U.S.-Australia Free Trade Agreement

• Launched in November 2002, most important formal advance in U.S.-Australian relations since ANZUS Treaty

• Bush/Howard meeting in March 2003 set end of year as deadline

FTA History

• First proposed in 1934!• Latest proposal was made by

Australian Government in late 2000

• Overdue!

FTA Objective

• WTO Rules: Violation of MFN?• WTO recognizes “the desirability

of increasing trade through FTAs,” requires that they encompass “substantially all of the trade” between the countries

• U.S.-Australia FTA should accomplish this

FTAs and Overall U.S. Trade Policy

• Useful complement – “engine” – for WTO process

• Historically, WTO’s consensual approach has required competitive spur to maintain forward momentum

• “Competitive Liberalization”• Cancun collapse unfortunate, but

with historic precedents

Current Trade Relationship

• We already have a relatively open trade relationship!

• Two-way trade of goods and services totaled A$40.5 Billion in 2002

• The U.S. is Australia’s second-largest export market for goods

• Australia purchases more goods from the U.S. than from any other country

Current Investment Relationship

• We already have a relatively open investment relationship!

• Two-way direct investment totaled A$84.5 Billion in 2002

• The U.S. is the #1 destination for Australian investment, U.S. is Australia’s largest foreign investor

FTA Coverage

• Chapters could include:

• National treatment• Market access for

goods• Rules of origin• Customs

administration• Standards• Trade remedies

• Government procurement

• Investment• Financial services• Telecommunication

s• Competition policy• Intellectual property• Labor and

Environment

Main Issues for U.S.

• Investment• Quarantine• Government Procurement

Main Issues for Australia

• Agriculture market access• Agricultural subsidies• Government procurement• Safeguards

Impact of Failed Cancun (WTO) Talks

• Extended Delay in Multilateral Forum Possible

• Reform of WTO Rules?• U.S. Likely to Augment, Accelerate

Regional, Bilateral Trade Initiatives

Political Prospects: U.S.

• Strong Congressional support• Agriculture is sensitive• Export opportunities for U.S. farm

products could be important

Political Prospects: Australia

• Available polling shows support• Better access to U.S. agricultural

markets a big attraction• Several domestic sensitivities