Auckland is the biggest Polynesian city in the world and a key hub for Oceania. Pacific businesses in New Zealand, based mainly in Auckland, are developing a niche that offers good growth potential in the future. Auckland is well positioned to take advantage of its capital value – both in terms of location and as a leader for Pacific partnerships.

The global recession makes it more challenging for Pacific businesses to compete with the mainstream markets, yet opportunities exist for growing the business relationship and supporting wider aims for sustainable economic development.

New Zealand merchandise exports to the Pacific Islands Forum members (other than Australia) were valued at $786.5 million in 2007, or 2.2 per cent of NZ’s total exports (NZ MFAT figures). Imports from the Pacific Islands Forum market were valued at $170.8 million, with nearly half this figure being crude oil imports from Papua New Guinea. (The Pacific figures exclude the US and French territories).

Traditionally, Pacific trade expos focus on goods and this will continue to be a mainstay for business and trade in the region. However, a number of changes in the Pacific suggest the time is right for a trade expo that includes a stronger focus on trade in services i.e. human resources and skills. There are several changes that will, over time, lay the platform for a Pacific regional economy – these include the Pacific Agreement on Closer Economic Relations (PACER) and the Pacific Island Countries Trade Agreement (PICTA).

The PACER is a stepping stone approach to trade liberalisation among the 14 Forum Island Countries (FICs), which will gradually integrate the island economies into a broader Pacific regional economy. A related agreement, known as PACER Plus, will gradually include Australia and New Zealand in the free trade zone for the islands.

In addition to PACER and PICTA, there are a range of economic development initiatives which focus on trade in services i.e. skills. Among the more recent initiatives is the Recognised Seasonal Employment scheme involving labour from a number of FICs and employers in Australia and NewZealand. This is currently focused on seasonal labour requirements in the horticulture and viticulture industries, but is likely to evolve into other areas.

One of the issues for any trade agreement is the need to offer benefits for all parties, including the smaller island economies. The islands typically have fewer goods, or similar goods, to trade with one another. And once Australia and New Zealand are phased in, the islands will be hard pressed to trade in goods on a competitive basis with the two larger developed countries.

The incentive for the island countries is believed to lie not so much with trade in goods, (which will continue in some form) but with trade in services i.e. skills. This brings up the issue of labour mobility, or easier worker access within a wider Pacific regional economy.

This brief introduction is behind the proposal by Pacific EDA for a trade expo in end-2009 or early 2010. The expo would still have a component for material goods, but the main focus will be on exploring the opportunities for a greater focus on trade in services. The RSE programme is but one of the examples – there will be others. The advantage of the RSE is that it is focused specifically on services; it involves a group of ‘starter’ island countries thereby spreading the benefits; it has direct value for the employees (who are better able to save) and employers (who have a more consistent labour supply and therefore more reliable production runs); and gives the authorities in the islands a practice run on how to administer a possible evolution of this initiative into other areas.