Colliding with trade barriers

By GREG ANSLEY in Canberra

The forces arrayed against a free-trade agreement between Australia and the United States are gathering strength as negotiations speed toward the year-end deadline decreed by the two nations' leaders.

In the US, farmers are maintaining pressure on American negotiators. In Australia, unions, opposition parties, farmers, film and TV and consumer groups are warning of political retaliation if Canberra caves in.

"A bilateral agreement with the US means we will lose our cultural and economic independence, and we're not prepared to accept that without a hard fight," said Australian Manufacturing Workers Union national secretary Doug Cameron, a leading anti-free-trade activist.

The negotiations, which have only one more round in Washington to go after last week's talks in Canberra, have also underlined the difficulties New Zealand will face if it joins the US free-trade agreement queue.

American dairy farmers continue to be among the staunchest opponents of a deal with Australia, even citing the possibility of New Zealand dairy goods diverting through Australia to gain free access to US markets, and complaining of the edge the New Zealand industry has through subsidised research and development.

US dairy groups are also lobbying for Australian access to be granted on a product-by-product basis, rather than allowed under a single agreement.

Australia's hard road also clearly indicates the importance of political goodwill: were it not for the military alliance and the sponsorship of President George W. Bush in Washington, it is doubtful whether the talks would have even got off the ground, let alone be driven with the pace and determination now evident.

Enormous barriers remain: free access to the US for Australian dairy, beef, sugar and cotton; the Australian Wheat Board; Canberra's pharmaceutical benefits scheme; investment and legal issues; and cultural and new media issues.

Neither side is close to getting what it wants on the most difficult of these, although both chief negotiators, Stephen Deady of Australia and America's Ralph Ives, said at the end of last week's talks that the gap had narrowed.

Nor does either admit that tension is rising as the deadline nears.

"The discussion has been very co-operative, cordial," Ives said. "Both sides are trying to solve problems, and that's regardless of whether the issue is wording of text or really fundamental issues."

Deady agreed: "The mood is good, the atmosphere is very, very good and that helps the negotiation ...

"The advances we've made are consistent with meeting the end-of-year target for concluding the FTA confirmed by the Prime Minister and President Bush."

But the divisions are deep and entrenched.

The two teams set aside the pharmaceutical benefits scheme altogether; Australia considers the latest offer on agriculture - which will now include phase-in periods - to be inadequate, and Canberra's local content rules remain a sticking point.

Canberra's public position remains clear: there will be no deal without comprehensive access for agriculture and protection for the PBS, among others.

The negotiators have conceded that the final horse-trading, and the ultimate shape of the deal, will be up to the politicians - who both face elections next year.