24 January 2004

Howard may pay for misjudging US free-trade mood

After three years of talking free trade, the Bush Administration now faces its moment of truth. Will it commit to removing its own trade barriers to Australian farm exports? Or, when the chips are down, is its priority to protect jobs in United States industries, whether competitive or not?

With a year of intense negotiations for a US-Australia free-trade agreement to end on Friday, the answer now seems clear. And John Howard's Government is in a dilemma after seriously misjudging the Bush team's commitment to free trade.

US negotiators have offered only modest openings for Australian exports of beef and dairy products and none at all for sugar. Washington seems to be angling for an agreement for freer, not free, trade.

Australian negotiators expect US trade representative Robert Zoellick to raise the stakes in his final offer next week - although yesterday he was reported as confirming that the US would give nothing on sugar - but they are perplexed and concerned.

Washington's mood has changed. The Bush Administration is under heavy attack for agreeing to even a modest expansion of sugar imports in a trade deal with Central America. It seems in no mood to risk it again.

For three years, Trade Minister Mark Vaile and his team have been fending off criticisms that the deal would mean radical changes to the pharmaceutical benefits scheme, film and television production and the rest. Now they are staring at the opposite problem: this agreement might not change much at all.

Perhaps the congaline approach to foreign relations does not work so well after all, or perhaps the Man of Steel is about to get a Dear John letter.

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