Trade agreements and immigration policy: Commitments in the China-Australia Free Trade Agreement

While discussion of Australia’s Free Trade Agreements (FTAs) with various countries usually focuses, for obvious reasons, on tariffs and trade barriers, what is often not widely discussed is the fact that these agreements usually also include provisions for the ‘movement of natural persons’. That is, FTAs (as well as multilateral trade agreements) often include clauses relating to migration. These usually relate to the entry of foreign nationals into Australia as temporary overseas workers, for example on subclass 457 visas. The effect of Australia’s FTAs with Japan, Thailand, Chile, South Korea and New Zealand is that employers wishing to sponsor workers from these countries on 457 visas are exempt from the labour market testing requirement which is usually applied to sponsors of temporary overseas workers.

The Minister for Trade has stated that the China-Australia Free Trade Agreement will also include commitments on migration policy through ‘Investment Facilitation Agreements’ (IFAs). These are expected to be similar to Enterprise Migration Agreements (EMAs), an existing component of Australia’s migration framework. The Minister stated that ‘all the conditions that were negotiated and put into effect by the Labor Party in the parliament when they were in power are embodied in this Investment Facilitation agreement’. However, EMAs have not yet been used, and there are some differences in the parameters between EMAs and the proposed new IFAs.

Enterprise Migration Agreements (EMAs) were announced in the 2011 Budget, as one component of the Government’s response to recommendations made by the National Resources Sector Employment Taskforce in its 2010 report on the employment needs of the resources sector. EMAs were designed to meet the needs of the resources sector in accessing temporary overseas workers to work on large-scale projects–those with capital expenditure of more than $2 billion and a peak workforce of more than 1500 workers.

EMAs essentially extend existing Labour Agreement arrangements to an entire project. A Labour Agreement is an agreement between the Commonwealth and a single employer allowing for the recruitment of an agreed number of overseas workers. EMAs allow the manager of an eligible resource project to negotiate an agreement for the entire project, meaning that individual employers and sub-contractors do not need to negotiate individual agreements for their work on that project.

EMAs allow only for the hiring of temporary overseas workers, on subclass 457 visas, not permanent overseas workers. Employers must meet all the sponsorship obligations associated with hiring 457 workers, including paying Australian market salary rates. Projects also need to demonstrate ongoing local recruitment efforts, in order to ensure that overseas workers are being used only to supplement gaps in the local labour market, rather than as an alternative to Australian workers.

The EMA sets out the terms of employment for workers on the project, including occupations, qualifications, English language skills, wages and conditions for the foreign workers. It also sets out the training commitments which must be met by the project. Sub-contractors then sign onto Labour Agreements under the terms agreed to in the EMA, ensuring that the company directly employing the overseas worker maintains the sponsorship obligations that go along with hiring overseas workers.

The Roy Hill iron ore project in the Pilbara was the first project to negotiate an EMA, with the Government announcing in May 2012 that in-principle agreement had been reached. It was stated that the EMA would allow up to 1715 overseas workers to be sponsored for work on the project over the course of the initial three year construction phase, in occupations including electricians, mechanical fitters, scaffolders, and boilermakers. However, in May 2013 the Department of Immigration and Citizenship advised a Senate Estimates Committee that, while the Minister had given in-principle agreement to the EMA, it was never finalised. In May 2014 the Department advised that no agreements were in place and there were no applications in the pipeline.

While the Minister for Trade has linked Investment Facilitation Agreements (IFAs) to Enterprise Migration Agreements, there appear to be some differences:

  • Inclusion in a trade agreement: EMAs are part of Australia’s immigration framework, and as such can be modified by the Australian Government. The inclusion of IFAs in a trade agreement reflects a binding commitment, which may reduce the ability of the Australian Government to change policy settings in the future.
  • Sector: EMAs were designed for the resources sector. The DFAT website refers to ‘large infrastructure projects’, which suggests that IFAs may apply to a different sector. 
  • Threshold: While EMAs are available to projects with capital expenditure over $2 billion, it appears that IFAs will be available to projects over $150 million—a substantially lower threshold.

This post was co-authored by Harriet Spinks (Social Policy Section) and Tarek Dale (Economics Section).


Flagpost is a blog on current issues of interest to members of the Australian Parliament

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