Healthy Skepticism Library item: 339

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Publication type: news

Becker E.
Trade Deal Opens Australia to U.S. Manufactured Goods
2004 May 19

Full text:

The United States and Australia signed a free trade agreement on Tuesday, and the Bush administration says it hopes Congress will pass the measure this summer.

But the prospects for Congressional approval are uncertain. The agreement could become a victim of the growing distractions of the war in Iraq and the presidential election as well as a paralysis caused by disagreements between powerful interest groups.

In the horse trading to reach the accord, the United States opened itself to Australian agriculture exports, while Australia opened the door to American manufacturing exports.

As a result, the American manufacturing and pharmaceutical industries strongly support the accord, and American farmers are nearly unanimous in their opposition.

The Bush administration has yet to persuade a majority in Congress to support the agreement with Australia, which was one of the United States’ earliest allies in the war in Iraq.

The United States trade representative, Robert B. Zoellick, signed the agreement and said afterward that the administration would put it before Congress soon.

“We’re looking to try to get this agreement done this summer, if we can, even though it’s a crowded calendar because of the election,” he said.

The Australian minister for trade, Mark Vaile, signed the agreement in a ceremony at the gilded Andrew W. Mellon auditorium. In marked contrast, President Bush signed the trade agreement with Singapore last year in a glittering White House ceremony, when his administration was less preoccupied with war and the election.

The issues in this accord have produced a strange alliance. Many Congressional Democrats who generally oppose the administration’s trade agreements for what they consider lax labor and environmental standards favor the agreement with Australia.

Representative Charles B. Rangel, the New York Democrat, said in a statement on Tuesday that the two nations had complementary standards that would benefit workers and the middle class.

While the pharmaceutical industry favors the accord because it breaks new ground for its exports, public health advocates say the measure may weaken Australia’s ability to offer drugs at a low price through its national health system.

Kevin Outterson, a professor of law at the University of West Virginia, said that while the measure was not as intrusive as originally proposed, it still interfered in what had been “the gold standard for offering citizens the most cost-effective medicines.”

“The inevitable result will be a rising cost of drugs for the Australian people,” Mr. Outterson said.

With America’s trade deficit continuing to climb – it jumped to a record $46 billion in March – American manufacturers said the accord could open the door to an increase of as much as $2 billion in exports to Australia.

American dairy farmers were among the most vocal opponents of the agreement. Senator Russell D. Feingold, the Wisconsin Democrat, said the accord would mean a loss of dairy farms and also undermine the American dairy industry.

The American Farm Bureau Federation, which has been a strong supporter of the administration and a benefactor of its subsidy policy, refused to endorse the agreement.

“It doesn’t appear agriculture will play a role in trying to get this agreement passed,” said Christopher Garza, director of Congressional relations for the farm organization.

The United States refused to open its sugar market as part of the agreement.