In the United States, the free trade agreement improved the overall trade deficit and generated a trade surplus with Australia, which increased by 31.7% in the first quarter of 2005 compared to the same period in 2004. U.S. exports to Australia increased by 11.7% in the first quarter of 2005 to nearly $3.7 billion. Agricultural exports to Australia increased by 20%. [Citation required] Article 19.2 states that “the parties recognize that it is inappropriate to promote trade or investment by weakening or reducing the protection of their respective environmental laws.” Special tariff quotas are part of the agreement. These quotas allow Australian producers to export larger quantities of these products to the United States duty-free during the duty elimination period. The following agricultural products are shown: the agriculture section of the agreement describes the system of removing most tariffs on agricultural products traded between the two countries. It also agrees to eliminate export subsidies if the quantity of goods in question is exported to one of the two countries of the party. While the system is very effective at keeping many drug prices low, pharmaceutical companies in both the U.S. and Australia are cautious about operating the system, saying that higher drug prices are needed to finance research and development costs. U.S.
pharmaceutical companies argue that Australians, when they ingest low-cost drugs, are essentially free from the cost of research in the United States[8] Free trade agreements that are international agreements that eliminate or reduce certain trade and investment barriers between two or more countries. Australia currently has 11 free trade agreements with 18 countries and is seeking to negotiate and implement additional agreements. In the year following the agreement, Australian exports to the United States declined,[10] while U.S. exports to Australia increased. This was followed by the International Monetary Fund`s prediction that the Australia-U.S. free trade agreement would slightly reduce the Australian economy due to the loss of trade with other countries. The IMF has estimated $US an additional US$5.25 billion received annually to Australia under the free trade agreement, but only $US 2.97 billion in additional exports from Australia to the United States.
