ALAN KOHLER: As we go to air this morning, and as the Iraq crisis reaches its climax, a delegation of about 40 American trade negotiators is arriving in Sydney to start formal work on a free trade agreement with Australia. Coincidence? Well that's what they'd have us believe. Preparations for this week's talks have been going on for years, it's true, but there's no doubt the Americans have stepped on the gas lately. In our 360 Degree interview I discussed security, trade and coincidences with Mike Delaney, the man leading the American team in Australia. Mike Delaney, thanks for joining us. Is the fact that the free trade negotiations are now being fast-tracked John Howard's reward for supporting the US so strongly over Iraq?
MIKE DELANEY, US ECONOMIC COUNSELLOR: The idea of a free trade agreement with the US and Australia goes back as far as I can tell to 1934. This is an old idea that has been proposed off and on for the past 60-70 years and it... the latest proposal, this one that now is coming to its culmination began in November 2000, so this is not a Johnny-come-lately idea. This is something that's been brewing for a long, long time and it's been something that's been considered. So no I don't see any particular connection between this and Iraq.
ALAN KOHLER: Yes, but 18 months ago things seemed to be going nowhere with the FTA negotiations and in fact at one stage George W Bush actually refused to talk to John Howard on the subject. Yet now it's moving ahead, we've got a delegation arriving tomorrow at the peak of the tensions over Iraq, surely that's not a coincidence?
MIKE DELANEY: I'm not aware of any occasion where President Bush refused to talk to the Prime Minister about the FTA. But this has taken us two years of consideration on the part of the US Government, we have proceeded in a careful, deliberate fashion throughout. We've made slow but steady progress and now we finally come to a policy consensus within the US Government that this is a good thing and we're very excited about the FTA finally moving forward.
ALAN KOHLER: Yeah, I'm sure Australia is too. Just to finish off on this point I guess, Gary Hufbauer from the Institute of International Economics in Washington addressed a forum in Australia this week and he said that security is the reason that we've got to this point and that the US wouldn't be doing it if Australia took a different view to the US on matters of security?
MIKE DELANEY: I'm the economic councillor and I've been intimately involved in these FTA consideration process for over two years now. And I can tell you that in all of our deliberations we always regarded this as primarily an economic entity that would strengthen our economic relationship. And I can tell you as far as broader considerations, the fact that we're an ally with Australia has certainly made things easier. And the fact that there's so much good will and good feelings towards Australia has made things easier in terms of selling our basic economic argument to Congress and others. We are good friends, I make no apologies for that, and that has facilitated what is essentially an economically advantageous deal for both parties.
ALAN KOHLER: In fact how would France go, do you think, in getting a free trade agreement up at the moment?
MIKE DELANEY: Well, we would, be interested in talking about further trade liberalisation with France and the EU as well, but things are considerably more advanced with Australia. Australia took the initiative in November 2000 and happily we've been able to answer in the affirmative.
ALAN KOHLER: But there'll be some tough moments, won't there, when the Australian side will want things that you won't want to give and these are human beings operating in a real world, where connections do exist. So at some point someone is going to lean forward on the table and say, "This one is for Saddam" or "You owe us one"?
MIKE DELANEY: I think both sides have protected areas of their economy that are going to resist change and we're going to need strong public opinion support in both countries in order to overcome these protectionists interest.
ALAN KOHLER: But do you think that someone from Australia at some point might say, "You owe us one"?
MIKE DELANEY: You'd have to pose that to the Australian side, we're looking at this from an economic point view. We are looking for a balance of rights and obligations on both sides. The deal has to be a good deal for both parties, it's got to make economic sense for both parties and we think that's imminently do-able and that's what we're about starting this week.
ALAN KOHLER: Australia's Trade Minister Mark Vaile has put Australia's agenda on the table pretty clearly, what's your agenda?
MIKE DELANEY: Our agenda is simply we want to make this the most comprehensive FTA possible. We want to address substantially all trade and investment barriers between our two countries, so that's our agenda.
ALAN KOHLER: Well, OK, but what's the US view, in particular, about Australian FIRB system on investment?
MIKE DELANEY: We think there are ways of protecting Australia's vital interests that would be somewhat less burdensome and somewhat less sweeping and more transparent than the current FIRB mechanism, and we're looking forward to discussing how we might do that with the Australian side.
ALAN KOHLER: There are some specific investment restrictions as well on Telstra, media companies, Qantas and so on. Do you want those to be on the table?
MIKE DELANEY: If they're barriers to investment we see that as an agenda item.
ALAN KOHLER: And where do you see that going, you want obviously those barriers reduced?
MIKE DELANEY: Yes, we do. Again we're interested in having talks and negotiations on every one of these. It's difficult to predict how far we're going to get on any particular item. And again, at the end of the day both parties are going to have to look at this as a package of perhaps things you want to do things versus things that you maybe don't want to do, but overall the package will have to be advantageous to both parties. So it'll have to be viewed as an entire package rather than one concession here or one concession there.
ALAN KOHLER: Australia wants access to US markets for agricultural products, how difficult would that be?
MIKE DELANEY: Well, these are sensitive areas, we all know that. These are...there are powerful protectionist interests in the US that will have to be confronted. I think public opinion in both countries is going to be very important if we are to have a successful comprehensive FTA. Comprehensive is the word that we're sticking to in this FTA. We recognise that in order to have an FTA that addresses substantially all the trade and investment areas we're going to have to confront these agricultural barriers and we're prepared to do that.
ALAN KOHLER: But how are you actually going to overcome Congress on these issues? They are very much against it, it's not going to be easy, is it?
MIKE DELANEY: Well, no, it's not. I'm not sure Congress is opposed to it. We feel we have very strong support for our FTA agenda, we have been in communication with Congress, we've told them exactly what we intend to do with this FTA and we feel we have very strong support in Congress for this FTA.
ALAN KOHLER: And when Congress says to you - what is America going to get out of this? Australia is a small country we don't need to trade with them, we don't need to sell products to Australia, what do you say?
MIKE DELANEY: Well, Australia is relatively small compared to the US. That having been said, it's not a small market. We stand to gain several billion dollars in our GDP growth over several years according to several econometric studies that we find credible.
ALAN KOHLER: In a trillion-dollar economy...?
MIKE DELANEY: Well it's not a huge amount of money but it's well worth the effort.
ALAN KOHLER: Are there other broader reasons apart from investment and trade for America to be pursuing this? I mean, is it the first of many or is there an agenda, a longer-term agenda that America's got?
MIKE DELANEY: There is a larger agenda here. And that is our feeling that within the WTO it's going to be very, very difficult to make rapid, good progress in the current WTO round without some competitive spur to those talks. And we feel that the way to push the WTO process along and have it avoid the lowest common denominator approach to which it is prone, is to negotiate a series of regional and bilateral trade agreements that act as a competitive spur to the WTO process. I can personally testify that if it hadn't been for NAFTA, for example, we would still be negotiating the Uruguay Round. I believe that process is going to repeat itself in the Doha Round. We're going to need some other deals in order to spur things along in the WTO.
ALAN KOHLER: I know you've said that economies and securities are separate, but is there a view in the American Government that having bilateral ... a series of bilateral free trade agreement with countries enhances America's security interests around the world?
MIKE DELANEY: Well, we feel that our economic security is not that different from our political security, it's all about peace. We think that this will make us economically stronger, this and the other agreements, trade agreements we're negotiating, and that will enhance our security.
ALAN KOHLER: We'll leave it there, thanks very much, Mike Delaney.
MIKE DELANEY: Thank you.