180,
194,195, 231, 246, 247, 255
Forum Regional Security Committee
59
Forum Secretariat 59, 60, 70, 71, 72,
73, 76, 81, 97, 104, 128
Forum Secretary-General 59, 63, 67,
161
Forum countries free trade agreement
71–72
Post-Forum Dialogue 243–244, 248,
249
Pacific Parliament 3, 12, 67, 93, 229, 235
Pacific paradox 23
Pacific Patrol Boat Program 26, 45, 65,
171, 185, 186
Pacific Way, the 36, 67, 68, 94, 216, 227
Palau 2, 18, 38, 45, 129, 159
Papua New Guinea 2, 13, 17, 18, 29–30,
47, 50, 51, 62, 63, 125, 128, 133,
144, 169, 173, 181, 183, 185, 193,
235, 236, 247, 252
aid 99
Central Highlands 30
Enhanced Cooperation Program (ECP)
50
foreign direct investment 19
Foreign Minister Sir Rabbie Namaliu
52
Minister for Bougainville Affairs Moi
Avei 164, 176
Papua New Guinea Defence Force
(PNGDF) 26, 171, 176
Prime Minister Julius Chan 163, 179
Prime Minister Mekere Morauta 30,
62
Sandline Affair 30, 163, 179

West Papua Independence Movement
31, 244
WTO trade commitments 33, 114
Papua New Guinea-Australia Trade and
Commercial Relations Agreement
(PATCRA) 21, 61
peace enforcement 161, 184–85, 186
peacekeeping 163, 179–84, 186
people smuggling 31, 64
Philippines 244, 247, 252
pollution 1
Polynesia 15, 29
population growth 17, 40
poverty of opportunity 18
preventive diplomacy 168–69
quarantine 106, 110, 136
Regional Assistance Mission to Solomon
Islands (RAMSI) 2, 9, 46, 64, 67, 77,
95, 162, 165, 167, 180, 181, 182,
183, 260, 261
remittances 124, 129, 133, 154
Reserve Bank of Australia 152, 157
rule of law 2, 7, 9, 10, 11, 12, 13, 32–
36, 48, 55, 64–65, 67, 81, 86–87,
91, 186, 211, 215–27, 242, 244,
256, 259, 262, 265
supranational law 32–33
rules of origin 106–9, 135, 264
Samoa 2, 15, 38, 59, 62, 125, 128, 144,
235, 236
security 2, 7, 9, 10, 11, 12, 13, 26–31,
44, 46, 47, 48, 50, 51, 52, 54, 55,
59, 62–64, 67, 81, 85–86, 91, 92,
159, 161–86, 211, 231, 241, 244,
256, 259, 262
seigniorage 155
services 19, 69, 102, 111–15, 135,
149, 151, 154, 264, 265
shared sovereignty 7, 8, 10, 58, 64, 81,
95–96, 100, 261

320

Index
Singapore 247, 252
skills development 124, 264
soft power 89–90, 91, 266
Solomon Islands 2, 3, 15, 17, 24, 26,
27–29, 47, 49, 51, 52, 63, 144, 162,
165, 167, 169, 171, 180, 181, 182,
183, 184, 185, 186, 206, 235, 236
democracy 38, 66
Guadalcanal Revolutionary Army/
Isatabu Freedom Movement (IFM)
27–28
Honiara 28
Malaitia 27
Malaitian Eagle Force (MEF) 28, 29
Peacekeeping operation (RAMSI) 2, 9,
46, 50, 51, 64, 67, 77, 95
Prime Minister Bartholomew Ulufa’alu
28, 29, 165
Prime Minister Sir Allan Kemakeza 166
Townsville Agreement 165, 174–75
WTO trade commitments 33
South Pacific Applied Geoscience
Commission 60, 96
South Pacific Commission 46, 58, 67,
100
South Pacific Forum
see ‘Pacific Islands Forum’
South Pacific Nuclear Free Zone 65
Treaty of Rarotonga 65, 223, 224
South Pacific Regional Environment
Programme (SPREP) 60, 96
South Pacific Regional Trade and
Economic Cooperation Agreement
(SPARTECA) 18, 47, 61–62, 73, 75,
107, 108, 109, 131, 135
Soviet Union 47
strategic vision 2, 7, 75, 134, 252, 259,
261–68
subsidiarity 10
sustainable economic development 2, 7,
10, 11, 12, 13, 15–25, 48, 55, 61–
62, 76, 81, 82–85, 91, 102, 136,
140, 145, 186, 211, 241, 244, 256,
259, 264
tariffs 73

taxation 98
double taxation agreement 123, 135
progressive taxation 98
regional taxation 98–100
value-added taxes 106
technical assistance 106, 135
technology transfer 121
telecommunications 19, 93, 114, 124,
135
terrorism / terrorists 31, 50, 51, 52, 64,
95, 162, 168, 185, 244, 265
Bali bombings 31, 162
combating terrorism 172–73
Timor-Leste/East Timor 246, 247, 252
Tokelau 55, 128, 246
Tonga 2, 38, 59, 66, 73, 124, 128, 144,
163, 166, 167, 193, 209, 235, 236
tourism 22, 25, 111, 112, 114, 130,
146, 154, 264
Tourism Council of the South Pacific
60
trade 18–19
free trade agreements 39, 54, 71, 94
non-reciprocal trade agreements 18
Transboundary Movement of Radioactive
Waste 65
Waigani Convention 65, 223, 224
Transnational Corporations 21, 22, 115,
121, 123, 135, 226
United Nations Draft Code of Conduct
on Transnational Corporations 116
Trans-Tasman Travel Arrangements 126,
131
Treaty of Niue 65
Treaty of Rarotonga 65
Turkey 86
Tuvalu 2, 15, 45, 144
United Kingdom 47
United Nations (UN) 9, 15, 90, 94, 122,
161, 162, 164, 165, 183, 184, 186,
194, 198, 199, 243, 256, 265
United Nations Commission on
International Trade Law’s Model Law
on Electronic Transmissions 114–15

321

Pacific Regional Order
United Nations Development Programme
(UNDP) 15, 17, 18
Human Development Index 15
Regional Rights Resource Team 195
United Nations Law of the Sea 64, 95
United Nations Security Council 164,
181
United States 15, 19, 31, 47, 53, 65, 66,
72, 118, 147, 150, 227, 243, 246,
252
United States dollar 45, 154
University of the South Pacific 60
Vanuatu 2, 15, 17, 38, 47, 62, 117, 144,
163, 175, 177, 235, 236, 238
weapons disposal 166, 176, 178
West Pacific Dialogue/Forum
247, 248, 266
working holiday visas 126
World Bank 23
World Trade Organization (WTO) 9, 62,
74, 94, 135, 227, 243, 252, 254,
255, 256, 264
CARICOM engagement 69, 72
enabling clause 72
General Agreement on Tariffs and
Trade (GATT) 72, 74, 94, 109, 133
General Agreement on Trade in
Services (GATS) 33, 94, 111, 114,
115, 127, 134
regional trade agreements 39
Uruguay Round 33, 115, 127
Yugoslavia, former 86, 89

322