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No change likely on sugar in FTA talks

The Age, Melbourne

No change likely on sugar in FTA talks

5 March 2005

(AAP) Australia will push the United States to open its protected sugar market at the first review of the free trade agreement (FTA) between the trans-Pacific economic partners.

But Trade Minister Mark Vaile concedes it’s unlikely the US will open its market to more Australian sugar, while there was no chance America would get concessions on the Pharmaceutical Benefits Scheme (PBS).

Mr Vaile will sit down with US counterpart Rob Portman in Washington on Tuesday for a formal review of the FTA launched on January 1 last year.

At the time, Australia was disappointed it did not win more access to the US sugar market, the failure to do so forcing the government into a $444 million package to prop up the Australian sugar industry.

The US has raised concerns about amendments to Australia’s laws governing generic medicines which the government made under pressure from Labor to protect the integrity of the pharmaceuticals scheme.

Mr Vaile said both the US and Australia would like changes to the FTA, but this week’s meeting would not be the place for major breakthroughs.

"We know that the US would like to make more ground on pharmaceuticals, we’d like to make more ground on sugar, but we’ve got to be realistic and think that’s probably not possible," he said.

"I will still raise it (sugar) just as the Americans raise things in terms of keeping faith with that industry (pharmaceuticals), but we need to be realistic and understand that it’s not a likely outcome."

Mr Vaile said he believed there was no need to alter the government’s amendments to protection for generic medicines.

"I imagine the Americans will want to have a discussion about some of the amendments that were made to the legislation after we’d agreed on the deal," he said.

"Our view on that is that there’s been no identifiable commercial detriment as a result of those amendments and we don’t believe there’s any need to change them."

New figures seem to suggest the US is so far the big winner from the FTA.

For the first seven months of this financial year, Australian exports to the US have actually fallen to $5.3 billion from $5.5 billion for the same period in 2004-05.

Imports, however, have broken the $13 billion barrier, up from $12.3 billion.

Australia’s trade deficit with the US is up $856 million, to $7.7 billion, on the first seven months of the previous financial year.

But Mr Vaile played down expectations of a quick boost from the FTA.

"I’ve always taken the view that a full and accurate measure on this can’t be taken after the first one, two or three years.

"The benefits will build over time."

Opposition treasury spokesman Wayne Swan said the wider issue of foreign debt and poor trade performances was being completely ignored by the government.

The worst monthly trade deficit was recorded in January at $2.7 billion.

"The Howard government has seen foreign debt rise by more in the last three and a half years than during the entire 13 years of the last federal Labor government," he said.

"In the last two year’s alone it’s jumped by more than $100 million."