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US gains in one-sided trade deal

Adelaide Advertiser

U.S. gains in one-sided trade deal

By SCOTT MURDOCH in Canberra

20 August 2005

THE much-vaunted free trade agreement with the United States has become one-sided, with no financial benefit to Australia.

Income earned by the U.S. through imports to Australia has increased by $724 million in the first six months after the deal came into effect on January 1 this year.

But for Australia, exports to the U.S. have slumped by $123 million, or 2.7 per cent.

The finding came as the Government was accused of ramping up the publicity surrounding the deal before it was signed by former trade minister Mark Vaile - now Deputy Prime Minister - in May last year.

A parliamentary trade committee was told yesterday that industry groups believed the economic modelling used during the negotiations contained inflated forecasts.

The government, through the Centre for International Economics, claimed the Australian economy would benefit by $6 billion once the deal had been in place for a decade.

However, no economic goodwill has yet been felt in Australia.

The Department of Foreign Affairs and Trade’s U.S. director Jeannie Henderson told the hearing that Australian exports had been sliding for four years.

Since January the number of U.S. imports, particularly of pork which was a sticking point during the negotiations, are well up on last year.

In one positive contrast, the sale of Australian lamb into the U.S. has grown 29 per cent since January because of a tariff reduction from seven cents per kilo to zero.

"Our exports to the U.S. have been on a gradual decline since 2001, the exchange rate is one factor but the government is confident that the FTA and market access will turn that around," Ms Henderson said.

"We are seven months down the track, we are seeing an impact in some specific areas where the market access has been from day one.

"We have always said the U.S. market is extremely large and complex and not easy to just move into."

Ms Henderson said the largest declines in exports had been recorded in confidential items, motor vehicles and crude oil.

The drop in oil though, she said, came via Australia sending more of the commodity to Asia.

Trade committee chairman Bruce Baird, a Liberal backbencher, said he expected exports to grow once the deal had been in place longer.

Minerals Council of Australia public affairs director Brendan Pearson said the government’s forecasts of economic benefits were overstated.

The numbers, he said, had raised Australian producers’ expectations of a potential trade windfall.