ChAFTA set to be “game changer” for Australian companies

Following the recent announcement of the China Australia Free Trade Agreement, David Stratton, managing director of Nevett Ford, outlines the details for employers.

The recently announced China Australia Free Trade Agreement (ChAFTA) will, when it takes effect, mean that Chinese companies wishing to undertake large infrastructure projects above $150 million will be entitled to apply for the right to have specialist workers come to Australia to work on them.

Due to come into effect in 2015, the agreement deals with a number of labour-related issues which may give rise to significant opportunities for a broad range of Australian and Chinese businesses.

Australian owners and HR managers, particularly in the service industries, need to be aware of these opportunities and how they might contribute to the growth of their businesses.

Approximately 72% of Australia’s economic activity is currently bound up in services such as education, legal, finance, telecommunications, health and aged care services, construction and engineering services and tourism and travel related services. China is currently Australia’s largest services market, with exports in services valued at $7 billion in 2013.

ChAFTA secures new or significantly improved market access for Australian service providers across a wide range of industry sectors. The agreement also includes a framework to advance mutual recognition services qualifications, and to support mutual recognition initiatives by professional bodies in Australia and China.

A key pillar of the agreement is that it contains commitments on the movement of people between the two countries to reduce barriers to labour mobility and improve temporary access within the context of each country’s immigration and employment frameworks. This is intended to lead to increased trade and investment for the benefit of both countries.

China has agreed to provide guaranteed access to Australian citizens and permanent residents in the following categories:
  • Intra-corporate transferees for up to 3 years (including executives, managers and specialists);
  • Contractual service suppliers, in certain sectors, for one year, or longer if stipulated under the relevant contract;
  • Installers and maintainers for up to 180 days; and
  • Business visitors for up to 180 days
In addition, China will guarantee equivalent entry and stay for dependents and spouses of Australians granted entry as intra-corporate transferees or contractual service suppliers for longer than 12 months.

Australia has agreed to provide guaranteed access to Chinese citizens in the following categories:
  • Intra-corporate transferees and independent executives for four years (including executives, managers and specialists):
  • Contractual service suppliers for up to four years;  including guaranteed access  for up to a combined total of 1800 per year in four occupations: Chinese chefs, Wu Shu martial arts coaches, traditional Chinese medicine practitioners and Andrew Lang is (subject to meeting standard immigration requirements);
  •  Installers and servicers for up to 3 months; and
  • Business visitors for up to 90 days, or 6 months for businesses who are service sellers.
 Australia will also provide entry and stay for dependants and spouses of Chinese citizens that have been granted entry for a period of longer than one year.

Because of the importance of the services industry to the Australian economy and the large demand in China for Australian services, ChAFTA will open up important and significant opportunities for Australian businesses wishing to expand their operations to a large, fast-growing offshore market. HR managers will need to familiarise themselves with procedures for obtaining appropriate Chinese visas for staff once the scheme becomes operational. Likewise, a good working knowledge of Australian visa categories will be necessary in order to facilitate transfers of personnel from China to Australia.

“I think the most important issue for employers will be for them to ensure that they have access to accurate and up to date advice relating to employment laws and conditions in each of the countries,” David Stratton, managing director at Nevett Ford, told HC. “While most Australian employers are aware of their obligations when wanting to bring people into Australia on 457 visas, those businesses wishing to send workers from Australia into China will need to be confident that they can access the correct advice regarding the types of visas available, and the terms and conditions which should be incorporated into employment contracts, as they would not want to discover that they are inadvertently in breach of Chinese Visa and employment laws.”

“I don’t really see any downsides as businesses can either choose to engage with China or not,” he added. “The agreement has potential to be a real game changer for businesses which are, or can be, in a position to take advantage of the benefits on offer.”

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