Congress is anticipating the arrival of the U.S./Australian Free Trade Agreement (FTA) for its consideration within the next several months. While there is widespread appreciation in Congress Australia's unwavering support in the War on Terror, and military and reconstruction efforts in both Afghanistan and Iraq, there isn't a similar level of support for the free trade agreement with our allies in Congress.
Although congressional concern has typically arisen over labor and environmental issues in other trade agreements, congressional support on the agreement with the Australians rests in the hands of agriculture. At issue is the exclusion of sugar from the Australian FTA.
In order to elicit Australia's support for an agreement without sugar, an important industry within Australia, U.S. negotiators passed upon the opportunity to gain significant reform of the Australian Wheat Board (AWB)--an Australia monopoly which controls all exports of Wheat from the country.
Like the Canadian Wheat Board (CWB), the AWB uses its monopoly and significant resources to pressure Wheat buyers around the world. Unlike American grain trading companies that must make a profit, the AWB does not. The AWB's ability to sell Wheat by undercutting its competitor's price has long been a large concern of the U.S. Wheat industry.
Passing on the opportunity to reform the AWB and further isolate the CWB, U.S. negotiators opted not to pursue an item that has long been of significant importance to U.S. agriculture--threatening the support of senators and representatives from Wheat producing states for the agreement.
The administration has spun the issue of lack of reform of the AWB by repeatedly stating that it has a gentleman's agreement with Australia to pursue reform of the AWB and CWB as part of the World Trade Organization (WTO) talks.
The agricultural industry and farm-state members of Congress are not convinced, especially as the Australians have countered the administration's claims by stating that they have only agreed to put all agricultural issues on the WTO negotiating table--something that Australia had agreed to do long before the bi-lateral free trade talks with the United States.
Further exacerbating the situation is the fact that the administration cut out one particular commodity from the trade negotiations. Members of Congress representing agriculture have expressed their concerns that excluding any commodity from an agreement sets a dangerous precedent for future trade talks, especially the multi-lateral agricultural negotiations within the WTO. In addition, the fact that sugar was the commodity excluded from the FTA with Australia brings fears that this agreement will net similar problems that have arisen as the result of sugar being negotiated separately with Mexico during the establishment of NAFTA. A large percentage of the recent agricultural trade disputes with our neighbors to the south have centered over Mexico's concerns with the side agreement on sugar.
The lack of support and the growing concerns of agricultural state senators and representatives has been strongly underestimated by members of the administration, who may continue to assume that agriculture interests will again shoulder the cause of free trade and push for passage of the Australian FTA.
Instead of assuming it has agriculture's support, the administration would do well to talk to a few members who represent agriculture. They'll probably walk away with a rather different impression.