The Australia-China Free Trade Agreement (ChAFTA) could unravel this week, as Australian unions intensify the attack on a key clause. In response, China has threatened to retaliate by requiring changes to a deal that has taken 10 years of negotiations.
Unions have taken umbrage to a provision allowing importation of Chinese workers for investment projects worth at least AUD150 million (USD110.6 million), saying Australian jobs would go.
Under ChAFTA Chinese investors in projects value over AUD150 million would have the right to bring in temporary migrant workers without local labour market testing.
Unions are lobbying the opposition Labor Party at its national conference in Melbourne which begins 24 June to demand changes before allowing ChAFTA to pass through parliament.
In response China has warned it reserves its right to renegotiate the agreement.
The Australian PM Tony Abbott and China’s commerce minister Gao Hucheng shook hands in Canberra on 17 June.
Under ChAFTA tarrifs on Australian coal exports would be lifted straight away, with Australian beef and dairy products to follow.
This would be a welcome relief to Australian coal and iron ore exports languishing since prices plummeted in recent months. It is also a boon for Australia beleaguered diary and meat industries.
Reefer and bulk shipping trade between Australian and China would also get a boost.
“ChAFTA has the potential to reduce costs and increase trade volumes so it’s got to be good for our shipping trades,” Rod Nairn, CEO of Shipping Australia told IHS Maritime.
“But there is a risk a monopoly section of our logistics chain could remove any benefit of reduced tariffs, by increasing charges,” he said reflecting SAL’s long running dispute over port charge hikes.
China is Australia’s latest trading partner, the government publications released on ChAFTA begins. “It buys almost a third of all Austrian exports valued at nearly AUD108 billion in FY14.”
Chinese investment in Australia has reached almost AUD65 billion.
Australia forecasts 85% of its exports will enter China duty free when the agreement comes into force, rising to 93% after four years and 95% when fully implemented.
On full implementation 99.9% of Australia’s resources energy exports would be duty free.