October 2, 2002

October 2, 2002 | WebMemo on Trade, Economic Freedom

Move Forward with Liberalization: Negotiate with Australia

Recent protests by the U.S. farm lobby have stalled the Bush Administration's momentum in initiating an agreement with Australia. While the President noted negotiating an agreement with Australia as an objective in his new National Security Policy, the Bush Administration has yet to commit to formal negotiations. The farm lobby has protested the initiation of talks due to Australia's restrictions on agricultural products. With the average global agricultural tariff at 62 percent, the farm lobby should be spearheading efforts to negotiate free trade agreements not delaying them. As Australian Trade Minister, Mark Vaile visits Washington this week, the Bush Administration should commit to negotiating a serious agreement that includes concessions on agriculture from both sides.

Only through trade negotiations will markets be liberalized and contentious issues resolved. With only three out of the 190 trade agreements in the world, America lags far behind in market liberalization. Aside from attaining trade promotion authority (TPA) this year, the Bush Administration's trade policies have been characterized by the steel tariff and the farm bill. Stalling negotiations with Australia only reinforces the global view that the United States needs less talk and more action.

In August, the Bush Administration made an ambitious proposal to the World Trade Organization (WTO) to lower agricultural tariffs and subsidies. The proposal is an important first step that needs to be followed with implementation. Negotiating with Australia to lower barriers to agriculture would be an appropriate beginning.

While the farm lobby protests that such action should not be taken until Australia lifts restrictions, Australia could easily state the same about the United States. Australia's complaints include difficulties exporting items such as tomatoes, citrus, feeder cattle and avocados. American producers protest Australian restrictions on Florida citrus, stone fruit, chicken, pork, apples, pears, and corn. Australia recently opened its market to California grapes and should open the door to American citrus, stone fruit, apples, pears, and corn. If it's possible to export American grapes, in negotiations, the United States should insist that Australia extend the same treatment to other fruit and vegetables as well.

America, on the other hand, should expand market access to Australian farm products by lowering tariffs, slashing domestic subsidies, and ensuring speedy processing in customs. Australians have complained about livestock getting delayed in customs. Complaints from both sides would be best resolved at the negotiating table.

President Bush should take use of his greatest achievement thus far, TPA, to begin immediate negotiations with Australia. While agricultural negotiations will be tedious, President Bush should not be swayed by the opinions of one industry. Both countries will greatly benefit in a range of sectors from agriculture to services from the increased market access that an agreement would bring.

About the Author

Sara J. Fitzgerald Policy Analyst
Center for Trade and Economics (CTE)