Deadlock hangs over trade pact
By CNN's Geoff Hiscock
SYDNEY, Australia (CNN) -- A landmark free trade agreement between Australia and the United States faces a political deadlock in Australia, despite U.S. President George W. Bush signing legislation in Washington to implement it.
The agreement, hailed by Bush Tuesday as "a milestone in the history of our alliance," is designed to eliminate tariffs and other barriers in the $28 billion two-way flow in goods and services.
It is also expected to increase investment flows.
Bush said the agreement, which received strong bipartisan support in the U.S. Congress, is likely to increase U.S. manufactured exports to Australia by nearly $2 billion a year, and to boost agricultural exports as well.
The deal has already been agreed to by the Australian administration, led by Prime Minister John Howard, who is a staunch ally of Bush in the war on terror.
It has also been formally backed by the opposition Australian Labor Party, led by Mark Latham, despite reservations about the level of access for Australian farm products to the U.S. market.
But Latham's insistence on including two controversial amendments on media and health may hold up enabling legislation for the agreement in the Australian parliament's upper house, or Senate.
That would delay the start of the free trade agreement, due to take effect on January 1, 2005.
Howard said Wednesday he had no problem with Labor's media amendment, covering local television content rules, but would not accept the proposed changes to the pharmaceutical benefits scheme (PBS).
He said Labor's proposal was based on a misunderstanding of Australian patent law.
"We are not willing to turn the patent law of this country on its head," he told Sydney radio station 2UE.
Labor is opposed to long-life patents used by drug companies in the United States, claiming they are a tactic to delay the release of cheaper generic medicines.
Australian critics of the free trade agreement say higher drug prices are an inevitable consequence, despite Howard saying there will be no impact on the PBS.
Latham said it was absolutely vital to ensure the amendments went through, to protect local television content and to see there was no weakening of Australia's pharmaceutical benefits scheme.
He said he was prepared to fight an election on the two issues. Howard, who has led the conservative Liberal coalition government since March 1996, is expected to call a federal election later this year, with October now seen as the most likely time.
Close poll
 |  Latham is level with Howard in the latest opinion polls in Australia. |
Latham, who became Labor leader in December, is neck and neck with Howard in the opinion polls. The latest Newspoll of voting intentions released on Tuesday shows the two-party preferred vote is 50 percent for Labor and 50 percent for the Liberal coalition. Labor's support peaked at 55 percent in March.
Latham fell foul of Washington when he said in March he would bring Australian troops in Iraq home by Christmas. He has since softened his policy and has pledged military support if the United States comes under a "clear cut attack" again.
Under the Howard government, Australia contributed about 2,000 troops, along with fighter jets and naval vessels, to the initial invasion of Iraq last year, and about 850 soldiers remain there indefinitely.
Howard said Wednesday that Latham's "ad-hoc anti-Americanism" on many policy issues would be an election issue.
Australia and the United States concluded the free trade deal in May after Australia dropped a demand that its farmers, particularly its sugar producers, get broader access to the U.S. market.
While Howard has said the agreement is "not perfect" he says it will help the Australian economy grow in line with the U.S. economy.
