1. Australia-United States Free Trade Agreement: Call for Submissions by 15 January 2003
2. Points for Submissions
3. All the Way with the USA: Sydney Morning Herald article, 15 November 2002

1. Australia-United States Free Trade Agreement: Call for Submissions by 15 January 2003

The Department of Foreign Affairs and Trade's Office of Trade Negotiations has called for public submissions on the proposed Free Trade Agreement (FTA) between Australia and the United States.

The proposed FTA has met with widespread criticism from community groups, including AFTINET, because of the unequal bargaining situation for Australia, in economic terms we are a mouse bargaining with an elephant. The US has targeted important Australian social policies as barriers to trade. The US wants abolition of the Foreign Investment Review Board, an end to Australian content rules in film and television, the abolition of the pharmaceutical benefits scheme and reductions in quarantine standards. The National Farmers'Federation has criticised this agenda and said that they are doubtful that any gains would be made in access to US agricultural markets. All the Opposition Parties, including the Australian Labor Party, have also been strongly critical of the proposed agreement. Commentators have also made the point that, while trade and security issues have traditionally not been officially linked, the US government is linking the FTA with the US security alliance.

The deadline for receiving submissions is 15 January 2003.

A background paper on the Australia-United States FTA proposal, including information on issues that might be covered in an agreement, and studies on the benefits and implications of an Australia-US FTA, is available via DFAT's website at: www.dfat.gov.au/trade/negotiations/us.html

Submission enquiries: Ph: (02) 6261 2019/1811 Fax: (02) 6261 3514

Submissions may be lodged electronically at us.fta@dfat.gov.au or by post at the following address:

US FTA Task Force
Office of Trade Negotiations
Department of Foreign Affairs and Trade
BARTON ACT 0221

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2. Points for Submissions

Such a bilateral trade negotiation places Australia in a very weak bargaining position given the relative sizes of the US and Australian economies. Australian negotiators want greater access to the massive US economy, which is Australia’s second largest market after Japan, in return for entry for US goods to Australia's comparatively tiny market of 19 million people, the 15th largest destination for US exports. The US has little need for such an agreement,  Australia would have to make concessions.

The National Farmers’ Federation has expressed doubt about Australia’s bargaining position in such a bilateral negotiation and is sceptical that the US government would concede access to US agricultural markets.

The US list of "barriers to trade" include the Pharmaceutical Benefits Scheme, Australia’s local content rules in film and television, our quarantine laws and the Foreign Investment Review Board. Such vital social policies should not be traded away.

The Pharmaceutical Benefits Scheme makes medicines more affordable to most Australians. It should not be targeted as a trade barrier.

The local content rules are a vital pillar of Australia’s cultural identity which ensures that Australian stories are told on film and television. These rules ensure a local skills base which enables quality films and television programs to be made here.

Australia has relatively high quarantine standards because as an island country we are disease-free in some areas, and the impact of such diseases would be devastating. We should not compromise these standards.

Australia has specific investment restrictions through legislation in only a few strategic industries like the media, telecommunications and airlines. The Foreign Investment Review Board is the only general restriction, and its discretion is very seldom exercised. If these few remaining restrictions were to be weakened, all of these industries would be vulnerable to US takeover.

All of these trade-offs would be unacceptable in terms of Australian culture, health and safety, public interest and economic independence.

The Minister for Trade has said that Australia does not want to rule out any of these areas in the negotiations (Sydney Morning Herald 15/11/02).

While trade and security issues have traditionally not been officially linked, both the US government and commentators are linking the FTA with the US security alliance. This is a serious mistake and could be detrimental to Australia's independence in both foreign policy and trade policy.

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3. All the Way with the USA: Sydney Morning Herald article, 15 November 2002

By Tom Allard and John Garnaut

Australia is willing to consider United States demands for unfettered investment access and relaxed labelling for genetically modified food in exchange for opening new markets for Australian farmers under a free trade deal.

The Minister for Trade, Mark Vaile, said yesterday there were no areas off-limits as the US President, George Bush, notified Congress of a start to negotiations on a free trade agreement.

In an eight-page letter to Congress from Mr Bush's trade representative, Bob Zoellick, the Administration listed a range of demands for the FTA that will anger farm, industry and lobby groups in Australia.

They include an end to Australian Government screening of US investment proposals, a relaxation of quarantine laws and changes to Australia's "single desk" grain marketing bodies.

"Technical barriers" to trade like GM food labelling and greater access to Australian markets for US telecommunications, airlines and banking services are also in the sights of the US.

Despite claims from both nations that the trade talks had nothing to do with Australia's strong support of US military and security strategy, Congress was told a trade deal with Australia would "strengthen the foundation of our security alliance".

The US call for unfettered investment access has implications for the pharmaceutical benefits scheme, which it has argued restricts investment by keeping prices low. Labor attacked the Government's apparent willingness to consider changes to the PBS, which was "one of the cornerstones of Medicare and a guarantee for every Australian that essential medicines will be available and affordable".

The ambit claim of investment access may also undermine the Government's promise to keep Telstra and Qantas in majority Australian ownership.

Relaxing Australia's local content rules for television and radio could also be of interest to the US.

Asked if Australia had nominated any no-go areas, Mr Vaile said: "We can't do that. We want to move ahead and we don't want to talk about things negatively or rule anything out. There may be no-go areas that emerge but we want to go into this with everything on the table."

The Government wants to pursue the FTA with the US because it will increase Australia's links to the world's biggest economy and, according to its modelling, eventually be worth $4 billion a year if completed successfully. The key to an economic boost is substantial gains in access to the US for Australian farmers, who are generally much more price competitive.

Mr Zoellick, who briefed federal cabinet in Canberra yesterday on the US approach to a free trade deal, heartened the Government when he said the US wanted an FTA "as absolutely broad as possible, and that includes agriculture, manufacturing, services".

The Prime Minister, John Howard, told Parliament: "This is, by any measure, an historical development in the bilateral relationship; it is unambiguously good news for Australia." He acknowledged that negotiations would be difficult, and a successful conclusion was by no means assured, especially as politically powerful US farm groups had expressed reluctance about a deal.

To placate its farmers, the US has demanded changes to quarantine and Australia's single-desk marketing bodies for key grains commodities - to the ire of Australian farmers. The National Farmers Federation's trade expert, Lyall Howard, said: "We're not going to let products in that have diseases. They find that frustrating, because they've got diseases we don't want. We're not watering down our standards for anyone."

A Melbourne University trade expert, Ann Capling, said she was shocked at the link made between of security and trade. "It's been a cornerstone of both Australian and US foreign policy since World War II that security and trade issues are kept in separate boxes. To see them linked now has major implications for the Australia-US security alliance."

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