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Racism, Fairness, Corruption: a Look at Australia’s Free Trade Agreement with China

Organised labour, the Government, and corporations all stand to lose or gain, and all are asking heavy, insinuating questions. Let's go through them one at a time.

by Girard Dorney
Aug 18 2015, 1:08am

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There's been a few political shitstorms in Australia of late: The same-sex marriage debate, the Bronwyn Bishop entitlements scandal, and Dyson Heydon's now troubled position as head of the royal commission into union corruption. With all that going on it's no wonder a business story like Australia's Free Trade Agreement (FTA) with China has fallen to the back pages, despite being a potentially game changing trade deal with the nation that's already our largest trading partner.

Australia signed the FTA in July. However, the contentious deal can't be ratified until a few enabling pieces of legislation get passed through Parliament, putting everything in doubt. The Labor party has taken up the Trade Unions' campaign to amend the agreement so that Australian workers are better protected. And while Labor hasn't guaranteed that they'll scuttle the deal if their attempts to modify it fail, they have opened that door.

There is an undercurrent of anxiety to any business deal as large as this, and the gap in time between the penning of signatures and the passage of legislation has caused age-old distrusts to re-emerge and fester. Organised labour, the Government, and corporations all stand either to lose or gain, and all are asking some heavy, insinuating questions. Let's go through them one at a time.

Will fully ratifying the FTA with China screw Australian workers?

Michael O'Connor, the National Secretary of the Construction, Forestry, Mining, and Energy Union (CFMEU) has raised concerns that workers, both Chinese and Australian, might be losers under the FTA. And according to certain analyses, Aussie workers do have cause for concern.

While the FTA vaguely requires Chinese companies comply with Australian laws and regulations (securing Chinese workers our minimum wage, workplace safety standards and so on), Clause Five of the Memorandum of Understanding (MOU) accompanying the Agreement—which deals with Chinese investors employing migrant workers—creates leeway to reverse that. As it reads, "the project company may be asked to provide additional information by DIBP in respect of its requests for concessions in the above areas."

According to Labor's Senate Leader and Shadow Minister for Trade Penny Wong, her party's specific problem with the Agreement is the erosion of labour market testing laws. Currently, the temporary migration system operates by allowing companies to bring foreign workers into Australia on 457 visas if and when there are not enough skilled local workers to meet their demand for labour. Chapter 10 of the Agreement contains this clause: "Neither party shall ... require labour market testing, economic needs testing, or other procedures of similar effect as a condition for temporary entry."

Among other things, this will allow migrant workers to avoid passing certain skill tests, and will weaken unions, as it effectively removes them from negotiations when Chinese-owned enterprises invest in Australian projects valued over $150 million.

So, while it's not certain that union fears will eventuate, there is a path for providing migrant labourers with jobs in Australia when there are local workers available, paying them less, and subjecting them to worse working conditions than their Australian counterparts. Government spokespeople have insisted any concessions would be screened and agreed to by the Government. But so long as there is a path to securing cheaper labour, the concern is: what company would not try to take advantage of it?

Are free trade critics xenophobic?

The Coalition is trying to portray Labor as kowtowing to unions, with Hockey claiming the unions are living in the past and looking after fringe interests. And Abbott telling the media, "I say emphatically to Bill Shorten, please Mr Shorten, stand up to the unions, do not give in to the xenophobic demands of the CFMEU."

The Coalition attack on Labor and the union movement's objections to the FTA is threefold – we need this deal for our economic future, it's not dissimilar from deals Labor has committed to, and the people who would endanger the deal are doing so with racist intent. As Trade Minister Andrew Robb argued in an interview with Alan Jones on 2GB last week, "Why do they use the word 'China' every second word? Because they know it produces a nervous response throughout the community, rather than looking at the facts."

Related: Fair Trade, Free Markets, and the Bitter Fight Behind Your Morning Cup of Coffee

For its part, the CFMEU argued that, far from being racist, they were looking after Chinese workers—and anyway, a Coalition MP addressed a Reclaim Australia rally. Also during Robb's interview with outspoken radio announcer, Alan Jones, (Jones has been terrifying his audience with predictions of mass Chinese ownership of Australian land and resources for years) the Trade Minister went right at the CFMEU, adding 'criminal association' as another reason not to trust the union. "They're the most corrupt union in Australia, Alan. They're in bed with the bikies who control 15 percent of the drug trade in Australia. Give me a break." Which brings us to:

Are the unions who are complaining about the deal corrupt, backward institutions that are in bed with outlaw bikie gangs?

This line likely stems from accusations levelled against the union by the Victorian Assistant Police Commissioner Stephen Fontana last year. Fontana told the Royal Commission into Trade Union Governance and Corruption that the CFMEU uses outlaw bikie gangs as standover men for illegal debt collection. Also last year, a joint investigation by Fairfax and ABC's the 7.30 Report uncovered evidence of major crime figures receiving union kickbacks for organising construction contracts. Senior members of the CFMEU were implicated.

Fontana's statements didn't lead to arrests, and he provided no evidence. He said there were several ongoing investigations into the CFMEU and his concern was that, without better whistleblower protection laws, arrests would endanger people.

Of course, whether or not a union is corrupt is not evidence of the relative fairness or unfairness of a Free Trade Agreement. The thing is: there are no organic winners or losers in this kind of deal; there is a bargaining process. Instead of arguing for certain sensitive sectors to be excluded from liberalised trade (a 'negative-list' approach) the two sides bargained over what should be included (a 'positive-list' approach).

Who stands to win and who could get shafted?

As the deal stands, those who will benefit from the parameters of the FTA are many of the Australians involved in agriculture, services, and mining. In the case of operators in the first two industries, they'll have greater access to Chinese markets. For participants in the latter sector, Chinese tariffs on coal, alumina, and some base metals will be eliminated.

The losers will be the Australian manufacturers that find themselves pushed out by the competitive prices of Chinese manufacturers, the farmers who sell sugar, rice, wool, cotton, wheat, maize or canola, and, depending on how the next few weeks go, workers from both countries.

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