Quotes of the Day

Australian Trade Minister Mark Vaile called it a "historic achievement." U.S. Trade Representative Robert Zoellick described the deal as "very excellent." After four weeks of legal scrubbing, the text of the Australia–United States Free Trade Agreement was released to the public last week; its thousand or so pages of trade legalese left readers wishing for the shiny simplicities of the spin doctors and politicians. In a perfect world, Australian Prime Minister John Howard would say to President George W. Bush: "Let's have free trade." Bush would nod, they would shake on it and alert the press. The agreement, with all the seals and signatures, would fit on one page, and the two countries would instantly become a single market - no tariffs, no quotas. But the deal struck last month is not so pure. Amid the hype and hysteria of supporters and critics, here's what you need to know.

What does it mean?
Over time, all countries develop a web of regulations to protect their industries from foreign competition. Some apply only to particular countries; others are broadly based. The measures can be as transparent as quotas on beef or customs duties on consumer products. Or they can be as sneaky as some quarantine regulations, the non-recognition of professional qualifications, or investment-screening protocols. This agreement tries to dismantle many bilateral barriers. In general, Australia's is an open economy that has been reducing its industrial protection (often unilaterally) for 30 years. But political fiddling and the idiosyncrasies of its producers, workers and consumers have closed off some areas to foreigners. As a superpower accounting for one-third of global production, the U.S. has natural protection for many of its industries. The entrenched power and influence of some sectors - such as auto making, steel and agriculture - have diminished America's claim to being a free trader. Now many of the barriers between the two countries will be ditched immediately; some will be taken down gradually. A few, such as those shielding American sugar farmers or Australian film and television producers, will stay.

Why did they do it?
There's a good vibe in Canberra and Washington. The relationship between the two national leaders could hardly be better: both support free trade in principle, and they fought as allies in Afghanistan and Iraq. Congress had given Bush fast-track approval to pursue FTAs; Howard saw a chance to prise open the U.S. agricultural market. This FTA (following agreements between Australia and New Zealand and between the U.S. and Canada) is only the third between developed nations. Many minor FTAs are being written that have not required the toil and sweat of the AUSFTA. But as with exercise, no pain, no gain. The agreement, while far from ideal for either country, will be a model for deals between rich countries that negotiate from strong positions but are nevertheless pursuing divergent goals. After plenty of haggling, the so-called "playing field" for business has been made more level by the two governments. Now it will be up to companies and individuals to sell their products and services and make wise investments abroad.

How much is the deal worth?
Two-way trade in goods and services between the countries is worth about $28 billion a year, with a $9 billion trade surplus to the U.S. Mutual direct investment is worth $60 billion. Once the FTA comes into effect (and it could be as early as Jan. 1, 2005), all American farm products and more than 99% of U.S.-made goods will land in Australia duty free. The share of Australian exports with that status will be smaller, because U.S. farm protection is extensive and will remain so. American producers estimate that they could sell an extra $2 billion a year in factory-made goods - trucks, machinery, chemicals, plastics - because of this deal. Australia hasn't finished doing its sums yet. Vaile became accustomed to tossing about a figure of $A4 billion ($3.2 billion), but he's more circumspect these days, as that early estimate had factored in a sweeter FTA for Australia and a lower exchange rate. The Australian government is now calling for tenders to recalibrate the expected benefits - and fight off a charge that they gave away too much and won too little.

What does Australia get?
Australian auto parts and light commercial vehicles (such as utility trucks), fresh seafood (and canned tuna) and some horticultural products will no longer be subject to duties. For the first time, Australian companies will be able to compete for government tenders in the U.S. Service providers will be treated as if they were American. Farmers will be able to sell an extra $3.6 billion worth of beef and dairy products over the next two decades. The tariff on Australian wine will be cut to zero over 11 years.

What does the U.S. get?
American exporters already have relatively easy passage to Australia - but for manufacturers and farmers, access will improve. Service providers in fields such as telecommunications, express delivery, IT, and finance will find it easier to compete in Australian markets. Most U.S. companies will be exempt from screening by the Foreign Investment Review Board. American intellectual-property rights (such as copyrights, patents and trademarks) have been significantly improved - a windfall for media conglomerates such as News Corp, Disney and Time Warner, parent of the company that publishes Time.

Who got the upper hand?
Australia's government wanted (needed, even) an FTA more than the U.S. did. Culturally and economically, America is where Australian exporters hope to make it. And smaller countries tend to benefit more than larger ones in such deals; just ask Canada and New Zealand. If the aim of the game is to reduce protection at home and abroad - because protection ultimately hurts consumers and impedes the market - the more open nation (Australia) wins.

Will the FTA get legislative approval?
Despite the flaws and compromises, the deal deserves to become law. But it's an election year in both countries, and time is running out for law makers. Democratic candidate John Kerry and Labor Opposition leader Mark Latham are free traders at heart (who knows - President-elect Kerry and Prime Minister Latham may be congratulating each other come New Year's Day). But the anti-free-trade scaremongers and interest groups will be shouting louder this year than the champions of an almost-free trade agreement. It's just too tight to call.

What's the bottom line?
An FTA brings two countries closer. Its hundreds of minor concessions may go almost unnoticed at the time yet one day add up to something big. These tiny changes could mean the difference in getting a small business up and away, or be the start for such intangibles as new friendships, networks, and marriages. The deal could become the basis for further talks that again create winners and losers on both sides. Or the current agreement itself may be the high point; officials in both countries will explore new trade frontiers elsewhere. It's premature to call it a once-in-a-lifetime deal. But here's a rare instance where doors on opposite sides of the globe could soon open to the profit-hungry, dynamic, brave and creative Australians and Americans who help keep the world trading system alive.

• Tom Dusevic
• As a landmark U.S.–Australian deal is published, Time presents a no-nonsense guide through the forest of fine print