About 1,000 unionists rallying in Sydney have condemned the Federal Government for signing the Free Trade Agreement (FTA) with China, saying it will threaten local jobs, pay and conditions.

Signed in June, the agreement was hailed as "history-making" by the Abbott Government.

It will cut and eliminate tariffs on a wide range of Australian exports to China, including dairy, seafood, coal and wine.

But the workers at Friday's protest on Macquarie Street, outside Parliament, are wary of the agreement because it allows China to bring in foreign workers on projects worth more than $150 million.

The workers, from the major manufacturing, construction, mining and transport unions, timed their rally to coincide with a federal committee meeting considering the impact of the agreement on Australia.

CFMEU national secretary Michael O'Connor vowed to fight the foreign worker provisions of the agreement.

"We are ... trying to make sure they don't put downward pressure on wages by exploiting people they bring into this country on a short-term basis," he said.

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"It's not going to happen."

The rally follows the launch of an emotive union advertising campaign focusing on the effect of the FTA on jobs.

The ad, which screened during the primetime TV show Masterchef on Monday, shows a family discussing the signing of the free agreement.

A father tells his son he "won't even get a look in" because the agreement allows China to bring in its own workers.

The Federal Government said the union campaign against parts of the deal was xenophobic.

But unions said it was a bad deal, and the Labor Party was pushing for it to be renegotiated.

At its national conference last week, Labor resolved to safeguard the rights of Australian workers before agreeing to the deal.

The party also adopted a motion to pursue all legislative and parliamentary options to scrutinise the agreement.

Major business groups said the deal expands export horizons for Australian businesses in China.

Two-way trade between Australia and China is worth nearly $160 billion.