CAIRNS, Australia, Aug 7, 2009 (AFP) - Australia and New Zealand Friday denied bullying Pacific Island nations into starting negotiations for a controversial regional free trade deal.
At the end of a two-day summit on Thursday, the 16-nation Pacific Islands Forum announced that negotiations for a closer economic relations pact, known as PACER-Plus, would start "forthwith".
But just two days earlier the outgoing forum chairman Toke Talagi had said island countries were not ready to start negotiations yet.
New Zealand Prime Minister John Key was asked Friday about accusations from non-governmental organisations that the island nations had been bullied into agreeing to starting talks.
"It's factually incorrect," Key told journalists.
"There's no question New Zealand and Australia support PACER-Plus and that's going to be a very important trade architecture for the region."
"I can tell you that in the discussions the leaders had yesterday there was quite significant support for PACER-Plus."
Australian Prime Minister Kevin Rudd agreed, saying the deal would include measures to bolster education and other infrastructure in island countries, which include some of the smallest and poorest nations in the world.
The Pacific Area Closer Economic Relations (PACER) plans have long been controversial, due to claims that free trade would greatly favour Australia and New Zealand, which already have a heavy trade imbalance in their favour with the island countries.
Opponents say the islands' local industries would be destroyed by cheaper imports and their governments would lose much of their revenue if tariffs and duties were lifted on Australian and New Zealand goods.
Canberra and Wellington say the deal would increase trade in the region and the development assistance would ensure it worked in the island nations' favour.
International aid organisation Oxfam said Friday the decision to start negotiations risks rushing into a free trade agreement that would undermine the Pacific economies.
"This is deeply disappointing. Rushing into an agreement before the Pacific has had a chance to consult properly and undertake the necessary research will risk a bad deal," Oxfam New Zealand executive director Barry Coates said.
But Ajay Chhibber, assistant secretary general and Asia-Pacific regional director of the United Nations Development Programme (UNDP) told AFP Thursday it was vital that any trade deal included so-called "behind the border" measures to bolster economic capacity in the island countries.
"Every time we have had a trade agreement that doesn't go behind the border and looks at what is the capacity to take advantage of a trade agreement, those deals have not really been good for the smaller developing countries," Chhibber said.
"If I understand PACER-Plus correctly, it does go behind the border to address some of these capacity issues. In that sense, I think it's a good thing to have."