As the world continues to grapple with the decision by the US to unilaterally increase tariffs on all trading partners, Fiji a small island nation is positioning itself to be one of the first to sign a new agreement. While this is being discussed as beneficial for Fiji, there are a number of challenges and concerns that come with rushing into appeasing a global power.

The US had reportedly told countries to present their best offers on tariff reductions, US investments as well as other items like digital trade and economic security by Wednesday June 4^th. This comes as legal uncertainty grows in the US about whether or not President Trump exceeded his presidential authority when announcing the tariffs.

In April when the Trump administration produced its chart on global tariffs, it had deduced that Fiji was taxing US imports at a rate of 64% and as such would apply a ‘reciprocal’ tariff on Fiji’s exports of 32%. The rationale behind the Trump figures has been shown to be bogus and the Fiji government should be commended for acting very quick to correct the record on what tariffs they charge. The Fiji’s government’s figures painted a very different figure to what the Trump Administration was saying, far from 64%, the weighted average tariff was less than 2% on US goods.

While the Trump administration has rarely bothered with the truth, their unilateral decision threatens to severely impact many exports from Fiji. While Fiji Water comprises the majority of exports to the US, there are others like kava, that any decline in exports would have flow on effects to farms and communities in Fiji. Given the impacts, the Fiji government is left with little choice to try and stem the short-term pain while it looks to diversify its export markets from the US.

However, in the rush to appease the US, Fiji is risking throwing the baby out with the bathwater.

Whatever is being agreed upon with the US will likely have to be given to all of Fiji’s trading partners. The rules at the World Trade Organization (WTO), which both Fiji and the US are members, state that if members conclude a trade agreement outside the WTO it must include ‘substantially all trade’ or be considered WTO-illegal. Since Fiji has a slight goods trade surplus with the US this means that substantially all trade will likely require commitments from both parties despite the disparity in economic development. If Fiji negotiates a reduced outcome it will fall foul of the WTO, if it negotiates an expansive outcome it will encounter other problems.

Whatever the outcome from the Fiji/US negotiations, other trading partners of more significant value will be expecting something similar if not more. Often trade negotiations take benchmarks from other outcomes. This was seen in the initial discussions in the regional free trade deal between Australia, New Zealand and the Pacific Island Countries, known as PACER-Plus. Australia and New Zealand were quick to argue that anything given to the European Union in separate agreement should be the starting point for talks with them, despite the Pacific acknowledging the higher offer was in recognition of the lower impact of trade imports with the EU. As Fiji appears set to re-enter negotiations on PACER-Plus with Australia and New Zealand, the regional powers will no doubt be waiting to take what was agreed with the US as the baseline.

This makes what is being negotiated with the US all the more important because in effect it’s about what others will expect from Fiji. If it’s lowering tariffs on a range of imports then there are questions about how that impacts government revenue or local producers. Fiji previously walked away from PACER-Plus because of the concerns about local industries competing with Australian and New Zealand companies. Given that what is on the table goes beyond the US, there needs to be clarity about what is being traded away.

However, the process with which Trump is demanding trading partners meet the US completely lacks transparency, leaving communities in Fiji and elsewhere in the dark. While the US has documented its trade concerns/wish-lists about other countries, critical questions about what is being demanded from Fiji remains unclear. Fiji doesn’t mention in the US wish-list documents, yet the Fijian government has hinted that its geo-strategic location is something that may be in its negotiating favour. This isn’t trade policy or development planning, this is a global power demanding the world remake itself to suit power.

It’s important to also remember that the usual processes for trade negotiations are being swept aside to meet the US imposed timeline. The usually processes for trade agreements often involve some consultation however these happen without the negotiating texts being available leaving little genuine consultation, with the texts only being released once the deal was done. Yet even those minimum processes aren’t being followed with the US.

Fiji is an undesirable position, but with a Trump administration that is seeking to set precedent for others it may be better to sit it out until the bigger US trading partners have fought to set some baselines. Fiji enters the negotiations with limited leverage and belief that their historical relationship will be considered kindly. This approach ignores the way that Trump has targeted allies and enemies alike and may see Fiji ultimately pay too high a price.

The situation also raises broader questions about Fiji’s development strategy and how to build on its export base. While Trade Minister Kamikamica has highlighted a range of other free trade agreements as a way to insulate Fiji against further trade barriers, there is more discussion needed than to continue following a path on trade that has failed so many.

The US is seeking to unilaterally re-write the economic relationships it has around the world and there is no guarantee that whatever is agreed here won’t unilaterally be thrown out later. As Fiji heads off to Washington it needs to consider just what is being put on the table and what they’ll have left over when it’s all done.