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Summary of the U.S.-Australia Free Trade Agreement

Free Trade "Down Under"


Expanding U.S. Manufacturing Access to a Key
Market


· More than 99 percent of U.S.
exports of manufactured goods to Australia will become duty-free immediately
upon entry into force of the Agreement.
Manufactured goods currently account for 93 percent of total U.S. goods exports to
Australia.


· This is the most significant
immediate reduction of industrial tariffs ever achieved in a U.S. free trade agreement, and will provide immediate benefits for
America’s manufacturing workers and companies. U.S. manufacturers estimate
that the elimination of tariffs could result in $2 billion per year in increased U.S.
exports of manufactured goods.


· There will be immediate benefits
for such key U.S. manufacturing sectors as:

o Autos and auto
parts

o Chemicals, plastics, and soda
ash

o Construction
equipment

o Electrical equipment and
appliances

o Fabricated metal
products

o Furniture and
fixtures

o Information technology
products

o Medical and scientific
equipment

o Non-electrical
machinery

o Paper and wood
products

· Because Australian tariffs are
much higher than U.S. average tariffs, American firms today pay 10 times as much in total annual import tariffs to
Australia as the U.S. collects from Australian imports. The U.S.-Australia FTA will eliminate
this disparity.

Two-way annual goods and services trade with Australia is about $28 billion,
and the U.S. has a $9 billion trade surplus with Australia. Australia is
America’s 9th largest goods export market** Considering the European Union as
a single export
destination.

New Opportunities for U.S. Farmers

· All U.S. agricultural exports to
Australia, totaling more than $400 million, will receive immediate duty-free access.

· Key agricultural products that
will benefit from immediate tariff elimination include:

o Processed food products such as
soups, food preparation and bakery products.

o Soybeans and oilseeds
products.

o Fresh and processed fruits,
vegetables and nuts, including: dried onions, fruit and vegetable juices, dried plums, potatoes, almonds, tomatoes,
cherries, raisins, olives, fresh grapes, sweet corn, frozen strawberries,
and walnuts.

o With resolution of technical
issues expected in the near future, pork products.

o Alcoholic beverages, including
distilled spirits.

· The U.S. and Australia will work
to resolve sanitary and phytosanitary barriers to agricultural trade, in particular for pork, citrus, apples and
stone fruit

o The agreement establishes a new
mechanism for scientific cooperation between U.S. and Australian authorities to resolve specific bilateral
animal and plant health matters.

 o USDA’s Animal and Plant Health
Inspection Service and Biosecurity Australia will operate a standing technical working group, including trade
agency representation, to engage at the earliest appropriate point in
each country’s regulatory process to cooperate in the development of
science-based measures that affect trade between the two countries.

· In response to U.S. concerns
about Australia’s agricultural state trading enterprises, Australia committed to working with the U.S. in the ongoing WTO
negotiations on agriculture to develop export competition disciplines that
eliminate restrictions on the right of entities to export.

· The FTA is sensitive to concerns
that have been expressed by some members of Congress and some U.S. farm sectors, and the agreement uses
tariff-rate quotas to respond to these concerns.

o Beef: U.S. above-quota duties will be phased out over an 18-year
period. Initial increased imports from Australia under the TRQ quota will amount
to about 0.17% of U.S. beef production, and 1.6% of U.S. beef imports. The
quota increases will take effect when U.S. beef exports return to their
2003 (pre-BSE) levels, or three years after the effective date of the agreement,
whichever comes first. The U.S. and Australia will cooperate in international
organizations on BSE standards. After the transition period, a price-based safeguard
will be available, designed to be sensitive to market disruptions for high-quality
beef.

o Dairy: There will be no change in the U.S. MFN above-quota tariff on
dairy products subject to quotas. Increases in imports from Australia
under the FTA tariff rate quotas will amount to about 0.17% of the annual value
of U.S. dairy production, and about 2% of the current value of total U.S. dairy
imports. The additional imports are not expected to affect the operation of the
Commodity Credit Corporation’s dairy price support program.

o Sugar: Australia’s current quota access for sugar is unchanged. Under
the Uruguay Round Agreements, Australia’s access for sugar in FY 2004
was 87,402 metric tons.

· An agricultural safeguard will be
available in the event of significant price decreases in certain imported Australian horticultural
products.

Pharmaceuticals: A Shared Commitment On Access to Innovative
Medicines

· The United States and Australia
agreed to common principles on facilitating high quality health care and continued improvements in public health for their
nationals. The Parties state a shared commitment to:

o Recognizing the important role
played by innovative pharmaceuticals in delivering high quality health care;

o The importance of research and
development in the pharmaceutical industry, and of government support including through intellectual property
protection;

o The need to promote timely and affordable access to innovative
pharmaceuticals through transparent, expeditious and accountable procedures;
and

o The need to recognize the value
of innovative pharmaceuticals through adopting or maintaining procedures that appropriately value the objectively
demonstrated therapeutic significance of a pharmaceutical.

· In implementing these principles,
Australia will make a number of improvements in its Pharmaceuticals Benefits Scheme (PBS) procedures—including
establishment of an independent process to review determinations of product
listings—that will enhance transparency and accountability in the operation of the
PBS.

· The two sides also agreed to
establish a Medicines Working Group that will provide for continued dialogue between the United States and Australia on
emerging health care policy issues. In addition, the U.S. Food and Drug Administration
and the Australia Therapeutic Goods Administration will work together to make
innovative medical products available more quickly.

Textiles and Apparel

· Textile and apparel tariffs will
phase out over a maximum of 15 years for goods that meet the Agreement's yarn-forward rule of origin, promoting new
opportunities for U.S. and Australian fiber, yarn, fabric and apparel
manufacturing.

Open Services Markets

· Australia will accord substantial
access across to U.S. services suppliers, subject to very few exceptions, based on the so-called "negative list" approach.
Australia’s commitments apply across a wide range of sectors, including but not limited
to

· Telecommunications
services,

· Financial services, including
banking, insurance and securities

· Distribution services, such as
wholesaling, retailing and franchising

· Express delivery
services

·Computer and related
services

· Audiovisual and entertainment
services

· Energy services

· Construction and engineering
services

· Tourism

· Advertising
services

· Professional services
(architects, engineers, accountants, etc.)

· Environmental
services

· Education and training
services

Australian firms in the U.S. employ about 85,000 Americans, and it is estimated that U.S. exports to Australia support more than 150,000 U.S. jobs.

· In the area of broadcasting and audiovisual services, the FTA
contains important and unprecedented provisions to improve market access for U.S. films
and television programs over a variety of media including cable, satellite, and
the Internet.


· The commitments in services cover
both cross-border supply of services (such as services supplied through electronic means, or through the travel
of nationals) as well as the right to invest and establish a local services presence.


· Financial services:
U.S. financial service suppliers (banks,
insurance companies, securities companies) already enjoy a significant presence in the
Australian market through subsidiaries, joint ventures and branches.


o The FTA locks in Australia’s good
practice with regard to new investment and acquisitions, and grants new rights for life insurance
branches.


o For cross-border supply
(electronic supply), Australia confirms access for reinsurance, MAT insurance, brokerage of reinsurance and MAT
insurance, insurance auxiliary services, financial information and data
processing services, financial advisory services and portfolio
management.


o In addition, Australia and the
U.S. have agreed to high standards for regulatory transparency, including procedures applying to licensing systems.
Australia also confirms aspects of its regulatory approach that guarantee
expedited introduction of insurance products.


Important New Protections for U.S. Investors


· The agreement will establish a
predictable framework for U.S. investors operating in Australia. All forms of investment are protected under the
Agreement, including enterprises, debt, concessions, contracts and intellectual property.

· U.S. investors enjoy in most
circumstances the right to establish, acquire and operate investments in Australia on an equal footing with local investors, and with investors of other countries.


· All U.S. investment in new
businesses is exempted from screening under Australia’s Foreign Investment Promotion Board (FIRB). Thresholds for acquisitions by U.S. investors in nearly all sectors are raised significantly, from
A$50 million to $800 million. This higher threshold would have exempted nearly 90 percent of
U.S. investment transactions from screening over the past three years. A work
program will be initiated to limit the kinds of investment transactions, such as passive
investment, that would be subject to review.


· In recognition of the unique
circumstances of this Agreement – including, for example, the long-standing economic ties between the United States and
Australia, their shared legal traditions, and the confidence of their investors in
operating in each others' markets – the two countries agreed not to adopt procedures in this FTA
that would allow investors to arbitrate disputes with governments. This issue will be
revisited if circumstances change. Government-to-government dispute settlement procedures
remain available to resolve investment-related disputes.


U.S. foreign direct investment in Australia was $36.3 billion in 2002. Australian investment in the United States was $24.5 billion in 2002.


Significant New Access to Government Procurement
Contracts


· U.S. suppliers are granted rights
to bid on contracts to supply Australian government ministries, agencies and departments. Covers the purchases of 80
Australian central government entities, including key ministries and government
enterprises. Low-value contracts are excluded.


· These commitments are
particularly significant and commercially important, because Australia is one of the only developed countries that is not a
party to the WTO Agreement on Government Procurement.


· Requires the use of tendering
procedures that will ensure that procurements are conducted in a transparent, predictable and fair
manner.


· Australia gains
non-discriminatory access to the procurement of most U.S. federal agencies as well as certain government
enterprises.


· Australian central government
will eliminate its industry development programs, under which suppliers have had to provide various types of offsets,
e.g., local content or local manufacturing requirements, as a condition of their
contracts.


· Both countries are also committed
to extending non-discriminatory coverage of the agreement to sub-central entities and will be working with their
respective states and territories to refine the extent of that coverage in the next few
weeks.


· Restricts Australia’s use of
selective tendering to ensure that U.S. suppliers have a fair opportunity to compete for government contracts.


· Confirms that bribery in
government procurement is specified as a criminal offense under Australian and U.S. laws.


E-Commerce: Free Trade in the Digital Age


· Australia and the United States
agreed to provisions on e-commerce that reflect the issue’s importance in global trade and the importance of supplying
products and services by electronic means as a key part of a vibrant e-commerce
environment.


· Digital products will receive
non-discriminatory treatment and will not be subject to customs duties.


· First-time commitments will
facilitate the ability of businesses to use electronic means to authenticate a business transaction (e.g., digital signatures) in
both markets.


· The United States and Australia
will be cooperating on other e-commerce issues including on work towards mutual recognition of digital
certificates used for electronic transactions with each other’s government (e.g., in government
procurement).


State-of-the-Art Protection for U.S.
Trademarks


· Requires a system to resolve
disputes about trademarks used in Internet domain names, which is important to prevent "cyber-squatting" with respect to
high-value domain names.


· Applies principle of
"first-in-time, first-in-right" to trademarks and geographical indications, so that the first person who acquires a right to a trademark or
geographical indication is the person who has the right to use it.


· Encourages the development of an
on-line system for the registration and maintenance of trademarks, as well as a searchable database.


· Requires transparent procedures
for the registration of trademarks, including geographical indications.


Protection for Copyrighted Works in a Digital
Economy
· Copyright owners maintain rights over temporary copies of their
works on computers, which is important in protecting music, videos, software and text
from widespread unauthorized sharing via the Internet.

· Establishes that only authors,
composers and other copyright owners have the right to make their work available on-line.

· Ensures extended terms of
protection (e.g., life of the author plus seventy years) for copyrighted works, including phonograms, consistent with emerging international trends.

· Establishes strong
anti-circumvention provisions to prohibit tampering with technologies (like embedded codes on discs) that are designed to prevent piracy and unauthorized distribution over the Internet.

· Ensures that governments use only
legitimate computer software, thus setting a positive example for private users.

· Requires rules to prohibit the
unauthorized receipt or distribution of encrypted satellite signals, thus preventing piracy of satellite television
programming.

· Provides rules for the liability
of Internet Service Providers (ISPs) for copyright infringement, reflecting the balance struck in the U.S. Millennium
Copyright Act between legitimate ISP activity and the infringement of
copyrights.

The leading U.S. states exporting to Australia are Washington, California, Illinois, Texas, Michigan, New York, Ohio, Pennsylvania and Florida.

Patents & Trade Secrets: Stronger
Protections


· Provides for the extension of
patent terms to compensate for delays in granting the original patent, consistent with U.S. practice.


· Limits the grounds for revoking a
patent, thus protecting against arbitrary revocation.


· Clarifies that test data and
trade secrets submitted to a government for the purpose of product approval will be protected against unfair commercial use
for a period of 5 years for pharmaceuticals and 10 years for agricultural chemicals.
Closes potential loopholes to these provisions.


· Requires measures to prevent the
marketing of pharmaceutical products that infringe patents, and to provide notice when the validity of a
pharmaceutical patent is to be challenged.


· Assures protection for newly
developed plant varieties and animals.

Tough Penalties for Piracy and Counterfeiting

· Criminalizes end-user piracy,
providing strong deterrence against piracy and counterfeiting.

· Requires both Parties to
authorize the seizure, forfeiture, and destruction of counterfeit and pirated goods and the equipment used to produce them. Also
provides for enforcement against goods-in-transit, to deter violators from
using ports or free trade zones to traffic in pirated products. Ex officio action may be
taken in border and criminal cases, thus providing more effective
enforcement.

Groundbreaking Customs Procedures and Rules of
Origin

· Comprehensive rules of origin
will ensure that only U.S. and Australian goods benefit from the Agreement. Rules are designed to be easier to
administer.

· Agreement requires transparency
and efficiency in administering customs procedures, including the Australia FTA rules of origin. Australia commits to
publish laws and regulations on the Internet, and will ensure procedural certainty
and fairness.

· Both parties agree to share
information to combat illegal trans-shipment of goods. In addition, the Agreement contains language designed to facilitate
the rapid clearance through customs of express delivery shipments.

Protection and Promotion of Worker Rights


· Agreement fully meets the labor
objectives set out by Congress in TPA. Labor obligations are part of the core text of the trade
agreement.


· Both parties reaffirm their
obligations as members of the International Labor Organization (ILO), and shall strive to ensure that their domestic laws provide
for labor standards consistent with internationally recognized labor principles.
Agreement makes clear that it is inappropriate to weaken or reduce domestic labor protections to encourage trade or investment between the Parties.


· Agreement requires that Australia
and the United States effectively enforce their own domestic labor laws, and this obligation is enforceable through the Agreement’s dispute settlement procedures.


· Procedural guarantees in the
Agreement will ensure that workers and employers will continue to have fair, equitable and transparent access to labor tribunals/courts.


· Parties established a process for
further cooperation on labor matters, including possible joint cooperative activities to advance common objectives and work
on labor law and practice in the context of the ILO Declaration on Fundamental
Principles and Rights at Work.


Each of the fifty U.S. states exports to Australia, and Australia is among the top 25 export destinations for 48 of the 50 states.

Commitments and Cooperation to Protect the
Environment


· Agreement fully meets the
environmental objectives set out by Congress in TPA. Environmental obligations are part of the core text of the trade
agreement.


· Agreement commits parties to
effectively enforce their own domestic environmental laws, and this obligation is enforceable through the Agreement’s dispute
settlement procedures.


· Scope of obligations for
Australia extends to environmental laws at the level of the states and territories. Much of the significant environmental protection
in Australia takes place at the state and territory level.


· Both parties commit to establish
high levels of environmental protection, and to not weaken or reduce environmental laws to attract trade and
investment.


· Agreement also promotes a
comprehensive approach to environmental protection, as long practiced by the U.S. and Australia. Reflecting their
existing robust regulatory approaches, procedural guarantees that ensure fair, equitable and
transparent proceedings for the administration and enforcement of
environmental laws are married with provisions that promote voluntary, market-based mechanisms to
protect the environment.


· The Parties will also build on
their long history of collaboration and cooperation on international environmental matters through a Joint Statement on
Environmental Cooperation.

Dispute Settlement: Tools to Enforce the
Agreement


· Core obligations of the
Agreement, including labor and environment provisions, are subject to the dispute settlement provisions of the
Agreement.


· Dispute panel procedures set high
standards of openness and transparency:


o Open public
hearings;


o Public release of legal
submissions by parties;


o Special labor or environment
expertise for disputes in these areas;


o Opportunities for interested
third parties to submit views.


· Emphasis is on promoting
compliance through consultation, joint action plans and tradeenhancing remedies.


· An innovative enforcement
mechanism includes monetary penalties to enforce commercial, labor and environmental obligations of the trade
agreement.