Bob Kinnaird. China FTA truth still elusive

Aug 27, 2015

Two months after releasing the China FTA text the Coalition government has still not told the Australian people the truth about the labour mobility provisions in ChAFTA.

The result is confusion even among usually well-informed commentators. Greg Sheridan Foreign Affairs Editor for The Australian says ‘the clause in the FTA that says there is no need for labour market testing applies only to projects over $150 million’ (‘Shorten hits rock bottom with China FTA stance’, The Australian, 27 August 2015).

The fact is that FTA clause applies to all Chinese nationals on all non-concessional 457 visas and 400 visas regardless of where they are employed, that is, on projects over $150 million and elsewhere.

An AFR opinion piece from Angus Taylor Liberal member for Hume is the latest example from the government side (‘Campaign against China FTA defies reason’, Australian Financial Review, 26 August 2015). The AFR says that Mr Taylor was formerly a partner at McKinsey & Co and a director of Port Jackson Partners. So he should be a reliable witness on ChAFTA, but he is not.

Mr Taylor’s column criticises the union campaign against the foreign worker provisions in the ChAFTA package and claims that: ‘At the heart of the campaign is a false assertion that the China free trade agreement frees up Chinese workers to work on Australian projects. Nothing could be further from the truth. Treaties don’t override domestic laws in this country. If we were to free up the regime for offshore workers, we would need to change legislation, but this won’t happen. The 457 visa regime will remain unchanged, because nothing in the agreement requires workplace legislation changes.’

It is Mr Taylor’s assertions that are false.

The China FTA, and the associated MOU on an ‘Investment Facilitation Arrangement’ (IFA), do ‘free up’ Chinese workers to work on Australian projects and in Australian employment more generally.

The FTA itself commits Australia not to apply ‘labour market testing, economic needs testing or other procedures of similar effect’ to all Chinese nationals in the non-concessional 457 visa program, and the shorter-term 400 visa program for Chinese ‘installers and servicers’ of machinery and equipment. This obligation also carries over to any other temporary visa through which Australia chooses to implement its international obligations under ChAFTA.

In 2013 the Migration Act 1958 was amended to require labour market testing (LMT) by sponsors seeking non-concessional 457 visas for workers in specified occupations: Skill level 3 (mainly trade-level), engineering and nursing occupations.

The ChAFTA obligation means that from the date ChAFTA enters into force, Australia will not be able to apply LMT as legislated in the Migration Act to all Chinese nationals nominated for non-concessional 457 visas in trade-level occupations, engineering and nursing.

It also means that once ChAFTA enters into force, the Australian Immigration Minister will no longer have the discretionary power to require legislated LMT for sponsors nominating Chinese nationals for non-concessional 457 visas in all other 457 occupations. Before ChAFTA, the Minister could simply issue a new legislative instrument requiring LMT for these currently exempt occupations. After ChAFTA, the Minister can no longer do so, in respect of Chinese nationals.

All this very real change comes about because, contrary to Mr Taylor’s assertion, international trade treaties do ‘override’ domestic laws in this country, in this case the Migration Act 1958.

Mr Taylor appears unaware that the Migration Act specifically provides that LMT cannot be applied in the non-concessional 457 visa program where it is ‘inconsistent with Australia’s international trade obligations’, as determined by the Immigration Minister (s.140GBA of the Migration Act 1958).

Assistant Immigration Minister Michaelia Cash has so far made three such ‘Determinations’ by legislative instrument under s.140GBA, including in relation to the two North Asian FTAs concluded by the Coalition government, the Korea-Australia FTA (KAFTA) and the Japan FTA.

Mr Taylor should also know that these Ministerial determinations resulted in declarations that LMT would no longer be applied in the non-concessional 457 visa program to all Korean nationals and all Japanese nationals from the date these FTAS came into force; and that the relevant ChAFTA definitions of ‘natural persons’ of China covered by this obligation are the same as those in the Korea and Japan FTAs.

It is true that no ‘legislation’ is required to implement this particular ChAFTA obligation (only a regulatory change). But this is only because Australian migration legislation already provides that international trade obligations take precedence over our domestic migration legislation on ‘labour market testing’ in the non-concessional 457 visa program.

The MOU on an ‘Investment Facilitation Arrangement’ (IFA) also ‘frees up’ Chinese workers to work on Australian projects. This MOU is not part of the formal ChAFTA treaty but is listed on the DFAT website of ChAFTA Official Documents under the heading ‘Related documents’.

This MOU gives employers on Chinese-funded projects of $150 million or more (including Chinese State-owned-enterprises) access to Chinese concessional 457 visa workers under so-called umbrella ‘project agreements’ and ‘labour agreements’ for direct employers on these projects. These are over and above the non-concessional Chinese 457 visa and 400 visa workers granted LMT-exempt entry under the FTA itself, described above.

‘Concessional’ 457 visa workers mean Chinese and other foreign workers in semi-skilled occupations, and those nominally in skilled occupations but who do not meet the standard minimum requirements for a 457 visa, such as minimum English language skills.

Mr Taylor’s piece does not mention the MOU and it is not clear if Mr Taylor understands that the MOU on IFA is not part of the formal ChAFTA treaty.

But in any case, the salient point is that like the momentous change expanding Chinese worker access to 457 and temporary work visas via the FTA itself, implementing the MOU on IFA for Chinese concessional 457 visa workers does not require legislative change under current arrangements. This is because such arrangements are currently governed not by legislation but simply Ministerial ‘policy’.

That says more about how inadequate the current arrangements for regulation of concessional temporary work visas are, not that the changes involved in this MOU are trivial.

The question to ask is if these ChAFTA labour mobility concessions by Australia are really so trivial, why are they are so important as to be a potential deal-breaker for both China and Australia? The answer is that for both China and Australia, these labour mobility concessions are far from trivial. They are significant and substantial.

Bob Kinnaird is Research Associate with The Australian Population Research Institute and was National Research Director CFMEU National Office 2009-14.




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