National Grange Applauds U.S.-Australia Free Trade Agreement

02/13/2004

On February 8, 2004, the United States and Australia announced that they reached a free-trade agreement, which immediately would eliminate duties on 99 percent of U.S. manufactured goods and all agricultural goods, totaling more than $400 million, exported to Australia. The U.S.-Australia Free Trade Agreement is the first FTA between the United States and a developed country since the U.S.-Canada Free Trade Agreement in 1988. Australia is America's 9th largest goods export market. Two-way annual goods and services trade is about $28 billion and the U.S. enjoys a $9 billion trade surplus with Australia.

At a joint news conference Sunday, U.S. Trade Representative Robert Zoellick and Australian Trade Minister Mark Vaile said the agreement could boost manufacturing in both countries by billions of dollars. Mr. Zoellick called the deal "the most significant immediate cut in industrial tariffs ever achieved in a U.S. free-trade agreement."

In a coalition letter in 2001 to President Bush signed by 35 agricultural and agribusiness organizations, the National Grange expressed its opposition to the United States entering into Free Trade Agreement negotiations with Australia until the Australian government takes steps to resolve outstanding sanitary and phytosanitary (SPS) regulations that act as unfair trade barriers that restrict the importation of U.S. agricultural products into that nation.

Under the agreement the U.S. and Australia will work to resolve sanitary and phytosanitary barriers to agricultural trade, in particular for pork, citrus, apples and stone fruit.

• The agreement establishes a new mechanism for scientific cooperation between U.S. and Australian authorities to resolve specific bilateral animal and plant health matters.
• USDA's Animal and Plant Health Inspection Service and Biosecurity Australia will operate a standing technical working group, including trade agency representation, to engage at the earliest appropriate point in each country's regulatory process to cooperate in the development of science-based measures that affect trade between the two countries.

Key agricultural products that will benefit from immediate tariff elimination include:

• Processed food products such as soups, food preparation and bakery products.
• Soybeans and oilseeds products.
• Fresh and processed fruits, vegetables and nuts, including: dried onions, fruit and vegetable juices, dried plums, potatoes, almonds, tomatoes, cherries, raisins, olives, fresh grapes, sweet corn, frozen strawberries, and walnuts.
• With resolution of technical issues expected in the near future, pork products.
• Alcoholic beverages, including distilled spirits.

U.S. sugar makers, as well as beef and dairy producers will be protected under the agreement.

• Beef: U.S. above-quota duties will be phased out over an 18-year period. Initial increased imports from Australia under the TRQ quota will amount to about 0.17% of U.S. beef production, and 1.6% of U.S. beef imports. The quota increases will take effect when U.S. beef exports return to their 2003 (pre-BSE) levels, or three years after the effective date of the agreement, whichever comes first. The U.S. and Australia will cooperate in international organizations on BSE standards. After the transition period, a price-based safeguard will be available, designed to be sensitive to market disruptions for high-quality beef.
• Dairy: There will be no change in the U.S. MFN above-quota tariff on dairy products subject to quotas. Increases in imports from Australia under the FTA tariff rate quotas will amount to about 0.17% of the annual value of U.S. dairy production, and about 2% of the current value of total U.S. dairy imports. The additional imports are not expected to affect the operation of the Commodity Credit Corporation's dairy price support program.
• Sugar: Australia's current quota access for sugar is unchanged. Under the Uruguay Round Agreements, Australia's access for sugar in FY 2004 was 87,402 metric tons.

For more information

USTR U.S.-Australia FTA
The Washington Post 2/9/04: U.S., Australia Agree on Free-Trade Pact

If you have any questions or comments please contact Legislative Research Analyst Chil-Sook Hwang by fax: 202-347-1091 or by phone: 1-888-4GRANGE, ext 109. Thank you for your grassroots participation in the National Grange Legislative program.

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