Kerry Unsure About Free-Trade Deal with Australia

By Patrick Goodenough | July 7, 2008 | 8:21 PM EDT

Pacific Rim Bureau ( - A U.S.-Australia free-trade agreement is being welcomed by both governments, praised by the business sector, and appears to enjoy strong support in Congress -- but Democratic presidential hopeful John Kerry evidently is undecided.

U.S. Trade Representative Robert Zoellick said the deal he signed Tuesday with Australian Trade Minister Mark Vaile contained "the most significant immediate reduction of industrial tariffs ever achieved in a U.S. free trade agreement."

The FTA, which must still get past Congress and the Australian parliament, has the support of the U.S. Chamber of Commerce and the National Association of Manufacturers (NAM), and both bodies urged speedy approval by U.S. lawmakers.

It also has been welcomed by the Business Council of Australia and other industry leaders, although in both countries, some sectors are critical of the agreement.

NAM vice president for international economic affairs, Frank Vargo, noted that more than 90 percent of U.S. exports to Australia are manufactured goods.

Under the "balanced and ambitious" deal, Australian import duties on almost all of them will disappear from day one, making it "most front-loaded free trade agreement ever," he said.

According to the U.S. Chamber of Commerce, bilateral trade between the U.S. and Australia grew to $28 billion last year, and Australia is the ninth-largest export for market for U.S-made products.

Chamber President and Chief Executive Thomas Donohue said the agreement directly benefited U.S. companies, demonstrated American commitment to wider trade opportunities and the accompanying benefits, and "recognizes an important U.S. relationship in the region."

For many Australians, the prospect of an FTA with the world's biggest economy is seen as a reward for the Howard government's close relationship with Washington and strong support for the war against terror.

Vaile said what he was hearing from the Americans was, "we've been good allies ... we've been pursuing the same economic objectives, so why not bring the economic relationship to the same level as the strategic alliance?"

Canberra says the likely benefits for Australia are considerable.

In a report commissioned by the government last month, Australia's Centre for International Economics said the FTA would probably add 5.6 billion Australian dollars ($3.9 bn) to Australia's gross national product, and 6.1 billion Australian dollars ($4.2 bn) to its gross domestic product, after a decade.

The government has estimated that the agreement will create some 40,000 new jobs in Australia, a country of 20 million.

Some Australian economists have dismissed the predictions as over-optimistic, while also expressing concern about how it may affect Australia's trade relations with Asian countries.

In an election year, opposition politicians have also questioned some elements of the deal and its potential benefits, and parliamentary inquiries are currently underway.

Kerry 'reviewing' deal

In the U.S., meanwhile, politics is also expected to play a part.

Vaile, who has been lobbying members of Congress in recent days, sounded optimistic about the deal winning sufficient bipartisan support.

Speaking after the signing ceremony, he said: "In the discussions we've had here with representatives of both the Republican Party and Democratic Party on the Hill, we sense a growing groundswell of support, gaining momentum as we moved towards today."

Rep. Cal Dooly (D-Calif.), who chairs the Friends of Australia congressional caucus, has predicted "one of the strongest bipartisan votes for a trade agreement in recent times."

Likewise, two senior Democrats on the House Ways and Means Committee, Reps. Charles Rangel (D-NY) and Sander Levin (D-Mich.), have both voiced their support.

Their party's presumed presidential candidate, however, has declined to endorse the agreement.

The Kerry campaign did not respond Tuesday to queries about the senator's position on the matter, but a spokeswoman was quoted earlier as saying Kerry was "still reviewing" the FTA.

Kerry is banking on the support of the Teamsters Union in November's election, and the president of the 1.4 million-member union, James Hoffa, has come out in opposition to the FTA, citing what he said were flaws in Australian labor laws.

Kerry addressed a Teamsters event in Las Vegas last weekend, and promised that he intended to put the American worker first.

According to a report posted on the Teamsters website, Hoffa told reporters unions were not happy with Kerry's past support for free trade, but said he was confident the senator now understood the need to provide more protection for U.S. workers.

Despite union concerns about the deal's effect on U.S. workers, Commerce Secretary Donald Evans said in a statement that the FTA "creates incentives that will encourage manufacturers to put more workers on the shop floor while keeping our economy moving in the right direction.

"The alternative to free trade would be economic isolationism that would destroy American jobs, lower our standard of living and leave American workers on the sidelines," he said.

Asked about Kerry's position, Vaile told Australia's channel nine television from Washington Wednesday that he recognized it was "a sensitive and difficult" time in the U.S. election campaign, but he was confident the deal was get through Congress.

If the deal is approved by Congress and the Australian parliament, it will come into force on January 1 next year.

Send a Letter to the Editor about this article.

Patrick Goodenough
Patrick Goodenough
Spencer Journalism Fellow