things you need to know about the China Free Trade Agreement and why it s bad news for Australian jobs.

Transcription

1 things you need to know about the China Free Trade Agreement and why it s bad news for Australian jobs.

2 Factsheet 2 THE CHINA FREE TRADE AGREEMENT IS THE WORST TRADE AGREEMENT THAT AUSTRALIA HAS EVER SIGNED. THE GOVERNMENT HAS BEEN OUT-NEGOTIATED AND IT WILL COST AUSTRALIAN WORKERS. HERE ARE TEN REASONS WHY IT IS A BAD DEAL: #1 THE CHINA FTA PUTS LOCAL WORKERS AND LOCAL JOBS AT RISK China Australian Free Trade Agreement (ChAFTA) removes Labour Market Testing both in the text of the agreement as well as through the use of Investment Facilitation Arrangements which allow Chinese companies to bring in temporary skilled workers to work on projects over $150 million. This means that employers will be able to bring in their own workforce without testing the market to see if there are local workers to do the jobs or without the requirement to offer jobs to locals first. #2 THERE WILL BE NO SKILLS ASSESSMENT FOR MANY TRADES UNDER THE CHINA FTA Mandatory skills assessments are used to determine whether workers have the necessary skills to work in particular occupations in Australia. ChAFTA removes mandatory skills assessments for 10 trades (including carpenters, joiners and electricians) with the aim of eliminating mandatory skills assessments for all occupations within 5 years. #3 THE CHINA FTA PUTS WORKPLACE SAFETY AT RISK ChAFTA creates workplace safety risks by allowing for the lowering of English skills for Chinese workers and by removing mandatory skills assessments. Under ChAFTA, employers will be able to recruit Chinese workers with limited or no English language ability who have not been required to demonstrate Australian-standard skills. Without a sufficient level of English language capability, it will be difficult for temporary workers to familiarise themselves with relevant Australian safety standards and conditions. #4 AUSTRALIAN WORKING CONDITIONS AND WAGES WILL BE UNDERMINED AND OVERSEAS WORKERS WILL BE EXPLOITED ChAFTA allows employers to pay overseas workers less than the current rules allow. Local workers will feel compelled to accept worsening conditions and wages in order to compete, with temporary overseas workers under even more pressure to accept substandard conditions. #5 THE CHINA FTA IS NOT LIKEANY OTHER FTA AUSTRALIA HAS EVER SIGNED The China FTA goes significantly further than any other FTA a Labor Government has ever entered into. A Memorandum of Understanding included in ChAFTA extends concessional 457 visas to include semi-skilled or trade workers. It removes mandatory Labour Market Testing for a wide range of occupations. WINNERS AND LOSERS: 40% OF #6 AUSTRALIAN AGRICULTURAL EXPORTS WILL RECEIVE NO BENEFIT FROM CHAFTA The benefits of ChAFTA have been oversold. Australia will reduce all its tariffs to zero under ChAFTA, China has excluded over 250 tariff lines from further tariff reductions. Industry groups have stated that negotiators have accepted an unbalanced deal, with even key agricultural industries not likely to see any great benefits. There is concern that China will use technical barriers other than tariffs, to reduce any benefits to Australia under ChAFTA. THE GOVERNMENT IS MISQUOTING #7 STATISTICS IN ORDER TO SELL CHAFTA The Government has come out and stated that ChAFTA will create Many hundreds of thousands of jobs. These figures are grossly overestimated and have been proved to be wrong. Andrew Robb stated that ChAFTA would create 178,000 jobs over 20 years. He misquoted the Government s own research, which claims that only an additional 5434 jobs will be created. By contrast, in the month of July alone, over 40,000 people in Australia became unemployed. EXISTING FTAS HAVE NOT #8 PROVIDED BENEFIT TO AUSTRALIAN INDUSTRY There is no research which shows that existing FTAs have benefited Australia. In fact, the evidence shows that Australia has been made worse off as a result of previous free trade agreements. Mark McGovern, a senior Lecturer at QUT Business School found that Australia s trade position for agriculture and food manufacturing has deteriorated since FTAs with New Zealand, the United States and Thailand. The Productivity Commission has stated that previous research has produced overly optimistic expectations of the likely benefits of FTAs. #9 THE CHINA FTA WILL ALLOW CHINESE INVESTORS TO SUE THE AUSTRALIAN GOVERNMENT ChAFTA includes Investor-State Dispute Settlement (ISDS) provisions which allow Chinese investors and large multinationals to sue Australian governments for laws that might affect their profits. The Australian Government has already spent $50 million of taxpayers money defending its plain packaging tobacco laws against similar provisions. WHAT THE #10 EXPERTS SAY Independent experts and academics have had their say on ChAFTA, and it s not positive. 2/ 3/

3 Factsheet 1 THE CHINA FTA PUTS LOCAL WORKERS AND LOCAL JOBS AT RISK THE CHINA FTA CREATES WORKPLACE SAFETY RISKS BY ALLOWING FOR THE LOWERING OF ENGLISH SKILLS FOR CHINESE WORKERS AND BY REMOVING MANDATORY SKILLS ASSESSMENTS. Labour Market Testing (LMT) is where companies must advertise jobs locally in Australia before bringing in overseas labour. Under the China FTA, LMT requirements are removed in two ways: IN THE CHINA FTA ITSELF: The China FTA states that in relation to commitments on temporary entry, neither party shall require labour market testing, economic needs testing or other procedures of similar effect as a condition for temporary entry. 1 THROUGH THE USE OF INVESTMENT FACILITATION ARRANGEMENTS : In a Memorandum of Understanding (MoU) as part of the China FTA package, the Governments of Australia and China can establish Investment Facilitation Arrangements or IFAs for projects of at least $150 million (with as little as 15% Chinese investment). Under these IFAs, employers can recruit temporary skilled workers to work projects. The MoU states that there is no requirement for Labour Market Testing to enter into an IFA, nor is there any mandatory requirement for employers to undertake LMT. The Department of Immigration and Border Protection (DIBP) has tried to cover up this lack of safeguards for local jobs in ChAFTA by releasing guidelines which require employers to show that there is a labour market need. But these guidelines don t cut it because 1) they are not legislated so are subject to change at the whim of the government and 2) they provide conflicting advice about the actual testing and are essentially a sham LMT. Dr Joanna Howe, a labour law and migration expert at the University of Adelaide, stated that the guidelines can be whittled away at any time so that the ability of these requirements to protect local workers preferential access to jobs becomes virtually meaningless. 2 No requirement for LMT means that any employer can bring in workers from China without testing the market to see if there are local workers to do the jobs or without the requirement to offer jobs to locals first. ABC FactCheck found that ChAFTA does threaten Australian jobs. There s nothing in the agreement that requires them [DIBP] to mandate there will be labour market testing. - Stuart Rosewarne, expert on international migration at the University of Sydney and Joanna Howe, expert on migration and labour law at the University of Adelaide. 3 The Conversation FactCheck found that Australian workers can be excluded from labour market opportunities through the China Free Trade Agreement. 4 4/ 5/

4 Factsheet 2 THERE WILL BE NO SKILLS ASSESSMENT FOR MANY TRADES UNDER THE CHINA FTA THE CHINA FTA REMOVES THE REQUIREMENT FOR MANDATORY SKILLS ASSESSMENTS FOR TEN OCCUPATIONS WITH THE AIM OF ELIMINATING THE REQUIREMENT WITHIN FIVE YEARS. Mandatory skills assessments are used to determine whether workers have the necessary skills to work in particular occupations in Australia. Mandatory skills assessments for temporary workers from high-risk countries, including China, were introduced by the former Labor government to restore integrity into the 457 visa program. They were introduced to 1) prevent exploitation by employers recruiting skilled foreign workers and working them as cheap unskilled labour and 2) to address concerns about trade training standards and qualification and document fraud in high-risk countries. In a side letter as part of the ChAFTA package, Andrew Robb has removed the requirement for mandatory skills assessment for ten occupations including: Automotive Electrician [321111] Cabinetmaker [394111] Carpenter [331212] Carpenter and Joiner [331211] Diesel Motor Mechanic [321212] Electrician (General) [341111] Electrician (Special Class) [341112] Joiner [331213] Motor Mechanic (General) [321211] Motorcycle Mechanic [321213] The remaining occupations will be reviewed within two years with the aim of further reducing the number of occupations, or eliminating the requirement within five years. The removal of mandatory skills assessments eliminates the regulatory safeguards designed to prevent employers recruiting Chinese workers who do not possess Australian-standard skills in these trades. This will create significant workplace dangers and allow for the exploitation of foreign workers. There is no doubt that removing mandatory skills assessments for Chinese applicants will result in increased numbers of 457 visa applications. 6/ 7/

5 Factsheet 3 THE CHINA FTA PUTS WORKPLACE SAFETY AT RISK THE CHINA FTA CREATES WORKPLACE SAFETY RISKS BY LOWERING THE LEVEL OF REQUIRED ENGLISH SKILLS AND BY REMOVING MANDATORY SKILLS ASSESSMENTS. In a Memorandum of Understanding (MoU) as part of the China FTA package, the Governments of Australia and China can establish Investment Facilitation Arrangements or IFAs for projects of at least $150 million (with as little as 15% Chinese investment). Under these IFAs, projects can negotiate concessions with the Department of Immigration and Border Protection (DIBP) for the English language proficiency requirements for temporary workers accessed by employers under the IFA. In a side letter as part of the ChAFTA package, Andrew Robb has also removed the requirement for mandatory skills assessment for ten occupations, with the aim of further reducing the number of occupations, or eliminating the requirement within five years. The Conversation FactCheck found that the Chinese FTA has the potential for Chinese workers to be permitted into Australia with lower level English and lower skills than under the 457 visa programme. 4 Under ChAFTA, employers will be able to recruit Chinese workers with limited or no English language ability who have not been required to demonstrate Australian-standard skills. Without a sufficient level of English language capability, it will be difficult for temporary workers to familiarise themselves with relevant Australian safety standards and conditions. A report in February 2015 by SafeWork Australia has already found that workers with a lower level of English competency reported exposure to more work hazards on average than workers who understood English well reducing the English language requirement will only make this worse. For example, in the 3 years after the Labor Government s minimum English language standards were introduced, only a single workrelated death of a 457 visa worker was recorded. By contrast, when 457 English language standards were lower, 11 workers lost their lives in work-related incidents over the same time period. All except one were from countries where English was not the first language. Joanna Howe, a labour law and migration law expert at the University of Adelaide states IFA workers can have lower English skills than under the 457 visa, which will hamper their ability to understand their rights or to complain about their violation. Lower English skills also have concerning implications for workplace safety. 2 Many imported goods from countries where companies receive subsidies from the State and where there are unfair labour laws and no adequate environmental protection, often do not meet Australian Standards and are unsafe. There have already been numerous examples of unsafe imported products including cladding which caused a fire in a 21 storey apartment building in Melbourne s Docklands; decorative plywood and particle board for flatpack kitchens with unsafe levels of formaldehyde emissions; asbestos found in crayons; hepatitis A in frozen berries; sub-standard cable causing risk of electrocution and fire; falling glass panels; etc. 8/ 9/

6 Factsheet 4 AUSTRALIAN WORKING CONDITIONS AND WAGES WILL BE UNDERMINED AND OVERSEAS WORKERS WILL BE EXPLOITED FOREIGN WORKERS CAN BE PAID LESS UNDER THE CHINA FREE TRADE AGREEMENT THAN THE CURRENT RULES ALLOW. Nowhere in ChAFTA does it say that temporary workers working side by side with local workers will receive the same pay and conditions. 5 In a Memorandum of Understanding (MoU) as part of the China FTA package, the Governments of Australia and China can establish Investment Facilitation Arrangements or IFAs for projects of at least $150 million (with as little as 15% Chinese investment). Under these IFAs, projects can negotiate concessions with the Department of Immigration and Border Protection (DIBP) including the calculation of the terms and conditions of the Temporary Skilled Migration Income Threshold. While the MoU states that the project company must comply with all Australian laws and regulations, the Conversation FactCheck finds that the MoU also opens the door to removing those protections through negotiated concessions and that there is no black-and-white statement in the MOU that stipulates that foreign workers working side by side with an Australian worker shall unconditionally receive the same conditions and pay. 5 This will put further pressure on local working conditions and wages. Concessions on IFAs under CHAFTA will undermine Australian working conditions and wages if employers are allowed to pay 457 visa holders even less than the current rules allow. The Conversation FactCheck states that there is a possibility of circumvention of this clause [that requires project companies to comply with Australian laws and regulations] through negotiation of concessions there is a distinct possibility of foreign workers with award minimum conditions working alongside Australian workers under an EBA with superior conditions. 5 If workers on temporary visas are able to be paid less than their local counterparts, they are likely to be exploited by employers as cheap labour. IFAs effectively tie a Chinese worker s migration status to the project. Joanna Howe, an expert on labour law and migration law at the University of Adelaide states that the IFA represents an entirely employer-driven approach to migration which entrenches the vulnerability of these types of workers...withdrawal of support from the employer-sponsor may mean cancellation of the visa. This threat, actual or perceived, may induce an IFA worker to accept any degree of substandard working conditions and creates a strong disincentive for these workers to voice concerns for fear of being sent home. 2 Australian working wages and conditions will be even further undermined, as local workers feel compelled to accept worsening conditions in order to compete with temporary workers on lower wages and with worse conditions. 10/ 11/

7 Factsheet 5 THE CHINA FTA IS NOT LIKE ANY OTHER FTA AUSTRALIA HAS EVER SIGNED THE CHINA FTA GOES FURTHER IN TERMS OF LABOUR MOBILITY THAN ANY OTHER FTA. Concessional 457 visas are extended #1 to semi-skilled workers: In a Memorandum of Understanding (MoU) as part of the China FTA package, the Governments of Australia and China can establish Investment Facilitation Arrangements or IFAs under which employers can recruit temporary skilled workers under concessional 457 visas. The MoU is one of the most serious of several unprecedented measures under ChAFTA as it extends visas to semi-skilled/sub-trade level occupations. Stuart Rosewarne, an expert on international migration at the University of Sydney, told ABC FactCheck Free trade or economic agreements with South Korea and Japan include clauses that set out the terms for the movement of natural persons, essentially skilled and professional workers and business people, but the memorandum goes well beyond these categories to include semi- and low-skilled workers 5 Investment Facilitation Arrangements #2 (IFAs) are included as part of the FTA package: IFAs are included as a MoU as part of the ChAFTA package, this is unprecedented and may make it legally more difficult for Australia to make any changes to IFAs without China s approval. The threshold for entry into an IFA is #3 significantly lower: Under the MoU, to enter into an IFA a project company only needs 15% Chinese investment in a $150 million project ($22.5 million) this is significantly less when compared to Labor s Enterprise Migration Agreements (EMAs) which required $2 billion in capital expenditure and were never part of an FTA package. The sectors where IFAs are available has also expanded considerably. Clauses on labour mobility: ChAFTA #4 includes several provisions on temporary employment which have the potential to remove Labour Market Testing (where companies must advertise jobs locally in Australia before bringing in overseas labour) for a wider range of occupations. Side letter on Skills Assessment: An #5 unprecedented side letter to the China FTA removes mandatory 457 skills assessments for Chinese citizens in 10 skilled trades and commits Australia to removing those assessments for all other listed trades within 2-5 years. Non-reciprocal Work and Holiday visa #6 agreement: In an MoU as part of the ChAFTA package, Australia has committed to a nonreciprocal Work and Holiday visa that provides up to 5,000 visas for young Chinese to live and work in Australia. The ChAFTA package has committed Australia to opening up to China in ways that are unprecedented in FTA packages. This causes concern about the impact of these commitments on future FTAs currently being negotiated and those yet to be negotiated. These new commitments will be the new baseline demanded by all countries where Australia is negotiating FTAs including with India and TPP countries. 12/ 13/

8 It seems we should be more closely monitoring the realities of trade, not fixating on rhetoric and so far empty promises. There is nothing free about these trade agreements. Dr Mark McGovern Senior Lecturer QUT Business School

9 Factsheet 6 WINNERS AND LOSERS: 40% OF AUSTRALIAN AGRICULTURAL EXPORTS WILL RECEIVE NO BENEFIT FROM CHAFTA THE CHINA FTA IS TOUTED AS BENEFITING EXPORTING INDUSTRIES AT THE EXPENSE OF JOBS AND IMPORTING INDUSTRIES. BUT EVEN THE BENEFIT TO EXPORTERS HAS BEEN OVERSOLD. While Australia has reduced all its tariffs to zero under ChAFTA, China has excluded over 250 tariff lines from further tariff reductions, which include some agricultural products, fertilisers and wood and paper products. Australia has been out negotiated. The Australian Industry Group (AiG), a peak industry association for more than 60,000 Australian businesses in a range of industries stated It appears that the fears that many Australian manufacturers had for ChAFTA have been realised; namely that industries deemed sensitive in China remain heavily protected while most Australian industries face zero tariffs from day one of the agreement it is difficult to understand why our negotiators accepted such an unbalanced deal. 7 China retains import tariffs on many manufactured forest products including certain plywood, particle board, fibre board, paper and packaging. AiG states that for paper-based products Australian companies could start to make the strategic decision to move manufacturing to China, as this is the business model currently being rewarded under ChAFTA. 7 For agriculture, a big winner from ChAFTA, the National Australia Bank stated that there are no changes to tariffs or market access for Australian rice, wheat, cotton or sugar, wool and cotton, which make up more than 40% of Australian agricultural exports to China, are not likely to see any great benefits from the [ChAFTA] deal. They also found that on dairy, a major hyped beneficiary of ChAFTA, it remains to be seen whether the China-Australia FTA will spur any increased Australian dairy production and export. 8 In addition to concerns about labour mobility and tariffs, there is also widespread concern regarding China s technical barriers to trade (TBTs). Technical barriers to trade are barriers other than tariffs that allow countries to protect domestic markets and discriminate against imports. China is well known for the use of TBTs, including as unfair protection for their domestic coal mining and iron ore industries. The Australian Grain Growers commented While reduction of a tariff, or removal of a quota is hugely beneficial, if you do not have technical access for products, then the liberalisation measure is moot. As tariffs and quotas fall, technical barriers to trade are becoming a greater and greater issue 9 Even the National Farmers Federation, which represents the primary winners from the China FTA argues for many commodities, trade with China will be significantly inhibited by the existence of non-tariff barriers. The Australian pork industry is a key example Another example is Australian rice, which faces a similar situation, and with no import protocol in place, has severely limited export opportunities into China. 10 While a subset of exporters who stand to benefit from lower tariffs are peddling the advantages ChAFTA, the complete picture of the winners and losers of ChAFTA is a different story. Though some industries will benefit from lower tariffs, there are many who won t. Labour mobility clauses threaten local jobs, domestic industries will face increased competition competing with overseas imports and technical barriers to trade have the potential to mitigate any benefits obtained from lower tariffs. 16/ 17/

10 Factsheet 7 THE GOVERNMENT IS MISQUOTING STATISTICS IN ORDER TO SELL CHAFTA THE GOVERNMENT HAS MISCALCULATED AND MISQUOTED NUMBERS FROM ITS OWN MODELLING Andrew Robb, the Minister for Trade who signed the China Free Trade Agreement, has come out and stated that ChAFTA will create many hundreds of thousands of jobs and sent journalists highlights stating that ChAFTA will create an additional 178,000 jobs - an average of almost 9000 extra jobs a year. The figures are grossly overestimated and are wrong. The Government s own modelling, conducted by the Centre for International Economics (CIE), does not mention 178,000 jobs. It states As a result of the FTAs, there would be a net increase of 7,925 jobs in 2016 and 5,434 jobs in 2035, compared to if the FTAs are not implemented. 11 The report sets out the aggregate number of jobs that would be created, in total, for each year until The Government has obtained the 178,000 figure by adding up the cumulative total for each year. The real figure of jobs created in 2035 is only 5,434. To put this figure in perspective (5,434 jobs), with an estimated workforce of 15 million by 2035 this an increase of only 0.036% of jobs, around one third of one tenth of a percent over 20 years. By contrast, in the month of July alone, the unemployment rate rose 0.3%, over 40,100 people became unemployed. The figure is also for all three North Asian free trade agreements Japan, Korea and China. Not China specifically. Incorrect quoting of the report aside, CIE modelling has been found to provide favourable modelling results for FTAs, this is likely why the CIE was chosen rather than the Australian Government s independent research and advisory body, the Productivity Commission who in 2010 found that bilateral agreements divert trade from other countries and therefore any increase in national income from preferential trade agreements is likely to be modest. 12 This notion was confirmed by research by the ANU s Crawford School of Public Policy who, in 2015, found that the Australia US FTA (AUSFTA) resulted in a fall in Australia and US trade with the rest of the world (trade diversion) as well as reduced trade between the two countries. The CIE modelling on AUSFTA in 2004 had claimed that GDP could be up to $6 million higher under AUSFTA (0.7% of GDP the same as they found for ChAFTA), including modelling on foreign investment which Economist Professor Ross Garnaut commented wouldn t even pass the laugh test. Even the favourable figures the Government itself commissioned on job creation under ChAFTA have been grossly underestimated and misrepresented. The number of jobs is nowhere near the 178,000 being pushed by the Government, their own modelling shows it is a significantly lower 5,434 jobs over 20 years. Though even this number is likely to have been overstated. 18/ 19/

11 Factsheet 8 EXISTING FTAS HAVE NOT PROVIDED BENEFIT TO AUSTRALIAN INDUSTRY THERE IS NO RESEARCH WHICH HAS INDICATED THAT EXISTING FTAS HAVE PROVIDED A BENEFIT TO AUSTRALIA. IN, THE EVIDENCE SUGGESTS THEY HAVEN T. Australia has entered into a range of bilateral free trade agreements with numerous countries including New Zealand, Thailand and the United States - and we are negotiating more. The Government has claimed that FTAs provide millions of dollars of benefit to Australia. But they have no evidence to back their claims. In fact, the evidence points to the contrary. A Productivity Commission review of bilateral and regional trade agreements in 2010 found that current processes for assessing and prioritising [FTAs] lack transparency and tend to oversell the likely benefits, feasibility studies for previous agreements have produced overly optimistic expectations of the likely economic effects and that they have received little evidence from business to indicate that bilateral agreements to date have provided substantial commercial benefits. 12 It is unsurprising that the Government chose not to assign the Productivity Commission to conduct an evaluation of the benefits of Australia s North Asian Free Trade Agreements, but rather the Centre for Independent Economics (CIE) who has a history of providing favourable modelling. In 2004, the CIE claimed that GDP could be up to $6 million higher under the Australia United States Free Trade Agreement (0.7% of GDP the same as they found for ChAFTA). This included modelling on foreign investment which respected Economist Professor Ross Garnaut commented wouldn t even pass the laugh test. 13 An evaluation of the performance of the Agreement in 2015 by the ANU s Crawford School of Public Policy found that AUSFTA actually resulted in a fall in Australia and US trade with the rest of the world (trade diversion) as well as reduced trade between the two countries. Mark McGovern, Senior Lecturer at QUT Business School found that Australia s trade position for agriculture and food manufacturing (two of the primary beneficiaries of Australia s FTAs) have deteriorated since FTAs with New Zealand, the United States and Thailand have come into play. He states that clearly, these three FTAs have failed to deliver. There has been no improvement evident in the agriculture and food trade position under any of the three agreements. Furthermore, he finds that Australia s trade performance has actually been better with non-agreement partners FTA partners have clearly been able to outperform Australian enterprises. On the other hand, where no agreements have been struck, Australia enterprises have outperformed partners. 14 Australia has been out-negotiated in our trade agreements. Our fundamentalist and literal approach to free trade has put us in a position where we are not benefiting from these agreements like we should be. Research has shown that the analysis conducted prior to Australia entering into previous agreements, has severely overstated the benefits. In many cases, the deals have left us worse off Australia would have been better had we not signed up to these agreements. 20/ 21/

12 Factsheet 9 THE CHINA FTA WILL ALLOW CHINESE INVESTORS TO SUE THE AUSTRALIAN GOVERNMENT THE AUSTRALIAN GOVERNMENT MAY FIND ITSELF IN COURT AGAINST FOREIGN COMPANIES SIMPLY FOR CREATING REGULATIONS THAT BENEFIT THE WELFARE OF AUSTRALIANS. The China FTA includes Investor-State Dispute Settlement (ISDS) provisions which allow Chinese investors, and large multinational companies, to sue Australian governments for taking measures that could negatively affect investors profits. Dr Kyla Tienhaara, Australian National University College of Asia and the Pacific, and Professor Gus Van Harten, York University Osgoode Hall Law School, state that ChAFTA raises alarm bells because it allows for ISDS: the controversial mechanism that lets corporations bypass the courts and sue countries before arbitrators who lack judicial safeguards. 18 Around the world, investors have challenged Governments under ISDS provisions for measures related to renewable energy; environmental laws; taxes; labour laws; land zoning decisions; health regulations; etc. Similar provisions have already let Philip Morris sue the Australian government for cigarette plain packaging laws which have helped to save lives, despite the Australian High Court rejecting challenges to the laws. The case has already cost Australia $50 million of taxpayers money in defending itself - and it is still in the early stages. The number of ISDS cases is sky rocketing, with 42 cases filed last year, with one case awarding a record $USD50 billion. Dr Tienharra states The huge sums of money involved make it all the more surprising that ISDS is so poorly designed Because they are chosen by the parties to the dispute and paid by the hour, arbitrators lack the independence of court judges. 19 Chief Justice of the High Court, Robert French, highlighted concern with ISDS clauses stating that the tribunals set up under ISDS provisions are not courts. Nor are they required to act like courts. Yet they can make rulings that impact on a country s ability to regulate. He stated that the judiciary, as the third branch of government in Australia, has not had any significant collective input into the formulation of ISDS clauses in relation to their possible effects upon the authority and finality of decisions of Australian domestic courts. 20 ISDS provisions mean that large multinational corporations can sue the Australian Government for implementing laws which are in Australia s best interest. Ruth Townsend, Lecturer in health law, ethics and human rights at the Australian National University states The ISDS mechanism arguably limits the legitimate role of government and preferences private over public interest in a way previously unseen. It creates a disincentive for government to make laws that protect the national interest. 21 There seems to be no reason for ISDS clauses other than to protect the interests of large investors and multinational firms. The Productivity Commission states There does not appear to be an underlying economic problem that necessitates the inclusion of ISDS provisions within agreements. Available evidence does not suggest that ISDS provisions have a significant impact on investment flows. Experience in other countries demonstrates that there are considerable policy and financial risks arising from ISDS provisions. 12 It gets worse - the FTA also contains a commitment to negotiate even greater rights for investors in the future. 22/ 23/

13 Factsheet 10 WHAT THE EXPERTS SAY INDEPENDENT EXPERTS AND ACADEMICS HAVE HAD THEIR SAY ON CHAFTA, AND IT S NOT POSITIVE. Academics and experts have commented on ChAFTA and Australia s other regional and bilateral free trade agreements. There is consensus that the labour provisions under ChAFTA are radical and have far-reaching implications for local workers. Here is what the independent experts and academics have to say Free trade agreements are driving reforms by stealth.chafta moreover introduces a radical shift in the institutional context within which the negotiation of employment standards and conditions has traditionally occurred This arrangement removes agreements on employment terms and conditions from the purview of interested industrial relations stakeholders and the Australian public more generally. Associate Professor Stuart Rosewarne, Department of Political Economy, University of Sydney 15 Free trade agreements like the ChAFTA have far-reaching implications and need to be closely scrutinised. Traditionally, countries like Australia have fiercely guarded their borders in order to safeguard national living standards. Although Australia s temporary migrant worker programme (the 457 visa) has been increasingly liberalised since its inception in 1996, the ChAFTA is a game changer. Dr Joanna Howe, Senior Lecturer in Law, University of Adelaide 4 We don t want trade agreements to adversely affect labour standards and the provision of public goods and labour market testing could be tackled without affecting ChAFTA. Tim Harcourt, J.W. Nevile Fellow in Economics, University of NSW. 16 ChAFTA is an imperfect agreement, borne out of political difficulties and the compromises these have entailed. Some sectors are in, but others are out, and carve-outs and caveats impose limits on many of the concessions. The unpleasant - but unavoidable - reality is that positive-list FTAs are not about free trade, but picking winners and commiserating losers. Dr Jeffery Wilson, Fellow of the Asia Research Centre, Murdoch University 17 The balance of trade positions of Australian agriculture and food manufacturing have deteriorated since FTAs with New Zealand, the United States and Thailand have come into play Clearly, these three FTAs have failed to deliver. There has been no improvement evident in the agriculture and food trade position under any of the three agreements. Rather, deterioration has been evident in each case It seems we should be more closely monitoring the realities of trade, not fixating on rhetoric and so far empty promises. There is nothing free about these trade agreements. Dr Mark McGovern, Senior Lecturer at QUT Business School 14 The Commission has received little evidence from business to indicate that bilateral agreements to date have provided substantial commercial benefits Productivity Commission 12 There is consensus among many academics and experts that the China Free Trade Agreement is an imperfect agreement and that it is a game changer. Particular concern has been raised about the agreement s labour provisions and how they remove safeguards for local workers. Experts have also commented that we are not learning from past agreements, that bilateral agreements to date have not provided benefit to Australian industry. There is no indication ChAFTA will be any different. 24/ 25/

14 References 1. Department of Foreign Affairs and Trade (2015), ChAFTA Text, accessible at: chafta/official-documents/pages/official-documents.aspx 2. Howe, J. (2015), Abbott has sold out Australian workers to China, The Age, 22 Jul 2015, accessible at: theage.com.au/comment/abbott-has-sold-out-australianworkers-to-china gigata.html 3. Howe, J. and Rosewarne, S. (2015), Should Australian workers be worried about the China FTA?, The Drum, 31 Aug 2015, accessible at: news/ /howe-and-rosewarne-fears-about-thechina-fta/ Howe, J (2015), FactCheck: Could the China-Australia FTA lock out Australian workers?, The Conversation, 22 Jun 2015, accessible at: factcheck-could-the-china-australia-fta-lock-outaustralian-workers Rosewarne, S. and Markey, R. (2015), Fact Check: Could foreign workers be paid less under the China-Australia FTA: Review, The Conversation, 27 July 2015, accessible at: 6. ABC FactCheck, (2015), Fact Check: Does the China Free Trade Agreement threaten Australian jobs?, ABC, 13 Aug 2015, accessible at: 7. The Australian Industry Group, (2015), Submission to the Joint Standing Committee on Treaties, 4 Sep 2015, accessible at: Business/Committees/Joint/Treaties/17_June_2015/ Submissions 8. Ziebell, P. (2015), Special Report: China-Australia Free Trade Agreement, National Australia Bank Economic Report, accessible at: wp-content/uploads/2014/11/nab-special-reportagribusiness-china-australia-free-trade-agreement.pdf 9. Grain Growers (2015), Submission to the Joint Standing Committee on Treaties, July 2015, accessible at: Joint/Treaties/17_June_2015/Submissions 10. Mahar, T. (2015), National Farmers Federation s submission to the Joint Standing Committee on Treaties, July 2015, accessible at: Parliamentary_Business/Committees/Joint/Treaties/17_ June_2015/Submissions 11. Centre for International Economics (2015), Economics benefits of Australia s North Asian FTAs, Report prepared for the Department of Foreign Affairs and Trade, 12 June 2015, accessible at: publications/documents/economic-modelling-ofaustralias-north-asia-ftas.pdf 12. Productivity Commission (2010), Bilateral and Regional Trade Agreements, Productivity Research Report, accessible at: trade-agreements/report/trade-agreements-report.pdf 13. ABC (2014), Former diplomat says FTAs benefits exaggerated, ABC Transcript 3 May 2004, accessible at: McGovern, M. (2015), Free trade agreements fail to boost Australian agriculture and food manufacturing, The Conversation, 17 Sep 2015, accessible at: theconversation.com/free-trade-agreementsfail-to-boost-australian-agriculture-and-foodmanufacturing Rosewarne, S. (2015), Free trade agreements driving labour market reform by stealth, The Conversation, 20 Jan 2015, accessible at: free-trade-agreements-driving-labour-market-reform-bystealth Harcourt, T. (2015), Australia can get the balance right on free trade and workers rights, The Conversation, 8 Sep 2015, accessible at: australia-can-get-the-balance-right-on-free-trade-andworkers-rights Wilson, J. (2015), China-Australia trade agreement a compromised victory, The Conversation, 18 Jun 2015, accessible at: Tienhaara, K. and Van Harten, G. (2015), Half-baked China-Australia Free Trade Agreement is lopsided, The Canberra Times, 19 Jun 2015, accessible at: canberratimes.com.au/comment/halfbaked-chafta-islopsided ghs8fm.html Tienhaara, K. (2014), China free trade: is there a devil in the detail? The Drum, 17 Nov 2014, accessible at: French, R.S. (2014) Investor-State Dispute Settlement A cut above the courts? Supreme and Federal Court Judge s Conference, 9 July 2014, accessible at: hcourt.gov.au/assets/publications/speeches/currentjustices/frenchcj/frenchcj09jul14.pdf Townsend, R. (2013), When trade agreements threaten sovereignty: Australia beware, The Conversation, 13 Nov 2014, accessible at: when-trade-agreements-threaten-sovereignty-australiabeware The Government appears to have been outsmarted or outmanoeuvred by the Chinese government, to the detriment of Australian workers and businesses. Michael O Connor CFMEU National Secretary 26/

15 Authorised by Dave Oliver, Secretary ACTU 6/365 Queen St, Melbourne VIC 3000