Australian Worries About FTA With China

What are the current local concerns over Australia’s free trade agreement (FTA) with China? Is it the intersection of strategy and economy, or their balancing? In Australia right now, it is in fact opposition concerns about foreign labor.

The agreement with China was the third recent FTA with a major Asian economy since the Coalition government under Prime Minister Tony Abbott took office in 2013, though it was a decade in the making. When it was announced at the end of last year it received decent enough media coverage, as does anything associated with the “evergreen promise of China’s rising middle class.” The agreement has interested strategists, economists, business groups and the public. And as we’ve noted elsewhere in The Diplomat, a recent poll by the Lowy Institute showed that Australians view economic prospects from China favorably.

However, the Coalition and the opposition Labor Party are divided over one thing: labor prospects, or rather whether the ChAFTA allows for the importation of Chinese workers who may in turn affect Australians’ job prospects. Tony Abbott has recently called Labor’s public concerns “xenophobic games” and insisted that the deal is very good for trade and “jobs and growth.”

So what exactly is the problem? One answer lies with the so-called 457 visas, which allow the importation of workers for investment projects of A$150 million ($107 million) and up (rather than the previous A$2 billion benchmark) and with only 15 percent of that having to be actual Chinese investment. This is under the Investment Facilitation Arrangement. Trade Minister Andrew Robb has told media there will be no change in the way skills for 457 visas are assessed, but according to other media reports there may be ten occupations that will have the skills assessment component removed. The visas are temporary (up to four years), and permit businesses to bring in foreign skilled labor if they cannot find it in Australia.

There has also been the inclusion of an Investor State Dispute Settlement component, meaning China can legally take on decisions made by the Australian government. The Australian Council of Trade Unions (ACTU) protested this and more last year. President Ged Kearney said in a press release from November, “Despite the government today saying labor market testing will apply, their own fact sheet says rules for these new agreements will be based on Enterprise Migration Agreements – which do not require labor market testing.”

The Construction, Forestry, Mining and Energy Union (CFMEU), which signed a letter of concern from the ACTU last year, has more latterly criticized a government advertising campaign promoting the trade deal as wasteful.

Former Trade Minister Craig Emerson said that Labor was right to be skeptical of aspects of the ChAFTA, telling the Australian Financial Review, “It’s very messy and it includes statements that there will be no labor market testing.” The government may struggle to change things at this stage and at any rate is eager to assure Beijing of smooth sailing; business groups are also urging Labor not to hold up getting the agreement through Parliament. Labor has apparently said it may seek to change parts of the FTA should it win the next election, which it can under a two year review that is allowed in the agreement.

Part of the problem here is transparency, something at the heart of criticisms of the TPP also, or at least a certain level of organizational confusion. Exactly how or when labor market testing will apply remains unclear, or whether China will indeed wish to bring its workers to Australia and for what kinds of projects. China is known for bringing its labor into many nations across the Asia Pacific and Africa, though sustained examples of the practice haven’t been part of the pro-Australian labor argument since the issue started gathering more steam at the end of July.  

To dispel myths, such as the one about unqualified Chinese electricians working in Australia, the Department of Foreign Affairs and Trade put out a “myth busting” fact sheet in July.

There is also the issue of wages and conditions: Might Chinese workers end up being paid less, which in turn will hurt Australian workers? It is hard to say, though an article in The Age points out the structural problems they may face if they are mistreated and wish to take it to Australian authorities.

And what of the xenophobia Abbott speaks of? Fear of Chinese workers driving down wages is an old problem in Australia, from Gold Rush days onwards, and helped lead to the White Australia policy, which was a Labor Party initiative. However, as The Age points out, using racism when it comes to concerns over the text and implementation of agreements worth many billions of dollars is a simplistic get-out-of-jail card.