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What does ChAFTA really mean for Aussie jobs?

The Chinese-Australia fair trade agreement (ChAFTA) began negotiations in May 2005 with the agreement formally signed on the 17th July 2015, by Australian Minister for Trade and Investment, Andrew Robb and the Chinese Commerce Minister, Gao Hucheng. The ceremony was witnessed by Australian Prime Minister, Tony Abbott who described the signing as a “momentous day” for the Australian-China relationship. “It will change our countries for the better, it will change our region for the better, it will change our world for the better,” Mr Abbott said. He paid tribute to Chinese President, Xi Jinping whom he described as a “shrewd” negotiator and “friend of Australia”. He further toasted the deal saying “I trust that today our Chinese friends will enjoy the fine beef and the good wine that will soon be more readily enjoyed by their countrymen.”

Last year was a busy year for the Abbott government, which also signed off on the Korea-Australia free trade agreement (KAFTA) and the Japan-Australia Economic Partnership Agreement (JAEPA). According to a Department of Foreign Affairs and Trade (DFAT) report titled, Economic benefits of Australia’s North Asia free trade agreements, it will create lots of new jobs. It has estimated that between 2016 and 2035 the FTAs will lead to 178,000 jobs, at an average of 9,000 per year. Mr Robb also enthused the three FTAs job creation, saying that “Given what’s going on in the region, the extraordinary explosion of people going into the middle class, this is a landmark set of agreements, and it will see literally billions of dollars, thousands, hundreds of thousands of jobs, and will underpin a lot of our prosperity in the years ahead.”

The report also forecast an additional GDP increase between 2016 and 2035 of $24.4 billion and a boost in real consumption of $46.3 billion, equating to an increase in household consumption of nearly $4,500. This has been questioned by the Australian Fair Trade and Investment Network (AFTINET). It said the study authors were “consultants which produced wildly optimistic estimates of benefits for the Australia-US FTA (AUSFTA) which did not eventuate.” Ten years on it’s still unclear as to what benefits the American-Australian FTA has had for Australia or even America.

The Australian Council of Trade Unions (ACTU) is worried about how the deal will affect local jobs and unemployment levels. There is the ChAFTA and there is a memorandum of understanding (MOU) document, about an Investment and Facilitation Agreement (IFA), that was signed before the formal signing. An IFA is a project to be established between the Department of Immigration and Border Protection (DIBP), or its equivalent, and a project company. A project company is eligible to establish an IFA where:

  1. (a) A single Chinese enterprise owns 50% or more of the project company; or, where no single enterprise owns 50% or more of the project company, a Chinese enterprise holds a substantial interest in the project company;
  2. (b) There is a proposed infrastructure development project (“the project”) by the project company with an expected capital expenditure of $A150 million over the term of the project;
  3. (c) The project is related to infrastructure development within the food and agribusiness; resources and energy; transport; telecommunications; power supply and generation; environment; or tourism sectors;
  4. (d) The project company is registered as a business in Australia;
  5. (e) The project company agrees to comply with all Australian laws and regulations, including applicable Australian workplace law, work safety law and relevant Australian licensing, regulation and certification standards; and
  6. (f) The China International Contractors Association (CHINCA) and the Department of Foreign Affairs and Trade of Australia (DFAT) have recommended the project and the project company meet the criteria in paragraphs 2(a) through 2(e).

Section four, covers the areas of negotiation for DIPB and the project company, which includes –

  1. (a) The occupations covered by the IFA project agreement;
  2. (b) English language proficiency requirements;
  3. (c) Qualifications and experience requirements; and
  4. (d) Calculation of the terms and conditions of the Temporary Skilled Migration Income Threshold (TSMIT).
  5. The project company may be asked to provide additional information by DIBP in respect of its requests for concessions in the above areas. Other than the areas referred to in paragraphs 4(a) through 4(d), the grant of visas will be subject to meeting all other Australian nomination and visa requirements.

Interestingly the ChAFTA Myths versus realities released by DFAT only mentioned option 2. (b), most likely because it fits in with the infrastructure narrative. The “concessions” also aren’t mentioned but imply that the project company can negotiate a private contract with DIPB, to import Chinese workers on projects in lower skilled occupations. Though workers under the 457 visa scheme are required to be paid above TSMIT and possess a certain amount of English ability, this also looks like it can be negotiated under the IFA.

In paragraph six it states – There will be no requirement for labour market testing to enter into an IFA. The IFA is valid for four years from the date of execution and with the possibility of an extension. In the actual ChAFTA itself, in Article 10.4: Grant of Temporary Entry, it states – In respect of the specific commitments on temporary entry in this Chapter, unless otherwise specified in Annex 10-A, neither Party shall

  1. (a) Impose or maintain any limitations on the total number of visas to be granted to natural persons of the other Party; or
  2. (b) require labour market testing, economic needs testing or other procedures of similar effect as a condition for temporary entry.

Here is the ChAFTA side letter between Mr Robb and Mr Gao after the formal signing of ChAFTA, that provides more detail and states –

Australia will remove the requirement for mandatory skills assessment for the following ten occupations on the date of entry into force of the Agreement. And that the aim is to further reduce occupations or eliminate the requirement within five years.

Automotive Electrician [321111]

Cabinetmaker [394111]

Carpenter [331212]

Carpenter and Joiner [331211]

Diesel Motor Mechanic [321212]

Electrician (General) [341111]

Electrician (Special Class) [341112]

Joiner [331213]

Motor Mechanic (General) [321211]

Motorcycle Mechanic [321213]

Alan Hicks of the Electrical Trade Union (ETU) said that the Government’s decision to remove the mandatory skills assessment for Chinese workers in ten occupations was a disgrace. “For the Federal Government to come out and waive that under a free trade agreement, without any consultation with unions or employers, is an absolute disgrace,” he said. “It’s going to create significant workplace dangers, not only just for electricians, but all those people who use electricity.” Mr Hicks said China’s statistics of workplace deaths was of “genuine concern” to Australians. “Australia leads the way in electrical safety. We’ve got some of the best electrical workers in the world. A lot of countries aspire to have the same level of safety standards that we do,” he said. “We’ve got a licence system right across the country – no matter which state or territory you work in, you’ve got to be licensed to carry out the work – and those sorts of systems aren’t in place in other countries like China. Mr Hick’s also said that “And China has a woeful workplace health and safety record. They have over 70,000 workplace deaths a year, so we are genuinely concerned.”

There is also a ChAFTA DFAT factsheet that says – In order to better facilitate the temporary entry of workers associated with trade and investment, Australia and China will also increase cooperation in the areas of skills recognition and licensing, including through encouraging the streamlining of relevant licensing procedures and improving access to skills assessments.

Besides the Abbott government’s ideologies being against the work of the unions, it’s unclear as to why industries relating to the ten different occupations including employers, weren’t consulted. In the ChAFTA Myths versus realities document, it tackles untrained Chinese electrician worries, but it doesn’t mention doing away with the mandatory skills assessments or mention the total amount of visa’s on offer. The ChAFTA agreement also enables an Executive arm of government power that goes against the parliament’s 457 visa bill in 2013, where employers, are expected to conduct labour market testing.

The Chinese government’s response to ChAFTA through correspondence with Mr Robb is clear – I have the further honour to confirm that my Government shares this understanding and that your letter and this letter in reply shall constitute an integral part of the Agreement. What any of this means in the long term, in regards to state and federal industrial laws remains to be seen. But it does look like an overreach by the Abbott government in regards to executive power, with the Minister for Immigration and Border Protection, Peter Dutton, deciding matters without employer input, let alone employees, the opposition or workers. It also has the faint scent of Work Choices, an unpopular set of federal industrial laws brought about by former Prime Minister, John Howard in 2006. Taking the power away from workers, over employers in your own country is one thing but taking on China’s is another. The IFA seems to enable these features, and how this will impact on local employment in Australia, also remains to be seen.

Either which way, training needs to be involved, and concessions made solely by Mr Dutton, is not enough to allay justifiable fears from the Unions and Australian’s looking for jobs in the areas of – Food and Agribusiness; Resources and Energy; Transport; Telecommunications; Power supply and generation; Environment and the Tourism sectors. The other question is, if it’s just a matter of training Chinese workers in Australian regulations etc; who is providing this training and how long does it take? And lastly, is there options for Australian’s who have the skills but don’t speak Mandarin and so on?

This article was originally published on Mel’s blog Political Omniscience.


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  1. Roscoe

    it will be interesting to see what happens with your home insurance when an unlicensed electrician does work in your house and it all goes horribly wrong

  2. Carol Taylor

    I know of a situation where a person was working alongside an electrician bought in on a 457 Visa. When questioned about what he was doing, the answer was that he was stripping the insulation from the wires “to make it fit”. Experience has been that many imported workers simply are not trained to Australian safety standards and with a very limited knowledge of English can be a danger to themselves and others on worksites.

  3. Phil

    This means it is going to be absolutely essential to check by actually sighting trade qualification papers and trade assistant training credentials before engaging any practitioners in the trades for which this disgraceful waiver for mandatory skills assessment applies.

  4. paul walter

    A few things already, incidentally at a time when it is acceptable to sack workers by text (too gutless to look them in the eye?).

    Filthy Shenhua is urged on, despite the enviro damage likely. They are allowed to bring their workers, despite unemployment here now at record levels.

  5. Andreas Bimba

    We expect the Liberals and Nationals to just look after their narrow sectional interests. For the Liberals it’s the richest 10% and the corporations and for the Nationals it’s the bulk agricultural sector. The main problem is that the ALP will also blindly accept this destructive FTA just like they have for all the others as they also have been bought.

    The promises of jobs for Australians of 9,000 p.a. is a total lie. China has significant labour and production cost advantages and are advancing technologically much faster than we are. Their higher education sector has also passed ours in scope and level in almost all areas as it has been a priority area for a long time.

    A few Australian businesses will benefit but overall we will lose badly. The goods that they want from us already had good market access and it was totally unnecessary to sacrifice our manufacturing industry for slightly improved trade access. A net loss of 9,000 jobs p.a. is more likely to be the sad reality.

    FTA’s only really make sense for similar size and wage rate economies like New Zealand. FTA’s with huge and low wage economies like China only suit our rich elite as goods for them will be cheaper and it suits the corporations as they will switch production to the lower cost producer. The majority will however be disadvantaged due to greater unemployment, lower wages and depressed economic activity. Total free trade is a race to the bottom for the majority as eventually all tradable goods will be made by the lowest cost producer.

    The other appalling aspect is allowing Chinese residents to work in Australia and undercut local workers. The hatred the Liberals and Nationals have for Australian workers and unions must be intense and must be ingrained in the bones of our ruling squattocracy but again the ALP are little different and continue to betray their traditional constituency.

    I look forward to the day that we abandon our neo-liberal march to banana republic status and all our FTA’s are thrown into the shredder and we return to a more robust, diverse, balanced and self sufficient economy. We should instead have protected our living standard advantage and industrial capabality with moderate trade barriers where required and returned to the full employment we had for the first 30 post war years but we were conned by the elite to adopt neo-liberalism. Just like Japan or Korea we could have advanced technically behind moderate trade barriers but under neo-liberalism this is now mostly impossible.

  6. Jollyjumbuck

    Any agreement with China is dangerous and this stinking PM is selling Australia off. He cares so little for the high unemployment in this country and now he is allowing the Chinese to bring their own unqualified workers into Australia. This PM is not a leader for his people, he is leader who wants to save a buck no matter where it comes from and if that means selling our soul to a Communist country so be it. What the hell is wrong to politicians who will allow this to happen! Are they gutless to stand up to this pathetic PM and his cronies. Once this has been signed then there is no going back and God help this country then. They will eventually own this country. The USA is in debt in the trillions of dollars, and this stinking PM want Australia to go down the same path. Get off your arses politicians and stop this before it takes a hold! God where is this country heading to.

  7. Florence nee Fedup

    Roscoe, you know, the PM will be held personally responsible. Same as happened to Rudd because of the Pink Batts disasters. That is what Abbott believes.

  8. Florence nee Fedup

    We will have cheaper cars they say.

  9. kerri

    Can we send Abbott and Robb to Bali with a boogie board fully loaded?

  10. David Spry

    The progressive weakening of Australia and the abandonment of responsibility for a large part of our population is facilitated by our long standing foreign relations.
    Following the 2nd World War we became a tribute nation to the US – this was not some sordid capitulation – the US had won the war in the Pacific, they had played a major role in saving Australia from invasion and we owed them – morally and financially. The US expected our obedient support and we gave it. We had been conditioned to accept the superior status of Great Britain so it took little effort to adjust to obedience to another.
    The US demanded and received our tribute and our geld, thinly disguised as defence contracts that we could not really afford. Our conservative politicians, already being the willing sycophants and collaborators of big business and the wealthy, found it comfortable to adopt the same relationship with the US and other countries.
    We followed the US into Korea and Vietnam, but then the ALP won government and withdrew from Vietnam and started to develop an independent foreign policy. What action the US took during the Whitlam years is a matter of conjecture but what did result was a new mantra in the centre and right of the ALP – ‘Don’t buck the US’.
    When the ALP failed to make any meaningful stand when John Howard took Australia into the illegal 2nd Iraq War and continued our involvement after winning the 2007 election it confirmed their willingness to tug their forelock to, and to kiss the ring of their superior.
    When it comes to Trade we can look back more than 25 years to an ABC documentary which revealed that in our negotiations of the annual coal prices with Japan our representatives did not take the time to learn the Japanese procedures and accepted their first formal price instead of negotiating. The Japanese representatives explained that they were willing to negotiate in private but that Australia’s representatives did not seem to understand concepts of respect or honour – they just capitulated.
    The majority of both sides of government have developed a belief that sycophancy and collaboration are the only workable foundation for our foreign policy, particularly in relation to trade and that Australia is somehow obliged to make more concessions than the counties with which we make treaties.
    Of even greater significance in both the ChAFTA and the TPP is the acceptance of what amounts to de facto surrender of jurisdiction and perhaps even Sovereignty (particularly the powers of the States) under their terms. The initial phrases might state the preservation of Australian laws but the body of the documents and various binding addenda provide for the suspension of those laws and even gives foreign companies the right to sue if there is an attempt to impose local laws. If all the provisions of the ChAFTA and its associated documents are applied to the Shenhua mine, together with the submissive facilitations of the Federal Government, it will in operation be closer to being Chinese territory operated for the benefit of China rather than Australian land.
    The fine points could be argued indefinitely, but the crucial realisation is that our politicians have become so submissive and weak that no-one has considered that what is being proposed goes far beyond what should reasonably be recognised as matters of trade and commerce or the foreign corporations power under the Constitution.
    The questions of making our country weaker and less safe for its citizens should have been clearly put to the people? They were not because both parties are prepared to capitulate to facilitate the financial model they have for Australia. A model that only cares about, at most, 70% of the population – and I only use such a high figure to make allowances for some ALP factions.
    They accept the contraction of Australian Industry, continuing unemployment and reduction of income for the lowest paid. When Kevin Rudd became PM in 2007 there was an opportunity to do away with the oppressive Work Choices agreements in the pastoral industry. Instead the new government did a deal that allowed these agreements to continue, so we now have experienced hard working (12 hours a day, 6 or more days at a time) people who, even if the amount of their room and board is valued at 5 times the contract amount, are still paid less than the minimum wage. If they are assessed as if they were receiving overtime rates their pay falls to less than $12.00/hour. This is how the ALP divides responsibility between workers and the pastoral industry.
    As government in Canberra has become more about personal ambition and the cynical manipulation of the electorate the focus has turned to copying policies that have won votes. The biggest shift has been from the ALP who have latched on to the success of fear and selfishness as keys to electoral success. Because they don’t want to isolate themselves from the already successful and powerful (who might be useful to them after parliament) there is a widespread reluctance to consider new policies, and a serious fear for radical policies let alone reform.
    Nobody is game to change from our current economic and export model, and no-one feels safe in arguing seriously with other countries or global businesses, so both major parties are happy to pimp Australia and all its attractive bits to any big player, and in the long run, they don’t really care about the health and welfare of Australia.

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