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US concern poses threat to free trade deal

Canberra Times

Friday, 29 October 2004

US concern poses threat to free trade deal

The United States’ continuing concern about Australian laws is threatening to delay the countries’ free-trade agreement.

Trade Minister Mark Vaile conceded yesterday that an October 31 deadline for the US and Australia to agree on laws bringing the deal into operation may not be met.

There had been problems in the US with the laws Australia passed earlier this year that give legal underpinning to the FTA, which is due to start operation from January 1.

US pharmaceutical companies have expressed concerns about Labor Party amendments aimed at protecting generic drug companies and keeping a lid on drug prices under the Pharmaceutical Benefits Scheme.

These have been increased by a Government pledge during the election campaign to deliberately push down prices under the PBS in a move that would affect margins for name-brand drugs.

Mr Vaile said although he was still confident the deal would go through, there was a chance the October 31 date for the formal exchange of letters between Australia and the US may be delayed. "We might not meet the deadline on Sunday of this week," he told ABC radio.

"That’s not the end of the game."

The exchange of letters is a legalistic system of each country confirming it has passed laws that meet requirements under the FTA.

The US passed its laws in July, although because of the nature of the agreement, they were largely uncontroversial.

Australia, however, had to pass a series of laws affecting drug prices, the Foreign Investment Review Board and other sensitive areas.

Mr Vaile said the Government was holding discussions with the US over both Labor’s FTA amendment on generic drugs and on concerns the US pharmaceuticals industry had over the Coalition’s election promise to cut the drug prices when cheaper generic versions hit the market.

Mr Vaile said there would be no further negotiation on the FTA itself.

New Opposition trade spokesman Simon Crean said yesterday that Mr Vaile had undermined Prime Minister John Howard’s claims about a possible delay of the FTA.

"Instead of playing politics with the free trade agreement, Mr Howard should just tell the truth and get on with the job of improving Australia’s export performance," Mr Crean said.