As reported by Fairfax’s Peter Martin this morning, the Labor Party is digging-in against the China-Australia Free Trade Agreement (ChAFTA), leaving open the prospect that the deal could be voted down in the Senate:
The agreement signed in June prevents Australia from satisfying itself of genuine labour market shortages before agreeing to requests to bring in certain types of Chinese workers.
“It removes labour market testing for contractors, installers and servicers”, [according to] Labor’s trade spokeswoman Penny Wong…
“And the agreement defines these categories so broadly that they will include a wide range of occupations…”
“The upshot is that despite his promise to retain labour market testing, Tony Abbott has removed it for contractors and made it an optional extra for $150 million-plus infrastructure projects”…
Labor’s concerns that the ChAFTA could undermine local workers has merit.
Analysis by Joanna Howe, a Senior Lecturer at the University of Adelaide Law School and an expert in temporary labour migration, revealed that ChAFTA provides only minimal protections for local workers. Ms Howe also argued convincingly that the “Investment Facilitation Arrangements” (IFAs) included in ChAFTA are likely to erode worker’s rights.
Two separate Fact Checks published in The Conversation (here and here) also suggested that ChAFTA could see “a project being wholly staffed by Temporary Skilled Chinese migrant workers” with “no labour market testing requirement”.
This does not mean that ChAFTA is not worth signing, but rather than any benefits from the deal need to be weighed against these costs in determining whether it is in the national interest.
But don’t expect DFAT to commission such work, given that it has failed to undertake independent analysis to work out whether past agreements have delivered positive outcomes.
And herein lies the key flaws with Australia’s treaty system. Namely that:
- Independent robust analysis of agreement terms is not undertaken prior to signing;
- Independent robust analysis is not undertaken between signing the agreement and ratification; and
- Once signed, agreements can only be voted up and down by parliament without amendment.
For this reason, the Productivity Commission’s Peter Harris has called for genuine independent analysis both before trade negotiations begin and after the deals are signed but prior to them being ratified:
“We should do better on transparency or we risk losing the consensus that has lasted for decades,” Mr Harris said…
The recently-signed Korea Australia agreement included 5200 separate so-called rules of origin delineating which inputs included in an export in order to give it preferential treatment. An earlier agreement with Singapore had one.
“It’s red tape, growing at a very healthy rate,” he said.
“It adding to the compliance costs of businesses as well as the costs to governments”…
“We would like to see analysis conducted that demonstrates the benefit,” Mr Harris said. “We are not alone on this. Senior representatives of Australia’s legal system have questioned why rights should be made available to foreign parties that are not available to domestic parties.”
Given the near impossibility of making amendments to ChAFTA, it is highly unlikely that Labor will end up blocking the deal. Rather, it will voice protest in a bid to appease its union base before reluctantly agreeing to ratify the agreement.
And as was the case with the Australia-US FTA, we will not know whether the deal was beneficial/costly until an ex post examination is conducted years down the track.
Such is the nature of Australia’s flawed treaty processes, which are geared more towards political expediency than actual outcomes.
