Inside U.S. Trade
September 3, 2004

The Bush Administration is still reviewing amendments added by the Australian Senate to legislation implementing the U.S.-Australia Free Trade Agreement, and so far has not ruled out any options, including the possibility of preventing the agreement from taking effect. One option under consideration could see the U.S. refuse to certify that the implementing legislation fulfills Australia’s obligations under the FTA, which would prevent the agreement from coming into force, congressional and Administration sources said.

Officials with the Office of the U.S. Trade Representative have discussed the amendments with congressional staff, and indicated that the Administration has not excluded any options at this time, congressional sources said. Separately, a Ways and Means Committee aide said Chairman Bill Thomas (R-CA) intends to work closely with the Administration to determine what options are available to the U.S.

“Under the provisions of the U.S. implementing bill, the President must make a determination that Australia has taken measures necessary to bring it into compliance with the Agreement before he is authorized to exchange notes providing for the entry into force, and Chairman Thomas intends to work closely with the Administration as it decides whether to make this determination,” the Ways and Means aide said. Thomas strongly believes that both the U.S. and Australia should be in full compliance with the agreement, the aide added.

A USTR official indicated that the Administration is continuing to review the Australia legislation and consider its options for dealing with the amendments. The official referred to an earlier USTR statement that said the U.S. must certify the legislation before the FTA comes into effect.

Under the terms of the U.S. implementing legislation, President Bush is authorized to exchange notes with the government of Australia allowing the FTA to enter into force on or after Jan. 1, 2005.

At issue are amendments backed by the Australian Labor Party and reluctantly accepted by Australian Prime Minister John Howard’s majority government that would penalize pharmaceutical companies for making frivolous attempts to extend drug patents in Australia.

U.S. pharmaceutical industry sources have charged that the amendments could violate both the U.S.-Australia FTA and the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights. Howard himself indicated that the amendments could pose a problem for the FTA (Inside U.S. Trade, Aug. 13, p. 1).

A pharmaceutical industry source said it is unlikely the U.S. would come forward with a position on the amendments at this time since Howard, who supported the Bush Administration’s decision to invade Iraq, is in the midst of a tight election race.

Separately, U.S. Trade Representative Robert Zoellick will meet the Congressional Oversight Group next week to discuss the August 1 World Trade Organization framework agreement and other trade issues, according to congressional and Senate sources. The meeting will take place on Sept. 8 and will likely be attended by Thomas, Ways and Means Ranking Member Charles Rangel (D-NY), Ways and Means Trade Subcommittee Ranking Member Sander Levin (D-MI), Senate Finance Committee Chairman Charles Grassley (R-IA) and Finance Ranking Member Max Baucus (D-MT).

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