U.S. and Australia Reach Agreement on a Free Trade Agreement
The Office of the U.S. Trade Representative (USTR) has issued a press release announcing that on February 8, 2004, the U.S. and Australia concluded a free trade agreement (FTA) which is designed to, among other things, eliminate and reduce tariffs and other trade barriers. The USTR states that the text of this FTA will be made public in the near future.
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According to the USTR, the U.S.-Australia Free Trade Agreement (AFTA) is the first FTA between the U.S. and a developed country since the U.S.-Canada Free Trade Agreement in 1988. The USTR explains that Australia is a major trade and investment partner of the U.S., and in 2002 was the U.S.' 13th largest export market for goods.
Highlights of AFTA's Provisions
According to the USTR, AFTA will consist of the following provisions (partial list):
More than 99% of U.S. manufactured exports to Australia to be duty-free. The USTR states that more than 99% of U.S. manufactured exports to Australia will become duty-free immediately upon entry into force of AFTA. The USTR states that this represents the most significant immediate reduction of industrial tariffs ever achieved in a U.S. FTA, with U.S. manufacturers estimating that the elimination of tariffs could result in $2 billion per year in increased U.S. exports of manufactured goods.
All U.S. agricultural exports to Australia to be duty-free. According to the USTR, all U.S. agricultural exports to Australia, totaling more than $400 million, will receive immediate duty-free access. Key agricultural products that will benefit from immediate tariff elimination include processed foods, soups and bakery products, etc. In addition,, the U.S. and Australia will work to resolve certain sanitary and phytosanitary barriers to agricultural trade.
Sensitive agricultural products (beef, dairy, sugar). The USTR notes that the FTA is sensitive to concerns that have been expressed by Congress and U.S. beef farmers, and the agreement phases out above-quota duties over 18 years, with the initial quantity increases small. In addition, there will be no change in the above-quota duties on dairy products, and the initial quantity increases will be small. Also, Australia's current quota access for sugar is unchanged and AFTA provides that an agricultural safeguard will be available in the event of significant price decreases in certain imported Australian horticultural products.
Textiles and apparel tariffs to be phased out. The USTR's fact sheet states that textile and apparel tariffs will phase out over a maximum of 15 years for goods that meet the Agreement's yarn-forward rule of origin. The USTR states that this will promote new opportunities for U.S. and Australian fiber, yarn, fabric and apparel manufacturing.
Customs procedures and rules of origin. The USTR's fact sheet also states that comprehensive rules of origin will ensure that only U.S. and Australian goods benefit from AFTA and notes that these rules of origin are designed to be easier to administer.
In addition, AFTA requires transparency and efficiency in administering customs procedures, including the AFTA rules of origin. The USTR notes that Australia commits to publish laws and regulations on the internet, and will ensure procedural certainty and fairness. The fact sheet further states that both parties agree to combat illegal transshipment of goods. The Agreement also contains language designed to facilitate the rapid clearance through customs of express delivery shipments.
Protections for intellectual property rights. The USTR's press release notes that AFTA requires higher and extended standards for protecting intellectual property rights (IPR) such as copyrights, patents, trademarks, and trade secrets and enhanced means for enforcing those rights. According to the USTR, AFTA calls for each government to adopt state-of-the-art protection for digital products such as software, music, text, and videos, and encourages adoption of measures to promote trade through electronic commerce.
Australia to make improvements to its Pharmaceuticals Benefits Scheme. With regard to pharmaceuticals, the USTR states that Australia will make a number of improvements in its Pharmaceuticals Benefits Scheme (PBS) procedures that will enhance transparency and accountability in the operation of that program, including establishment of an independent process to review determinations of product listings. Among other things, the U.S. and Australia have agreed to establish a Medicines Working Group.
USTR Press Release (Press Release No. 04-08, dated 02/08/04) available at http://www.ustr.gov/releases/2004/02/04-08.pdf
USTR Fact Sheet (dated 02/08/04) available at http://www.ustr.gov/releases/2004/02/2004-02-08-factsheet-australia.pdf
USTR Resources on AFTA available athttp://www.ustr.gov/new/fta/australia.htm