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February 5, 2004

Sweetening a Good Deal

By

Good news: We're close to signing a major trade deal with Australia -- one that could give our economy a real boost.

Provided the deal happens, that is. That's where the bad news comes in: Weeks of negotiations may come to naught because we won't give up our high trade barriers on imported sugar.

That would be bad enough, but the issue goes beyond one trade deal. Thanks to U.S. trade policy, Americans pay two to three times more for sugar than others. Even those who don't use sugar pay, because we shell out more than a billion taxpayer dollars annually so that our government can buy and store excess sugar to maintain these prices.

StillNow, with the Australian trade deal at stake, is a good time to address the problem. We run a trade surplus with The United States is already running a trade surplus with Australia, andthe Australians, and this deal could lock in even more benefitsincrease their demand for our products. Yet the deal could be significantly delayed or even thwarted if we don't guarantee the Aussies better access to American agricultural markets.

Unfortunately, the U.S. proposal is protectionist. The Bush administration won't fully open the sugar trade. Our sugar industry, already uncompetitive and heavily protected by quotas, again may succeed in obtaining an exclusion shielding itself.

Sugar's not the only item of concern with this particular trade deal. TIt's unfortunate that all the information we can collect about the trade deal comes from leaks and rumors. After all, how can a good agricultural policy be developed without sunshine? But at the moment, American and Australian negotiators are refusing to disclose what they're talking about, so we're left to sort through rumor and speculation.

Moreoverhe U.S. offer on beef is rumored to be at least somewhat protectionist. American cattlemen may complain about imports, but the fact remains that Australia simply doesn't have the capacity to flood the U.S. market with cheap beef.

In addition, U.S. ranchers have benefited greatly from past free-trade agreements. For instance, thanks to NAFTA, Mexico is one of our fastest growing markets for beef. And like most Americans, ranchers probably consume a fast-food hamburger from time to time. The majority of Australian beef is flipped on the griddles of America's fast-food chains. Lower tariffs keep their prices affordable.

Australia's government says its official objectives for the trade deal include "the removal of tariff rate quota restrictions on Australian exports to the United States, including those affecting exports of beef, dairy products, sugar, peanuts and cotton." That makes sense. Australia is one of the world's most efficient agricultural producing countries, and its leaders want to guarantee increased market access for their farm products.

The Bush administration can't simply assume Australia will be willing to take home half a loaf. Canberra may gamble that it can strike a better deal with other trading partners. Assuring that Australian sugar and beef producers have significant access to our markets to secure a trade deal would be a small price to pay to get a wide-ranging trade deal.

And that's why all this is so critical. America's overall trade surplus with Australia reached nearly $6 billion in 2002. That means we're exchanging a lot more than sugar and beef.

For example, "U.S producers of transportation equipment, non-electrical machinery, computer and electronic products and chemicals are the strongest exporters to Australia," according to a report prepared for the American-Australian Free Trade Agreement Coalition. Additionally, according to the report, more than half of U.S. imports from Australia are capital goods used to manufacture products in the United States. That means lower overhead costs for U.S. manufacturing, which could open the door for companies to hire more workers.

It also means more jobs here at home -- just what President Bush talked about in his State of the Union address and just what all the Democratic presidential candidates promise on the stump.

President Bush claims his administration "is promoting free and fair trade, to open up new markets for America's entrepreneurs, manufacturers and farmers, and to create jobs for America's workers."

But to give those stirring words meaning and to show he means what he says about the benefits of free trade, the president must put everything on the table and reach an agreement with Australia. The proof is in the pudding -- pudding that will be a lot more affordable without our current tariffs on sugar.

Distributed nationally on the Knight-Ridder Tribune wire

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