Australia, US Conclude Free Trade Agreement
Trade pact will create a bi-lateral market valued at $10.8 trillion annually
WASHINGTON, DC - 02/09/04 - The US and Australia have concluded a comprehensive free trade agreement (FTA) "designed to eliminate and reduce tariffs and other trade barriers and promote economic growth and prosperity."
Free trade talks between the two countries were launched in March, 2003.
According to the Office of the US Trade Representative (USTR), the pact will permit more than 99% of US-manufactured goods exports to Australia to be brought into the country duty-free "immediately upon entry into force of the agreement."
Manufactured goods currently account for 93% of US exports to Australia.
The US agricultural sector will also benefit from the pact, the USTR said, with all US agricultural exports to Australia, totaling more than $400 million, also receiving "immediate duty-free access."
Key agricultural products that are expected to benefit include processed foods, soups and bakery products, fruits and vegetables, dried onions, fruit and vegetable juices, dried plums, potatoes, almonds, tomatoes, cherries, raisins, olives, fresh grapes, sweet corn, frozen strawberries, and walnuts - many of which are grown in California's San Joaquin Valley and Imperial County regions.
"Food inspection procedures that have posed barriers in the past will be addressed, benefiting sectors such as pork, citrus, apples and stone fruit," the USTR said.
According to the USTR, the agreement also uses "tariff-rate quotas" (TRQ) to address the volatile issues of market access concerns raised over the past several months by vocal factions in both countries' beef and dairy sectors.
Regarding beef, the USTR said, "above-quota duties will be phased out over an18-year period, and initial increased imports from Australia under the TRQ quota will amount to about 0.17% of annual US beef production, and 1.6% of annual US beef imports."
The quota increases will take effect when US beef exports return to their 2003 (pre-BSE) levels, or three years after effective date of the agreement, whichever comes first.
Safeguards will be available, including a price-based safeguard after the transition period.
There will be no change in the US MFN above-quota tariff on dairy products subject to quotas, and initial increases in imports from Australia under the TRQ quota will amount to about 0.17% of the value of annual U.S. dairy production, and about 2% of the value of total US dairy imports, the USTR said.
Australia is a major trade and investment partner of the US, and in 2002 was America's 13th largest export market for goods, and the 9th largest if the European Union countries are considered as one destination.
Two-way annual goods and services trade is approximately $28 billion, and two-way foreign direct investment is $60 billion. The US currently enjoys a bilateral goods and services trade surplus of $9 billion.
The country - which purchases more goods from the US than from any other country - is also a key export market for important US manufacturing sectors such as aircraft, autos and auto parts, machinery, computers and electronic products, chemicals, and wood and paper products.
Australia is California's 13th largest overseas market, importing nearly $2 billion in California-made products in 2002, according to the California Chamber of Commerce in Sacramento.
The text of the agreement will be made public in the near future, the USTR said.
The US has free trade agreements with Canada and Mexico (NAFTA), Jordan, Chile, Israel, and Singapore.
In addition, Washington has recently concluded the Central American Free Trade Agreement (CAFTA) with Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, and is working to complete an FTA with Morocco, while negotiations with the five nations of the Southern African Customs Union (the SACU comprised of Botswana, Lesotho, Namibia, South Africa and Swaziland) will continue this year.
The US recently began negotiations to include the Dominican Republic in CAFTA; launched negotiations with Bahrain last month; and has announced plans to negotiate FTAs with Thailand, Panama, Colombia, Peru, Bolivia and Ecuador.
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