Dr Jeffrey Wilson, a Fellow of the Asia Research Centre and Senior Lecturer in International Political Economy at the Murcdoch University School of Management, believes there are two sides to the Free Trade Agreement currently being hammered out between Australia and China. And he also believes there is a great deal of misunderstanding surrounding it also.

“I have recently made a minor career out of explaining free trade agreements to media audiences that normally don’t know or care about them,” he quipped to news.com.au.

“Bassically, the main reason we want these agreements is for agriculture,” said Dr Wilson. “We export lots of food; Asia has a growing middle class; and we can feed them.

“The second thing we wanted were services. So if a lawyer or an architect want to open an office in China, now they can, and their legal certificates and so on, will be recognised.

“So we’ll export more agricultural products, more services, and we’re basically giving up  on manufacturing. That is what this is about.”

The catch comes when you start to look at the commitments in transport, construction, telecommunications and the legal sectors made between the two countries. These commitments only apply in the ‘Shanghai Free Trade Zone’ not the whole of China.

Education and hospitals are likewise constrained by certain fine print – not having access to the whole of China’s 1 billion plus population.

Even agriculture (upon further scrutiny) is far from a whole-of-China win. While China can’t get enough Australian beef and dairy (and these farmers are eager for the deal to be signed) other farmers, like rice and sugar growers, won’t be allowed access to China’s markets.

Paul Schembri, Chairman of Canegrowers Queensland, said “It’s disappointing, given that it’s a huge market. We only wanted to fill in the gap between their domestic production and consumption, but we didn’t gain much traction except for a framework for futher reviews.”

China wants to protect its own sugar industry because of both economic and cultural reasons.

And while the government are lauding the 178,000 jobs windfall that the FTA will bestow on Australia no one is quite sure what this figure is based on.

Unions, in contrast, see it as pure rhetoric and are genuinely concerned about more Fly-In, Fly-Out Asian workers undercutting wages and taking Aussie jobs.

“Investors can bring in lower-skilled workers, with lower-level language skills, and (give them) lower wages than are allowed under the standard visa program,” say the unions.

It makes sense. Why would a Chinese investor pay premium wages to Australians when they can fly in their own workers for a fraction of the cost?

Dr Wilson responds, “In a sense the unions are correct. But the FTA doesn’t automatically open that up. Chinese companies have to negotiate a special deal with the government (to import their own labout forces) and the government of the day doesn’t have to say yes. All it does is set up a system where the government has to review the case.”

But Dr Wilson doesn’t believe labour costs are a big issue for the Chinese. Labor costs are a fraction of the capital costs on big equipment used for business.

In fact, the biggest stumbling block is likely to come from all our regulations and scrutiny Chinese businesses aren’t used to.

But the FTA is written. It can’t be altered. There are a few ‘side letters’ over which one or two arguments continue. But now we’re just waiting for it to be signed.

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