While the system is very effective at keeping many drug prices low, pharmaceutical companies in both the U.S. and Australia are cautious about operating the system, saying that higher drug prices are needed to finance research and development costs. U.S. pharmaceutical companies claim that Australians, when they ingest low-cost drugs, are essentially free of the cost of research conducted in the United States[8] Five rounds of negotiations took place in 2003. Nearly 100 negotiators from both countries worked on the free trade agreement. There are nearly 20 chapters of the agreement, including agriculture, industrial products, services, investment, intellectual property, competition policy, market access, the environment, labour standards, technical barriers to trade, public procurement, e-commerce, financial services, telecommunications and comprehensive administrative agreements, such as dispute resolution. As a result of these efforts, the free trade agreement was concluded on February 8, 2004. As a result, each party endeavours to ensure that it does not renounce such laws or otherwise abstain from them, or that it refrains from doing so in any other way, which weakens or reduces the protection afforded by these laws as an incentive to trade with the other party or as an incentive to establish, acquire, expand or maintain an investment in its territory. · The agreement will provide a predictable framework for U.S. investors operating in Australia. All forms of investment are protected by the agreement, including companies, debts, concessions, contracts and intellectual property. · This is the largest immediate reduction in industrial tariffs ever achieved in the case of a U.S.

free trade agreement, and will bring immediate benefits to U.S. workers and businesses in the manufacturing industry. U.S. producers estimate that the abolition of tariffs could result in $2 billion a year in increasing U.S. exports of industrial products. This chapter defines the framework of the free trade agreement. It states that the provisions are in line with the relevant sections of the 1994 General Agreement on Tariffs and Trade (GATT) and the General Agreement on Trade in Services (GATS). Both GATT and GATS are documents created by World Trade Organization (WTO) agreements that set limits on future bilateral agreements such as the United States of Australia.

Free trade agreement. On March 3, 2004, the USTR released draft free trade agreements between the United States and Australia. Chapter 19 raises concerns that a relaxation of environmental legislation would allow the parties to obtain commercial benefits. · Both sides are committed to setting a high level of environmental protection and not weakening or reducing environmental legislation in order to attract trade and investment. The agreement also improves Australia`s services, trade and investment prospects, improves the regulatory and investment environment between the two countries and promotes increasing business mobility. Chapter 4 deals with the trade in textiles and clothing between the two countries. Most of this section includes rules of origin for textile products and protection of the internal markets of both countries. The agreement provides for an emergency mechanism if the sudden increase in imports due to the reduction in tariffs has negative effects on the domestic industry of the importing country.