July 15,2004

Grassley Floor Statement on the U.S.-Australia Free Trade Agreement

Floor Statement of Sen. Chuck Grassley on
S. 2610, the U.S.-Australia Free Trade Agreement Implementation Act
July 15, 2004

Mr. President, I rise in support of S. 2610, the U.S.-Australia Free Trade AgreementImplementation Act. This bill will implement the U.S.-Australia Free Trade Agreement. While theagreement is not perfect, I believe it will provide significant benefits to the United States and to thepeople of my home state of Iowa.

During committee consideration of the agreement, we heard from a number of differentsectors of the economy which stand to benefit from this agreement. At the top of the list is the U.S.manufacturing sector.

Under the Agreement, more than 99 percent of U.S. manufacturing exports to Australia willbecome duty-free immediately after the Agreement enters into force. This is the most significantreduction of manufacturing tariffs ever achieved in a U.S. free trade agreement.

This is very good news for manufacturers like Al-Jon of Ottumwa, Iowa. Al-Jon employsabout 100 people in Ottumwa. Today about 10 to 15 percent of Al-Jon’s production is exported.They are confident that, with a level playing field, they can do even better. During testimony beforemy committee Jon Kneen, Chairman of the Board of Al-Jon, testified that, while they have had somesuccess selling to Australia, their exports are currently limited by two factors. First, Australiacurrently imposes a five percent tariff on their exports. Second, the cost of shipping heavyequipment to Australia is high. While we cannot do much to lower the cost of shipping, we caneliminate this five percent barrier with the enactment of this trade agreement.

And it is not just Al-Jon that will benefit. Mr. Kneen testified that over 19,000 U.S.companies that currently export to Australia are likely to benefit from the “instant competitiveadvantage” provided by the elimination of these tariff barriers on U.S. manufacturing exports. Thesecompanies include other Iowa manufacturers such as John Deere, which has four manufacturingplants in my state. John Deere anticipates increased exports to Australia on account of the FTA.

The U.S. agricultural sector stands to benefit from the Agreement as well, as duties on allU.S. farm exports will be eliminated, reducing tariffs on U.S. agricultural exports by over $700million. Processed foods, soybeans and oilseeds products, fresh and processed fruits and vegetablesall stand to benefit from these duty reductions. For U.S. farmers and ranchers that compete withAustralian agriculture, special safeguards and tariff rate quotas are included as part of the agreementto make sure trade is fair.

The FTA negotiating process also opened the door to eliminate scientifically unfoundedbarriers to the importation of U.S. pork and U.S. pork for processing, major Iowa products. WhileAustralia made its scientific determination regarding pork outside of the FTA negotiations, theintensive consultation process that naturally flows from engaging in bilateral trade negotiationscontributed to the resolution of this matter. Dermot Hayes, an economist at Iowa State University,estimates that elimination of these unfounded barriers could increase U.S. exports of pork toAustralia by over $50 million annually.

The U.S.-Australia Committee on Sanitary and Phytosanitary Measures, and the StandingTechnical Working Group on Animal and Plant Health Measures, which are established under theFTA, will help to ensure that all Australian standards on U.S. agricultural imports are based on soundscience and are not used as a basis for protectionism.

Iowa’s service providers will also benefit from new market-access openings in Australia forour service exports. These commitments, along with new, transparent trading rules, should providea lot of important new market opportunities for Iowa’s service exports.

And, for the first time, this agreement opens much of Australia’s lucrative governmentprocurement market to U.S. exporters. The government procurement provisions are especiallyimportant, as Australia is one of only a few developed countries that are not members of the WorldTrade Organization Agreement on Government Procurement.

In sum, the United States will benefit from the U.S.-Australia Free Trade Agreement. I urgemy colleagues to vote for S. 2610, the U.S.-Australia Free Trade Agreement Implementation Act.