An Odd Couple? International trade and immigration policy

The recently concluded negotiations to amend the Singapore-Australia Free Trade Agreement expanded exemptions for Singaporean citizens from a prominent Australian immigration regulation, labour market testing (advertising jobs in the context of hiring temporary migrants). According to the Joint Standing Committee on Treaties Report 172, ‘Both Australia and Singapore have agreed to waive labour market testing for installers and servicers, investors/independent executives and contractual service suppliers.’

But what does immigration policy have to do with international trade agreements in the first place?

The Movement of Natural Persons

Australia has a growing number of international trade commitments relating to immigration. Under a framework established by the World Trade Organization (WTO), rules about ‘the movement of natural persons’ are designed to support the supply of trade in services, defined as:

… one of the four ways through which services can be supplied internationally… it covers natural persons who are either service suppliers (such as independent professionals) or who work for a service supplier and who are present in another WTO member to supply a service.

In practice this means allowing temporary business migration to facilitate the provision of services, a segment of the global economy that grew quickly from the mid-1990s but which appears to have stalled since the Global Financial Crisis:

While trade in services represents 12.4 per cent of global GDP, here in Australia, services account for 61 per cent of GDP and 79 per cent of all industry, according to the 2016 Australian Industry Report published by the Department of Industry.

An important caveat is that the ‘movement of natural persons’ only regulates services-related temporary immigration and specifically excludes citizenship, permanent residency, and permanent employment.

The General Agreement on Trade in Services

In 1995, Australia made several commitments under the General Agreement on Trade in Services (GATS) with practical effects for temporary immigration policy. These included temporary access for citizens of WTO member countries who are ‘Executives and senior managers as intra-corporate transferees, for periods of initial stay up to four years’. More limited commitments were made for ‘Independent executives’ (executives establishing new business in Australia), ‘Service sellers’ (sales representatives and similar), and ‘Specialists’ (trade, technical or professional skills).

Australia meets these commitments to other WTO members through temporary visa categories, such as the Temporary Work (Skilled) visa (subclass 457) and the Temporary Work (Short Stay Specialist) visa (subclass 400). For example, a sales representative from an Indian-based IT company may be granted a Short Stay Specialist visa for three months to negotiate a business contract to provide IT infrastructure to an Australian firm.

Australia’s GATS commitments also provide for exemptions from some immigration-related eligibility criteria (exemptions are given effect through legislative instruments under the Migration Act). A common example is the requirement to advertise jobs, one element of labour market testing. From 1 March 2018, the Turnbull Government is mandating labour market testing to cover all occupations where an employer sponsors a migrant using the Temporary Skilled Shortage (TSS) visa, the visa replacing the 457 visa. However under Australia’s GATS commitments, exemptions will apply. For example, if Google Australia hired a new Managing Director on a TSS visa, the company would be exempt from advertising the position if she had already worked for Google in the United States for at least two years. This is because the United States is a WTO member and the position of Managing Director would qualify as a senior manager under Australia’s GATS commitments.

While GATS does not stop a country from regulating temporary migration, domestic policy cannot ‘nullify or impair’ the commitments already made or Australia may be subject to formal complaints by other WTO members.

Existing Australian trade agreements

The commitments made in 1995 established a foundation for future trade-immigration policy in Australia. The following agreements include provisions on the movement of natural persons:

Collectively, these agreements have expanded Australia’s immigration-related trade commitments. ‘Contract Service Suppliers’, a category of natural person not defined under Australia’s GATS commitments is included in the agreements with Thailand, Chile, Singapore, Malaysia, Korea, Japan, and China. While this term is defined differently within each agreement, it broadly relates to persons who are employed by an employer based in Australia and have trade, technical, or professional skills.

Contract Service Suppliers applies to a much larger number of people than service sellers, independent executives, and intra-corporate transferees under the agreements with Thailand, Chile, Korea, Japan, and China. The Department of Immigration and Border Protection’s Procedures Advice Manual states the ‘practical effect’ of these five agreements is an exemption for any citizen of these countries from labour market testing for the 457 visa (and TSS visa from 1 March 2018).

The effect of these provisions can be contentious. A recent review of the 457 visa program led by John Azarias recommended labour market testing be abolished, while ChAFTA and other agreements have been heavily criticised by Australian Council of Trade Unions for the exemption of labour market testing. The ACTU has a long-standing policy of promoting labour market testing as a method of prioritising employment for Australian citizens and permanent residents.

In the future, these provisions may prove particularly difficult to negotiate as some developing countries view emigration of their citizens as a high priority. According to media reports, movement of natural person commitments are a ‘key stumbling block’ for the proposed Australia-India Comprehensive Economic Cooperation Agreement and the Indonesian Government has requested more access for their citizens in negotiations on the Indonesia-Australia Comprehensive Economic Partnership Agreement, set to conclude in November 2017. 


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

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