logo logo

Chile deal ’a model’ for other free trade agreements

The Australian, Canberra

Chile deal ’a model’ for other free trade agreements

By Lenore Taylor, National correspondent

28 May 2008

The Rudd Government says its first successful free trade agreement reveals the tests it will apply to all bilateral trade negotiations as it switches the emphasis of trade policy back to multilateral free trade talks.

Announcing a free trade agreement with Chile yesterday, Trade Minister Simon Crean said it was "the most comprehensive agreement Australia has ever signed" and did not "carve out" any sectors.

He said the Government would insist on the same approach in its trade talks with China and Japan.

The agreement with Chile, which covers 97 per cent of trade between the two countries and will be formally signed in July, includes all agricultural products, including sugar, which the former government excluded from the free trade agreement with the US.

Mr Crean said the agreement went further than the commitments both countries had made in World Trade Organisation talks and included clauses that meant Chile would extend to Australia any concessions it made in other bilateral or multilateral agreements.

"We have always been interested in FTAs, but they have to be enhancements of the multilateral round, not detractions from it," Mr Crean said, in response to Opposition criticism that Labor was neglecting the bilateral trade agenda.

But Opposition trade spokesman Ian Mcfarlane said Mr Crean was taking credit for an agreement largely negotiated during the Howard years.

"Since taking office Trade Minister Simon Crean has been downplaying bilateral agreements as the poor cousin of multilateral agreements," Mr Macfarlane said. "But today, with a straight face, Mr Crean claimed credit for the completion of a process started in 2006 by the previous government."

Under the agreement with Chile, tariffs covering 97 per cent of trade between the two countries will disappear when it takes effect next January, including the 5 per cent tariff Australia imposed on Chilean wine and the 6 per cent tariff Chile imposed on Australian products.

Two-way trade between Australia and Chile is more than $850 million a year and Australia has invested $US3 billion in Chile. The president of the National Farmers Federation, David Crombie, said: "In many ways, it’s a model FTA, covering all goods, even Chile’s sugar sector, and ensures meaningful benefits will flow to Australian agricultural exporters."

Australian Industry Group chief executive Heather Ridout said the FTA could provide Australian businesses with a "beach-head" for the Latin American market.