For Immediate Release February 9, 2004 Contact: John Goyer (202) 289-7460 U.S.-Australia FTA Opens Services Opportunities, Raises Investment Concerns (Washington, DC). The Coalition of Service Industries (CSI) today expressed approval of the measures contained in the US-Australia Free Trade Agreement (FTA) to lock in US access to a diverse range of Australian service markets. At the same time, CSI expressed regret that the agreement did not achieve some key US objectives in investment. The agreement will accord substantial market access to U.S. services providers across a range of industries, subject to very few restrictions. It will allow U.S. companies to provide services both on a cross-border basis, as well as through commercial presence in Australia. The commitments apply to key sectors such as express delivery, audiovisual and entertainment services, financial services including banking, insurance, and securities, fund management, telecommunications, and other industries. However, in a marked departure from other U.S. FTAs, investor-state arbitration has not been included in this agreement. Under the investor-state dispute settlement mechanism, foreign investors can seek redress for measures they believe to be in violation of an FTA from neutral tribunals. The investor-state mechanism gives investors assurance that disputes can be settled in a context independent of the political interests of governments. Australia will also retain its foreign investment screening mechanism, under which a foreign investment can be reviewed and rejected by Australia based on what it considers to be in its "national interest." New investments will not be subject to the screen, but acquisitions will remain subject to screening, depending whether the investment exceeds certain thresholds. Despite minor adjustments to the screening mechanism, including a process for consultations and periodic reviews, Australia can still prevent a US acquisition of its largest corporations. "Ultimately, the screen is a government approval process based on an undefined "national interest" test and is a barrier to free operation of the market," said Robert Vastine, President of CSI. In 2002, U.S. foreign direct investment in Australia was $36.3 billion, and Australian investment in the U.S. was $24.5 billion. Two-way trade in services between the two countries was $8.1 billion in 2002, with the U.S. running a $2.3 billion surplus. The services sector is an increasingly important component of the US economy. Services account for approximately 81% of U.S. GDP, and a similar proportion of private sector employment. US services exports were in surplus over imports in 2002 by $74 billion. "Opening foreign markets to US services exports and investment is a high priority, because the US is so competitive globally in services, and because services are the source of so many high quality jobs," Vastine said. # # # # # CSI is the leading business organization dedicated to reducing barriers to U.S. services exports and mobilizing support for domestic U.S. policies, including tax policies, which enhance the global competitiveness of its members. CSI was formed in 1982 to ensure that U.S. trade in services would become a central goal of U.S. trade policy and trade negotiations. It played a major role in the General Agreement on Trade in Services (GATS) and in the advocacy effort leading to the 1997 World Trade Organization (WTO) Basic Telecommunications and Financial Services Agreements. CSI’s knowledge of the process of services trade negotiations, its ties to the WTO and its network of relationships with governments and industry in other countries are unmatched. For a complete list of CSI members, visit our website at www.uscsi.org.