Governments And Forum Misled Pacific Peoples
The Value Added Tax (VAT) increase in Fiji is an indication of things to come under the new free trade area agreements,
and shows that the agreements were signed without consulting ordinary people of its full implications, says the Pacific
Network on Globalisation (PANG).
PANG says, as in Fiji, similar burden on the poor will be experienced in the other Pacific countries.
“The Fiji government now tells the public that VAT had to be increased to address the impacts of globalisation and free
trade on its revenue base, and that further reductions in tariffs are anticipated as they move towards free trade with
other Forum island countries under the Pacific Island Countries Trade Agreement (PICTA). Why wasn’t this revealed in
detail when negotiations were taking place,” said PANG Coordinator Stanley Simpson.
“It is evident that the government made the policy in collusion with and for the benefit of big business and
corporations, aided with pressure from overseas donors and international institutions like the World Trade Organisation.
The poor, the weak, and local business who do not have the resources to lobby but will be worst affected were ignored.”
PANG also criticised the Pacific Islands Forum for misleading Pacific Islanders in their ‘PICTA and PACER Frequently
Asked Questions’ document released last year, where they stated that the adverse social effects of PICTA were expected
to be small.
“The VAT increase in Fiji shows that the Forum was deceitful when they wrote in their Question and Answer document
(Quote): “Because the economic effects, including adjustment costs, of the PICTA are expected to be small, at least at
first, these social impacts are also expected to be small.”
“Can the Forum explain how they concluded that an “adjustment cost” like the increase in VAT from the loss of tariffs
under PICTA is small? Do they really believe that something like a VAT increase will have little social impact on the
poor in the Pacific?” Mr. Simpson asked.
“Not only will we see more tax burden on the poor, but we will see more job losses, loss of public assets, small local
companies driven out of business by big corporations and investors, and a drastic increase in social problems and
People are also realizing that not only will there be adverse social effects from the loss of tariffs under PICTA, but
under its partner Pacific Agreement on Closer Economic Relations (PACER) there will be more adverse social impacts once
negotiations with Australia and New Zealand begin on a free trade agreement.
“The Forum also misled Pacific peoples into thinking that under PACER, free trade negotiations with Australia and NZ
would only happen in another 8-10 years, when they knew very well it would be triggered in September this year once
Pacific countries started negotiating with the EU for and Economic Partnership Agreement (EPA) under the Cotonou