Free Trade Agreement between Us and Australia

Free Trade Agreement Between US and Australia: What You Need to Know

The United States and Australia have been in discussions for some time regarding a potential free trade agreement (FTA) between the two nations. Recently, talks have gained steam, with both sides expressing optimism about reaching a deal. So, what is an FTA, and why is this one significant? This article will explore the ins and outs of the proposed FTA between the US and Australia.

What is a Free Trade Agreement?

Put simply, an FTA is a pact between two or more countries that reduces or eliminates tariffs, quotas, and other trade barriers between them. By doing so, it aims to increase trade and investment between the nations, creating new market opportunities for businesses and lowering costs for consumers. It is worth noting that FTAs are not without their critics, with some arguing that they can have negative impacts on certain industries or lead to a race to the bottom when it comes to labor and environmental standards.

What Are the Benefits of a US-Australia FTA?

From a US perspective, an FTA with Australia would provide several key benefits. Australia is already one of the US`s closest trading partners, with $26.7 billion worth of goods and services exchanged between the two countries in 2020. However, much of this trade is subject to tariffs, which an FTA would eliminate. In particular, US farmers and ranchers could see significant gains from increased access to the Australian market, which is currently subject to high tariffs on some agricultural products.

For Australia, an FTA with the US would provide similar benefits, including increased access to the lucrative US market and lowered tariffs on Australian goods. It could also help to counterbalance China`s growing economic influence in the region, as both the US and Australia seek to deepen their economic ties with other nations in the Asia-Pacific.

What Are the Challenges in Negotiating an FTA?

As with any international trade negotiation, there are several challenges that must be overcome to reach an agreement. One issue that has already arisen is the question of intellectual property (IP) protections. The US has traditionally taken a strong stance on IP, and it remains to be seen how willing Australia will be to comply with US demands in this area. Additionally, tariffs on certain products, such as cars and dairy, are likely to be sticking points in negotiations.

Another challenge is the political context in both countries. In the US, President Joe Biden has signaled a desire to prioritize domestic issues such as infrastructure and healthcare, which could impact the speed at which the FTA negotiations progress. Meanwhile, in Australia, Prime Minister Scott Morrison is facing a host of domestic challenges, including a slow vaccine rollout and tensions with China, which could make it difficult to devote significant political capital to trade negotiations.


Despite the challenges, there is reason to be optimistic that a free trade agreement between the US and Australia can be reached. Both countries stand to benefit from increased trade, and negotiations have been ongoing for several years. However, as with any trade agreement, the devil is in the details, and it remains to be seen whether the two sides can overcome their differences to reach a mutually beneficial agreement. As always, we will continue to monitor this story and provide updates as they become available.