US trade agreement would benefit WA economy: study

WA’S shipbuilding, agricultural and mining sectors stand to benefit most if Australia enters into a free trade agreement with the United States, according to a study commissioned by the Department of Foreign Affairs and Trade.

The Centre for International Economics study found that a FTA would provide a $2 billion a year injection to the Australian economy by 2010, pushing the country’s Gross Domestic Product up by 0.4 per cent.

Co-author of the report Andrew Stoeckel told Business News the benefits to WA would be three-fold, with the first of these being better access to markets, particulary for the WA dairy industry and the wool industry.

While some eastern states manufactures, such as the Victorian and South Australian car manufacturing industries, would face tougher competition from the US, WA stands to gain through cheaper input costs.

Imports of US motor vehicles and parts into Australia could rise by 46.6 per cent.

Mr Stoeckel said the mining industry would be a beneficiary because it was a big user of machinery.

The price of motor vehicles also would be pressured downward, further benefiting the community.

The third benefit, as Mr Stoeckel sees it, would be an increase in wealth and consumption, which would have a multiplier effect to other sectors such as retailing and tourism.

WA exports to the US have more than doubled in the past four years from $1.2 billion in 1996 to more than $2.6 billion in 2000, accounting for 32 per cent of Australia’s exports to the US, while imports rose only marginally, from $1.2 billion to $1.3 billion.

Federal Minister for Trade Mark Vaile said Australia’s shipbuilding industry was likely to be another beneficiary, although he urged caution.

“While we want to pursue an ambitious agenda, we are also realistic. For example, a FTA is not going to see the complete overturn of the United States’ Jones Act protecting the American shipbuilding industry,” he said.

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