February 5, 2004
By Sara J. Fitzgerald
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
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
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
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
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
Good news: We're close to signing a major trade deal with Australia -- one that could give our economy a real boost.
Sara J. Fitzgerald
Read More >>
Heritage's daily Morning Bell e-mail keeps you updated on the ongoing policy battles in Washington and around the country.
The subscription is free and delivers you the latest conservative policy perspectives on the news each weekday--straight from Heritage experts.
The Morning Bell is your daily wake-up call offering a fresh, conservative analysis of the news.
More than 200,000 Americans rely on Heritage's Morning Bell to stay up to date on the policy battles that affect them.
Rush Limbaugh says "The Heritage Foundation's Morning Bell is just terrific!"
Rep. Peter Roskam (R-IL) says it's "a great way to start the day for any conservative who wants to get America back on track."
Sign up to start your free subscription today!
The Heritage Foundation is the nation’s most broadly supported public policy research institute, with hundreds of thousands of individual, foundation and corporate donors. Heritage, founded in February 1973, has a staff of 275 and an annual expense budget of $82.4 million.
Our mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense. Read More
© 2014, The Heritage Foundation Conservative policy research since 1973