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National Farmers' Federation looks at the impact of NAFTA on Australia and on APEC

ELLEN FANNING: The National Farmers' Federation of Australia has been closely watching the negotiations over NAFTA. The North American deal is portrayed by some as representing a protective trade bloc which could damage Australia's interests, including those of our farmers. It may also have an effect on APEC. Leaders of the 15 Asia-Pacific trade group will meet in Seattle next week. Well, we're joined now by the Deputy Director of the National Farmers' Federal, Philip Eliason.

Mr Eliason, why should we, in Australia, be interested in NAFTA?

PHILIP ELIASON: Well, I think the first thing to note is that there are two sides to NAFTA for Australia. The first side is the direct trade impact that the final settlement of NAFTA can have on our exports, and that's not only in agriculture but it is also in the minerals area.

ELLEN FANNING: And that's a negative impact?

PHILIP ELIASON: And that's a negative impact. To date we've seen already the commencement of a closure .. trend to closure of markets in North America, particularly for our beef exports where they're already controlled by a US quota arrangement, under the US meat import law. The Mexicans now have increased their tariffs on Australian imported beef to about 25 per cent, and what we are concerned about is the preferential trading arrangements between the NAFTA three to the expense of our exports.

ELLEN FANNING: So, if Congress supports NAFTA next week, that's bad news for Australia?

PHILIP ELIASON: Well, I think the bigger picture, however, provides more interest to us overall, that if NAFTA does, as the Clinton Administration and the Bush Administration before it said, that is, engender faster economic growth, prevent - as we heard Al Gore say in the tape from Washington - prevent recession, we are going to see NAFTA possibly provide a kick-a-long to global economic recovery. Again, that's very important; if that sucks in goods and services from the Asia-Pacific region and Australia, then that will help.

ELLEN FANNING: But how likely is that, though?

PHILIP ELIASON: I think it's broadly reasonably likely. I guess that in one sense is a bit equivocal, but you have to assess the impact of NAFTA on Australia, on a product-by-product and service-by-service basis. Now from the agricultural perspective, beef industry is under some pressure and will be under pressure due to NAFTA. No doubt NAFTA will also have a deleterious effect on our canned fruit and vegetable exports to North America as it will in some of our minerals exports. But overall, I think the NAFTA should be seen in the context of a liberalising step, and if it's rejected by Congress, which I believe is unlikely, but if it's rejected by Congress, then we'll find that Bill Clinton goes along to the APEC heads of government meeting signalling to the rest of the APEC players that despite the good intentions in terms of economic recovery that the Americans might have, they're unable to deliver a liberalising act through NAFTA, and that is the reduction of obstacles and barriers to trade across a range of areas.

ELLEN FANNING: So, you'd agree that the President's credibility is on the line over this and it could have an effect on that APEC summit?

PHILIP ELIASON: Oh very much so, and we've been observing the range of political talent that Bill Clinton has brought to bear in promoting NAFTA. He's had the unlikely support of a range of former Republican senior administration officials, as well as his own supporters, now touting that NAFTA is good. We think that Bill Clinton has an important role to play, not only in the settlement of the GATT round, which again will be influenced to some degree at a political level by the treatment of NAFTA in Congress, but also has an important role to play in the process of APEC. But again, from Australia's perspective, I think one of the first things that we have to consider after the passage of the agreement to establish NAFTA in Congress on the 17th, would be for a joint APEC representations to the Americans saying 'Now you've opened your borders internally between Canada, United States and Mexico, we need to see an equivalent perforation of those borders around the three of you'.

ELLEN FANNING: But if that doesn't happen and Bill Clinton goes to Seattle a diminished leader, what effect will that have on the fledgling APEC grouping?

PHILIP ELIASON: Well, to date, the APEC process is largely related to discussions between governments about the measurement of trade flows, the early discussion of movement of people - the transferability of labour force between countries - trade and services and so on.

ELLEN FANNING: So no real effect at this stage?

PHILIP ELIASON: Well, I think it would provide a serious political hiccup to it, actually. The APEC process looked at through Australian eyes is very important in terms of its regional trade liberalisation program. Now, if one of the major economic partners, if not .. well, the largest economic partner of the APEC process has signalled to the rest of the APEC 14 that it itself is unwilling and unlikely to progress trade reform in markets right next door to it - Canada and Mexico - then we'd see a lot of sterility, I think, in the heads of government meeting.

ELLEN FANNING: Philip Eliason, thank you.