Aussie and US negotiators racing against the clock over free-trade

CANBERRA - Australian and US trade negotiators were racing against time yesterday to try to save a free-trade deal, but officials said big gaps remained over farm trade concessions.

Australia's negotiating team in Washington has set today as the deadline for talks with the United States, because US Trade Representative Robert Zoellick leaves tomorrow for a two-week trip.

Some analysts said the only way to rescue the deal was for Australian Prime Minister John Howard and US President George W. Bush to step in.

A spokesman for Australian Trade Minister Mark Vaile, who is in talks with Zoellick, would not comment on the chance of clinching a deal this week, in time to seek Congress' approval before November presidential and congressional elections.

Free-trade talks between Australia and the United States began last March and were made a priority of the Bush Administration after Canberra sent troops to Iraq.

But the two sides have struggled to agree on trade concessions for sugar, beef, dairy, foreign investment and drugs.

Agriculture is a major obstacle in the talks. Australia wants greater access for sugar, dairy and beef to help boost two-way trade worth A$28 billion a year.

But the Bush Administration has bowed to US sugar producers by pushing for a pact barring Australia from exporting more sugar to the United States and Senate Democratic leader Tom Daschle called for beef to be excluded from any deal. US dairy producers also oppose greater imports.

It is estimated a free-trade deal could inject A$4 billion a year into the Australian economy.

US business groups said Washington risked killing an agreement that promised great benefits for US manufacturers if it gave in to farmers, with Australia believed to have agreed to drop to zero almost all tariffs on US-manufactured goods.

- REUTERS