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:
- (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;
- (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;
- (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;
- (d) The project company is registered as a business in Australia;
- (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
- (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 –
- (a) The occupations covered by the IFA project agreement;
- (b) English language proficiency requirements;
- (c) Qualifications and experience requirements; and
- (d) Calculation of the terms and conditions of the Temporary Skilled Migration Income Threshold (TSMIT).
- 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
- (a) Impose or maintain any limitations on the total number of visas to be granted to natural persons of the other Party; or
- (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 visas 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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