In a recent Submission to the Australian Senate I proposed three specific interventions which would assist in this regard. The first is to encourage a freer trade in goods and factors of production including labour from the neighbourhood. The second is support for improved access to basic healthcare and universal access to primary education; and, the third is to under-write law and order within Pacific states by cooperating with the members of the South Pacific Forum.

I shall discuss the first of these in more detail now and leave the remaining two issues for future blogs.

There is considerable consensus within the economics profession that freer international trade improves economic prospects for the participating economies. Australia’s own lessons with a century long experimentation with trade protection and productivity growth is instructive in this regard. The Closer Economic Relations Agreement (CER) with New Zealand is a stark and recent reminder of the above. I submit that serious consideration should be given to extending the CER facility to PNG and the rest of the island nations in the Southwest pacific. This can happen progressively over time with continuous fine-tuning of policies.

The recent shift to allowing guest workers from the islands into Australia for fruit picking jobs under a pilot project, is a first step. The economic case demands a lot more. An open and deep market such as that founded on the CER arrangement will allow for two-way flows of goods, services, workers, investors, etc. I would like to see goods flow between the region as freely as workers, investors, retirees, and tourists (but bearing in mind security implications, such as terrorism, some regulation will be required). Australia can initiate this unilaterally, possibly on reciprocal basis, but doing so multilaterally – say on the Most Favoured Nation (MFN) principle – could be even better. I am arguing for progression, with Australian leadership, towards a single economic market for the Pacific; and, solely on its economic merits. The ensuing political and security gains would be a bonus to the above.