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United States the FTA winner one year on

The Age, Melbourne

United States the FTA winner one year on

4 January 2006

The government has blamed a stronger currency and increased competition from Asia for a disappointing first year in Australia’s new trade pact with the United States.

Figures from the Department of Foreign Affairs and Trade (DFAT) revealed Australia sold less to America but bought more from the economic giant in the year after it signed its Free Trade Agreement (FTA).

While Australia’s merchandise exports to the US fell by 4.7 per cent in the 12 months to October, imports from the US rose 5.7 per cent, the data showed.

Critics say the government should consider using its escape clause and pull out before the situation gets worse.

"Our argument is that we should be looking seriously at the provision in the agreement (under which) the government can give six months notice to end the agreement," Public Interest Advocacy Centre (PIAC) policy officer Patricia Ranald said.

The FTA was fundamentally lopsided, Dr Ranald said.

"We will subject ourselves continually to pressure like the pressure that is being exerted now by the drugs companies," she said.

"It would be a disaster if we gave away our rights to affordable medicine."

The FTA came under renewed scrutiny on Tuesday after Acting Prime Minister and Trade Minister Mark Vaile announced he was considering scrapping a Labor amendment to the deal protecting cheap, generic drugs.

Doctors, trade analysts and the opposition say the move would put more pressure on the cash-strapped Pharmaceutical Benefits Scheme (PBS), leading to inevitable price hikes for medicines.

Mr Vaile said the PBS would not be jeopardised and the amendment would only be removed if the US drug industry, which has been lobbying the government for changes, could prove it hurt them.

"We went to the brink in the negotiations to defend the structure, the viability, and the sustainability, and affordability of the Pharmaceutical Benefits Scheme to the point where the agreement nearly didn’t take place," he said.

He also called for patience as concern about recent trade figures surfaced.

The benefits of the FTA would not begin to flow to Australia’s economy for a number of years, he said.

"I would caution people about making judgments after 12 months only," he told reporters after touring bushfire-affected Junee in south-western NSW.

Mr Vaile said the strong Australian dollar had an impact on trade.

"During the last 12 months ... (we have) had a very high exchange rate on the Australian dollar, which has been attractive for imports and an impediment to exports," he said.

"At the same time, there have been buoyant and robust economies operating in north Asia that have been very attractive for our exporters to go into those markets, so you can’t just look at 12 months in isolation."

Mr Vaile said he was still working to get access for Australia’s sugar farmers to the highly protected US market when the deal comes up for review in March.

"There may be an opportunity in the future to include it and so we’ll continued to put that forward as an ambition of ours to get sugar included in the bilateral agreement."

The FTA came into force on January 1, 2005.

© 2006 AAP