Global Trade Watch – FTA Article

Bush in push to seal trade deal

13 October 2003, The Australian, By Roy Eccleston

George W. Bush is expected to tell John Howard later this month that he has ordered his senior aides to "move heaven and earth" to negotiate a free trade agreement with Australia.Deputy Secretary of State Richard Armitage told The Australian that about a month ago the US President called together several top administration officials and "really put the heat on us to try to get it done".

When Mr Bush visits Australia on October 23, "I think he'll be saying if we can get a fair agreement all around, let's move heaven and earth to get it", he said.

But the Howard Government says the US offer so far is totally inadequate on the key area of market access for Australian farm products such as beef, sugar and dairy.

Mr Armitage was non-committal on the prospects of an improved offer at the next meeting of US and Australian negotiators in Canberra late this month, shortly after the Bush visit.

"I believe we are in a negotiation, with two of our respective most important sectors – agriculture being the issue of the day," he said. "So I expect we'll have a lot of give and take."

Asked if this meant the US was prepared to move on its offer on agriculture, he said: "I didn't say that. Maybe I'd ask that the Australian position move. I just noted that this was a negotiation."

Officials fear that without a US shift, the negotiations will fail to meet Mr Bush's urging to finish the agreement by the end of the year, jeopardising the deal.

If the talks continue into next year, the process will run into major political obstacles because of the 2004 US elections. This is because the deal must be available to the US Congress to peruse for 90 days, and then must be voted up or down within the next 60 days.

That would put the congressional vote in June or July at a time when members of Congress and Mr Bush will be particularly sensitive to anything that threatens to take income or jobs away from Americans.

The strong Australian selling point is that the FTA would be the only deal the US is now negotiating that could significantly boost exports of US manufactured goods, at a time when such exports have slumped in the face of competition from nations such as China.

Quizzed on Mr Bush's desire to see the deal done, Mr Armitage said: "About a month ago, he made it very clear to all of us that he wanted to move heaven and earth, if possible, to get an agreement before the end of the year."

But he added that the US wanted a deal only if it benefited the US economy. "What I'm going to tell you is the same as the position of Australia: that is, that if it's fairly equitable and it betters both our situations, then we certainly are keen on it."

The likely success of the FTA is finely balanced, Australian officials say.

On one hand, the failure of world trade talks in Cancun, Mexico, last month have made the US more determined to press on with a series of bilateral and regional trade deals to open up markets.

But the failure at Cancun has also given US farmers ammunition to keep competitors such as Australia out.

They say that until American farmers get more access overseas, Australians should not win new sales into the US. That argument will be magnified enormously in Congress before the election.