Trade talks test U.S. resolve

By Evelyn Iritani
Los Angeles Times

U.S. milk, beef and sugar producers are likely losers if the Bush administration finalizes a trade pact with Australia that is seen as a key test of America's resolve in promoting global free trade.

Negotiators meeting this week in Washington, D.C., are easer to wrap up the agreement, aimed at giving Australian farmers greater access to U.S. consumers while opening up markets Down Under for U.S. pharmaceuticals, machinery and entertainment.

A deal would also allow the Bush administration to reward Australia for its support of the Iraq war.

But by backing the pact, the Bush team could face a political backlash at home.

American consumers would probably benefit through lower food prices, while Hollywood could gain a greater share of the attractive Australian entertainment market.

The U.S. agriculture industry, however, fears the agreement will open the door to a flood of cheap imports, driving thousands of U.S. producers out of business.

"There's a lot of trepidation among California farmers," said Christopher Galen, a spokesman for the National Milk Producers Federation in Washington. "The guys with the boots in the Central Valley are real concerned that the guys with the suits in Hollywood are going to be the ones who benefit from this agreement, at their expense."

California's 2,144 dairy farmers, who provide more than 20 percent of the nation's milk, said they will lose up to 21,000 jobs and $4.9 billion in farm income if the United States agrees to Australia's dairy proposal.

"This is going to either make or break the dairy industry in the United States," said Cornell Kasbergen, 46, a third-generation dairy farmer in Tulare, Calif.

Farmers in Australia and the developing world, who accuse Washington of failing to match its free-trade rhetoric with action, say the United States must open up its most protected farm sectors or risk further alienating developing countries under pressure to purchase more American high-tech goods and services.

Anger over huge U.S. and European farm subsidies contributed to the breakdown in global trade talks last fall in Cancun, Mexico. Officials at the Geneva-based World Trade Organization are trying to restart those negotiations, which were supposed to develop a blueprint for a trade round launched two years ago in Doha, Qatar.

The clash over agriculture has turned the U.S.-Australia trade talks into a litmus test of America's willingness to confront free-trade opponents within its own borders. Though the Bush administration has been a leading proponent of opening markets around the world, it triggered widespread resentment when it levied punitive restrictions on imports of steel and apparel and textiles.

With global trade talks in hiatus, the United States has turned its attention to finalizing bilateral free-trade agreements with Australia and more than a dozen other countries, including Morocco, five Central American nations, the Dominican Republic, Bahrain and Thailand.

The United States and Australia already boast a robust economic relationship. The United States shipped $12 billion in goods to Australia in 2003, making it the country's top supplier, while purchasing $5.8 billion in Australian goods.