Australia the loser in China Free Trade Agreement: analysis
Australian businesses have copped a bad deal in Australia’s free trade agreement with China, according to the Australian Fair Trade and Investment Network.
Analysis by the AFTINET published last week shows the Australian government made “huge concessions” on temporary labour and investor rights in its “desperation” to complete the deal.
While the FTA was signed last year further details were only released last week.
The details of the FTA show the Australian government has increased temporary labour mobility.
It has also agreed Chinese investors will be able to sue Australian governments if they can claim a change in law or policy "harms" their investment, known as Investor-State Disputes or ISDS, but those provisions are unfinished and ambiguous.
A Memorandum of Understanding separate from the text of the trade agreement gives Chinese investors in projects valued over $150 million additional rights to bring in temporary migrant workers.
There is no equivalent provision for Australian firms to bring in Australians.
Labour market testing of the local labour market to see if local labour is available is optional, not mandatory for the Chinese businesses.
They can negotiate the numbers, occupations to be covered, English language requirements, qualifications and experience, and calculation of the terms and conditions of the Temporary Skilled Migration Income Threshold.
“This means that the minimum wage to be paid to the temporary migrant workers will be the subject of negotiation between the project company and the Department of Immigration and Border Protection,” the AFTINET report says.
“The minimum wages and conditions are meant to conform to Australian industrial law, but may be below the actual market rates paid to Australian workers in the industry.”
But Russell Wilkinson, national head of customs and international trade at Crowe Horwath, told SmartCompany while there may be issues with the FTA it is also a win for Australian businesses.
“It depends which way you look at it,” he says.
Wilkinson says the agreement will allow for better market access to the Chinese economy, improve Australia's competitive position in a rapidly growing market, promote two-way investment and reduce import costs.
“There is no one way winner. Everybody has to make some sacrifices, but at the end of the day, I think on balance it looks fair,” he says.
“I think, for SMEs, it’s about access into a fairly substantial market and in particular for regional small businesses. For farmers and people on the land, it’s a good outcome it’s going to give them more access.”
'The Guardian' UK, Opinion
‘Chafta was deliberated in secret by the Australian and Chinese governments, with no details of its provisions released outside cabinet before it was signed.’ Photograph: Pool/Getty Images
It was hard to remain unmoved by the recent Four Corners exposé into the exploitation of foreign workers in the agriculture industry. Images linger of cramped accommodation, underpayment, the young woman with a work-injured hand tearfully recounting the sexual harassment from a supervisor which she reported and her bosses ignored.
Australian workers have inherited a hard-won legacy of industrial rights – minimum wage, workplace safety, award conditions, penalty rates and collective bargaining; rights so valued that “WorkChoices” – the Howard government’s attempt to strip away some of these rights – brought that government down.
Perhaps it’s because so many Australian families emigrated here in search of an egalitarianism that their homelands denied them, that treating workers poorly strikes so powerfully at the national conscience. The horrified reaction to the program suggested that you don’t have to be Australian for Australians to believe you deserve a “fair go”.
Someone really should tell this to the federal trade minister, Andrew Robb. The bilateral trade agreement between Australia and China known as “Chafta” that he’s just signed with his Chinese counterpart, Gao Hucheng, seriously undermines Australian expectations of industrial fairness for foreign workers and has dire implications for domestic workers, too.
In what is becoming a disturbing trend in international trade agreements, Chafta was deliberated in secret by the Australian and Chinese governments, with no details of its provisions released outside cabinet before it was signed. As industrial stakeholders pore over its details, alarm has been raised over a Memorandum of Understanding that establishes an “investment facilitation arrangement”, and its potential impact on Australian jobs, pay and safety standards.
The “investment facilitation arrangement” allows for the possibility under some circumstances for projects worth more than $150m built in Australia but backed by Chinese companies to be staffed by workers hired in China without advertising the jobs in Australia first.
In the normal course of employment, companies are required to demonstrate that they can’t find locals to fill the jobs before hiring workers from overseas. Chafta removes this obligation for “infrastructure development projects within the food and agribusiness, resources and energy, transport, telecommunications, power supply and generation, environment, or tourism sectors”.
Those defending the prerogative of Chinese companies to employ Chinese labour, be aware: the fine print of what Robb has agreed to reveals that to meet “investment facilitation” requirements, Chinese investment can be as little as 15% of a project’s budget for the potential for all its hiring to take place in China.
In advance of these projects, it may seem far-fetched to imagine Australian consortiums securing Chinese investment merely to bring in Australian non-union labour, but let’s not forget that Australia’s richest person – mining billionaire Gina Rinehart – once complained of being denied the “competitive” advantage of foreign labour available for $2 a day.
Four Corners exposed the willingness of even small and medium-sized Australian employers to exploit the vulnerability of foreign workers. One of the attractions of the present 457 foreign worker visa scheme is that with workers entirely dependent on their employer to maintain residency in Australia, they’re vulnerable to underpayment and are less likely to report safety concerns.
Foreign workers now number more than a million, or 12% of our workforce – 167,000 of whom are on 457 visas – but submissions to the recent Senate inquiry into into temporary work visas found employees on 457 visas getting paid as little as $4 an hour, some workers paid only $150 a week, some being paid late or not at all, and employees “accommodated” on office floors.
A mine in Boggabri sacked 100 Australian workers, but retained six foreign workers with fewer skills on less money. The same company then tried to bring in 300 more workers from overseas for other mines. Paying tax but offered no voting rights, foreign workers also face restrictions, some practical and some imposed, in their ability to organise. Thiess, the Australian services and infrastructure company, recently pressured Filipino line workers to sign contracts that stated – illegally – they could be terminated for union activity.
In Australia, the energy sector has remained a highly unionised industry, with strict skills assessment and safety provisions for electricians, whose pay is above-award. The recent spate of state electricity privatisations has created a window in which Chafta could allow companies with Chinese investment to bring in non-union labour and drive down pay and conditions. Within Chafta’s associated documents is a mechanism to waive mandatory skills assessments for electricians coming from China, and also mechanics and employees in eight other trade vocations.
In theory, Australian industrial law will determine the pay and conditions of workers employed under Chafta rules. But with the abuse of guest worker visas already a matter of record, the potential for exploitation of foreign workers, and workplace accidents, is profound.
The government hails agreements like Chafta as victories for “free trade”, but as secretive agreements that have the capacity to erode workplace fairness, it’s hard to imagine the outcome, for any worker, will feel anything like freedom.
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