Luxon defends PACER Plus as PNG pushes for separate trade deal

Prime Minister Christopher Luxon says New Zealand remains dedicated to improving regional trade through the Pacific Agreement on Closer Economic Relations Plus (PACER Plus) despite a major economy’s continued refusal to join the development-focused free trade alliance between Aotearoa, Australia, and nine Pacific island nations.

In an interview on Pacific Mornings, Luxon says the Pacer Plus agreement is working effectively across the Pacific region, despite the Papua New Guinea government’s concerns that it does not benefit PNG’s interests.

“We know from our own experience as a small country that being part of those big trading agreements where the vast majority of our trade is now delivered and done is actually a really good thing,” Luxon says.

PACER Plus aims to lower trade barriers, improve access to major markets like Australia and New Zealand, and promote trade within the Pacific region.

It also includes binding commitments in key service sectors, such as tourism, digital trade, and transport, which are key to the growth of Pacific economies.

The agreement took effect in 2021 and includes 10 members of the Pacific Islands Forum: Australia, Cook Islands, Kiribati, New Zealand, Niue, Sāmoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu.

New Zealand’s trade with PACER Plus members (excluding Australia) has steadily increased since the agreement entered into force in mid-December 2020. Photo/Supplied

However, two of the region’s biggest economies, Fiji and Papua New Guinea, have not signed the agreement.

PNG’s Trade Minister Richard Maru is urging New Zealand to engage in negotiations for a bilateral Comprehensive Economic Partnership Agreement (CEPA), arguing that the current trade policies do not meet the unique economic needs and aspirations of Papua New Guinea.

Maru told PMN News that after 50 years of diplomatic relations between the two nations, it’s time to reset the relationship and elevate it to the next level.

PNG Trade Minister Richard Maru. Photo/PMN News/Ala Vailala

“We're not interested in PACER Plus. We are interested in a bilateral comprehensive economic partnership agreement. We would like to think that the New Zealand government will be open to our approach and they'll be ready for us to enter into negotiations,” Maru says.

In response, Luxon says that while the government is always open to revisiting aspects of the agreement, he believes its current framework already reflects the priorities of the Pacific region.

“What we want is Pacific solutions to Pacific challenges and Pacific opportunities and that's why it is working well,” Luxon says.

“Other countries have joined it and are getting real benefit from it and as I said, our own experience from New Zealand is that when we join agreements like that and others, that's how we get most of our trade away internationally.”

Watch Christopher Luxon's full interview below.