ߣߣÊÓƵn academics are alarmed that a free-trade agreement signed last week with the US could lead to American universities establishing operations in ߣߣÊÓƵ and receiving the same benefits as local institutions.

Under the agreement, American universities would be able to compete with their ߣߣÊÓƵn counterparts for both staff and students, and their students could be eligible for the federal government's loans scheme.

Although full details of the free-trade agreement have not been released, and may not be for months, the National Tertiary Education Union fears that American universities operating in ߣߣÊÓƵ will have to be treated as favourably as local providers.

Ted Murphy, the union's deputy general secretary, said that the agreement did exclude government subsidies and grants for all services. While foreign institutions would not be entitled to receive government funding, they could demand to be treated the same as ߣߣÊÓƵns in receiving land grants to set up their campuses.

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Mr Murphy wrote a submission on the agreement for the ߣߣÊÓƵn Council of Trade Unions. He said that preferential treatment such as allowances for local students could be in violation of the agreement. This could also result in an international jurisdiction covering disputes if foreign institutions were to set up campuses in ߣߣÊÓƵ.

ߣߣÊÓƵ is a signatory to the General Agreement on Trade in Services (Gats), which allows private foreign institutions to operate in ߣߣÊÓƵ if they meet accreditation and quality standards.

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But ߣߣÊÓƵ reserved the right to treat local public institutions and their students more favourably than foreigners.

Mr Murphy said the American negotiators had asked that this exemption not be included and he believed ߣߣÊÓƵ had agreed.

He said ߣߣÊÓƵ's free-trade agreements with Singapore and Thailand did provide for preferential treatment for public institutions in this country.

"We do know that ߣߣÊÓƵ has given a commitment to treat American institutions as favourably as locals but we don't know how far that extends," he said. "Under Gats, that applies only to private providers."

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ߣߣÊÓƵn vice-chancellors are more optimistic about the consequences of the agreement. They believe that it could lead to increased American investment in ߣߣÊÓƵn research while also offering the country's universities greater access to US funding.

Mutual recognition of degrees and other tertiary qualifications could also boost mobility among university graduates. But the agreement might expose ߣߣÊÓƵn institutions to American litigation and its associated costs, the ߣߣÊÓƵn Vice Chancellors' Committee said.

The federal government initially claimed that the agreement would provide A$4 billion (£1.7 billion) in benefits to the ߣߣÊÓƵn economy. But treasurer Peter Costello refused to be specific.

Mr Costello said that ߣߣÊÓƵ was gaining enhanced access to a market of some 300 million people.

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