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‘Free’ trade with Australia comes at a price

By Dave Frederickson, National Farmers Union President

(Tuesday, June 29, 2004 -- CropChoice guest commentary) -- The U.S.-Australia Free Trade Agreement is hardly free. It actually comes with a sizeable price tag for rural America.

U.S. agricultural imports are already increasing at a faster rate than our exports. The U.S. agricultural trade deficit with Australia alone has grown from $577 million in 1994 to more than $1.5 billion for calendar year 2003. During the last 10 years, Australian agricultural exports into the United States have more than doubled. According to the U.S. Department of Agriculture, more than 98 percent of these commodities directly compete with U.S. production and exports. For example, the U.S.-Australia FTA will widen our borders to beef imports at a time when the future of the domestic beef industry is uncertain because of the implications of bovine spongiform encephalopathy (BSE). This deal could further open the door to Australian beef in the next three years, even if our exports remain closed to the 50-plus countries that banned U.S. beef because of one BSE-infected cow found in the U.S. And, in less than 20 years this FTA would completely open the flood gates for Australian beef.

Additionally, Australia produces more beef than it consumes, making it an unlikely export market for much more U.S. beef. In fact, Australia offers limited potential for expanding demand for any U.S. agricultural products as it is a relatively small and mature agricultural market in terms of population growth and personal incomes. Because of its geographic location, many other importers into that country have a substantial competitive transportation advantage over U.S. farm exports.

The U.S.-Australia FTA also opens the border to Australian dairy products at a time when dairy prices are only now beginning a modest recovery from years of record lows and dairy imports are at record levels. The United States imported about $500 million worth of milk protein products in 2003. Nearly two-thirds of Australia’s total dairy exports are in the form of milk proteins, and nothing in the U.S.-Australia FTA would limit or safeguard the United States against expanded imports of these products in the future.

The future implications of this agreement on the sensitive beef and dairy markets are ominous. Assuming a return to normalcy in U.S. beef export markets, Australian beef exports into the United States will increase dramatically in the second year of the agreement and will expand more than 70,000 tons within the first two decades. Industry experts also anticipate increased imports of dairy products, including certain products previously excluded from the U.S. market. Import competition in our domestic seafood, peanuts and citrus markets is also expected to increase in the next several years.

National Farmers Union cannot support trade negotiations like the U.S.-Australia Free Trade Agreement that trade away our agricultural markets for no visible returns to American farmers and ranchers. However, Farmers Union does support trade that benefits agriculture producers in both countries. NFU encourages Congress to weigh the costs versus the benefits of the U.S.-Australia FTA as it ponders its fate over the next several weeks.

National Farmers Union ( http://www.nfu.org ) works to protect and enhance the economic interests and quality of life for rural citizens through legislative representation, educational opportunities and support for farmer-owned cooperative ventures.