AUSTRALIA AND CHILE CONCLUDE FTA

UNCLAS CANBERRA 000554 SENSITIVE SIPDIS STATE PLEASE PASS USTR; STATE FOR EEB, EAP/ANP, WHA E.O. 12958: N/A TAGS: ETRD EINV ECON AS CI SUBJECT: AUSTRALIA AND CHILE CONCLUDE FTA ¶1. (U) Summary: Australia and Chile have concluded negotiations for an FTA. It is expected to be signed in July. This is the first FTA to be concluded by the Rudd Government; negotiations began under the previous Howard government. End summary. ¶2. (U) On May 27 Trade Minister Simon Crean announced that Australia and Chile have concluded negotiations on a free trade agreement. Crean, who has been critical of the former Howard Government's policy of favoring bilateral FTAs over the multilateral approach, stressed this is a "high-quality agreement" covering goods, services, and investment, that exceeds Australia's and Chile's WTO commitments. (In turn, the opposition noted that they launched the talks and did a significant part of the negotiations on the Chile FTA before the Rudd Government won office last November.) ¶3. (U) Crean added he would continue to champion strong FTAs, and that this deal disproved the opposition's claims that the Rudd Government has "taken its eye off the trade agenda." Crean also added a dig against the Howard Government for "selling out Australian agriculture to pursue an FTA at any cost" - for example, excluding sugar from the US-Australia FTA and giving the US an 18-year phase-in for improvement in access for imports of Australian beef and dairy products. ¶4. (U) Chile is Australia's third-largest trade partner in Latin America, with two-way trade exceeding US$800 million/year. Australian FDI in Chile totals around US$3 billion, making it the fourth largest foreign investor in Chile. ¶5. (U) Department of Foreign Affairs and Trade contacts expect the agreement will be signed by the end of July, and it would enter into force on January 1, 2009. Post will follow up with a more detailed analysis of the FTA. ¶6. (SBU) Comment: Crean trade adviser Sophie Ward stressed to us Crean's commitment to quality FTAs; it appears the Chile one fits the bill. She also acknowledged that this was a relatively easy one, since Chile wanted the FTA and like Australia, has already concluded quality FTAs with the United States. FTA talks with Japan and China has been much more difficult. End comment. MCCALLUM