Shadows in the Water: Japan and the Pacific Islands States – with special focus on Papua New Guinea A International Relations Perspective 7/16/2014 BY JOELSON ANERE 1. Introduction His Excellency Prime Minister Shinzo Abe visited Papua New Guinea on the 11th to the 12th July, 2014 at the Official Invitation of the Prime Minister of Papua New Guinea, Hon. Peter O’Neill, MP of the Independent State of Papua New Guinea. Prime Minister Shinzo Abe, as you will soon note is a nationalist to the core of his beliefs and this is indicated in the Japanese Cabinet approving the re-interpretation of Article 6 of Japan’s Pacifist Constitution which now empowers the Japanese Government to utilize the Japanese Self Defence Force for the first time in International Conflicts and to assist an allied nation in International waters. This paper, takes aim at uncovering the thinking behind the main actors in the relationship between Papua New Guinea and Japan. Importantly, this paper strives to achieve what former Prime Minister Sir Julius Chan termed during the Pacific Island Forum Leaders Meeting in 1996, “dispassionate calculations”. A term first used at the regional level and more precisely referred to the need for pragmatic approach to cooperation particularly in our bilateral relationship on Overseas Development Assistance or ODA. The core questions this paper poses is: ‘how can Papua New Guinea maximise its interests with extra-regional powers such as Japan?’ The focus is on Japan, a leading distant water fishing nation. This paper engages in some “dispassionate calculations” of the benefits and value of growing stronger with Japan in our bilateral relationship since 1975. This paper considers what strategies have worked and what could work for Papua New Guinea. 2. Some Dimensions of Japans presences in the Pacific Region As you will soon note, Japans principal interest in Papua New Guinea is fisheries. Papua New Guinea is the leading producer of Southern Bluefin Tuna and Yellow-fin Tuna. Hence, and important partner were fisheries is concerned. In terms of the region, generally speaking, the central and western Pacific produce almost one-half of the global catch of primary market species of tuna and about 60 per cent of global demand of canning tuna. In 1995, the estimated value of regional fishery was about US$1.7 billion. Of the estimated one million tonnes taken annually from the 200-mile Exclusive Economic Zone of Papua New Guinea, about 95 per cent of this is taken by distant water fishing nations. In 1995, these included purse seine fleets from USA (46 vessels), Taiwan (43 vessels), Japan (32 vessels), South Korea (29 vessels), and the Philippines (11 vessels). Purse seine accounted for 780,000 tonnes of tuna in 1995 worth about US$750 million. Longliners from Japan, Taiwan, and South Korea accounted for 110,000 tonnes of tuna in 1995 alone, worth an estimated US$590 million. The longline vessels mainly target the higher blue-eye and yellowfin tuna for the sashimi market in Japan. The fresh Longline fishing is dominated by vessels from China and Taiwan which are mainly based in the Pacific Region such as Kiribati, Marshall Islands, PNG, Tonga, Fiji, and so on. The frozen Longline fishing is dominated by Japan, with around 400 vessels operating in the region under existing Bilateral Agreements. Japanese vessels also dominate the pole and line fishery in the region, which accounted for about 80,000.00 tonnes in 1995. The total access fee paid by distant fresh water nations to Pacific Island States such as Papua New Guinea is estimated at US$50 to US$60 million per year. This includes about US$18 million under the US Multilateral access agreements and about US$19 million under the Japanese Vessels Bilateral Access Agreement. For Japan, this is equivalent to 4.5 to 5.5 per cent of Tuna Catch Value, while the US Agreements, which is subsidized under the US Government, pays close to 10 per cent rate of return. In other words, the internal economic rate of return for Pacific Island States such as Papua New Guinea is high. Japan currently has access agreements with Kiribati, the Federate States of Micronesia, the Marshall Islands, Palau, Nauru, Solomon Islands, PNG and Tuvalu. 3. Japanese Aid Fisheries access was the original intention and motivation of Japan’s aid to Pacific Island States such as Papua New Guinea. This continuous to be the major rationale underpinning its South Pacific aid policies. Some countries in the region such as Papua New Guinea receive fisheries grant aid and technical cooperation as an inducement to continuing their agreements. This aid serves as an indirect subsidy to individual operators who are willing to pay higher access fees. Papua New Guinea like the rest of the Pacific is a lucrative market for Japanese suppliers of fisheries related goods and services and this is one reason why Japan prefers to give “in kind” rather than “in cash-grant”. However, Japan is the region’s leading Aid donor apart from Australia. This is proven by Japanese Prime Minister Shinzo Abe’s recent visit to Papua New Guinea. On the 10th July, 2014, Prime Minister Shinzo Abe and Prime Minister Hon. Peter O’Neill, MP signed the “Comprehensive Partnership for Regional Stability and Prosperity” in Port Moresby, Papua New Guinea. This a clear signal that Japan not only values its cooperation and bilateral relationship with Papua New Guinea but also sees it as the key to prosperity between Papua New Guinea, the rest of the Pacific and Japan. It’s also an appreciation for Papua New Guinea’s increasingly assertive leadership role in the South Pacific Region. This means Papua New Guinea is shifting its economic weight from “Aid” to “Trade”.Japan recognises this and wants to deal with Papua New Guinea on an “equitable” footing, hence the “Agreement on Promotion and Protection of Investments between Papua New Guinea and Japan.” 4. Trade Japan is the largest market for Pacific Island exports accounting for 30 per cent of total exports from Pacific Island Forum Countries. The total two-way trade between Pacific Island Countries and Japan is valued at US$1.4 billion. While export trade mainly of commodities such as wood (e.g. sandalwood), non-ferous ores, fish, vegetables and coconut products are in favour of Japan. That’s good for business. Japan dominates Papua New Guinea’s trade (23.8 per cent), Solomon Islands (42.7 per cent), Tonga (47.1 per cent), and Vanuatu (19.8 per cent). Current figures show that trade volume has increased between Papua New Guinea and Japan, the recent Spirit of Hela berthing in Tokyo carrying oil and gas is one indication. The key issues in the trade relationship between Papua New Guinea and Japan are the need to secure a larger market in light of Japan’s diversifying of its market and to share in Japan’s Pacific Island exports; to improve processing and increase the value-added exports; to secure more joint ventures between Papua New Guinea national companies and Japanese’s business companies. There is a realization that there is greater need for more information about the Japanese market and for assistance in establishing contacts between Japan and Papua New Guinea for a range of exports. Potential exists for two-way trade volume to increase significantly in other areas particularly through the niche market. At a broader angle, the issue for Papua New Guinea is how to prepare for the move towards free trade in the global economy. In this area, Papua New Guinea’s effort to develop its links with the Association of Southeast Asian Nations (ASEAN) is a step in the right direction for the country as a whole. 5. Recommended Strategies for Maximisation of PNG’s interests with Japan Papua New Guinea should seek Japan’s support at the ASEAN Forum to: a. Propose for ASEAN to provide a framework for free trade and economic cooperation between Pacific Island States and the advanced industrialised ASEAN nation States; and, b. Propose for the Melanesian Spearhead Group (MSG) to strengthen links with ASEAN through a ASEAN Pacific Development Fund for Melanesian Spearhead Group nation States to be funded by Japan; and, c. Propose for ASEAN Assistance in the areas of Competition Law and the training of more Judges’ in Competition Law and Policies in Papua New Guinea. d. References: Edward, Lindy. Consensus in Conflict: competing conceptual structures and the changing nature of Japan’s politics in post-war era, Crawford School of Economic and Public Policy, Australia National University, Canberra, ACT, 2013. Pp. 1-900
Posted on: Fri, 18 Jul 2014 06:34:23 +0000
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