Ambassador Zoellick of the U.S. Trade Representative's (USTR) office announced on Feb. 8 that the U.S. and Australia had completed their Free Trade Agreement. Zoellick stated, "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." The U.S.-Australia Free Trade Agreement is the first FTA between the United States and a developed country since the U.S.-Canadian Free Trade Agreement in 1988, noted USTR.
While USTR recognized that "Australia is a key export market for important U.S. manufacturing sectors," it also pointed out that the "FTA is sensitive to concerns that have been expressed by Congress and U.S. beef and dairy farmers, and the agreement uses tariff-rate quotas (TRQ) to respond to these concerns while increasing trade." Notably, a "summary of the U.S.-Australia FTA" for agriculture products showed the U.S. sugar industry received a carve-out, maintaining its current quota-like mechanisms with Australia. The dairy industry received an 18-year phase-out period on their TRQ. USTR stated that there will be no increases in the beef TRQ until "U.S. beef exports return to their 2003 (pre-BSE) levels, or three years after the effective date of the agreement, whichever comes first."
R-CALF United Stockgrowers of America (R-CALF USA) and a coalition of over 40 cattle and agriculture organizations were concerned about granting Australia expanded access to the U.S. agricultural marketplace since there are limited benefits to U.S. agriculture and significant downside problems for U.S. agriculture producers. Thus, "We would ask you to seek, consistent with Article XXIV of GATT 1994, an exclusion from the negotiations for cattle and beef in the U.S.-Australia negotiations," stated the coalition in a recent letter to President Bush, Secretary Veneman, and Ambassador Zoellick regarding the then ongoing Australian FTA negotiations.
Dennis McDonald, R-CALF USA Trade Committee chair, said after reviewing initial reports of the newly inked agreement, "While this FTA may not immediately impact U.S. cattle producers, in the long term it could be disastrous to the U.S. live cattle industry." McDonald expressed his appreciation to USTR for at least considering U.S. cattle industry concerns by providing longer phase out periods on TRQs. However, McDonald said, "I cannot endorse this trade agreement because of the potential long-term negative impacts it will have on our next generation of farmers and ranchers."
The U.S.-Australian FTA next must go to Congress to be approved and is part of a larger agenda of FTAs such as the Central America FTA with Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua, which will also be presented to Congress this year. The CAFTA countries represent 7.7 million cows, as compared to Canada's 5.5 million cows. USTR also noted in their release they have launched negotiations for an Andean FTA with Columbia, Peru, Bolivia, and Ecuador. R-CALF USA recently sent submissions to USTR representing their concerns with the Andean who combined run 4.4 million cattle.
To view a copy of the coalition letter, please visit www.r-calfusa.com.