[Congressional Record (Bound Edition), Volume 150 (2004), Part 9]
[Senate]
[Pages 12143-12145]
[From the U.S. Government Publishing Office, www.gpo.gov]




                     AUSTRALIA FREE TRADE AGREEMENT

  Mr. BAUCUS. Mr. President, in the book of Ecclesiastes, the Preacher 
spoke of how there is ``a time to plan, and a time to uproot.'' The 
American farmer has known this truth from the first days when Indians 
first walked to this continent.
  Those of us who are privileged to represent rural States know well 
the times of American farmers and ranchers. No matter what the time, 
their concerns are never far from our thoughts.
  Times have changed for American agriculture, and for American jobs. 
In 1900, 37 percent of American workers worked in agriculture. Now, 
only about 2 percent do.
  Of course, it doesn't seem like 2 percent to rural States such as 
Montana, North Dakota, and South Dakota, where agriculture can still 
account for as much as 50 percent of the economy.
  But that is the reality: American farmers are more productive than 
ever. And because productive American agriculture produces more than 
American households consume, exports are as important as ever. That is 
why American farmers have been among the strongest supporters of 
international trade.
  And it is about that intersection between American agriculture and 
international trade that I rise to speak today.
  Last month, the United States and Australia signed a free trade 
agreement, taking an important step to connect two of the world's most 
vibrant economies. This agreement creates opportunities for both 
countries. For Australia, it offers integration with the world's 
largest economic power. For the United States, it offers a link to an 
Australian market that has one of the highest standards of living in 
the world--and is a key platform to markets in Asia.
  In the coming weeks, we will hear about the significant economic 
benefits of this agreement. But I think we should also look at this 
agreement in a broader context. First, we need to take a balanced look 
at the agreement and assess its costs and benefits. Second, we need to 
view the Australia agreement in the context of our larger trade agenda.
  The benefits of the Australia agreement are compelling--particularly 
in the context of the current debate over jobs moving overseas.
  When compared to some of the other agreements that the administration 
is negotiating, Australia offers real benefits. And it is not subject 
to some of the traditional criticisms.
  Compare the debate over the Australia agreement to the debate over 
the Central America agreement. Critics of CAFTA contend that Central 
America's lower labor and environmental standards will undercut jobs 
here at home. I share some of these concerns and continue to work hard 
on strengthening these standards.
  Yet, with the Australia agreement, this tension disappears. 
Australian workers enjoy high labor standards. Australia protects its 
environment.
  More importantly, Australian consumers want U.S. manufactured goods. 
Australia is one of the few countries where the U.S. enjoys a trade 
surplus. This fact helps explain the strong support of U.S. 
manufacturers for this agreement--which they estimate will result in $2 
billion more in exports every year.
  This free trade agreement offers clear benefits to the U.S. economy 
and to U.S. workers.
  Thus the Australia agreement does not raises the usual concerns over 
labor and the environment. But it does raise concerns over agriculture. 
And farmers are usually stalwart supporters of free trade.
  Their anxieties are understandable. Australia is a major exporter of 
many of the same commodities that Americans produce--particularly beef, 
dairy, and sugar. Yet, Australia offers a relatively small consumer 
market in exchange. So, while Australian farmers would get increased 
access to our consumer market of around 250 million people, our farmers 
would get increased access to an Australian consumer market that is 
much smaller.
  So when the administration announced late in 2002 that it intended to 
enter into negotiations with Australia, agriculture groups immediately 
voiced concern.
  As I looked at the negotiations, I saw two options. I could sit back, 
say nothing, and hope for the best. This might have been politically 
expedient, given the anxieties within the agriculture community, but it 
would have risked getting a worse product, as a result.
  Instead, I decided to engage the process, using my position as the 
ranking Democrat on the Finance Committee to help shape the best 
possible agreement for our country and our farmers. After consulting 
with the agriculture community in Montana, I decided that to do 
otherwise would be a disservice to the many farmers and ranchers back 
home who look to me to fight for them.
  As I looked at this agreement, the potential concerns for beef, 
dairy, and sugar producers were clear. But I also saw potential gains 
for Montana--including wheat farmers and pork producers, as well as 
Montana's growing technology manufacturing industries. With this in 
mind, I set out to help Ambassador Zoellick find ways to mitigate the 
dangers and maximize the gains.
  My staff and I worked closely with the U.S. Trade Representative 
throughout this process. And I met personally with the Australian Prime 
Minister and other officials. As negotiations entered a critical phase 
last December, I spelled out to Ambassador Zoellick the sensitive areas 
for Montana agriculture that needed his greatest attention. I also 
offered some ideas for how to manage them.
  My staff and I worked tirelessly to ensure that negotiators--from 
both countries--understood and accommodated the needs of Montanans. In 
early February, the negotiators concluded an agreement that addressed 
sensitive Montana products with great care. The U.S. Trade 
Representative addressed my concerns on virtually every commodity.
  While Australia agreed to the immediate elimination of all tariffs on 
many U.S. agricultural products, the U.S. received important 
protections.
  Beef. On beef, my first concern was ensuring that the U.S. gets what 
is called ``access for access.'' In other words, the U.S. Trade 
Representative should undertake new agreements and find new export 
markets to offset potential increased imports from Australia. The 
proposed U.S.-Thailand agreement, for example, will help us reach that 
goal. Thailand's population is three times larger than Australia's, 
with a consumer market that is growing quickly. We need to build on the 
Thailand agreement by opening other significant markets--particularly 
in Asia.
  But we are several years from finishing the Thailand agreement. And 
we are likely several years from completing the current round of 
negotiations in the WTO. So we need to make sure that increased access 
to our market is far enough down the road that it will be offset by 
other agreements. To address this, I worked with USTR to ensure a 
significant transition period. As a result, access for Australian beef 
will increase very slowly, with duties in place for 18 years. 
Importantly, the agreement only provides increased access for 
manufactured beef--other beef products will continue to face the same 
duties they face today.
  I also worked to ensure the agreement contained special safeguards--
so that there is not a surge of Australian imports into the U.S. 
market. As a result, the agreement contains two safeguards--one in 
effect during the 18-year transition, and another taking effect in year 
19 to remain in place indefinitely.
  Dairy. For dairy, this agreement recognizes the sensitivity of this 
industry by retaining existing tariffs indefinitely. Most importantly 
for Montana,

[[Page 12144]]

tariffs for milk protein concentrates are unaffected by the agreement.
  Sugar. Perhaps the most difficult issue in the agreement was how to 
address the concerns of the U.S. sugar industry. This industry faces 
extreme distortions on the global market, for example, high export 
subsidies in Europe. These distortions chronically depress the world 
price far below the world's average cost of production. For these 
reasons, sugar policy must be addressed multilaterally in the WTO 
negotiations.
  In this agreement, Ambassador Zoellick took a difficult and 
controversial step in excluding sugar entirely from the agreement. Some 
have criticized him for this. But not this Senator and those I 
represent.
  Sheep. Even for Montana sheep ranchers, who already face free trade 
in lamb, the agreement delays the elimination of the few remaining wool 
tariffs, rather than providing for their immediate elimination. This 
comes on the heels of initial efforts by the U.S. and Australian 
industries to establish a joint marketing effort aimed at increasing 
consumption of lamb.
  Wheat. On wheat, which is a major Montana export, the agreement makes 
some progress toward our ultimate goal of reforming global markets. The 
U.S. industry and I had both hoped to secure an Australian commitment 
to restructure the Australian Wheat Board, a state trading enterprise, 
or STE, that acts as a monopoly trader controlling the Australian 
market. Because Australia is a significant exporter of wheat, their 
artificially low prices distort the world market and make it harder for 
U.S. wheat growers to compete.
  While Australia did not agree to immediate changes to its Wheat 
Board, it did agree to reverse its position in the Doha Round 
negotiations and work with the U.S. to mandate global reform of STEs. 
This is an important step. It further isolates and undermines the Doha 
negotiating leverage of other countries that use STEs to distort 
agriculture markets.
  This will particularly help us in our efforts to force reform in 
Canada. Montana wheat producers are affected daily by the distortions 
introduced into the U.S. market by the Canadian Wheat Board. This part 
of the Australia agreement is thus a very positive development, and a 
clear improvement compared to the status quo.
  SPS Issues. Finally, I reminded Ambassador Zoellick of the crucial 
need for Australia to resolve its sanitary and phytosanitary, or SPS, 
barriers to U.S. products. In response to U.S. concerns, the 
Australians agreed to resolve SPS disputes as soon as possible. I am 
pleased to note that the Australians have made good on this promise in 
the high-profile dispute over pork. Last month, Australia lifted 
regulatory barriers to U.S. pork. That one action could mean an 
additional $50 million in U.S. pork exports.
  U.S. negotiators understood my concerns in this agreement. I thank 
Ambassador Zoellick and his staff--particularly Al Johnson--for 
addressing them.
  Of course, it would be a mistake to think that free trade agreements 
affect only farmers. For the great swath of American and Montana 
manufacturing workers hit hard by the more than 3 million jobs lost 
over the past 3 years, this agreement couldn't come at a better time.
  Australia is one of the few large economies with whom the U.S. enjoys 
a trade surplus. With a standard of living higher than Germany, France, 
and even Japan, Australia has one of the most robust and fundamentally 
sound economies in the world. Guaranteed access to a market like this 
is crucial if we are serious about rebuilding the U.S. economy.
  Industrial trade with Australia is already strong, but with this 
agreement, it will get even stronger. This agreement will eliminate 
tariffs on more than 99 percent of U.S. goods immediately. Mr. 
President, 93 percent of current U.S. exports to Australia are 
manufactured goods, so further economic integration is bound to help 
U.S. manufacturers and U.S. workers.
  These benefits will extend to all parts of the country. Montana 
industries already export $3.4 million worth of industrial goods to 
Australia. This number will only grow higher, as a result of this 
agreement. Montana will benefit not only from increases in direct 
exports, but from increased demand for other goods that require Montana 
inputs.
  Further benefits would accrue to U.S. exporters from using Australia 
as a platform for more efficient access to Asian markets. This 
agreement will thus provide net benefits across a vast spectrum of the 
U.S. economy--manufacturing, services, investments, and workers.
  But let me return to how international trade will help U.S. farmers. 
This is always a fundamental question, particularly for those of us who 
represent rural states.
  As a Montanan, it is hard to talk about international trade without 
thinking about agriculture. Over the years, U.S. agriculture has 
undergone enormous changes, for reasons that are much broader than 
globalization. The U.S., as a whole, has changed dramatically. Where we 
live, where we work, the things we make, the technology we use to make 
things--all of these have changed since our parents' time.
  We need a rural America that is not only stable and prosperous; we 
need a rural America that is compatible in the long-term with a 21st 
century characterized by mobility and rapid technological advancement. 
We need a farm economy that is highly adaptive and aggressively focused 
on competitiveness.
  To accomplish this, we need sweeping changes in several areas. We 
will need more agricultural research--an area suffering from an 
appalling decline in federal support. We will need a farm policy that 
facilitates, rather than simply underwrites, the farm economy.
  And we will need a vigilant search for new and growing markets.
  Of course, many of these needs are beyond the ken of trade policy, 
but the search for new markets is not. That is why fundamentally we 
need a strategy that embraces the global trading system.
  For the U.S. to remain a superpower in agriculture, we must see the 
world as it is, not as it used to be. That means we need to focus our 
attention on global negotiations that will create real fairness in 
agriculture trade. I share the concern of many about a trade policy 
agenda that focuses too much attention on bilateral agreements, at the 
expense of our broader efforts in the World Trade Organization.
  Yet, in the trend toward globalization, the industrial world is 
moving ahead. We should not allow agriculture to be left behind. 
Leaving agriculture behind in the 20th century trading regime would be 
disastrous for U.S. farmers, if for no other reason than they are, on 
the whole, the most productive and technologically advanced in the 
world. A globalized economy and its institutions are the only forum in 
which American farmers' technological advantage is most powerful. 
American agriculture must move ahead to prosper.
  We cannot shut agriculture out of the globalizing process. We cannot 
settle for the status quo, hoping that it will sustain us indefinitely. 
As the rest of the world's agricultural producers rapidly develop, we 
cannot hide behind high tariffs and high subsidies.
  The U.S. represents only 5 percent of the world's consumers. Yet, in 
commodity after commodity, we produce far more than Americans can 
consume. That is true of beef and wheat, for example. And demand from 
our own 5 percent will likely grow much more slowly than demand from 
the other 95 percent. There are only so many steaks any one well-fed 
American can eat. But in the developing world, demand for food still 
has much room to grow. The more their wealth grows, the more that 
consumption patterns will shift from low-cost, starchy foods to high-
value sources of protein such as beef and wheat.
  We are faced, then, with a simple choice: Either we try to turn back 
the clock to a time of inferior technology and a more insular world or 
we seek greater access to the markets of the other 95 percent of the 
world. The choice is clear.

[[Page 12145]]

  As a nation, we have embarked on a policy of opening markets. This is 
a wise policy and a sound one. The fruit of this effort should be more 
and higher-paying jobs for U.S. workers, more abundant choices for our 
consumers, and greater markets for our farmers and ranchers.
  Yet, if we are going to sell our products overseas, then we have to 
engage global markets. And we can't do that in a vacuum. This means 
negotiating trade agreements and fighting the distortions--such as high 
tariffs and high subsidies--that other countries use to undermine our 
competitiveness. In that fight, we have no better ally than Australia.
  At the heart of the matter, engaging global markets means opening 
doors. And we won't succeed in opening doors to other markets if we 
won't open our own. We can't insist that China, Thailand, Taiwan, and 
Japan open their markets to our products, if we aren't also willing to 
open our markets to theirs. And I can't insist that Ambassador Zoellick 
accommodate my concerns in a free trade agreement, if I am not willing 
to offer my support in return.
  When Ambassador Zoellick announced the administration's intention to 
negotiate a free trade agreement, many of us harbored concerns that he 
would negotiate a far different agreement than the one we have before 
us today. But the protections that American negotiators built into this 
agreement are strong. And I congratulate the Trade Representative's 
office for its skill in negotiating such a tough agreement.
  Mr. President, I will support the U.S.-Australia free trade 
agreement. I look forward to working with my colleagues to make sure 
that this agreement is implemented fairly. And I look forward to 
working with the U.S. Trade Representative to make sure that all trade 
agreements are the best possible deal for Montana.
  This is the time for engaging our allies and for opening the door to 
new markets. This is the time for planting the seeds of a greater world 
trade system. As the American farmer has done down through the 
centuries, we should labor today for a future of growth.

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