CANBERRA: Australia, hoping to seal a free trade pact this week with the United States, said last Thursday negotiations were stuck over sugar and other commodities.

Trade Minister Mark Vaile said talks between the two major rural exporters had "reached a make-or-break stage."

Agriculture, particularly sugar, was a key stumbling block in a deal to free up market access by eliminating tariffs and quotas that could be worth billions of dollars a year to Australia.

Vaile said it was crucial to strike a deal before presidential elections later this year in the United States, which is Australia's second-largest trading partner.

"If we can't reach an agreement in the next couple of weeks, and it stretches out beyond that June/July timeframe to put it before Congress, then obviously it puts it beyond the life of this administration," Vaile told a news conference.

Vaile said he hoped officials meeting in Washington would agree on details of a pact which he could finalize during a visit in late January, in time to put the final document before the US Congress for approval mid-year.

"It could be 20 years or more before this environment exists again to capitalize on the strength of the relationship between Australia and the United States," he said.

Free trade negotiations began last March and were made a top priority of President George W. Bush's administration following Australia's backing of the US-led invasion of Iraq.

So far, no details have been released, but Vaile said the next talks would "crunch" numbers on access for products from the two nations, whose two-way trade is worth A$28 billion (US$20 billion) a year.

Access for Australian sugar to the massive US market remained the most difficult issue in the talks, which have already overshot an ambitious end-of-2003 deadline, he said.

Australian farmers are also seeking greater access for dairy and beef.

But US farmers, already smarting from a mad cow scare, firmly oppose a free trade pact, arguing it would open their market without reciprocal benefits.

The two countries are also tackling rules governing pharmaceutical trade, local content for television and investment.

Australian trade officials last Friday began negotiating with counterparts from China, Australia's third-largest trading partner, over a two-year study to develop a free trade pact.

"There's a lot of political commitment to moving forward with this, and this is the beginning of that process," Vaile said.

Australia last year signed free trade pacts with Singapore and Thailand. It has a long-standing deal with New Zealand.

Agencies via Xinhua

(Business Weekly 01/20/2004 page2)