Free trade deal with US under threat
By Tim Colebatch Economics Editor The Age January 23, 2004
Prospects for a meaningful free trade agreement between Australia and the US are in jeopardy, with 31 of the 100 US senators writing to President George Bush in "deep concern" over its potential impact on American farmers. The letter from the senators, including Hillary Rodham Clinton, comes as US negotiators refuse to pledge any significant opening of agricultural markets. The negotiations are now in their final days, with Trade Minister Mark Vaile and US Trade Representative Robert Zoellick due to shake hands on a deal next week. But opposition in the US is mounting, and free trade is losing political support. Sources said the US this week had offered only minor market liberalisation for Australia's beef and dairy exports and no opening at all for sugar. But US negotiators appear to have softened their demands for changes to Australia's pharmaceutical benefits scheme and future local content rules on TV. Trade veterans believe the US is holding back its real offer for next week's talks between Mr Vaile and Mr Zoellick. "This could be brinkmanship," one old hand cautioned. "If the US system wants something, deals are done behind the scenes and it gets through." But with the Bush Administration under attack for agreeing to modest increases in sugar quotas for four Central American countries, the odds that it will offer an ambitious package to Australia's highly competitive farmers are shrinking. Instead, it could be angling for a modest agreement in which Australia would get little and give up little. Such a deal would reduce investment barriers and expand market access but would not be a real free-trade agreement such as those Australia has with New Zealand, Singapore and Thailand. The US now applies tariffs averaging 100 per cent on dairy products and 181 per cent on sugar to keep out Australian exports. The US dairy industry claims full liberalisation of US markets for Australia would cost 150,000 jobs.
* * * *
This story was found at: http://www.theage.com.au/articles/2004/01/22/1074732546113.html