Reuters | By Michelle Nichols | Feb. 9, 2004
CANBERRA (Reuters) - A free trade agreement with the United States will bring little benefit to Australia, analysts and economists said on Monday after the deal failed to meet hopes on agriculture, although business groups welcomed it.
The deal, struck overnight in Washington, left the nation's sugar industry angry about being sacrificed for a deal that business groups said would boost Australia's economy, while the farming industry was disappointed about its marginal gains.
The United States has refused to allow more access for Australian sugar, but agreed to cut tariffs on Australian beef over 18 years and raise the duty free quota for dairy products.
Alan Oxley, director of lobby group Australian Business for a Free Trade Agreement with the United States, said the deal would add billions to trade between Australia and the United States and sugar was a small sacrifice to make.
"This agreement will add billions to Australia's trade and investment with the United States," Oxley told ABC radio.
"It creates free trade with beef, it might be a long phase in but this will ultimately give our beef exporters unhindered access to the U.S. market. That's a very big result for agriculture."
The Australian Chamber of Commerce and Industry said the deal has given Australian business substantial mew market access opportunities "in one of the world's most dynamic and innovative economies" and benefited the whole economy.
But analysts and economists disagreed.
"The U.S. free trade agreement is of marginal significance to Australia, and that was something that studies the government even commissioned beforehand indicated, on assumptions of more generous concessions on agriculture," said Rick Kuhn, political analyst at Australian National University.
"The government will try and say it is the beginning of a new era, but it is a load of rubbish."
Trade between Australia and the United States totals A$28 billion (US$21.5 billion) a year and some analysts have estimated the deal could add between A$2 billion and A$4 billion to Australia's economy.
Prime Minister John Howard, who is expected to hold an election this year, said the agreement was in the national interest and offered too much to the Australian economy for it to be lost on the single issue of market access for sugar.
"If we'd walked away from this because of sugar, that would not have advantaged the sugar people at all and it would have, I believe, robbed many other Australian industries of advantages that they are entitled to have," Howard told reporters.
But Kuhn said Howard had simply attempted to shore up voter support, particularly in some regions, ahead of an election. "Not to reach any agreement at all would be an utter failure, so they have cobbled something together," he said.
AUSTRALIAN JOB LOSSES
Free trade negotiations between the close allies began last March and were made a priority of the Bush administration after Australia sent troops to the war in Iraq.
Howard and Bush wanted to seal a deal so it could be voted on by the U.S. Congress before November's presidential election.
U.S. Trade Representative Robert Zoellick said the main benefit of the agreement for the United States was that it would give U.S. factories a boost by eliminating tariffs on more than 99 percent of U.S. manufactured exports to Australia.
Australia's top manufacturing union warned of tens of thousands of job losses under the deal.
"Worst-case scenario for us is a flood of United States imports and car components and general engineering, and our manufacturing base is decimated," said Doug Cameron, national secretary of the Australian Manufacturing Workers Union.
The main opposition Labor party said concessions made on agriculture had damaged Australia's position in world trade negotiations, which stalled after collapsing over agriculture and other issues in Cancun, Mexico, nearly five months ago.
"This is not a free trade agreement. It's a partial trade agreement that, from our assessment this morning, is not in Australia's interests," Labor leader Mark Latham told reporters.
The deal does not need the approval of the Australian parliament, though some laws may need to be passed to give effect to some sections, and it will be referred to a Senate panel for scrutiny.
Macquarie Bank Chief Economist Richard Gibbs said the real test of the deal would be whether it encouraged greater long-term U.S. investment in Australia.
"But in terms of is this going to put a lot of dollars in the pockets of Australians, no, I don't think it will," Gibbs said.Reuters:
