The
recent political ruckus in Australia over a new free trade agreement with China
has far-reaching implications for other nations. It points to the future of
trade talks and the labor migration issues they are likely to present.
There is no doubt the China-Australia
agreement signed earlier this year after a decade of negotiation is
groundbreaking. The Chinese market already absorbs nearly a third of Australian
exports, and the trade deal removes many impediments to a wider range and
quantity of goods and services Australia can now send to China.
It contains what the Australian
negotiators claim is the "best package" in the trade of services that
China has agreed with any country, including legal and professional services,
health care, elderly care and education. It removes tariffs on the export of
nearly all Australian goods to China, and greatly eases quotas and duties on
dairy products, lamb and beef, and all horticulture.
Foreign
workers welcome?
But there is a big catch in the treaty. In it, Australia
has not only replicated labor migration concessions already granted in free
trade deals with other countries including Japan, New Zealand, South Korea and
Thailand, it has extended them. Specifically, the document includes a provision
that allows Chinese businesses engaged in projects in Australia to bring in
their own workers, without necessarily making it mandatory for these companies
to first establish that Australians cannot do the job.
This is a pertinent debate for the
rest of the world. A couple of decades ago, the most difficult issues in trade
negotiations were manufacturing tariffs and farm-product quotas. Today, the
most difficult issues are in intellectual property -- and the U.S. has been
pushing for greater protections in this area, notably in the Trans-Pacific
Partnership initiative -- and labor migration.
For China, labor migration is a big
issue. Workers from China are paid less than their peers from more advanced
economies and are unlikely to be militant trade unionists. Given that China is
often involved in big overseas projects in the resources industry that require
many workers in the construction stage, liberal -- albeit temporary -- labor
migration concessions are important for Chinese trade negotiators. As China
advances, these labor migration issues are likely to become more prominent in
its proposals for regional trade agreements.
The key provisions in the new
agreement are hotly debated in Australia, with the Liberal Party-led government
insisting that the opposition Labor Party and its trade union supporters are
deliberately misinterpreting the deal. There has certainly been a good deal of
exaggeration, but there is a little doubt the agreement widens the concessions
made in other treaties.
It is standard for Australia to offer
temporary labor migration rights to free trade agreement partners, and without
requiring a labor market test. But these provisions typically only apply to
management and service staff, not to the wider workforce. The new deal
with China allows Chinese investors to negotiate to bring workers into
Australia for specific projects. The provision is enshrined in a memorandum of
understanding attached to, and inseparable from, the agreement.
Moreover, it applies to projects
worth as little as 150 million Australian dollars ($106.2 million), rather than
the A$2 billion stipulated in the existing framework. A participating Chinese
company could have a stake of as little as 15% in a project to qualify. The new
deal could also apply to most projects, not just those in the resources
industry.
By
John Edwards for Nikkei Asian Review
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