The Hidden Nasties In Australia's New Free Trade Deal


There was pomp and ceremony on the day the deal was signed: June 17, in Canberra.

“This is a momentous day – an absolutely momentous, historic day – for our two countries,” Prime Minister Abbott said in his address to the ceremonial luncheon.

Abbott went on to pitch a message to the neoliberal faithful.

“We are a leading trading nation,” he solemnly intoned. “Our prosperity depends on trade and the jobs and economic growth it creates.”

Three weeks later, we’ve barely heard about the Chinese free trade deal. For some strange reason, the Abbott government seems reluctant to talk about its historic trade achievement.

Back in November, Essential polled its respondents on the China-Australia deal. The results were positive: 44 per cent approved and only 18 per cent disapproved. Support was highest for the Coalition and lowest for the Greens and minor parties.

This suggests that Coalition voters will welcome a free trade deal as a sign that the Coalition is getting on with business.

Given that, you’d think the federal government would be trumpeting its success. Instead we've had a steady diet of terrorism, citizenship, and border security.

The Prime Minister’s recent transcripts and media releases are as good a record as any to study the burial of the free trade deal.

Since signing the deal the Prime Minister has returned to the topic just once.

The “Daesh death cult” has been discussed during at least four separate doorstops. So has Zaky Mallah and his appearance on Q&A. The PM mentioned legislation to strip terrorists of citizenship far more often than he mentioned Chinese trade.

On June 21, Abbott published “A Message from the Prime Minister”, laying out the government’s mid-term achievements. He glossed over the free trade deal, placing it alongside the small business package, the pensions deal with the Greens, the northern Australia white paper, and the citizenship-stripping law as wins for the government.

Nor has Andrew Robb been much in the news. Robb has been missing in action for weeks after signing the agreement.

As a result, a key opportunity has been missed to sell the Abbott government’s economic credibility at a time when the economy is struggling.

Why the reluctance? Perhaps the government doesn’t want to talk about the free trade deal because it knows it will be politically unpopular.

Critics of free trade deals come in two main types.

Some think that freer trade is a dangerous thing. The looser reins of sovereignty erode the economic security for local industries and workers, they argue.

Others think free trade is a good thing, but find much to dislike in the winner-picking thicket of special interest favours that modern free trade agreements have become. Notoriously, the Productivity Commission decided that bilateral trade deals “lack transparency and tend to oversell the likely benefits.”

A number of both kinds are now starting to wade through the vast economic compact recently struck between the Commonwealth of Australia and the People’s Republic of China. They’re not liking what they’re finding.

There are some potentially explosive aspects of the deal that are yet to come to wide public understanding. Were they to, they might pose some uncomfortable challenges for the government.

Take, for example, investor-state dispute resolution.

There is a clause in the free trade agreement that apparently allows Chinese corporations to sue the Australian government for taking certain actions. Australia is already the subject of one such claim, from the tobacco giant Phillip Morris, over plain packaging laws.

Chinese President Xi Jinping addresses the Australian Parliament in 2014

But the really explosive stuff is contained in the free trade deal’s many schedules and side letters, some of which enable significant labour market deregulation. 

For instance, the government appears to have removed the skills assessment criteria for ten classes of workers on 457 visas, including electricians.

The Electrical Trades Union says a side letter to the agreement will allow Chinese electricians to apply for a 457 visa without having their skills assessed.

The more you read about the so-called Investment Facilitation Agreement, the more interesting it gets. The new agreement has the potential – and perhaps the transparent aim – of smashing construction unions.

According to the University of Adelaide’s Joanna Howe, “it allows Chinese companies registered in Australia to import Chinese workers for the duration of projects, so long as the capital expenditure exceeds $150 million.”

There are also wide-ranging labour market deregulations built into the IFA. Chinese companies will get to negotiate their wages and conditions, not with Australian workforces, but with the Department of Immigration and Border Protection, in a process that can be kept secret. Even if you agree that the free trade deal may well ultimately create jobs, it’s easy to see how some Australian workers and certain keys sector could lose out … big time.

Measures like this could become widely unpopular, should they become well known. Australia’s unemployment rate is elevated. Popular sentiment has been stoked by this fear-mongering government in quite unpredictable ways.

The government presumably knows this, because it is highly sensitive to anti-investment sentiment in the hosing market. In recent months, Joe Hockey has made a point of launching a crackdown on overseas property investors in Australia buying houses.

Free trade, in itself, has never been a particularly popular policy in Australia. For the first seven decades of federation, Australia had an official policy of industry protection. The tearing down of Australia’s tariff walls is now seen by the current orthodoxy as a positive reform. Ordinary voters, on the hand, tend to see the local manufacturing jobs packing up and leaving. A recent poll of marginal seat voters found sharp opposition to the investor-state and foreign workers aspects of the deal.

Labor’s Trade spokesperson Penny Wong has been actively pursuing Andrew Robb for details. “Will the Abbott Government honour its promise to maintain labour market testing for 457 visa holders?” she asked last week. “Why has the government abolished mandatory skills assessments for Chinese workers in ten critical occupations?”

It is possible for Labor and the minor parties to block the deal in the Senate. But few believe the modern Labor Party will walk away from a free trade deal. Andrew Robb rightly points out that Labor pursued the deal throughout its time in government.

If Labor wanted to, it could enlist popular opposition against the Investor Facilitation Agreement and use it against the government. It could be a very effective campaign.

Ben Eltham is New Matilda's National Affairs Correspondent.