The Abbott Government has claimed the free trade agreement Australia signed with China in June as a landmark deal that will underpin Australia's future prosperity.

The claim: Unions say the China-Australia Free Trade Agreement "allows Chinese companies to bring in their own workforce for projects over $150 million and removes the requirement that jobs be offered to local workers first".

Unions say the China-Australia Free Trade Agreement "allows Chinese companies to bring in their own workforce for projects over $150 million and removes the requirement that jobs be offered to local workers first". The verdict: The agreement allows the Immigration Department to decide that jobs should be offered to local workers before it issues visas to overseas workers, but it does not require this to happen. The ACTU's claim checks out.

Trade Minister Andrew Robb told ABC radio the agreement would net Australia billions of dollars and hundreds of thousands of jobs. But not everyone is so enthusiastic.

Unions said the deal threatens Australian jobs, but the Abbott Government responded by accusing the trade union movement of racism.

The Australian Council of Trade Unions (ACTU) is particularly concerned about workers on large infrastructure projects run by Chinese companies.

A "Stop the China free trade agreement" campaign on its Australian Unions website includes a petition to send to MPs urging them to vote down the agreement.

"The FTA allows Chinese companies to bring in their own workforce for projects over $150 million and removes the requirement that jobs be offered to local workers first," the letter says.

ABC Fact Check investigates.

The China-Australia Free Trade Agreement

The China-Australia Free Trade Agreement was signed in Canberra on June 17, 2015.

According to the Department of Foreign Affairs and Trade it will enhance Australia's trade with China, our biggest trading partner and buyer of almost a third of Australia's exports.

The deal took 10 years and 21 rounds of negotiations before it was concluded in November 2014.

It gives Australian exporters better access to Chinese markets, in areas like agricultural goods and education services.

Two parliamentary committees are examining the detail of the agreement, after which legislation will be put to a vote.

Large infrastructure projects

One of the key claims of the ACTU is that Chinese companies can bring in their own workforce for projects over $150 million.

The China free trade agreement includes a separate memorandum of understanding on large infrastructure projects and Stuart Rosewarne, an expert on international migration at the University of Sydney, told Fact Check it was the first of its kind in an Australian free trade agreement.

"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," he said.

A three-step process

The memorandum allows substantially Chinese-owned companies to build large infrastructure projects such as mines and power stations worth more than $150 million.

It sets out a three-step process for bringing in workers on these large projects.

The first step is that the substantially Chinese-owned project company, represented by the China International Contractors Association, establishes with the Foreign Affairs and Trade Department that the project is eligible for an infrastructure "investment facilitation arrangement" under the free trade agreement.

Step two

The second step is that the Chinese company negotiates the infrastructure arrangement with the Immigration Department.

Details that are subject to negotiation include the jobs, English language proficiency of the workers, and their qualifications and experience.

Fact Check approached the Department of Foreign Affairs and Trade for more information about how the agreement will work. A spokesman responded on behalf of both the Department of Immigration and the Department of Foreign Affairs and Trade.

The Government spokesman told Fact Check that "robust labour market analysis is required to be undertaken and consideration will be given to whether a strong business case has been made for the requested occupations and concessions".

The memorandum says the infrastructure arrangement will set out "guaranteed occupations and the terms and conditions against which overseas workers can be nominated for a temporary skilled visa for the purposes of the eligible project".

But the memorandum also states "there will be no requirement for labour market testing to enter into an [infrastructure arrangement]".

Labour market testing means a company has to prove there are no Australians who can do a job before temporary visas are granted for foreign workers.

Step three

The third step is that each employer involved in the project sets up a "labour agreement" with the Immigration Department.

Sorry, this video has expired Watch John Barron present the facts

The memorandum states that a labour agreement will set out the number and type of jobs needed for the project and "the sponsorship obligations associated with the labour agreement, including any requirements for labour market testing".

A footnote to the memorandum says that "where labour market testing is required, employers may satisfy this requirement by demonstrating that they have first tested the Australian labour market and not found sufficient suitable workers".

The Government spokesman said that once an infrastructure arrangement is in place, the labour agreements will be implemented in accordance with the Immigration Department's existing project agreement program.

The project agreement program was set up to allow Australian companies to bring in skilled and semi-skilled temporary overseas workers to fill labour shortages on infrastructure or resource development projects.

"It provides a flexible, tailored skilled migration arrangement for business and sectors with specific needs that sit outside the mainstream skilled migration programme," according to the department's information.

Issuing temporary visas

The mainstream skilled migration program gives temporary visas, called 457 visas, to skilled workers but not semi-skilled.

The department's spokesman said that overseas workers on these big Chinese infrastructure projects will be given 457 visas.

According to the regulations for 457 visas, the jobs must first be advertised to local workers and the Government spokesman told Fact Check that requirement would still apply to the Chinese-funded infrastructure projects.

He said the requirement for labour market testing was "clearly indicated" in the Immigration Department's project agreement program booklet for employers requesting a project labour agreement.

He added: "But there is the possibility that there may be unique and exceptional circumstances where labour market testing may be waived."

The wording of the memorandum does not state that labour market testing must occur before visas are granted, nor that they will be 457 visas.

The Department of Foreign Affairs and Trade's Myths versus realities document, released on July 17 to counter claims about the agreement, states that under the infrastructure arrangements, "Australian workers will continue to be given first opportunity" and "employers will not be permitted to bring in overseas skilled workers, unless there is clear evidence of a genuine labour market need, as determined by the Immigration Department".

But a spokeswoman for the ACTU told Fact Check that despite the Government's claims, "there is no definitive statement or reassurance in the memorandum that labour market testing will and must apply to labour agreements that fall under the umbrella of an [infrastructure arrangement]".

What the experts say

Michael Walker, a visa services manager with TSS Immigration, a company specialising in employer sponsored migration, told Fact Check that labour market agreements gave the Immigration Department very wide-ranging discretion.

"It is not subject to as much black and white law as the standard business sponsor process for a 457 visa," he said.

"My experience in dealing with labour agreements is that the department is fairly fastidious about Australian businesses providing ample evidence they have tested the labour market."

He said the department applied the rules differently from one agreement to another.

Joanna Howe, an expert in temporary labour migration law at the University of Adelaide, said the requirement to advertise jobs on big Chinese-funded infrastructure projects was up to Immigration Department policy.

"The department will say...they need to be assured there is a genuine need in terms of labour supply, but that requirement only exists at a policy level. And a legal status of policy does not have the same ramifications as the legal status of the agreement," she told Fact Check.

Dr Howe said the agreement was "a very weak protection for local workers" and in a dispute, the agreement would have a higher status than departmental policy.

Professor Rosewarne told Fact Check there were no protections for local workers in the agreement.

"The Department of Immigration might decide it's appropriate but there's nothing in the agreement that requires them to mandate there will be labour market testing," he said.

However, James Laurenceson, deputy director of the Australia-China Relations Institute at the University of Technology Sydney, said labour market testing was provided for, but that even without it, there was no economic incentive to bring in foreign workers.

He said the agreement for infrastructure projects made it clear work conditions would be the same for Chinese workers as they are for Australians.

"Why would you go through all the hassle for the paperwork of bringing in a foreign worker when the conditions you pay and the way you treat the foreign worker is exactly the same as the way you treat an Australian worker?" Mr Laurenceson said.

The verdict

The ACTU claims the China free trade agreement allows Chinese companies to bring in their own workforce for projects over $150 million and removes the requirement for jobs be offered to local workers first.

The written agreement does state that Chinese companies can set up a large infrastructure project without testing the market to see if there are Australian workers to do the jobs.

It also says that when issuing visas for these jobs, labour market testing is done "where required" and both the Foreign Affairs and Immigration Departments say companies will have to advertise jobs on these projects to local workers first.

But the agreement does not specify that labour market testing must occur before visas are granted and the Department told Fact Check that requirement could be waived in "unique and exceptional circumstances".

Experts contacted by Fact Check say the China free trade agreement allows the Immigration Department to decide that jobs should be offered to local workers before it issues visas to overseas workers, but it does not require this to happen.

The ACTU's claim checks out.

Sources

Editor's note (August 13, 2015): After the publication of this fact check the Minister for Trade and Investment, Andrew Robb, issued a press release disputing the conclusions. You can read the objections here. It does not change our verdict.