Australia admits that trade pact with US is `uphill battle'

Australia yesterday that finalising a free trade deal with the US by Christmas would be an uphill battle as negotiations reach crunch time on a number of politically-sensitive issues.

With the final round of talks on the deal scheduled to open in Washington Monday, Australia's ambassador in Washington Michael Thawley said he was not underestimating the task ahead.

"It's achievable, but it's going to be very difficult," he told ABC radio. "The reason for that is obviously we still have a number of issues to settle, and inevitably in any negotiation you end up with the difficult ones at the very end."

The main hurdles from the Australian point of view are US demands for changes to the Pharmaceutical Benefits Scheme (PBS), which strictly controls the price of prescription medicines, and local content rules for film television and radio.

US are resisting Canberra's push for greater access to US dairy, beef and sugar markets.

Thawley there would be problems finalising the text of the free trade agreement and then negotiating the document through the US Congress during an election year.

"I think it's true to say generally that trade is not seen as a good thing politically right now, and therefore it is going to be very difficult to get any trade agreement through the Con-gress," he said. "And being in an election year does create further difficulties."

Asked he would bet on the deal going through, Thawley replied: "No, I'm not so stupid at that."

The Australian government estimates a free trade agreement with the US would be worth A$4 billion (US$2.88 billion) a year.

Trade Mark Vaile said last week that he believed an agreement could be reached by the year-end deadline set by US President George W. Bush and Prime Minister John Howard.