US Has Plans For More Free Trade Areas

The Bush administration has added Australia, Morocco and five countries in Southern Africa to its
list of proposed free trade agreements. The new proposals, which still must be negotiated and
submitted to Congress, would be in addition to recently announced free trade proposals with Chile,
Singapore and Central America, which are in various stages of negotiation.

Talks with Morocco, at present not a major exporter of textiles and apparel, were initiated
January 21. Currently, Morocco’s leading imports from the US are aircraft, corn and machinery, but
US Trade Representative (USTR) Robert Zoellick said Morocco’s imports of pharmaceuticals and
fabrics recently have increased “significantly.” At present, US products entering Morocco face an
average tariff of over 20 percent, while Moroccan products entering the US are subject to an
average tariff of only 4 percent. Zoellick said the goal of the Moroccan free trade agreement would
be to eliminate tariffs “on the broadest possible basis.”

Meantime, the US and Australia also have initiated talks aimed at reaching a free trade
agreement. Because Australia is a major textile manufacturer and believed by US manufacturers to be
a source for transshipped Chinese goods, the American Textile Manufacturers Institute (ATMI)
immediately announced it will seek a tight rule of origin and tough Customs enforcement,. This
would include a so-called “kick-out” clause that would allow the US to withdraw its tariff
concessions if Australia does not live up to the rule of origin.

In addition, on January 13, the US and five southern African nations agreed to start
negotiations on a free trade zone, in what is known as the Southern African Customs Union (SACU).
The nations involved are Botswana, Lesotho, Namibia, South Africa and Swaziland. Pointing to
assistance and investment opportunities in those areas, Zoellick said Nambia recently received a
multimillion investment in an integrated textile and clothing production complex, and he said
negotiations are underway for two additional factories. This is part of a plan to bolster the
economies of the area and provide growth opportunities; textile manufacturing and trade are
important elements in that effort.

February 2003