- The Washington Times - Sunday, February 8, 2004

U.S. and Australian negotiators yesterday sealed a free-trade deal after marathon talks and a series of compromises that leave untouched some of the most sensitive issues on both sides.

President Bush and Prime Minister John Howard last year made the pact a priority for the allies after Australia backed the U.S. war against Iraq. Both men talked on the phone Saturday to help overcome final obstacles.

The agreement, which must be approved by legislators in both nations, covers the majority of the $28 billion in trade between the nations. It immediately would eliminate duties on 99 percent of U.S. manufactured goods and all agricultural goods exported to Australia, the Office of the U.S. Trade Representative said in a statement.

“This is the most significant immediate cut in industrial tariffs ever achieved in a U.S. free-trade agreement, and manufacturers are the big winners,” U.S. Trade Representative Robert B. Zoellick said at a news conference.

But Mr. Zoellick and his counterpart, Australian Trade Minister Mark Vaile, agreed to protect U.S. sugar makers, as well as beef and dairy producers. Australia had said there would be no deal without an increase to its sugar quota but blinked at the end of a three-week negotiating session. Australians would be able to increase gradually its dairy and beef exports to the United States. Beef, for example, would have some protection for 18 years.

“We applaud the administration’s treatment of sugar in the Australia agreement,” Carolyn Cheney, chairwoman of the U.S. Sugar Industry Group, said in a statement.

The United States left alone Australia’s system for controlling pharmaceutical prices, rules that require local content for media broadcasts and a private monopoly that controls wheat exports. The United States had wanted more competition in all three sectors in order to benefit U.S. drug companies, the entertainment industry and grain farmers, respectively.

The difficult compromises dragged the talks past an end-of-2003 deadline originally set by Mr. Bush and Mr. Howard, and threatened a de facto deadline yesterday as Mr. Zoellick prepared to leave Washington for meetings abroad.

“What we both had to do is deal with sensitivities on both sides in a way that allowed us to achieve a greater good and a comprehensive agreement,” Mr. Zoellick said.

U.S. sugar farmers and their supporters in Congress had promised to kill any deal that upset strict quotas on all foreign sugar and ultimately won, despite pressure from Australia and free-trade advocates in the United States.

The dairy and beef industries also had lobbied against any concessions.

Several members of Congress worried that the exclusion sets a bad precedent.

“If we exclude one industry, we will be under enormous pressure to exclude others. We will become paralyzed by our own sensitivities because we will have no consistent rationale to resist the demands by any sector,” Rep. Bill Thomas, California Republican and chairman of the House committee that has jurisdiction over trade agreements, said in a letter to Mr. Bush last month.

It is not clear when Congress would consider the agreement. Mr. Bush would submit the agreement under trade promotion authority, which allows a yes or no vote with no changes by legislators.

Despite some difficult choices, both sides hailed the agreement as groundbreaking. It is the first U.S. free-trade agreement with a developed country since a pact with Canada in 1998 and opens a relatively large market to new competition.

“This superb agreement can result in close to $2 billion in new U.S. manufactured goods exports,” Jerry Jasinowski, president of the National Association of Manufacturers, said in a statement. NAM is a District-based association that represents firms such as Procter & Gamble and Dow Chemical.

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