- The Washington Times - Friday, February 6, 2004

Good news: We’re in the midst of getting a major trade deal with Australia — one that could give our economy a real boost.

It hasn’t been easy, though. It has taken additional time to negotiate because we won’t give up our high trade barriers on imported sugar. The tone that the White House has adopted on sugar threatened this deal.

That would be bad enough, but the issue goes beyond one trade deal. Thanks to U.S. trade policy, Americans pay 2 to 3 times more for sugar than others. Even those who don’t use sugar pay, because we shell out more than a billion taxpayer dollars annually so our government can buy and store excess sugar to maintain these prices.

Now, with the Australian trade deal at hand, is a good time to address the problem. We run a trade surplus with the Australians, and this deal could increase their demand for our products. Although this deal offers many benefits for American producers, the White House has stalled for weeks over giving the Aussies better access to American agricultural markets.

Unfortunately, the U.S. proposal is protectionist. The Bush administration won’t fully open the sugar trade. Our sugar industry, already uncompetitive and heavily protected by quotas, again may succeed in shielding itself.

Sugar is not the only item of concern with this particular trade deal. The U.S. offer on beef is rumored to be at least somewhat protectionist. American cattlemen may complain about imports, but Australia simply doesn’t have the capacity to flood the U.S. market with cheap beef.

In addition, U.S. ranchers have benefited greatly from past free-trade agreements. For instance, thanks to the North American Free Trade Agreement, Mexico is one of our fastest-growing markets for beef. And like most Americans, ranchers probably consume a fast-food hamburger from time to time. The majority of Australian beef is flipped on the griddles of America’s fast-food chains. Lower tariffs keep their prices affordable.

Australia’s government says its official objectives for the trade deal include “the removal of tariff rate quota restrictions on Australian exports to the United States, including those affecting exports of beef, dairy products, sugar, peanuts and cotton.” That makes sense. Australia is one of the world’s most efficient agricultural producing countries, and its leaders want to guarantee increased market access for their farm products.

The Bush administration should not have assumed that Australia would be willing to take home half a loaf. Canberra may gamble it can strike a better deal with other trading partners. Assuring Australian sugar and beef producers significant access to our markets is a small price for securing a wide-ranging trade deal.

That’s why all this is so critical. America’s overall trade surplus with Australia reached nearly $6 billion in 2002. That means we’re exchanging much more than sugar and beef.

For example, “U.S. producers of transportation equipment, nonelectrical machinery, computer and electronic products and chemicals are the strongest exporters to Australia,” according to a report prepared for the American-Australian Free Trade Agreement Coalition. Additionally, according to the report, more than half of U.S. imports from Australia are capital goods used to manufacture products in the United States. That means lower overhead costs for U.S. manufacturing, which could open the door for companies to hire more workers.

It also means better paying jobs here at home — just what President Bush talked about in his State of the Union address and just what all the Democratic presidential candidates promise.

President Bush claims his administration “is promoting free and fair trade, to open up new markets for America’s entrepreneurs, manufacturers and farmers, and to create jobs for America’s workers.”

But to give those stirring words meaning and to show he means what he says about the benefits of free trade, the president must put everything on the table when negotiating with Australia or anyone else, for that matter. The proof is in the pudding — pudding that will be a lot more affordable without our current tariffs on sugar.

Sara J. Fitzgerald is a trade policy analyst in the Center for International Trade and Economics at the Heritage Foundation.

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