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Australia, US Sign Free Trade Pact - 2004-02-09

Australia and the United States have signed a free trade deal after months of tense negotiations. Talks between Australia's Prime Minister John Howard, and President George Bush helped save the deal after it nearly collapsed over Washington's refusal to open its markets to Australian sugar.

Prime Minister John Howard says the deal is "fantastic" and will deliver great benefits to Australia. It wipes out import duties on the vast majority of manufactured goods and gives many Australian farmers improved access to U.S. markets.

U.S. negotiators say the agreement has delivered "the most significant immediate cut in industrial tariffs ever achieved" by the United States. It is estimated the deal could be worth an extra $2 billion U.S. dollars a year in sales for Australian exporters.

The trade pact, however, doesn't cover many of the contentious agriculture issues that almost forced the entire negotiating process to collapse. U.S. officials have said the final draft is "sensitive" to concerns expressed by America's beef farmers.

Sugar has been omitted from the agreement altogether, much to the dismay of Australia's cane producers. Opposition politicians here have described it as a "kick in the guts" for the industry. U.S. sugar growers are politically powerful and have long been able to block efforts to increase sugar imports.

The opposition Labor Party, union leaders and farm organizations were all critical of the deal, saying it would cost Australian jobs.

Prime Minister Howard rejects criticism of the deal. "It would have been against the national interest to give up a deal that is going to be of enormous benefit to the rest of the economy because we couldn't get something on sugar," he says.

The lack of significant changes in certain farming sectors means the deal is likely to run into less opposition in the U.S. Congress in the run-up to the November election.

Trade between the two countries is worth $28 billion a year, with the United States enjoying a large surplus.

Relations between Canberra and Washington are the closest they have been in years. Australia has been an active supporter of the United States' global campaign against terror. The country's involvement in the conflict in Iraq was its biggest combat deployment since the Vietnam War.