Herald-Sun, Melbourne

Urgent call to amend FTA

By George Lekakis

12 January 2006

THE Bracks Government yesterday called on the Federal Government to negotiate "urgent amendments" to the Free Trade Agreement with the United States, claiming Victorian manufacturers had become victims of artificial trade barriers.

In a move aimed at stemming the decline of the local automotive sector, state Minister for Manufacturing and Exports Andre Haermeyer has written to the Federal Minister for Trade, Mark Vaile, seeking changes to parts of the FTA. The Victorian Government supports the move to free trade arrangements with the US, but Mr Haermeyer claimed that anomalies had emerged which were inconsistent with a genuine FTA.

The big issue worrying the Victorian Government concerns alleged deals between US labour unions and car makers such as General Motors and Ford which aim to limit car volumes imported from foreign subsidiaries such as GM Holden in Australia.

"We understand this practice limits the export potential of Victorian auto manufacturers, effectively putting a 20,000 unit ceiling on the importation of any particular vehicle type," Mr Haermeyer said. "The Holden Monaro, successfully marketed in the US as the Pontiac GTO, is a victim of this arrangement."

The political pressure from the Victorian Government comes ahead of a bilateral review of the Free Trade Agreement which is due to begin in Washington next month.

A spokeswoman for GM Holden refused to comment on whether exports of the company’s Australian-made parts and vehicles were subject to artificial limits.

"We believe the FTA is the best way to encourage two-way trade between Australia and the US," the spokeswoman said.

"Holden is one of the largest importers of engine components and transmissions from the US. The most important benefit of the FTA for Holden is that it increases our flexibility."

Mr Vaile defended the value of the FTA to the domestic car industry, saying that removal of tariffs in the US had opened new export opportunities.

"There’s huge opportunity for the Australian makers of sports utility vehicles to export to the US following the removal of the 25 per cent tariff," he said.

"Vehicle makers in other countries do have that opportunity."

While 2005 was traumatic for the local auto industry, the sector still accounted for almost one-third of all Victorian manufactured exports.

But the sector is struggling to maintain profitability in the face of stiff competition from low cost makers of vehicles and components in China and Thailand.

The loss of more than 14,000 jobs in the Australian automotive industry in the past three years has focused government attention on the sector.

A delegation of Australian government and industry representatives is scheduled to meet the global chiefs of General Motors and Ford in Detroit next week.