The U.S.-Australia Free Trade Agreement: Provisions and Implications

Publication Date: January 2005

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Trade

Type:

Coverage: Australia

Abstract:

After more than a year of negotiations, U.S. and Australian trade officials concluded a bilateral free trade agreement (FTA) on February 8, 2004. The negotiations proved unexpectedly difficult. President Bush and Australian Prime Minister Howard had committed to completing the negotiations by the end of 2003, but differences over agriculture, especially sugar, and other sensitive issues caused the deadline to slip.

The U.S.-Australia FTA (USAFTA) is a comprehensive agreement. It commits the United States and Australia not only to eliminate tariffs on most of their bilateral trade in goods, but also to ensure nondiscriminatory treatment in most areas of bilateral trade in services, government procurement, in foreign investment as well as improved protection of intellectual property rights.

Under the USAFTA, the United States and Australia addressed the few significant irritants in their bilateral economic relationship. In so doing, the agreement could further solidify an already strong relationship. For Australia, those irritants include U.S. restrictions on beef and dairy products. For the United States they include Australian local content requirements in television programming, sanitary and phytosanitary (SPS) measures, state-sanctioned monopolies in exports of wheat and other grains, and screening of foreign investments. In some cases, such as U.S. restrictions on beef and dairy and Australian investment screening, the two sides agreed to loosen restrictions. In the case others, such as the Australian SPS measures and state-sanctioned monopolies, they agreed to establish mechanisms for further discussion. However, in the case of some irritants, such as U.S. import controls on sugar, the two countries agreed no change was possible.

United States Trade Representative Robert Zoellick and Australian Trade Minister Mark Vaile signed the agreement on May 18, 2004, in Washington. On July 6, 2004, the President submitted legislation to implement the agreement. On July 8, the House Ways and Means Committee reported out the implementing bill, H.R. 4759, by voice vote, and on July 15, the full House passed the measure (314-109) in a largely bipartisan vote. On July 15, reported the Senate Finance Committee reported out the companion bill, and on July 16 the full Senate passed the measure (80-16), and it was sent to the President for his signature. President Bush signed the U.S.-Australia Free Trade Agreement Implementation Act on August 3, 2004 (P.L. 108-286). On November 17, 2004, trade officials from each country exchanged diplomatic notes indicating that implementing legislation passed by the other country met the requirements of the FTA. However, this occurred only after discussions were held to resolve U.S. concerns over provisions contained in the Australian implementing legislation pertaining to pharmaceutical patents. The FTA is entered into force January 1, 2005.