China Free Trade Agreement – Myths and Realities

MYTH 1:

The China FTA does not change existing protocols about labour market testing. (National Farmers Federation 16 September 2015).

REALITY:

There can be no doubt that the China FTA puts a permanent end to labour market testing for all Chinese nationals in all 651 skilled occupations in the standard or ‘non-concessional’ 457 visa program.  This includes over 200 occupations which are currently subject to the 457 Labor Market Testing obligation – engineers, nurses, and Skill Level 3 jobs like electricians, motor mechanics; plus  the 450 or so other mainly graduate-level occupations where there is no testing now simply by government policy.

The Government has expressly stated that in order to implement our obligations under ChAFTA, a Migration Act Determination is required in relation to labour market testing in the 457 visa program. Clearly if nothing was changing there would be no determination.

The definition of 'contractual service suppliers' of China, in combination  with other ChAFTA provisions, means that all standard business sponsors nominating Chinese citizens for non-concessional 457 visas will no longer have to labour market test.

The definition of 'contractual service suppliers of China' is identical to that of 'contractual service suppliers of Korea' in the Korea Free Trade Agreement. It is noteworthy that the Immigration Department has advised registered migration agents that "The effect of the obligations under the KAFTA is that labour market testing will NOT be applied to Korean nationals/permanent residents or to employees of businesses in Korea transferring to an Australian branch of that business being nominated under the 457 programme".

The China FTA also removes Australia’s right to apply labour market testing in the 400 visa program, for Chinese ‘installers and services’ of machinery and equipment.

At present there is no legislated requirement for labour market testing in the 400 visa.  But by policy 400 visas are only granted to foreign workers to do ‘highly specialised work – that is, it involves skills, knowledge or experience….which cannot reasonably be found in the Australian labour market.’

The China FTA will remove the Australian government’s ability to apply this current test or indeed any form of labour market testing to Chinese ‘installers and services’ in the 400 visa program.

MYTH 2:

We need a free trade agreement with China in order to do business with China. New Zealand etc will steal a march on us if we don't.

REALITY:

Australian agricultural exports to China have trebled in the past six years, rising from $3 billion in 2007/8 to $9 billion in 2013/14.

China had $27.7 billion - $12 billion of it in Australian real estate - in investment proposals approved by the Foreign Investment Review Board in the 2014 financial year, more than from any other country. Chinese investors bought more real estate in Sydney and Melbourne combined (almost $3.5 U.S. billion) than in each of London, Paris, and New York.

Any China market access advantage for Australian exporters will only be temporary.  Nothing in the deal prevents China from giving the same access to other countries. But all Australian concessions will be permanent.

MYTH 3:

This agreement is the same as others we've done. People who oppose it are being hypocritical at best and xenophobic or racist at worse.

REALITY:

Both the words and the meaning of the China deal are different from those of previous treaties.

The definition of "contractual service suppliers" in the Chile deal refers to persons with "high-level technical or professional qualifications, skills and experience". The definition for the China, Korea and Japan deals was watered down to persons with “trade, technical or professional skills and experience", with the words "high-level" and "qualifications" being omitted.

The Department provided unequivocal advice to the Treaties Committee in 2008 that the Chile deal was limited to professional skilled business people, and people with high-level qualifications who are already employed by an enterprise of the other country. The Department said the Chile FTA would not widen the capacity for people to apply for 457 visas, and was "not about nationals seeking access to the employment market; it is about service professionals coming temporarily to Australia to deliver their particular service and then leaving".

But with the China FTA there are over 650 trades and other occupations in the 457 program (including over 200 about which the Department has said that there is labour market testing now) which can never again be subject to labour market testing if this China deal comes into force.

The Department also said the Chile deal did not limit Australia's scope to change or abolish 457 visas. This is not true of the China deal.

The ASEAN and Malaysian FTAs, which Labor signed in government, provided labour market testing exemptions in the 457 visa program for very limited categories of foreign nationals. The China deal gives labour market testing exemptions to all Chinese nationals in the 457 program.

But wait, there's more. The initial period of entry for temporary contractual service suppliers in the Japan and Korea FTAs is one year. It is four years for the China FTA, four times as long.

The China Deal also differs from other trade deals in that it has:

• No labour market testing for Chinese ‘installers and servicers’ in the 400 visa program – other deals do not.

• A Memorandum of Understanding on Investment Facilitation Arrangements – other deals do not. Workers under IFAs will be semi-skilled or substandard skilled workers. Both can have lower English skills than under the standard 457 visa, which will hamper their ability to understand their rights or complain about violation of them. Lower English skills also have worrying implications for workplace safety.

• An Investor State Dispute Settlement provision – the Chile Deal does not, and the Japan deal does not.

• No labour rights chapter.

• No environment chapter.

• A side letter that removes mandatory skills assessment for ten skilled trades, including electricians, motor mechanics, and carpenters. Mandatory skills assessment for 457 visa applicants from high risk countries including China was introduced in 2009 by the former Labor Government as part of a series of reforms designed to restore some integrity to the 457 visa program. Prior to this it was all too common for employers to nominate Chinese and other overseas workers as skilled 457 workers in trade occupations but work them as semi-skilled or unskilled workers. Some Chinese workers granted 457 visas as professional engineers were found to be working as labourers on Australian construction sites. There were also well-founded concerns about the trade training standards and the extent of qualifications and document fraud in certain countries including China. Authorities like the World Bank say those concerns are still valid.

• A Memorandum of Understanding which provides young Chinese with 5000 work and holiday visas each year, with the right to work in Australia for the full 12 months of the year. There is no reciprocal arrangement for young Australians to work and holiday in China.