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Reacting to China: The cost of intervention


Daru, capital of impoverished Western Province, is the planned site of a major Chinese fishery. It will generate many jobs. But Australia opposes the idea

| Asia & the Pacific Policy Society

WAIGANI - Last November, Chinese company Fujian Zhonghong Fishery Limited signed a memorandum of understanding with the Papua New Guinea government to set up a K700 million multi-functional fisheries industrial park in Daru, Western Province.

Unfortunately, debate in Australia surrounding this proposal has not extended beyond Australia’s security concerns as to what this project means for Western Province people.

Australia’s main concern is that the fishery investment is in an area not known primarily for an abundance of fish, and some people believe it may have instead been chosen strategically because of Daru’s proximity to Australia.

However, this view is not balanced. Australian policymakers should note the ways the fishing industry has benefited PNG and the potential benefit of this project for the people of Western Province.

Let me look at the importance of fishing to PNG’s economic development.

In 2007, PNG signed an interim-economic partnership agreement with the European Union which exempts tariff and quota limitations for canned tuna and smoked loins manufactured in PNG and exported to the EU.

To access these benefits, about six foreign companies established tuna canning facilities in PNG. Though none are Chinese-owned, Chinese vessels do fish in PNG.

Under the deal, their exports of manufactured tuna to the EU increased from K210 million to more than K630 million over three years, providing important economic development for PNG.

Although the export revenue fluctuates, it remains higher than it was before the partnership agreement was signed.

This more recent Daru deal, if implemented, will likely bring similar economic benefits.

The proposed investment comes after PNG negotiated access to China’s large seafood market.

Just as access to European markets increased exports of canned tuna, local businesses will now be able to export tuna to the Chinese market, growing the PNG economy in the process.

On top of this, the government collects licensing and access fees from foreign fishing vessels that do not manufacture their catch in PNG.

This makes expanded PNG’s fishing grounds very profitable for the government. In 2016, the year for which latest data is available, the revenue from licensing and access fees alone generated K456 million for PNG.

The government is also planning to move towards full onshore manufacturing as part of the deal, meaning fish caught in the park will be canned in PNG facilities.

This comes with another benefit: employment.

The tuna manufacturing industry in PNG employs up to 40,000 workers, 90% of whom are women. This is the highest of any manufacturing sector in PNG, and twice the number of people employed producing palm oil.

While finer details of the proposed industrial park in Western Province are not known, it is very likely to include manufacturing facilities employing Papua New Guineans.

But will Australia give the project its blessing?

Bruce Hunt’s book, ‘Australia’s Northern Shield? Papua New Guinea and the defence of Australia since 1880, analysed declassified Australian cabinet documents on the issue and can help explain why Australia opposes the fisheries project.

In his book, Hunt outlines that, from the British colonisation of Papua in 1884, PNG has been central to Australia’s security concerns.

Whereas previously Australian governments were concerned about German, communist, or Indonesian aggression, the country is now worried about Chinese influence in its northern neighbour.

The Coral Sea Cable – an underwater internet cable connecting Sydney to Port Moresby – was negotiated after Huawei Technologies, a Chinese company, was engaged in 2016 to build underwater cables connecting PNG’s 14 maritime provinces.

In 2018, Australia asked PNG to terminate the Huawei contract even though the work was 60%. PNG declined Australia’s request.

The story is the same with the K6 billion electricity deal projected to cover 70% of PNG by 2030, co-funded by the United States, Australia, Japan and New Zealand.

This was only forthcoming when a Chinese plan to build a K3.2 billion hydro-power plant in Goroka was announced in 2018.

To cut a long story short, Australia’s intervention in infrastructure in PNG in recent years has largely been a reaction to Chinese initiatives.

While PNG remains the highest recipient of Australia’s foreign aid, including K54 million to the Western Province, its aid and investment in infrastructure will not create as many long-term jobs as the fishing industry has done, and can keep doing, for PNG.

A cannery at a fisheries park in Western Province will arguably provide more employment for the people than electricity projects or building i.nternet cables.

Above all, Australia’s behaviour shows disrespect for the right of PNG to guide its own development.

After meeting with Australian diplomats recently, the Western governor said, “it’s regrettable that all they want is for us to be subsistence farmers and fishermen and maintain our current status quo.”

The government may reject Australia’s pressure, just as it did when it requested it cancel the Huawei contract to build internet cables.

Alternatively, Australia may offer another deal in return for PNG dropping Fujian Zhonghong Fishery’s proposal, but it is unlikely that Australia will take over the fishery project as it did the Coral Sea Cable.

Ultimately, China’s offer comes with massive market access which Australia cannot match.

The best outcome for PNG’s economy is for the park to go ahead.

Michael Kabuni is a Lecturer with the Political Science Department of the University of Papua New Guinea


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Chips Mackellar

I agree with Michael Kabuni that the proposed fisheries industrial park would be of immense economic benefit to the people of Daru, if it caught any fish there.

But with the exception of Daru and Bristow Islands and a few coral cays to the east, all the fishing in the Torres Strait is protected by the Torres Strait Treaty.

This Treaty stipulates that commercial fishing in the Strait does not prejudice traditional fishing rights there.

As all the other islands in the Strait are part of Australia, any impact on traditional fishing will impact the fishing rights of Australian residents of the other islands.

If the intention is to fish the Gulf of Papua, then surely a more central port in the Gulf would be a more appropriate place to establish the fisheries industrial park, for example Yule Island, Kerema or Baimuru.

While the treaty allows the Kiwai people of Daru free access to the Australian fisheries and islands for traditional purposes, the same privilege is not extended to any Chinese people associated with the fishing project as the Chinese, of course, have no tradition in the Strait.

And given the Chinese propensity to disregard foreign treaties, all kinds of border problems for Australia are envisioned if the Chinese fishing enterprise were established at Daru.

It is therefore the location at Daru which is the problem for Australia, not the actual fisheries industrial park. If the park is located elsewhere along the Gulf of Papua, and it does not fish the Strait, no problem.

Chris Overland

I think that Michael Kabuni's analysis is basically correct. Australia's policy in relation to PNG has indeed been deficient and reactive in some respects.

While I agree that the proposed deal should bring economic benefits to PNG and the Western Province, I wonder how significant they will be in the long term.

China's approach to fishing appears to be one based upon large scale exploitation of fish stocks with little regard to sustainability although, in fairness, it is not the only offender in this regard.

With respect to security issues, there is no doubt in my mind that the Chinese government will exploit the intelligence gathering opportunities offered by having a fleet of fishing trawlers located so close to the Australian mainland. It would make no sense for them to do otherwise.

The "Five Eyes" (Australia, Canada, NZ, UK and USA) all use various means to gather intelligence about China's military and other activities so there is no reason to think that China will not act the same way.

It is all part of the modern version of the 19th century "Great Game" (which was a competition for power and influence between the major world powers) that is now being played out in the Pacific and elsewhere besides.

I think that if there is a flaw in Michael Kabuni's thinking it may lie in not paying sufficient attention to the broader strategic context within which the fishing deal is being offered.

A lesson of history is that deals offered under the aegis of major powers never come without strings attached. Those strings may be explicit or implicit, but they are always there.

PNG is at risk of only ever finding out about those strings after the deal is done and it is effectively locked into an arrangement that may work in ways that it did not intend or envisage.

Harry Topham

More propaganda from an academic who seems to have been brainwashed by rhetoric not facts.

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