Australia is encouraging Palau to join the Pacific Agreement on Closer Economic Relations (PACER) Plus Agreement but Palau has yet to address certain terms set by the Compacts of Free Association with the United States before the nation commits to the trade deal.

Minister of Public Infrastructure, Industries and Commerce Charles Obichang in a phone interview said he has met with Australian Foreign Minister Julie Bishop to discuss the regional trade deal.

Obichang, Palau, Federated States of Micronesia (FSM) and Republic of Marshall Islands (RMI) have created a Micronesia Trade Economic Committee, which is tasked to negotiate with the United States to clarify the Most Favored Nation Clause in the Compacts.

In the clause freely associated states are mandated to provide to the U.S. the same concessions they may give Australia and New Zealand under Pacer Plus.

Obichang said the committee has written to the US to address the details of the clause.

One of the salient aspects of PACER Plus is the elimination of import tariffs. This will mean significant revenue loss for Palau, as the United States is its major trading partner.

Since import tariffs provide huge revenue for the government, Palau is not likely to sign the treaty.

According to World Integrated Solution, Palau’s import industry generated $154 million in 2016.

The agreement, better known as PACER Plus, proposes tariff cuts among signatory nations and is rhetorically touted to help small Pacific Island through increased import-export trade and investments.

Bishop and her delegation visited Palau on the weekend as part of their North Pacific tour. (Bernadette H. Carreon)