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Frustrated Australia resorts to bilateral free-trade deals

Frustrated Australia Resorts To Bilateral Free-Trade Deals

December 3, 2004

CANBERRA, Australia — Frustrated with global trade talks, Australia is using a slew of free-trade agreements to win business across the Asian-Pacific region.

Within several years Australia could have deals in place with seven of its top 12 merchandise-trade partners. Last year, these partners accounted for 93.55 billion Australian dollars (US$72.53 billion), or almost 40% of total two-way merchandise trade.

Trade Minister Mark Vaile argues that possible agreements with China and the Association of Southeast Asian Nations won’t mean the end for Australian manufacturing industry as cheap imports flood in.

Indeed, the dropping of U.S. import tariffs on Australian manufactured items herald major opportunities, Mr. Vaile said, pointing to the deal struck with the world’s biggest economy earlier this year.

"A lot of our industries will get opportunities there," he said.

Australia’s import tariffs on most manufactured goods range between zero and 5%, with only autos and textiles, footwear and clothing sectors having higher tariffs under special arrangements.

"I don’t accept that it’s the death knell of the Australian manufacturing industries, because to a large extent they’re already facing that competition in the market place," he said.

A major global supplier of farm, mineral and energy products, Australia relies to a lesser extent on export earnings from manufactured products and services such as tourism, education and professional services.

It has FTAs with New Zealand and Singapore while two others with the U.S. and Thailand come into force at the start of 2005.

Studies are under way on the feasibility of negotiating FTAs with China and Malaysia, and this week Australia and New Zealand agreed to start negotiations leading to an FTA with the 10-member Asean bloc.

Mr. Vaile wants rules covering foreign direct investment eased in the same way the U.S. deal has allowed.

"As we embark on some of the negotiations we will expand it," he said. "My personal view is that we want inbound" foreign direct investment into Australia. "It will grow the economy and create jobs."

Mr. Vaile says the advent of FTAs complements the multilateral work Australia is doing through the World Trade Organization.

Broadly, Australia’s trade policy advocates scrapping production and export subsidies and increasing access to global markets. Australia pursues this agenda through the WTO and Mr. Vaile said it remains engaged in this process.

 source: WSJ