WORLD TRADE  
ORGANIZATION  WT/REG184/5/Rev.1 
24 September 2007 
 (07-3978) 
Committee on Regional Trade Agreements Original:   English 
  
 
FREE TRADE AGREEMENT BETWEEN THE UNITED STATES AND AUSTRALIA 
 
Questions and Replies
 
 
Revision  
 
  The following communication, dated 29 August 2007,  is being circulated at the request of the 
Delegations of the United States and Australia.  
 This document reproduces the questions addressed to the Parties and the responses submitted. 
 
 
_______________ 
  
Questions from Thailand 
 
 
~ Goods ~ 
 
1. According to Chart II.1 in the WTO Secretaria t’s Factual Presentation, it seems that the 
U.S. would not eliminate import duties on all tari ff lines.  Please clarify whether it is the U.S.’ 
intention to eliminate these remaining tariffs in the near future and when?  
 As reported in paragraph 17 of the Factual Presentation: Free Trade Agreement Between the 
United States and Australia (Goods) (WT/REG184/ 3) (the “Factual Presentation”), by 2015, the 
United States will have eliminated tariffs on 98.4 pe r cent of tariff lines.  Furthermore, pursuant to 
Article 3.6 of the U.S.-Australia Free Trade Agre ement (the “Agreement”), after year 20 of the 
Agreement (2025), the Parties shall revisit th e market access commitments on dairy goods, 
comprising 1.1 per cent of U.S. tariff lines.  The Agreement does not address eliminating the remaining 0.5 per cent of tariff lines.      
2. Whether special safeguard measures, such as the horticulture price-based safeguard 
(para. 51), quality-based safeguard (para. 52) and price-based safeguard (para. 52) would be 
applied collectively or separately?  How would measures be applied and what different results 
arise from applying each measure? 
 This question reflects some confusion about the agricultural safeguards.  The Agreement 
provides for three different, mutually-exclusive saf eguard measures on agricultural products.  The 
resulting application for each safeguard, however, is si milar – the application of  additional duties.   
     WT/REG184/5/Rev.1 
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  A.  Horticultural safeguard
.   
  As reflected in Section A of Annex 3-A of the Agreement, the Parties agreed to a price-based 
safeguard on 33 fruit or vegetable products from HS Chapters 7, 20 or 21 applicable only through 
year 18.  As illustrated in Table II.5 of the Fact ual Presentation, additional duties may be imposed on 
these products if the import price falls below a specif ied trigger price.  The amount of the additional 
duty is determined by the amount by which the impor t price falls below the trigger price.  In other 
words, the lower the import price, the greater the difference between the import price and the trigger 
price, and hence the higher the additional duty.  In no case, however, can the total duty exceed the 
MFN duty rate.  The list of products subject to this  safeguard and the product-specific trigger prices 
are listed in Annex 3-A of the Agreement.  This safe guard will expire in 2022, after which all of these 
products from Australia can enter the United States duty-free.   B. Quantity-based beef safeguard
.   
 
 As described in paragraph 52 of the Factual Presentation, and reflected in Section B of 
Annex 3-A of the Agreement, the Parties agreed to a quantity-based safeguard on beef, applicable 
only in years 9-18 of the agreement (2013- 2022).  Pursuant to this provision, Australia can still export 378,214 MT of beef products to the U.S. market, duty-free
, under the WTO TRQ.  In addition, 
it can also ship to the U.S. market the w ithin-TRQ quantity of beef products, duty-free .  If, however, 
Australia exports to the United States more than  10 per cent over the quantity allowed under the 
FTA TRQ, the safeguard is triggered and a small additional duty may be  imposed on the excess 
volume.  The imposition of this safeguard measure is discretionary; any safeguard measure applied 
under this provision will expire at the end of the ca lendar year in which it was applied.  In no case, 
will the duty applied exceed the MFN duty rate.  This safeguard will expire at the end of year 18 of 
the Agreement (i.e., 2022).  
 
C. Price-based beef safeguard .   
  As described in paragraph 53 of the Factual Presentation, and reflected in Section C of 
Annex 3-A of the Agreement, the Parties also agreed  to a price-based safeguard on beef that can be 
imposed only starting in year 19 of the Agreement (2023).  After year 19, if the monthly average 
index price of beef falls below a monthly trigger pr ice (6.5% below the average price of the previous 
24 months), an additional duty of 65 per cent of the applied MFN duty will be applied.  In no case, 
will the duty applied exceed the MFN duty rate.  Para graph 4(a) of Section C to Annex 3-A, ensures 
that the price-based safeguard measure can be impos ed on amounts of beef products from Australia in 
excess of 70,420 MT (the within TRQ volume in the final year of the FTA TRQ plus 0.6 per cent), 
with an annual compounded growth rate of 0.6%, plus
 Australia’s country-specific WTO TRQ 
quantity (378,214MT).  Thus, in  2023, if Austra lia’s WTO TRQ quantity does not increase, the price-
based safeguard measure can not be imposed on the first 448,634 MT of beef products from Australia.  
In addition, the U.S. Trade Representative is aut horized to waive the application of this safeguard 
measure if extraordinary market conditions demonstrate that the waiver would be in the interest of the 
United States. 
 
3. With regard to the agricultural special safeguards provision, is there any relationship 
between products under Tariff Rate Quota (TRQ) and products eligible for agricultural SSG 
measure?  Is it possible for a party to use agricultural SSG on TRQ products?  If such possibility exists, what would the method of  concurrent application of the measures?  
 Regarding the price-based safeguard provisi ons for horticulture, those products are not 
subject to a TRQ under the Agreement; therefore, the question is not applicable.    WT/REG184/5/Rev.1 
 Page 3 
 
 
   Regarding the quantity-based safeguard measur es on beef, these measures may be applied to 
products entering the United States under the TRQs established in the Agreement (an “FTA TRQ”).  
As described above, and in Section B of Annex 3- A of the Agreement, if imports under the FTA TRQ 
exceed 110 per cent of the in-quota amount (listed in paragraph 3 of Annex I of the U.S. Schedule to 
Annex 2-B of the Agreement), the United States may apply an additional duty equal to 75 per cent of 
the difference between the MFN duty and the appli cable tariff rate under the Agreement.  (Because 
the applicable tariff rate under the Agreement is ze ro, the additional duty would be 75 per cent of the 
MFN tariff.)  Any additional duty ma y be applied only until the end of the calendar year in which it 
was applied.  This special safeguard measure ma y be applied only in years 9 through 18 of the 
Agreement (2013 - 2022).  
 
 The FTA TRQ expires in year 18 of the Ag reement (2022).  Thereafter, all imports of 
Australian beef can enter the United States duty free.  However, starting in year 19 of the Agreement 
(2023) the price-based safeguard on beef, described in  Section C of Annex 3-A of the Agreement, will 
apply to the same tariff lines as  had been subject to the FTA TR Q.  As described above, if the 
monthly average index price of beef falls below a monthly trigger price (6.5 per cent below the 
average price of the previous 24 months), an add itional duty of 65 per cent of the applied MFN duty 
will be applied unless the U.S.  Trade Representative waives the duty.  
4. Which chapters are covered under the disput e settlement provisions of the AUSFTA? 
Which are not?  What would be the way to resolve a conflict if non compliance arises in areas of 
concessions that are not under the dispute settlement provisions of the FTA? 
 Footnote 41 of the Secretariat’s Factual Presentation on Goods (WT/REG184/3) sets out the 
provisions of the Agreement which are not
 covered by the dispute settlement procedures in the 
Agreement.  The rest of the Agreem ent is covered by these procedures. 
 5. Under the dispute settlement process, after the issuance of notice of retaliation 
(Art. 21.11.2), the losing party may request mone tary assessment to avoi d retaliation.  Is it 
possible for the retaliating party to  deny the monetary assessment?  In contrast, is it permissible 
for the winning party to request monetary  assessment in place of retaliation?  
 The decision whether to pay a monetary assessment in lieu of a suspension of concessions lies 
exclusively with the Party complained against. 
 
6. Does the role of Panel Determination (Art. 21. 11.3) cover decisions on appropriate level 
of monetary assessment?  Or is it  restricted only to retaliation? 
 Pursuant to Article 21.11.5, if the level of the monetary assessment cannot be agreed upon, it 
is set at “50 per cent of the level of the benefits the panel has determined unde r paragraph 3 to be of 
equivalent effect or, if the panel has not determ ined the level, 50 per cent of the level that the 
complaining Party has proposed to suspend under pa ragraph 2.”  Thus, the Panel Determination can 
indirectly determine the level of the monetary assessment.   
~ Services ~ 
 
7. Are there any commitments made at the level of local governments from both parties?  
If there are, what are they and how do th e parties reflect them into the agreement? 
 The Agreement is binding on all levels of government unless it specifies otherwise. The 
Agreement distinguishes between local government  and regional government.  Chapters 10 (Cross-
Border Trade in Services) and 11 (Investment) of  the Agreement apply to measures adopted or 
maintained by local and regional governments of the Pa rties.  For Chapter 10 this coverage is explicit WT/REG184/5/Rev.1 
Page 4  
 
  in Article 10.1.2.  For Chapter 11 this coverage is  reflected in the Agreement in Article 11.1.1 read 
together with the definitions in Article 11.17.   Regional governments of the Parties, but not local governments, have commitments under 
Chapter 15 (Government Procurem ent).  Annex 15-A Section 2 sets out the threshold values of 
procurements for which these commitments apply. 
 
8. According to article 10.9 of the Chapter on Cross-Board Trade in Services, what are the 
mutual recognition arrangements contemplated by this provision and how are third parties 
restricted by these arrangements? 
 The Agreement does not attempt to predetermine any particular mutual recognition 
arrangements.  Instead, it leaves the decisions as to wh at is desired and appropriate in the hands of the 
respective professions and regulators of those professions.   As Article 10.9 of the Agreement has not been invoked with respect to any mutual 
recognition arrangements, it is not possible to ascertain how third parties might be affected. 
 
Questions from Japan
 
 
~ Goods ~ 
 
9. With respect to the provisions in Article 3. 3 of the Agreement, what kind of measures 
are supposed to be adopted by an importing Part y to counter the effect of subsidized imports 
from a non-Party, when the exporting Party considers that the non-Party is exporting an 
agricultural good to the territory of the other Party with the benefit of export subsidies? If the 
counter measures will be applied to such a non- Party, whose export subsidy is allowed under 
the WTO Agreement on Agriculture, and what is the legal ground for this application of such 
counter measures with respect to the WTO Agreement?  
 Article 3.3 of the Agreement provides that should either Australia or the United States 
consider that another country is exporting an agri cultural good that benefits from export subsidies into 
the other’s market, Australia and the United States will consult on measures to counter the effect of 
subsidised imports.  The kind of measures to be adopted would be determined through these 
consultations, and would be  consistent with the Parties’ inte rnational trade obligations, including 
under the WTO Agreement. 
 10. With respect to the provisions in Article 9. 5 of the Agreement, when a Party excludes 
originating goods of the other Party from the application of global SG measures, in the process of investigation, is import of the originating goods of the other Party excluded from the total 
increase of imports? 
 As provided in Article 9.5 of the Agreement, each Party retains its rights and obligations 
under Article XIX of GATT 1994 and the Safeguards Ag reement.  The Article further provides that a 
Party taking a global safeguard measure may ex clude originating goods from the other Party under 
certain circumstances.  It does not describe how the Party considering the safeguard measure must 
conduct its investigation or analysis, or how that Party complies with its WTO obligations. 
 
Neither the United States nor Australia has applied a global safeguard measure since the free 
trade agreement entered into force, so neither Pa rty has yet had the occasion to apply Article 9.5.  
 
 
  WT/REG184/5/Rev.1 
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  11. With respect to Paragraph 17 and Annex 2 of the Factual Presentations 
(WT/REG184/3), what percentage do beef, dairy products, tobacco, cotton, sugar and 
sugar-containing products, which are under TR Q treatment, respectively account for in 
US imports from Australia (in terms of both number of tariff lines and value of imports)?  
 % tariff lines % import value 
(Avg. 2002-2004) 
Beef 0.5% 14.1% 
Dairy 0.1% 0.27% 
Tobacco 0.4% 0% 
Cotton 0.07% 0.01% 
Sugar and sugar containi ng products 0.06% 0.54% 
 
 We understand that the tariff for beef will be eliminated in the 18th year after the entry 
into force of the Agreement. According to our est imation based on the data from USITC, beef 
made up roughly 15 per cent of US imports fr om Australia in 2004. It is mentioned in 
Paragraph 17, however, that the duties on 98.8 per cent of imports from Australia, in terms of 
trade value, are to be eliminated by 2015 (10 ye ars after the entry into force of the Agreement). 
Could we obtain more detailed information on dut y elimination of beef from Australia? In what 
category do tariff lines for beef fall in terms of liberalization schedule?  
 
 In 2002-2004, the vast majority of beef that  entered the United States from Australia entered 
under its country-specific allocation WTO TRQ.  As  described in paragraph 1 of Annex II of the 
Factual Presentation (and as provided in Note 2 of Annex 1 to Annex 2B-US-Notes) duties on 
Australia’s imports under its WTO country-specific TRQ are eliminated upon entry into force of the 
Agreement.  Paragraph 1 of Anne x II further explains that the Un ited States granted additional access 
for Australian beef under a FTA-specific TR Q (described in Note 3 of Annex 1 to 
Annex 2B-US-Notes).  As Japan correctly notes, th e FTA TRQ expires in year 18 of the Agreement, 
giving Australia duty-free access for its beef.  However,  even before year 18 and the expiration of the 
FTA TRQ, the vast majority of beef from Austra lia (which accounted for approximately 14 per cent 
of total imports from Australia during 2002-2004) will enter the United States duty-free – whether 
under the WTO TRQ or the additional FTA TRQ.    
12. With respect to Chapter 9: Safeguards of  the Agreement, we understand that there are 
several types of safeguard mechanisms establis hed in the Agreement. Was there any safeguard 
measure imposed between the Parties after the en try into force of the Agreement? If so, could 
we obtain the detailed information? 
 No safeguard actions have been taken pursu ant to the provisions of Chapter 9 of the 
Agreement since the entry into  force of the Agreement.  
 13. With respect to Paragraph 65 of the Factual Presentations (WT/REG184/3) and 
Annex 15, Section 2 of the Agreement, we no ticed that, compared to the WTO Government 
Procurement Agreement, Georgia is included in the scope of the Agreement and 11 states 
(Arizona, Illinois, Iowa, Massachusetts, Michi gan, Minnesota, Missouri, Montana, Oklahoma, 
Tennessee and Wisconsin) are excluded from th e scope of the application of the Agreement. 
Could the US inform us about the backgro und of the diminution of the scope to which 
government procurement provisions apply? 
 Before entering into this Agreement, the U. S. government sought participation from each of 
the States.  The Agreement therefore covers only tho se states that agreed to cover their procurement 
under the Agreement.  To date, 31 states have agreed  to such coverage; 19 States have not yet agreed WT/REG184/5/Rev.1 
Page 6  
 
  to such coverage.  If other states subsequently auth orize coverage of their procurement, they will be 
added to the Government Procurement Annex.  
~ Services ~ 
 
14. With respect to Chapter 11: Investment, we do not find provisions regarding 
Arbitration between the Investor and the Stat e. May we understand that there are no such 
provisions in the Agreement? If that is the case, may we be informed of the reason for that?   
The Parties confirm that there are no provisions on Investor-State arbitration in the Agreement.  The 
Parties' agreed that in light of a number of unique circumstances, such as their open economic 
environments and shared legal traditions, and the c onfidence of investors in the fairness and integrity 
of their respective legal systems, these provisions we re not needed.  Article 11.16 of the Agreement 
provides that the Parties may consider establishing such  a procedure to hear a claim by an investor, if 
there is a change in these circum stances regarding the Parties' economic and legal environments. 
 
In the Statement on How the United States-Austra lia Free Trade Agreement Makes Progress in 
Achieving U.S. Purposes, Polici es, Objectives and Priorities , transmitted to the U.S. Congress in 
connection with implementation of the Agreement, the President of the United States explained that: 
  “In light of the unique circumstances of the Australian legal system, the FTA does not 
provide a separate dispute settlement mechanism fo r an investor of a Party to pursue a claim 
against the other Party.  Among other things , Australia has an open economic environment 
and a legal system similar to that of the United States, U.S. investors have confidence in the 
fairness and integrity of Australia’s legal system, and the Untied States has a long history of 
close commercial relations with Australia that has flourished largely without disputes of the 
type addressed by international investment provisions.  There are few other countries in the 
world that are in similar circumstances.  If a Party believes, however, that there has been a 
change in circumstances such that one of its  investors should be allowed to bring a claim 
against the other Party, the Party may request c onsultations with the other Party with a view 
towards establishing arbitral or other means of resolving the dispute.” 
 
Questions from the EC
 
 
~ Goods ~ 
 
15. How many Australian exports items that receive d preferential entry into the US market 
have benefited from an increase in trade (in value and volume terms) since entry into force of 
the Agreement? What are these products, and wh at has been the increase in value and volume 
terms for each tariff line?  What percentage of  tariff lines does this represent? What percentage 
of total current trade (value and volume) does this represent? 
 See answer to 16. 
 
16. How many U.S. exports items that received preferential entry into the Australian 
market have benefited from an increase in trad e (in value and volume terms) since entry into 
force of the Agreement? What are these products, and what has been the increase in value and 
volume terms for each tariff line? What percent age of tariff lines does this represent? What 
percentage of total current trade (value and volume) does this represent? 
 
   WT/REG184/5/Rev.1 
 Page 7 
 
 
   WTO members can examine specific tariff lines fo r movement in value or volume since entry 
into force of the Agreement, and import/export da ta for both countries, through the UN Comtrade 
website (http://comtrade.un.org/ ).  In order to determine whether a tariff line has benefited from a 
preferential tariff under the Agreement, Australian and US tariff schedules are available at: http://www.dfat.gov.au/trade/negotiations/us_fta/ final-text/Annex2b_Tari ff_Elimination /Annex_2-
B_Australia_Tariff_Schedule.pdf and http://www.us itc.gov/tata/hts/bychapter/index.htm A line-by-
line analysis of imports into the United States unde r the Agreement can be found through the USITC 
Interactive Tariff and Trade DataWeb on the website of the U.S.  International Trade Commission: http://dataweb.usitc.gov/scripts/u ser_set.asp.  Through this link u sers can tailor their search and 
analysis to specific time periods, tariff lin es, countries, preference programs, etc.   
 
17. We note that this Agreement provides for the full exclusion of an agricultural sub-
sector, namely sugar, from the scope of liberalis ation commitments. In addition, transitional 
periods  of up to 18 years for the full liberalisation of the U.S. beef market have been included.  
(a) Do the Parties consider the abovementio ned provisions to be compliant with 
their obligations under Article XXIV?  
 As reported in paragraph 17 of the Factual Presentation, under the Agreement, the United 
States eliminates tariffs on 98.4 per cent of tariff lin es and 99.9 per cent of trade on originating goods 
of Australia.  Australia will eliminate tariffs on 99. 9 per cent of tariff lines and nearly 100 per cent of 
trade on originating goods of the United States.  A free trade agreement with such comprehensive 
tariff elimination meets the obligations of Article XXIV.  
 
(b) The Parties being two developed economies,  do they consider that such carve-
outs from scope represent a helpful precedent for other WTO members in terms of what constitutes a "high quality" FTA? 
 As noted above, and as is evident from the Factual Presentation, the United States and 
Australia have eliminated tariffs on nearly 100 per cent of trade between them.  Such comprehensive 
elimination of tariffs between the Parties establis hes a precedent that we encourage other Members, 
both developed and developing, to follow.  We wo uld also call to Members’ attention the other 
elements of the Agreement which are at the cutti ng edge of trade liberalization and that clearly 
demonstrate the comprehensive nature and high quality of this Agreement. 
 
Sugar 
 
 
(c) What is the volume and value of two-w ay trade in sugar between the Parties 
over the past five calendar years? What proportion of total two-way trade does 
this represent (in volume and value te rms) for each calendar year? What 
proportion of two-way trade in agricultural goods does this represent (in volume 
and value terms) for each calendar year?  
 Because import data tends to be more reliable,  the charts below reflect imports of sugar/beef 
from one Party into the other, rather than exports .  In addition, because total imports, and total 
agricultural imports, enter each Party at different units of volume, we are unable to provide the 
proportion of sugar or beef imports from either Party as a share of total or agricultural imports based 
on volume.   
    WT/REG184/5/Rev.1 
Page 8  
 
   For “sugar” trade, the Parties have provided data for HS heading 1701 because that heading 
covers the most basic form of sugar: “Cane or beet sugar and chemically pure sucrose, in solid form”.  
Additional details on sugar trade betw een the Parties can be found at 
http://dataweb.usitc.gov/scripts /user_set.asp or http://comtrade.un.org , as described above.   
 
(d) What is the volume and value of Australian sugar exports to the U.S. over the 
past five calendar years? What proportion of total Australian goods exports to the U.S. does this represent for each ca lendar year (in volume and value terms)? 
What proportion of total Australian agric ultural exports to the U.S. does this 
represent for each calendar year (in volume and value terms)? 
 Please refer to table below. 
 
Total Sugar imports from Australia (Heading 1701) 2002 2003 2004 2005 2006 
Value (US$’000) 38,307 33,367 38,110 43,135 70,016 
Volume (‘000 MT) 91 78 88 100 142 
United States sugar imports from Australia as a % of total 
merchandise imports from Australia (value)  0.6 0.5 0.5 0.6 0.9 
United States sugar imports from Australia as a % of total 
agricultural imports from Australia (value)  2.0 1.6 1.5 1.8 2.8 
 
(e) What is the volume and value of U.S. su gar exports to Australia over the past 
five calendar years? What proportion of  total U.S. goods exports to Australia 
does this represent for each calendar year (in volume and value terms)? What proportion of total U.S. agricultural ex ports to Australia does this represent for 
each calendar year (in volume and value terms)? 
 Please refer to table below. 
 
Total Sugar imports into Australia from the U.S. 
(Heading 1701) 2002 2003 2004 2005 2006* 
Value (A$’000) 584 153 152 41 203 
Volume (‘000MT) 0.30 0.05 0.08 0.01 0.01 
Australia's sugar imports from the US as a % of total merchandise 
imports from the U.S. (value)  0.0 0.0 0.0 0.0 0.0 
Australia's sugar imports from the U.S. as a % of total agricultural 
imports from the US (value)  0.1 0.0 0.0 0.0 0.0 
 * 2006 figures account for the first 9 months of the year  
 
Beef  
 
(f) What is the volume and value of two-way trade in beef between the Parties over 
the past five calendar years? What propor tion of total two-way trade does this 
represent (in volume and value terms) for each calendar year? What proportion 
of two-way trade in agricultural goods does this represent (in volume and value 
terms) for each calendar year?  
 For “beef” trade, the Parties have provided da ta for HS headings 0201 (“Meat of bovine 
animals, fresh or chilled”) and 0202 (“Meat of bovine  animals, frozen”).  Additional details on trade 
of these products between the Parties can be found at  http://dataweb.usitc.gov/ scripts/user_set.asp. or 
http://comtrade.un.org for Australia  as described above. 
  Please refer to table below.    WT/REG184/5/Rev.1 
 Page 9 
 
 
  (g) What is the volume and value of Australian beef exports to the U.S. over the past 
five calendar years? What proportion of  total Australian goods exports to the 
U.S. does this represent for each calendar year (in volume and value terms)? What proportion of total Australian agric ultural exports to the U.S. does this 
represent for each calendar year (in volume and value terms)?  
 Please refer to table below. 
 
Total Beef Imports into the United States  from 
Australia 2002 2003 2004 2005 2006 
Value (US$ ‘000)  880,278 896,493 1,109,862 912,527 933,833 
Volume (‘000 MT) 379 375 371 300 296 
United States beef imports from Australia as a % of 
total merchandise imports from Australia (value) 13.6 14.0 14.7 12.4 11.4 
United States beef imports from Australia as a % of 
agricultural imports from Australia (value) 46.5 42.3 44.6 37.7 37.6 
 
(h) What is the volume and value of U.S. beef  exports to Australia over the past five 
calendar years? What proportion of tota l U.S. goods exports to Australia does 
this represent for each calendar year (in volume and value terms)? What proportion of total U.S. agricultural ex ports to Australia does this represent for 
each calendar year (in volume and value terms)? 
 Please refer to table below. 
 
Total Beef Imports into Australia from the US 2002 2003 2004 2005 2006 
Value (A$‘000)  301 15 0 0 0 
Volume (‘000 MT)  0.13 0.01 0 0 0 
Australia's beef imports from  the U.S. as a % of total 
merchandise imports from the U.S. 0.0 0.0 0.0 0.0 0.0 
Australia's beef imports from th e U.S. as a % of agricultural 
imports from the U.S. 0.0 0.0 0.0 0.0 0.0 
 
18. How do the Parties consider that the Rules of Origin (ROO) methodology employed 
under the Agreement is not unnecessar ily burdensome on exporters?  
 There are variety of rules of origin methodologi es used in the Agreement, all of which are 
trade-facilitative, clear and predictable.  The produc t-specific rules for most goods are based on clear, 
certain, predicable and verifiable tariff-shift rules that are based on the Harmonized System 
nomenclature.  A minority of goods and tariff lines are subject to regional value content rules which 
are based on the customs value of the good, ad justed to exclude the costs of international 
transportation charges, which in the view of th e United States should not contribute to whether a good 
qualifies for preferential tariff treatment under an FT A.  Any exporter and/or producer will know the 
customs value of its product.  Autos and certain au to parts are subject to a formula based on the net 
cost of the good, which is the total cost of pr oduction minus expenses unrelated to the cost of 
manufacture, such as sales, marketing, promotion, re bates, royalties, after-sales services costs, etc. 
 
19. What has been the experience of relevant authorities in each Party in implementing this 
methodology?   
 The Parties have had no difficulty implementing these methodologies.   
 
20. Paragraph 33 of the Factual Presentation states that "Article 5.16 foresees that the 
Parties consult six months after the date of entry into force of the Agreement regarding the 
implementation and application of Chapter 5".  Have any consultations pursuant to Article 5.16 WT/REG184/5/Rev.1 
Page 10  
 
  taken place regarding the implementation and application of Chapter 5? If so, what has been 
the outcome of these consultations?  
 No.  The Parties have agreed there are no s ubstantive issues requiring consultation.  The only 
consultations that have taken place regarding rules of  origin have been in re lation to changes required 
to ensure HS2007 compliance.  
 21. How do the Parties consider the safeguard me asures outlined in Chapters 3, 4 and 9 to 
be consistent with their obligations under the WTO Agreement on Safeguards?  
 The Parties believe that each of the various fo rms of safeguards outlined in Chapters Three, 
Four and Nine, respectively, are fully consistent w ith the Agreement on Safeguards and Article XXIV 
of GATT 1994.  The analysis of this issue must take as its starting point the fact that in each case the 
action contemplated under the various bilateral safe guard provisions is limited to an increase in the 
rate of duties applied to a maximum of the MFN a pplied rate of duty.  Thus, in no case can a Party 
apply a customs duty in excess of its bound rate of duty in the World Trade Organization (WTO).  As with other aspects of the Agreement, the Parties ar e free to agree on specific procedures and standards 
related to application of preferential treatment , subject to compliance with Article XXIV of 
GATT 1994 and Article 5 of GATS.  
With respect to Global Safeguard Measures, as provided in Chapter Nine, each Party retains 
its rights and obligations under Article XIX of  GATT 1994 and the Safeguards Agreement.  The 
United States and Australia have the discretion to exclude imports of originating goods from a global 
safeguard, under specified conditions.   
 
22. Have any of the safeguard measures in the above Chapters been invoked by either 
Party? If so, which?  
 No safeguard measures have been invoked by either party to date.  
 
23. Could the Parties specify the number of sa feguard measures available to each Party 
under the Agreement?  
 There are 3 categories of safeguard measure available under the Agreement: 
 
1. Global (WTO) safeguard measures which are available to both Parties. 
 
2. Bilateral transitional safeguard measures (i.e. tariff snapback mechanism available for all 
goods covered by the Agreement) which are available to both Parties. 
 3. Special safeguard measures (either price or volume triggered) which are available to the 
United States for 33 horticultural and 6 beef tariff lines.  
 
24. With respect to Article 6.4, and as stated in paragraph 58 of the Factual presentation, 
the Parties "also ensure that importers have th e right to an administrative review of the 
determinations of customs authorities and a judicial review at the end of the administrative process".  Has an administrative review of a cu stoms decision under Article 6.4 been requested 
by either Party? 
 No 
   WT/REG184/5/Rev.1 
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  25. Under the Agreement, Australia agreed to  new market opening commitments in 
government procurement in the FTA. Is there now an intention on the part of Australia to 
accede to the WTO GPA, and th ereby make this market opening available to all WTO GPA 
signatories?  
 The Australian Government’s Procurement po licy framework is non-discriminatory and does 
not differentiate between domestic and foreign s uppliers or between foreign suppliers. Current 
government policy is to extend to all foreign s uppliers and products, those measures required for 
implementation of the Agreement. The adva ntage for United States suppliers is that 
non-discrimination is assured in the event of any futu re policy change by the Australian Government.  
 
 Australia has no intention at present of acceding to the WTO Agreement on Government 
Procurement (GPA).   
26. In particular, at the state level of government  in Australia, U.S. suppliers are accorded 
preferential treatment over non-U.S. foreign s uppliers. Does Australia have any intention to 
extend this treatment to all WTO GPA signatories?  
 The Agreement gave most Australian State a nd Territory governments until the end of 2007 
to adjust their non-compliant preference and offset  policies.  State and Territory Governments are 
implementing the requirements of the Government  Procurement Chapter of the Agreement in a 
manner that treats all foreign suppliers equally – th at is, with no preferentia l treatment for suppliers 
from the United States over suppliers from other countries, such as members of the WTO GPA. 
 
27. Is the planned review of the government proc urement chapter scheduled to proceed as 
foreseen? 
 Consistent with Article 15.14 of the Agreemen t, officials of the Australian and the United 
States’ Governments met in May 2007 to review the operation and implementation of the government 
procurement chapter. 
 
28. Since entry into force of the Agreement, ha s there been an increase in the number and 
value of government contracts (at both federal a nd state levels of government) won by suppliers 
of the other Party? If so, what has been the in crease (in numerical and value terms, with each 
also expressed as a percentage)? 
 The Australian Government had operated a s ubstantially non-discriminatory procurement 
framework for a number of years preceding the Agreement.     The Australian Government does not require  departments and agencies to report when 
products are foreign sourced and is therefore unable to indicate whether there has been an increase in 
the number and value of contracts won by United States suppliers. This recognizes the 
non-discriminatory nature of the Australian Gove rnment’s procurement framework, in which the 
goods or services on offer must be considered on th e basis of their suitability for their intended 
purpose, and not the basis of their origin. It also recognizes the complexity and substantial 
administrative burden that would ensue from attempti ng to collect such information. However, it is 
possible, through the www.contracts.gov.au website for any enquirer to identify relevant suppliers for 
individual reported contracts. The details of c ontract awards by departments and agencies are 
available from the Australian Government’s  AusTender website at www.contracts.gov.au
. 
   Statistics on the effect of the Agreemen t in the United States are not available. 
 WT/REG184/5/Rev.1 
Page 12  
 
  29. Does the U.S. intend to make available to a ll WTO GPA signatories the lower thresholds 
it applies to Australian s uppliers under the Agreement? 
  The United States would consider offering GPA Parties the lower threshold on a reciprocal 
basis. 
 
30. Do the Parties consider that their commitments in intellectual property go beyond those 
contained in the TRIPS Agreement? If so, how? 
 In some respects the Agreement’s provisions on intellectual property build upon the minimum 
standards contained in the TRIPS Agreement.  This is  the case, for example, with respect to aspects of 
intellectual property related to the technological de velopments that have largely arisen since the 
conclusion of the TRIPS Agreement, such as In ternet domain names and technological protection 
measures in the area of copyright protection.  These elaborations upon the minimum standards of the 
TRIPS Agreement reflect the shared commitment of the United States and Australia to high standards 
of protection and enforcement of intellectual property rights.  31. Does the U.S. receive preferential treatment vis-à-vis  other foreign suppliers under 
Australia's intellectual property regime, and vice versa? 
 Australia’s intellectual property regime is applied on an MFN basis to all WTO Members.    
 
Pharmaceutical sector
 
 
32. At the time of the signature of this Agree ment, the U.S. still had remarkable concerns 
regarding two particular provisions of the Pharmaceutical Chapter: a) whether Australia had provided sufficient time for U.S. patent holders to  challenge the marketing of generic products 
in cases where their patents were still legitimate, and b) conditions and procedures for a patent 
holder to seek legal action to block cheaper ge neric medicines from being introduced. These 
patent provisions prompted also significant concerns regarding their TRIPS compatibility. 
(a) In this regard, could the U.S. indicate  whether they maintain these concerns? 
 The United States and Australia maintain a dialogue on a range of trade policy issues, 
including pharmaceutical issues.  Annex 2-C, the Annex on Pharmaceuticals, does not have 
provisions on either of the issues raised in the EC ’s question.  While the Intellectual Property Chapter 
requires Parties to put in place measures to preven t the marketing of pharmaceutical products that 
infringe patents, the United States has no concerns regarding TRIPS compatibility in this connection. 
 
(b) Do the Parties consider the provisions app lied on pharmaceutical products to be 
fully consistent with the TRIPS Agreement? 
 Yes, the Parties consider that the provisions applied on pharmaceutical products can be 
implemented consistently with their co mmitments under the TRIPS Agreement.   
 
(c) Could the Parties elaborate on their assessment of the operation of the 
provisions of the Pharmaceutical products under Annex 2-C of the Agreement?  
 Annex 2-C has promoted discussion and mutual understanding of issues related to the Annex, 
including importance of pharmaceutical research, th e transparency of pharmaceutical reimbursement 
listing decisions, and the continued improvement of healthcare outcomes. 
  WT/REG184/5/Rev.1 
 Page 13 
 
 
  (d) Does the U.S. enjoy preferential treatment over other foreign suppliers under 
Australia's regime for pharmaceuticals?  
 Any changes Australia has made as result of  Annex 2-C of the Agreement are equally 
applicable to U.S. and other foreign manufactured pharmaceuticals.  
(e) What has been the subject of discussion of the Medicines Working Group? 
Could the Parties elaborate on the outcome of such discussions?  
 The Medicines Working Group has promoted discussion and mutual understanding of issues 
related to Annex 2-C of the Agreement (except tho se issues covered in paragraph 4), including the 
importance of pharmaceutical research and devel opment to continued improvement of healthcare 
outcomes.  The discussions of the Working Group  have been constructive and informative. 
 
33. How many Committees did th e Parties agree to establish under the Agreement? Is it 
within the mandate of any of the Committees to  propose new market access commitments? If so, 
which Committees are these, and have any new co mmitments have been proposed or adopted? 
If yes, what are these new commitments?  
 The Agreement provides for five committees,  covering goods, agriculture, sanitary and 
phytosanitary measures and financial services, with  the ministerial-level Joint Committee providing 
oversight of the Agreement as a whole.  There is  also the working group on professional services, 
which encourages the development of mutually acceptable standards for licensing and certification of professional service suppliers.  
 
 The work of the Committees and working group is ongoing and several market access 
priorities have been discussed and reviewed.   
34. Could the Parties indicate whether there have been any disputes under Chapter 21 of 
the Agreement brought by either Party? 
 No disputes have been brought under Chapter 21 of the Agreement by either Party.   
 
~ Services ~ 
 35. Has two-way services trade increased in value since entry into force of the Agreement? 
If so, what is the increase? What percen tage change does this increase represent? 
 U.S. two-way services trade with Australia in creased by $3.3 billi on (29.3%) between 2004 
(the year before date of entry into force of the Agreement) and 2006 (preliminary estimates).  For 
private commercial services, two-way trad e increased by $3.0 billion (27.7%).  Source:  Bureau of 
Economic Analysis, U.S. Dept of Commerce.    
 
36. Have Australian services exports to the U.S. increased in value since entry into force of 
the Agreement? If so, what is the increase? What percentage change does this increase 
represent? 
 Yes. Australian services exports  to the U.S. increased by A$752 million or 14.7 % from 2004 
through 2006. Source: Australian Bureau of Statistics.  
 
37. Which Australian services exports to the U.S. have increased in value since entry into 
force of the Agreement? What is the increase for each service export? What percentage change 
does this increase represent? WT/REG184/5/Rev.1 
Page 14  
 
  Australia's Services Trade with the U.S.  
     $ Change % Change 
 2004 2005 2006  2004 to 
2006 2004 - 2006 
Two-way Services Trade with the U.S. 11,329 11,805 12,996   1,667 14.7 
       
       
Services Exports to the U.S. 4,790 5,013 5,542   752 15.7 
Transportation services 615 771 859  244 39.7 
Travel services 1,406 1,337 1,446  40 2.8 
     Business 315 274 343  28 8.9 
     Personal 1,091 1,063 1,103  12 1.1 
         Education related 226 216 233  7 3.1 
         Other 865 846 870  5 0.6 
Communication services 80 95 142  62 77.5 
Insurance services 290 293 297  7 2.4 
Financial services 281 281 281  0 0.0 
Computer & information services 369 388 452  83 22.5 
Royalties & license fees 263 248 315  52 19.8 
Other business services 1,203 1,301 1,474  271 22.5 
Source:  ABS Cat No. 5368.0 International Trade in Goods and Serv ices, Australia.  Consistent  with March 2007 edition of 
  5368.0. 
 
38. Have U.S. services exports to the Australia increased in value since entry into force of 
the Agreement? If so, what is the increase? What percentage change does this increase 
represent? 
 U.S. services exports to Australia increased by $2.6 billion (36.3%) be tween 2004 (the year 
before date of entry into force of the Agreemen t) and 2006 (preliminary estimates).  For private 
commercial services, U.S. services exports increased by $2.2 billion (31.8%).  Source:  Bureau of 
Economic Analysis, U.S. Dept of Commerce.    
 
39. Which U.S. services exports to the Australia  have increased in value since entry into 
force of the Agreement? What is the increase? What percentage change does this increase 
represent? 
 Every major category of services exports increase d in value since entry into force of the 
Agreement (between 2004 and 2006).    
• U.S. military transfers increased by $375 million (205%) 
• Travel increased by $408 million (20%) 
• Passenger fares increased by $94 million (20%) 
• Other Transportation increased by $9 million (3%) 
• Royalties and Licensing Fees increased by $181 million (17%) 
• Other private services increased by $1.5 billion (51.4%) 
• U.S. Govt miscellaneous services increased by $5 million (29%) 
  A more comprehensive breakout of U.S. export of private commercial services to Australia is 
available only through 2005.  ( See Survey of Current Business article from October 2006:  
http://www.bea.gov/scb/pdf/2006/10October/1006_intlserv.pdf ). 
 40. Could Australia indicate whether there has b een an increase in foreign investment stock 
and FDI from the U.S. since entry into force of the Agreement? If so, what is this increase in 
value and percentage terms?  WT/REG184/5/Rev.1 
 Page 15 
 
 
   There has been an increase of A$2.6 billion or 0.7 % in U.S. foreign investment stock in 
Australia since entry into force of the Agreement (2004 through 2006). There has not been an increase in FDI since entry into force of the Agreement. 
 
41. Could U.S. confirm whether there has been an  increase in foreign investment stock and 
FDI from Australia since entry into force of the Agreement? If so, what is this increase in value 
and percentage terms? 
 The stock of Australian foreign direct inv estment in the United States increased from 
$40.9 billion in 2004 (the year before date of entr y into force of the Agreement) to $44.1 billion in 
2005 (latest data available), an increase of 8 per cent.  Source:   Bureau of Economic Analysis, U.S. 
Dept of Commerce. (See Survey of Current Business article from September 2006 - http://www.bea.gov/scb/pdf/2006/09S eptember/0906_FDIUS_Article_web.pdf)  
 42. Could the Parties explain how th e agreed commitments in services  go beyond their 
GATS commitments?  
 Commitments on services and investment in the Agreement are based on the negative-list 
approach, whereby all services and investment se ctors are subject to commitments except those 
included in a list of reservations.  The negative-lis t approach has assisted the Parties in agreeing 
bilateral services and investment commitments th at go beyond their GATS obligations in many 
sectors.  
 As a general matter, investment in services vi a mode 3 enjoys much broader protections under 
the Agreement than under the GATS.  For example, indirect and portfolio investments are covered by 
the obligations of the Agreement, not just comm ercial presence in the form of a branch or 
representative office of the other Party, as are cove red by the GATS.  Further, a broader array of 
fundamental obligations is afforded to those investments, such as:  
 
• the right to appoint senior managers free from nationality restrictions;  
• freedom from a list of performance requirements beyond those that are covered in the TRIMS 
Agreement;  
• expropriation protections;  and 
• treatment in accordance with customary international law.   
  Other areas in which the Agreement goes beyond the GATS include:  
• The transfers and payments obligations are at a higher standard under the Agreement than in 
the GATS, with more narrow ly circumscribed exceptions. 
• The transparency obligations are more exte nsive under the Agreement than those of the 
GATS, extending to commitments to provide advance notice of final regulations and to 
provide a mechanism to respond to inquiries on regulations. 
• The Agreement includes a prohibition on local presence requirements (Article 10.5 of the 
Agreement) not found in the GATS; 
• The market access commitments in Article 10.4 of the Agreement are more clearly expressed 
than under Article XVI GATS. 
 
 Finally, the Parties to the Agreement have agreed  that for most of the measures for which they 
have taken a reservation, in the event that such  a measure is liberalized, the liberalization is 
automatically bound under the terms of the Agreemen t.  This provision is in contrast to the GATS 
approach which permits a Member to reverse a unilateral liberalization as long as the reversal does 
not exceed its bound level. WT/REG184/5/Rev.1 
Page 16  
 
  43. Could the Parties indicate on which provisions they have undertaken additional 
commitments to those in their GATS schedul es? Do the Parties have the intention to 
multilateralize such commitments at the WTO (i.e. Australia in the case of audiovisual 
services?) 
 The United States has taken additional commitments in higher education, pipeline transport of 
fuels, translation, radio and television distributi on services, and foreign legal consulting services, as 
well as commitments in certain environmental services, express delivery services, business services, research and development services, technical testing and analysis, physical well-being services, and auxiliary transportation commitments.  The United St ates has also liberalized  commitments in some 
sectors with respect to specific measures that othe rwise qualify commitments in the relevant sector, 
such as in auditing, accounting, and engineering.  The United States does not intend to multilateralize 
these additional commitments.   Australia has taken additional commitments in certain professional services, computer and 
related services, research and development services (on natural sciences and disciplinary), real estate 
services, rental/leasing services without operators, other business services, postal services, courier 
services, telecommunications services (on-line information and/or data processing), construction services, educational services, financial services, health related and social services, recreational, cultural and sporting services and transport services.  Australia has also liberalized commitments in 
some sectors with respect to specific measures th at otherwise qualify commitments in the relevant 
sector, such as in the audio-visual sector and with r espect to Australia’s foreign investment policy.  
Australia does not intend to multilateralize these additional commitments. 
 
44. Do the Parties consider that their commitments in investment go beyond their WTO 
obligations? If so, how?  Do the Parties inte nd to multilateralize these commitments at the 
WTO?  
 We note that at present there are only limite d WTO disciplines in the area of investment (as 
set out in the Agreement on Trade-Related Invest ment Measures and in the GATS for mode 3).  The 
inclusion of comprehensive investment provisions  in the Agreement therefore goes considerably 
beyond the Parties’ WTO commitments.  See the responses to the previous two questions.   The Parties have no plans to multilateralize these commitments at the WTO. 
 
45. Is Australia considering aligning the threshol ds for non-U.S. investors with those for 
U.S. investors, in particular the $A871 millio n threshold for investme nts in non-sensitive 
sectors? 
 Australia has no plans at this stage to extend the higher investment screening thresholds that 
apply to the U.S. under the Agreement to all WTO Members. 
  Australia notes that in December 2006 the Aust ralian Government raised foreign investment 
screening thresholds for all investors regardless of nationality to reduce unnecessary compliance costs 
on business and to reflect increases in Australian asse t values.  The general asset value threshold has 
been raised from $A 50 million to $A 100 million w ith exceptions for investments in media or by 
foreign governments.  This equates with the sensitiv e sector asset value threshold for U.S. investors 
under the Agreement.  The asset value threshold for offshore takeovers of fore ign corporations (with 
less than 50 per cent of their assets in Australia) has been raised from $A 50 million to $A 200 
million.   WT/REG184/5/Rev.1 
 Page 17 
 
 
  46. What have been the outcomes of the Joint Working Group on professional services? Has 
the group made recommendations to promote mutual recognition within the two-year timeframe envisaged by the Agreement? If so, what were these recommendations? 
The Working Group on Professional Services (WGPS)  established under the Agreement is an on-
going initiative that supports profession-led initiativ es that seek to establish arrangements for the 
mutual recognition of standards and criteria for th e licensing and certification of Australian and U.S. 
professionals.  The WGPS currently supports initi atives pursued by the law, engineering and 
accounting professions.   Relevant Australian and U.S. national prof essional associations and regulators have held 
discussions exploring options for improving pr ofessional mobility for engineers, lawyers and 
accountants.  Australian professional bodies have al so held discussions on improving professional 
mobility with specific U.S. states.  These discussions are continuing. 
  The working group has made recommendations that its work continue. 
 
Question from Chinese Taipei
 
 
~ Services ~ 
 
47. According to paragraph 23 of the Factual Presentation (WT/REG184/4) prepared by the 
WTO Secretariat, “A Party that is a party to an agreement or arrangement on mutual 
recognition, whether existing or future, shall affo rd adequate opportunity for the other Party, if 
the other Party is interested, to negotiate accessi on to such an agreement or arrangement or to 
negotiate a comparable one with it.” 
 Could the Parties please advise whether th ere is any existing mutual recognition 
agreement or arrangement between either one of th em and a non-Party? If so, have the Parties 
commenced mutual recognition negotiatio ns between each other accordingly ? 
 
 The U.S. Government has not entered into any mutual recognition agreements on services.  
However, U.S. non-governmental professional bodies ha ve entered into such agreements with their 
counterparts in Australia and other countries.  Su ch agreements exist between professional bodies in 
the United States and Australia, including in such sectors as accounting and engineering. 
  Australia has a Trans-Tasman Mutual Rec ognition Arrangement with New Zealand.  The 
arrangement recognises that if a person is registered  to practise an occupation in New Zealand, he or 
she will be entitled to practise an equivalent occupa tion in an Australian jurisdiction and vice versa. 
Australia and the United States have not s ought to negotiate a similar arrangement. 
  A number of Australian non-government prof essional organisations are party to mutual 
recognition agreements that include non-parties.  Fo r example, Engineers Australia is a signatory to 
the Washington Accord, that provides for mutual recognition of engineering accrediting authorities, and the APEC Engineer Register, that seeks to establish common criteria for the registration of 
engineers.  Australian professional associations are signatories to certain mutual recognition 
agreements with U.S. bodies, including for the professions of accounting and engineering. 
  Article 10.9 of the Agreement has not been invoked with respect to any mutual recognition 
agreements with non-parties. WT/REG184/5/Rev.1 
Page 18  
 
  Questions from Canada
 
 
~ Services ~ 
 48. The WTO Secretariat Report includes general services trade and investment data for 
both Parties. Could the U.S. and Australia further elaborate on how this agreement has 
stimulated services trade and investment in service sectors between them? 
 The United States-Australia Free Trade Agreemen t (the Agreement) has stimulated services 
trade and investment in service sectors between the United States and Australia by including commitments that go beyond the Parties’ GATS obligations in many sectors.  The use of a negative-
list approach, whereby all services and investment sectors are subject to commitments except those 
included in a list of reservations, has assisted in this respect.  Further, the Parties have agreed that for 
most of the measures for which they have taken a reservation, in the event that such a measure is 
liberalized, the liberalization is automatically bound under the terms of the Agreement.   
 
 The inclusion in the Agreement of strong and legally binding investment protection 
provisions is also a stimulant for investment in service sectors.   Detail on the increase in services trade between th e Parties since the entr y into force of the 
Agreement is provided in the responses to the EC’s questions 46-50.  49. The report discusses issues related to the sco pe of the Cross Border Trade in Services 
Chapter.  In this regard, in the U.S. Australia FTA, there is a GATS type Article 1 3 C provision at Article 10.1.4 (e) in the Cross Border Trad e in Services Chapter which carves out services 
provided under government authority from the provisions of the Chapter.  In addition, both Australia and the U.S. maintain an Annex II re servation for Social Services at II Australia 4 
and II United States 3 respectively.  With respect  to this, Canada would be interested in 
knowing what services within Australia and the U.S.'s domestic regulatory regimes are covered 
by Article 10.1.4(e) which are not already covered  by Annex II Australia 4 (Social Services) and 
II United States 3 (Social Services) respectively?  
 These provisions have a different coverage.  Annex II-Australia-4 (Social Services) and II-
United States-3 (Social Services) apply to the listed se rvices “to the extent that they are social services 
established or maintained for a public purpose”. 
  Article 10.1.4(e) covers all “services supplied in the exercise of governmental authority” which are defined as services “supplied neither on a co mmercial basis, nor in competition with one or 
more service suppliers” (by virtue of the de finition of “service supplied in the exercise of 
governmental authority” in Article 1.2.22 of the Agreement). 
  Unlike the Annex II entries referred to above, Ar ticle 10.1.4 (e) applies to the entire chapter 
of the Agreement on Cross-Border Trade in Servi ces (whereas Annex II-Australia-4 (Social Services) 
and II-United States-3 (Social Services) list the provisi ons of the chapter which are not applicable to 
measures adopted or maintained in respect of the listed social services) and Article 10.1.4(e) does not 
apply to a closed list of services but is open-ended,  within the definition in Article 1.2.22 of the 
Agreement.  
50. On page 6 (para. 13), the report notes that trade in services is generally defined to 
include GATS modes of supply 1, 2, and 4.  Could the U.S. and Australia elaborate on how 
mode 4 is addressed in the context of the Chapter on Cross Border Trade in Services 
(Chapter 10)?  WT/REG184/5/Rev.1 
 Page 19 
 
 
   The scope of the Agreement includes services supplied 'by a national of a Party in the 
territory of the other Party', which corresponds to  the GATS concept of Mode 4.  This scope is 
qualified through a side letter that excludes 'immigration measures'.     The net result is that the Agreement covers all non-immigration measures affecting the supply 
of services through Mode 4.  These measures would include licensing and qualification requirements 
or any other policies governing ser vices supplied by natural persons. 
 
51. Annex I-Australia(3-6) to the U.S. Aust ralia FTA describes Australia's foreign 
investment policy which applies to foreign investments above certain thresholds in several 
services sectors (with preferential thresholds for U.S. investors). Can Australia provide data as 
to how this preferential investment policy is  operationalized?  How many U.S. investments 
above the preferential threshold have been reviewed by the Foreign Investment Review Board (FIRB)?  How many non U.S. forei gn investments have been reviewed?  Does Australia plan to 
multilaterize this treatment to other WTO Me mbers by increasing thresholds for all foreign 
investments?  
 Australia’s foreign investment policy frame work comprises the Foreign Acquisitions and 
Takeovers Act 1975 (FATA), regula tions made under the FATA, and ot her requirements set down by 
way of Ministerial statement.   The Agreement provides exemptions/highe r screening thresholds for certain U.S. 
investments. Proposed new investments and investment s in certain Australian financial institutions are 
exempt from foreign investment screening (altho ugh investments of more than 15 per cent in 
Australian financial institutions (described below in  response to question 5) must still be approved 
under the Financial Sector (Shareholdings) Act 1998,  which applies to all investors on a national 
treatment basis).  Proposed U.S. investments in existing Australian businesses in non-sensitive sectors 
and in developed commercial real estate are subj ect to higher screening thresholds (currently 
A$871 million).   Proposed U.S. investments in existing Australian businesses in sensitive sectors and all other types of real estate, as well as U.S. government invest ments, are subject to the same rules that apply to 
non-U.S. investors. 
 
 As outlined in its most recent Annual Repor t, FIRB approved 5,186 foreign investment 
proposals valued at A$85.8 billion in 2005-06.  On ly 25 proposals were rejected by way of final 
notice (all of which related to residential real esta te).  307 of these approvals related to proposed U.S. 
investments (around 5.6 per cent of total approvals ). Approved U.S. investments were valued at 
A$23.4 billion (around 27 per cent of the total value of prop osals approved in 2005-06). 
  These data refer to approved proposals rather than realised investment and does not include 
proposals that were not required to be notified to the Australian Government. 
  In 2005-06, around 94.4 percent of approvals re lated to non-U.S. investment proposals.  
These approvals were valued at $62.4 billion. 
  Australia is not currently considering extendi ng the higher screening thresholds that apply to 
US investors to all other WTO Members.  
 In November 2006, Australia raised its ordinary  screening threshold that applies to all non-US 
investors from $50 million to $100 million ($200 million in the case of offshore takeovers).  It also 
eliminated foreign equity caps that previously applied in the media sector. 
 WT/REG184/5/Rev.1 
Page 20  
 
  52. The report states on page 15 (para. 54) that Australia's commitments under this 
agreement exempt all new investments in fina ncial services from screening under the Foreign 
Acquisitions and Takeovers Act (FATA). In addi tion, the report notes that Australia has 
provided new rights to U.S. suppliers to supply life insurance services in Australia through 
branches.  Is Australia considering extending th is same level of liberalization for commercial 
presence in the financial services sector to ot her WTO Members by expanding its GATS Mode 3 
commitments under financial services? 
 Under the Agreement, proposals by U.S. investor s to acquire 15 percent or more in Australian 
authorised deposit-taking institutions and authorised  insurers (and their respective holding companies) 
are exempt from screening under the FATA.  Ho wever, these proposed investments are subject to 
examination under the Financial Sector (Shareholdi ngs) Act 1998 (FSSA).  The FSSA is applied on a 
national treatment basis to all investors.  Under the FSSA, approval for a proposed shareholding that 
exceeds 15 percent is subject to the proposed invest ment being in the national interest. In a 1997 
Ministerial statement, the Australian Government st ated that any large scale transfer of Australian 
ownership of the financial system to foreign hands would be contrary to the national interest. This 
statement was reaffirmed as the basis for Australia’s  approach to foreign investment in financial 
services in a side letter to the AUSFTA.   Australia is not currently considering extending GATS Mode 3 concessions to other 
WTO Members.  53. Annex 10-A on Professional Services in the U.S.-Australia FTA establishes a Working 
Party on Professional Services which comprises re presentatives of the two Parties and is aimed 
at fostering the development of mutual recogn ition arrangements between relevant bodies. 
Could the U.S. and Australia further elaborate on  the objectives and ongoing operations of this 
Working Party – i.e. who currently participates in the Working Party?  What topics generally 
form part of the agenda items discussed at m eetings? What specific recommendations have been 
made by the Working Party to date on in itiatives to promote mutual recognition? 
 The Working Group on Professional Services (WGP S) established under the Agreement is an 
on-going initiative that supports profession-led initiatives that seek to establish arrangements for the 
mutual recognition of standards and criteria for th e licensing and certification of Australian and US 
professionals.  The WGPS currently supports initi atives pursued by the law, engineering and 
accounting professions. 
  Relevant Australian and U.S. national prof essional associations and regulators have held 
discussions exploring options for improving pr ofessional mobility for engineers, lawyers and 
accountants.  Australian professional bodies have al so held discussions on improving professional 
mobility with specific U.S. states.  These discussions are continuing. 
  The working group has made recommendations that its work continue.  
__________