Fran O'Sullivan: Brownie points in pragmatism for Aussie-US trade deal

COMMENT

The Australian-US free trade deal is a triumph of pragmatism over principle forged by two political allies who each wanted to ensure the other scored brownie points in an election year.

The deal announced yesterday is not perfect, as Australian Prime Minister John Howard concedes. Inevitably it came down to a race of quality against time. Time won.

The 11th-hour phone call between Howard and Bush could not break the deadlock still in place after 14 days of talks in Washington. So they cut a deal.

Howard dropped Australia's demands for greater access to the lucrative US sugar market (thus preserving the Republicans' grasp on vital special interest funding).

Bush dropped US demands for Australia to drop rules protecting local television content and told powerful US firms they would have to make do with greater transparency in Australia's Pharmaceuticals Benefits Scheme.

The big gains, as US Trade Representative Robert Zoellick announced, lie in the "most immediate significant cut" in industrial tariffs ever achieved in a US free-trade agreement.

For Mr Zoellick, who last year floated the abolition of industrial tariffs during the calamitous World Trade Organisation talks, this is an important marker, one he can use to crank up the US negotiating agenda at the WTO.

For Mr Howard, there also is the substantial gain of access to the US Federal Government procurement programme. Australian companies will be able to compete against the Halliburtons for valuable contracts.

And a direct recognition for Australia, from the US Trade Representative, that "security" - semaphore for Mr Howard's decision to play deputy sheriff in Iraq - was a tipping factor for the Bush Administration's decision to risk a fatal protectionist backlash in Congress.

So where does this leave New Zealand?

As with any complex deal, the beauty is in the detail.

Politicians and lobby groups have signalled they will pressure Australia to ensure there is no sting in the deal's tail that will penalise the Australian offshoots of New Zealand exporting companies.

But broader questions remain.

Four years ago, New Zealand was Australia's co-partner in a quest for a three-way deal with the US. Mr Howard judged New Zealand a political liability to Australia and cut its neighbour adrift.

Foreign Affairs Minister Phil Goff said yesterday the integration of the Australasian economies means that US negotiations with New Zealand will, in due course, be a logical step.

But it would be foolish to think that geo-political considerations, as the Wellington US Deputy Chief of Mission Dave Burnett spelt out last night, are not a significant factor in White House decision-making.

The stage is set for a new debate on security and trade.