CHINA/AUSTRALIAN FREE TRADE AGREEMENT

Visit the Department of Foreign Affairs and Trade (DFAT) website and conduct research about the China-Australian Free Trade Agreement (ChAFTA).

http://www.dfat.gov.au/trade/agreements/chafta/Pages/australia-china-fta.aspxa

1. Scan the website having a quick look at the headings and the summary About ChFTA. Do you think the information in this website is focussing on the positive or negative aspects of the FTA? More positive aspects of the FTA.

2. According to the website, who will benefit from the FTA?3. What other countries does Australia have FTAs with? 4. Click on the link Benefits of the FTA? List 4 benefits mentioned.

Read the article below from the Sydney Morning Herald? Go to the Who loses? Section. What are the main concerns mentioned?

10 questions about the China-Australia free trade agreement1.What is a free trade agreement?

A free trade agreement (FTA) is an international treaty that removes barriers to trade between two or more countries. They allow stronger trade and commercial ties to develop between countries, contributing to increased economic integration. They can cover entire regions with multiple participants or link just two countries.

The Chinese-Australia FTA, which was struck this week, is an agreement to lower trade barriers – such as tariffs on imported goods, and restrictions on labour and investment – between China's and Australia's economies. It is a big deal for Australia. Australia has recently signed FTAs with South Korea and Japan, and combined these three countries account for more than 61 per cent of Australia's exports of goods. 

2.How many jobs will the China-Australia FTA create?

We don't know. The government has not said how many jobs the FTA will create because it does not know either. And the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) says it has not had the opportunity to conduct an analysis of the employment impact of the FTA because the details have not be released fully.

However, economists generally say the FTA should lead to an increase in Australian jobs because local companies that export to China will have an incentive to produce and export more, or to expand into China with new offices and shopfronts. The huge markets in China present a tantalising prospect. Tim Harcourt, from UNSW's Australian School of Business, says if the China-Australia free trade deal "takes off" it will also likely have positive implications for Australian workers beyond an increase in employment.

"Most of my research shows – from past FTAs – that companies that export to China compared to those that don't will pay a lot higher wages, have better health and safety conditions, and better employment security," Mr Harcourt said.

3.What will we get cheaper?

When the deal is eventually signed and implemented, Australian consumers ought to enjoy cheaper household goods, electronics and clothing from Chinese companies, while Chinese vehicles and component parts will also be cheaper. Those things will help to reduce the cost of living in Australia.

4.Who wins?

It contains unprecedented access for Australian service providers across most sectors including health, tourism and travel, financial, engineering, legal, education, telecommunications, construction, aged care services, mining and extractive industries, manufacturing, architecture, urban planning and transport. It's a long list. The FTA also contains significant wins for the horticulture, agriculture, wine, dairy, wool and beef industries.

For example, tariffs of 12 per cent to 25 per cent on beef will be removed over nine years. The removal of tariffs on about 30,000 tonnes of Australian wool has been welcomed by the wool industry. Tariffs on Australian wine of 14 to 30 per cent will go within four years, while restrictive tariffs on a wide range of seafood, including abalone, rock lobster, and southern bluefin tuna will also be abolished within four years. Dairy is being hailed as the biggest winner.

The diary industry is calling it a 'game changer' for Australia. The access given to Australian diary producer is being compared favourably to the past deal struck between China and New Zealand (and that deal has been heralded as one of the reasons why New Zealand's economy is performing so well these days, relative to other comparable countries).

5.Who loses?

Australian sugar, wheat, canola, cotton, rice and maize producers got nothing. Those products were non-negotiable from China's perspective. Cotton, sugar and rice producers will have to wait at least three years until tariffs on their products are reviewed (as part of a built-in review mechanism). Sugar is seen as one of the biggest losers from the deal. The government says it had to set these industries aside in the negotiations in order to push the agreement forward. It says these products will be revisited in future years to see if progress can be made.

7 . Is there anything controversial in there?

Yes. Not only has the Abbott government left key agricultural products out of the agreement, it has also made it easier for Chinese businesses to import Chinese labour to work on China-led projects. The government says it will only allow that to happen if China can't find Australian workers to fill those roles, but unions are sceptical.

The government has also included a controversial clause in the deal that will allow Chinese corporations to sue the Australian government if the government introduces laws or regulations that damage the profits (or 'future profits') of Chinese companies.

Dr Kyla Tienhaara, from the Regulatory Institutions Network at the Australian National University, says Australia will have to revisit its trade agreement with Japan now, because that deal stipulated that if such a clause was included in an FTA with China then it would like to have one too. Ms Tienhaara says it also means Australia will almost certainly have to include a similar clause in its Trans-Pacific Partnership agreement with the US.

There are ripple effects to all of these things.

8.Could the government have negotiated a better deal?

It's a tough one. The government says it is surprised at how well it did (though you would expect them to say that), and big business seems very happy with the deal, except for industries that missed out altogether (like sugar and wheat).

Critics are pointing to the inclusion of the ISDS clause as a big mistake because it could reduce the sovereignty of Australia's government while setting a precedent for the Trans-Pacific Partnership with the US.

Economists say the deal appears to be a good one overall because it will allow Australian service providers unprecedented access to a huge market at a time when the economy desperately needs to switch from mining to non-mining parts of the economy.

9.How long has this deal been in the making? It's been in the making since 2005 when negotiations began with the Howard government.

10. So what's next? The government now turns its attention to India, and to the ongoing negotiations with the US.

Don't sell out Australian jobs, say unions

Australian manufacturing workers fear job losses to foreign workers. Photo: Louie Douvis

Unions are urging the federal government against "selling out" Australian jobs and have called for strong protections for workers as part of a new free trade agreement with China.

China's deal offered to farmers and professionals is promising billions of dollars in new markets for Australian exports. The Abbott government has given ground on labour, agreeing to a new case-by-case mechanism for Chinese investors to apply to bring in workers at Australian wage rates in areas of skills shortages.

Unions NSW secretary Mark Lennon said he was concerned about the impact of the free trade agreement with China on manufacturing in NSW following major job losses in western Sydney and the Hunter."Any weakening of anti-dumping measures that could result in the market being flooded by cheap imports is a concern," he said.

"We are concerned about any proposals that would allow Chinese companies to bring in their own workforce at the expense of jobs in NSW."

Unions from the manufacturing, resources, construction, services and transport industries have joined forces and have written to major parties and crossbenchers to demand strong protections for Australian workers. Signatories to the letter include the Australian Council of Trade Unions, Australian Manufacturing Workers Union, Construction Forestry Mining and Energy Union, National Union of Workers, Australian Workers Union, Textile Clothing and Footwear Union of Australia, United Voice, Transport Workers Union and the Rail Tram and Bus Union.

Australian Council of Trade Unions president Ged Kearney said unions would support a fair, transparent and mutually beneficial trading scheme, but it must not be at the expense of Australian jobs. She said it appeared provisions in the proposed free trade deal could result in "a fatal blow to the manufacturing industry, wreak havoc on our labour market and threaten Australia's sovereignty".

Unions have said a free trade agreement with China must not restrict Australia's ability to regulate the movement of workers, including quotas.The unions said the deal should include provisions to stop the exploitation of Australian workers. Ms Kearney said the recent Korea Free Trade Agreement has had a disastrous impact on jobs. It allows employers to nominate Korean workers for visas without having to advertise jobs locally.

"Similar provisions on labour mobility will allow Chinese contractors on Australian projects to bring in their own workforce. This removes any benefit of foreign investment since the profits and the jobs for large mining and infrastructure projects will go back to China," she said.

"Our national laws and regulations containing provisions on social security, collective bargaining, working time, employment conditions, public health, information and consultation rights and other protections should not be considered as non-tariff barriers to trade."

Australian Manufacturing Workers Union National Secretary Paul Bastian said any removal or weakening of anti-dumping, countervailing and safeguard measures would flood Australian markets with cheap imports.

"This will put even more pressure on our manufacturing industry already facing an uneven trading environment in which China heavily subsidises many of its industries through currency manipulation, exploitative working conditions and behind the border trade barriers," Mr Bastian said.

- Main concerns are job losses.