Fed: ACCI warns of risks of FTA, see benefits as small

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Fed: ACCI warns of risks of FTA, see benefits as small

By Shane Wright

CANBERRA, Aug 12 AAP - Business support for a free trade agreement (FTA) with the UnitedStates appears to be waning with the nation's peak industry organisation warning the deal'sbenefits are likely to be small.

The Australian Chamber of Commerce and Industry (ACCI) said there were bigger gainsto be made from world trade liberalisation, arguing a special deal with America may hurttrade and relations with nations such as New Zealand and China.

But Bush administration officials said they were committed to the agreement, arguingit would benefit both Australia and the US.

Australia and the US have spent all year negotiating an FTA, with both countries hopefulof signing it off by year's end.

But Australian farmers have expressed concern about America's offers to liberalisefarm trade, while there is concern in the US agriculture sector about the FTA.

Earlier this week, the Australian Industry Group said it would dump its support forthe deal if it failed to deliver full and equitable access.

Today ACCI said it was vital the FTA talks did not detract Australia's focus from theWorld Trade Organisation's (WTO) round of multi-lateral trade talks, which would offerAustralia much larger gains.

The FTA had to deliver benefits in addition to any that came out of the WTO round, it said.

There was also a risk the deal could harm trade with other countries, diverting tradethat would have taken place if not for the FTA.

"Any economic benefits from such an agreement are likely to be small, and must be consideredagainst the trade diverting impact it is likely to have on our other major trading partners,and our broader relationships with them," it said.

"As a small trading nation, Australia must remain acutely aware of the implicationsof any bilateral or regional trade agreement for the primacy of the WTO system."

Deputy US Secretary of State Richard Armitage, in Australia for a series of meetings,said the Bush administration was keen to wrap up talks by year's end.

The biggest stumbling blocks would be in agriculture, he said.

"Clearly the easy matters have been taken care of and the difficult matter is the onewe're wrestling with now, and that's the general subject of agriculture," he told reporters.

In Sydney, US Under-Secretary for International Trade Administration Grant Aldonassaid although agriculture access would bring benefits, bigger gains could be made on theinvestment front.

"For a country like Australia with its wealth of natural resources, with its humancapital, what it really needs to do is attract a lot of investment," he told reporters.

"So the real value ... is to put the domestic stamp of approval on the relationshipand encourage American capital to flow, encourage capital to flow generally."

AAP sw/sb/cjm/jlw

KEYWORD: TRADE US NIGHTLEAD