AUSTRALIA

Australia

Australia

I. Executive Summary

Off-shore investment by Australian owned or based firms is a relatively recent development - part of the more general, government-led effort to internationalize Australia's economy. Its specific encouragement can perhaps best be dated from the relaxation of exchange controls in 1983. Since that time the number of major firms active in Australia has grown progressively and these firms have established off-shore operations. More recently, there is evidence of similar activity by growing numbers of small and medium enterprises and a range of service providers.

II. Introduction

The U.S.-Australia Free Trade Agreement (FTA) entered into force on Jan. 1, 2005. Negotiations for the FTA occurred between March 2003 and February 2004, and the agreement was signed in Washington, DC, on May 14, 2004. In 2005, the United States exported a record of almost $555 million of agricultural products to Australia. U.S. exports to Australia were at record levels in 2005 for red meat, fresh and processed fruit and vegetables, tree nuts, pet food, vegetable oil, and rice, due in part to reduced Australian tariffs under the FTA. During the same period, the United States imported about $2.5 billion of agricultural products from Australia. Since implementation, the U.S.-Australia FTA has provided America's farmers, ranchers, food processors, and the businesses they support with improved and new access to Australia's 20 million consumers.

In response to U.S. concerns about Australia's agricultural state trading enterprises (STEs), Australia committed to working with the United States in the ongoing WTO negotiations on agriculture to develop agreement on export competition disciplines that eliminate restrictions on the right of entities other than STEs to export. Initially, Australia received an FTA preferential TRQ for manufactured-type beef and immediate elimination on the within-quota duty on Australia's WTO country-specific TRQ. The Agreement calls for a gradual opening of the TRQ to allow U.S. beef exports to rebound from BSE. The FTA TRQ becomes operational when U.S. beef exports exceed 2003 levels, or no later than the third year of the Agreement, whichever comes first. In addition, the United States and Australia agreed to cooperate in Codex and the International Office of Epizootics (OIE) efforts to promote scientifically based standards for BSE. The initial increase in imports from Australia under the FTA TRQ was about 0.17 percent of U.S. beef production and 1.6 percent of current U.S. beef imports.

The within-quota duty for beef products entered under the FTA preferential TRQs was eliminated immediately. The phase-out for the over-quota duties for all beef will take place from year 9 to year 18. In the post-transition period, all beef products will receive duty-free treatment. A price-based safeguard will be available for high-quality beef.

FTA preferential TRQs are established for most dairy products currently subject to WTO TRQs. There is no change in the U.S. most favored nation (MFN) over-quota rates for these products. Market access is provided through expansion of the quantities eligible for duty-free access under the FTA TRQs. Several different FTA TRQs were established for dairy products, due to the complexity of the ...