1. U.S.-Australia Free Trade Agreement Launched in November 2002, most important formal advance in U.S.- Australian relations since ANZUS Treaty Bush/Howard meeting in March 2003 set end of year as deadline

2. FTA History First proposed in 1934! Latest proposal was made by Australian Government in late 2000 Overdue!

3. FTA Objective WTO Rules: Violation of MFN? WTO recognizes “the desirability of increasing trade through FTAs,” requires that they encompass “substantially all of the trade” between the countries U.S.-Australia FTA should accomplish this

4. FTAs and Overall U.S. Trade Policy Useful complement – “engine” – for WTO process Historically, WTO’s consensual approach has required competitive spur to maintain forward momentum “Competitive Liberalization” Cancun collapse unfortunate, but with historic precedents

5. Current Trade Relationship We already have a relatively open trade relationship! Two-way trade of goods and services totaled A$40.5 Billion in 2002 The U.S. is Australia’s second-largest export market for goods Australia purchases more goods from the U.S. than from any other country

6. Current Investment Relationship We already have a relatively open investment relationship! Two-way direct investment totaled A$84.5 Billion in 2002 The U.S. is the #1 destination for Australian investment, U.S. is Australia’s largest foreign investor

7. FTA Coverage Chapters could include: National treatment Market access for goods Rules of origin Customs administration Standards Trade remedies Government procurement Investment Financial services Telecommunications Competition policy Intellectual property Labor and Environment

8. Main Issues for U.S. Investment Quarantine Government Procurement

9. Main Issues for Australia Agriculture market access Agricultural subsidies Government procurement Safeguards

10. Impact of Failed Cancun (WTO) Talks Extended Delay in Multilateral Forum Possible Reform of WTO Rules? U.S. Likely to Augment, Accelerate Regional, Bilateral Trade Initiatives

11. Political Prospects: U.S. Strong Congressional support Agriculture is sensitive Export opportunities for U.S. farm products could be important

12. Political Prospects: Australia Available polling shows support Better access to U.S. agricultural markets a big attraction Several domestic sensitivities