Controversy Builds in Australia over China Trade Deal

9 September 2015

Efforts to build support in Australia for a recently signed trade deal with China have erupted in controversy in recent weeks, ahead of the impending ratification vote required to bring the agreement into force. The China-Australia Free Trade Agreement, otherwise known as ChAFTA, was formally signed in June by the two countries following a decade of negotiations.

In the months since, however, questions have grown in Australian political circles and among the public over the deal’s safeguards for domestic labourers, sparking multiple protests and heated debate as the domestic legal procedures for eventual ratification get underway. (See Bridges Weekly, 25 June 2015)

Canberra, for its part, is currently awaiting a report from a joint parliamentary committee regarding the FTA, which is due in mid-October. Following the report, the government aims to put forward enabling legislation for a vote, with the goal of bringing the agreement into force by year’s end.

Robb: China could “walk away” if vote fails

Australian labour unions have been particularly wary of the trade deal, calling for more information to be released about the agreement’s potential impacts and questioning the provisions relating to the hiring of workers from abroad and on trade skills assessment. 

In this context, Labor Party leader Bill Shorten has tabled various requests that he says are necessary for his party to formally back the agreement. These include passing provisions in the enabling legislation that would help safeguard domestic jobs, such as mandatory labour market testing on projects over A$150 million, and that Australian wages not be undercut. The former essentially requires companies to first consider hiring domestic workers before extending the search abroad.

Liberal Party officials, in turn, have largely backed the deal as being key toward boosting investment and economic growth, with some officials claiming that certain criticisms that have been raised by major trade unions are inaccurate and potentially border on xenophobia.

Despite the controversy, Prime Minister Tony Abbott has repeatedly confirmed – including at a speech to the Tasmanian Liberal Party State Council on 5 September – that his government “will fight just as hard to say yes to the China free trade agreement as we fought to say no to the carbon tax.”

“This is a remarkably good deal for Australia,” the premier said, in comments reported by AAP. “It doesn’t involve changing workplace relations laws. It doesn’t involve changing any migration laws. It doesn’t involve reducing existing labour market testing and labour market protection.”

Australian Trade Minister Andrew Robb also cautioned last week that China would likely “walk away” if the trade deal fails to pass a vote in Parliament – a move that could have both economic and diplomatic ramifications.

“They would [walk away]. After 10 years of negotiation, they have presented Australia with the best deal that they’ve ever done by a country mile,” Robb told The Australian newspaper. The trade chief has also said over the past week that various current and former Labor leaders are indeed in favour of the pact, and has strongly urged Shorten to back the agreement publicly.

In response to questions over whether the deal could potentially be re-opened for additional negotiations, Australian Treasurer Joe Hockey, told reporters following a meeting with Chinese finance minister Lou Jiwei in Turkey this past weekend that “it was made explicitly clear that the free trade agreement will not be renegotiated.”

While much of the opposition to date has come from within the Labor Party, spokesperson Penny Wong said last month that the party will consider and confirm its formal stance on the legislation when it goes before Parliament.

“Labor is committed to examining the agreement through current parliamentary committee inquires,” Wong told the Sydney Morning Herald. “We want to make sure safeguards are maintained to ensure its potential benefits are realised.”

ChAFTA, regional impact

The signing of the bilateral trade agreement was a landmark event for both parties, marking part of a broader push by Canberra to deepen trade ties with various key Asian economies. Australia has already signed deals with both South Korea and Japan in recent years. Negotiations are also currently underway with India, with the next round of talks scheduled for later this month. (See Bridges Weekly, 25 June 2015)

Among other provisions, the China-Australia deal will make 85 percent of Australian exports duty free upon entry into force, moving to 95 percent over time. Agriculture was one of the most difficult parts of the agreement to close, given Australia’s interest in receiving comparable terms to those that China offered New Zealand in a separate FTA.

The agreement also included significant concessions on services, with Australia due to receive increased access to those markets. Provisions in the deal include legal, education, tourism, financial services, telecommunications, health, and aged care services. Any future improvements in market access that China offers to its other trading partners in select services sectors will also be extended to Australia.

ICTSD reporting; “Labor hardens its stance on China-Australia free trade agreement,” SYDNEY MORNING HERALD, 12 August 2015; “China will walk away from FTA if Labor votes it down, Robb warns,” THE AUSTRALIAN, 31 August 2015; “Next round of India-Australia free trade pact talks in Sep,” PTI, 27 August 2015; “Tony Abbott vows to fight for free trade deal with China,” AAP, 5 September 2015.

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