United States-Australia Free Trade Agreement

[flagreen]

From - http://usinfo.state.gov/usinfo/Archive/washfile_feature1.html

Trade Pact a Milestone in U.S.-Australia Relations, Bush Says
President signs free trade agreement, eliminating most tariffs



At an August 3 ceremony at the White House, President Bush signed legislation implementing the United States-Australia Free Trade Agreement (FTA).

The agreement, which Bush called "a milestone in the history of our alliance," will eliminate duties on 99 percent of all U.S.-manufactured exports to Australia as soon as it takes effect.

"That is the largest immediate reduction of tariffs on manufactured goods ever achieved in an American free trade agreement," the president said.

Annual two-way trade in goods and services between the United States and Australia totals $28 billion, with Australia ranked as the 10th largest export market for the United States. Bush said the trade agreement, which received strong bipartisan support in the U.S. Congress, is expected to increase U.S. exports of manufactured goods by nearly $2 billion per year, and to boost agricultural exports as well.

"We support free and fair trade," the president said, "... because it has the power to create new wealth for whole nations and new opportunities for millions of people."

The FTA was concluded in February after more than 12 months of negotiations. U.S. Trade Representative Robert Zoellick and Australia's Trade Minister Mark Vaile signed the draft agreement in Washington May 18.

In Australia, according to news reports, the agreement overcame its final hurdle on August 2 when the opposition Labor Party agreed to vote with Prime Minister John Howard's conservatives and pass the enabling legislation in the upper house.

Assuming the agreement is ratified by the Australian Parliament, the FTA will take effect January 1, 2005.

Sounds good in principle but will it help or hurt our Aussie brethren?

 

[Pradeep]

It still leaves lots of US protections in place for agriculture, so the sugar farmers etc get farked over.

Much better for the US side than the Aussie side.

 

[P5-133XL]

That would be normal -- the general rule with trade agreements is the bigger the economy the bigger its slice of the pie. Followed closely by the more resentment/anger from the country claiming to have been shafted by the agreement.

 

[Fushigi]

So it's the United States - Australia (USA) FTA instead of the Australia - United States (AUS) FTA...

 

[EdwardK]

It still leaves lots of US protections in place for agriculture, so the sugar farmers etc get farked over.

Much better for the US side than the Aussie side.

Exactly, and the government is spending millions of dollars to buy out/pork barrel the angry sugar farmers.
It will be interesting to see who will blink first (goverment or opposition) over the impasse on PBS amendments.

Cheers,
Edward

 

[Pradeep]

It could be a good election issue, I imagine most people care more about not paying 10 to 20 times more for meds (comparing prices in Aus to USA) rather than some FTA with dubious benefits.

With little Johnnie, he'll fold when the cost of lost votes outweighs the financial goodies he's getting from the drug companies. I'll be sure to send me postal vote in

 

[flagreen]

We subsidize our Sugar industry here as well. I know they have a fair amount of political clout but it's beyond all reason at this point to continue supporting them with price supports etc. Particularly when here in Florida we not only support them to grow it - but then also have to pay to clean up the Everglades when they finish.

I guess some of it is to avoid having to buy Cuban sugar? Our other big agricultural crop here is Citrus. But Brazilian imports of concentrate has really put a hurt on the Citrus folks. Brazil grows sugar as well. Is sugar a strategic commodity? I wouldn't think so. I mean if it were steel or some other really important commodity needed for the defense industry I could see subsidizing it to keep it alive. But sugar?

 

[Tannin]

A sugar harvestor costs $750,000 and is useless for anything except sugar.

I've forgotten most of what I know about the politics and economics of sugar, but I'm clear enough on the practicalities. There are vast areas of coastal north-east Australia that depend almost entirely on the sugar crop. The land in question, given the tropical climate, is really only suitable for sugar or mangos.

So many farmers have already switched over to growing mangos that that market is glutted and a good way to go broke. Mangos aren't the answer. None of the traditional temperate area crops — wheat, stone fruits, and so on — grow well in the tropical north.

Bottom line is it's sugar or bust. Entire communities depend on it. There is a great deal of bitterness: people feel betrayed by the rest of the country.

I can't blame them.

 

[sechs]

Have these people considered that maybe they shouldn't be trying to grow *anything*?

 

[Buck]

Is the North East coastal area part of the Murray-Darling Basin?

 

[time]

IMO, it's likely to hurt a lot. The economic fortune-telling I've seen seems to be based on current trade rather than the situation a few years down the track. That is, it assumes that Australia and the US will be trading the same goods they are now - but favoring each other a little more than other countries. It gives a boost to some Australian primary industry after several years while immediately granting US secondary industry relatively unfettered access. Three guesses which sector will increase in value.

Australia has huge disadvantages when it comes to exporting to the rest of the world. Obviously, it's geographically isolated. It has a small population largely contained in a handful of cities that are thousands of kilometres apart, so per capita transport costs are extraordinarily high (it doesn't help that the puny rail system isn't even a network). It's a bit like scattering the ancient Greek city states to the four corners of the Earth and pitting them against the Roman empire at its peak. Each local market is too small and it's too hard to reach other markets.

Based on what I've heard of the Canadian experience, I expect we'll have goods of varying origin dumped on us. Australians have lower product standards and expectations than the US or Europe, so we tend to end up with the dregs.

The copyright and patent provisions are particularly worrying, but these are the aspects that politicians can't begin to grasp.

The real reason for this "FTA" is supposedly to encourage US investment in Australia. If anyone can work out why US companies would suddenly feel the need to do this, please let me know.

 

[sechs]

Australia is the English-speaking part of Asia. And New Zealand is too small.

 

[time]

NZ's per capita GDP is a third higher than Australia's, but I digress ...

Sechs, I meant why would US companies feel the need to do this as a result of a new bilateral trade agreement?

The Sydney Morning Herald Economics Editor just penned a piece that reflects my opinion. If you want to wade through it, know that John Howard is the Prime Minister, Mark Latham is Opposition Leader and Kim Beazley is a former Opposition Leader. The Labor and Liberal parties are very roughly analagous to US Democrats and Republicans, and the Greens are a minority party (as is the Australian Democrats!). The shadow cabinet is the executive arm of the Opposition (potential Secretary of Defense etc). Tampa is a ship that (nearly) landed with a couple hundred refugees aboard, and you really wouldn't believe the significance so I won't bother telling you.

News Ltd owns an overwhelming majority of print media in Australia (after all, this is Rupert Murdoch's homeland), for example, the only local newspaper in my city of 1.5 million. It also owns almost all the Cable TV bandwidth. It is true that Rupert's press has been enthusiastically promoting the FTA - clearly there's something in it for the now US-based News Corp/Fox.

The majority of the shadow cabinet felt they had no choice but to tick it, while the minority couldn't see why they should acquiesce in such a bad deal for the economy.
...
Leading the outcry would have been the Murdoch press, whose American lord and master stands to gain from the US Government's efforts to make the world a cushier place for US exporters of intellectual property, such as Twentieth Century Fox.
...
Mr Howard has been running the line that, if Labor supports the deal, it will be for purely political reasons, not because of the deal's economic benefits. He's quite right.

It's doubtful that the deal's modest benefits exceed its costs and risks, particularly in the area business people and the political pundits either don't understand or don't care about but is now being highlighted by Mr Latham's tactics: intellectual property protection.
...
It's been reported and widely rumoured that the people closest to negotiating the deal wanted to walk away from it when the Americans proved so intransigent, particularly on agriculture. And when President Bush declined to yield any concessions after Mr Howard phoned him with a personal appeal.
...
I suspect that, after eight years in office, the Government has got it through to the business lobbies that, if they want to put their case to the minister in private, the price is never to criticise in public and always to give forth approving noises whenever a new policy is announced.
...
Mr Howard has used high pressure sales tactics to get the FTA passed by Parliament without the nation properly unpacking and debating its many pros and cons. He's generated a sense of urgency where little exists, emphasising the need to seize this "once in a generation" opportunity to join up with "the world's most dynamic economy".

In other words, don't think about whether it's actually a deal worth having, focus on the fear it might slip out of our grasp.
...
If, as I fear, the nation lives to regret the economic sovereignty it's giving away in the FTA, history will hold it against the memory of one John Howard. But we will all share the blame for allowing ourselves to be railroaded.

 

[Pradeep]

Honestly I would have to say that the Australian Liberal party is more analogous to the US Democrats with Socialist tendencies. With the Aussie Labor Party more towards the US Republicans. But they are both to the left of center compared to the US middle line.

Re: Australia being a part of Asia, it's like saying that the East coast of the US is part of Europe. There's long distances involved.

 

[sechs]

It's a lot easier to work on the premise that Australia is a trade gateway to Asia than that Canada or Mexico are....