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Last Updated: Sunday, 8 February, 2004, 19:00 GMT
US seals Australia trade pact
Sugar cane
The US remains unwilling to allow free entry for Australian sugar
Australia and the US agreed a free trade deal on Sunday after a fortnight of talks that came close to collapse.

The talks snagged on US reluctance to open its markets to Australian beef and sugar, and overran the Friday deadline.

The US Trade Representative's office said the pact delivers "the most significant immediate cut in industrial tariffs ever achieved" by the US.

But Australia seems to have failed to achieve an increase in sugar export quotas to the US.

"The Australian ambition in agriculture had to be modified, but it will be a very, very good agreement for Australia," said an Australian trade official.

US lobbyists win out

US farmers campaigned hard against increases in imports of Australian sugar, beef and dairy produce, playing on President Bush 's need to avoid upsetting voters in farm states ahead of November's presidential poll.

Australian negotiators had set a final deadline of Friday and at one stage threatened to walk away from the talks.

The final package means that more than 99% of US manufactured goods will enter Australia duty free as soon as the deal comes into force, the USTR said in statement on its website.

It predicted the deal would bring an extra $2bn a year in sales for US manufacturers.

Tariffs on all US agricultural exports to Australia, worth nearly $400m a year, are to be dropped immediately.

Cows and sugar

The USTR said the final pact was "sensitive" to concerns expressed by US beef and diary farmers.

US beef farmers are to get an 18-year breathing space during which cuts in customs duty on Australian beef will be phased in. The initial changes cover imports equal to 0.17% of US beef production, the USTR said.

Duty free shipments of Australian dairy produce will initially go up by 0.17% of the value of US output and there will be no tariff cuts, according to the USTR.

Its statement made no mention of any agreement on Australian sugar sales, one of the most contentious topics at the talks.

Trade between the two countries is worth $28bn, with the US enjoying a $9bn trade surplus, the USTR said.

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