A report by the Western Australian Department of Commerce says WA would break World Trade Organisation rules if it imposed local content quotas on mining projects.
The report, comparing the attempts of several countries to ensure local businesses get a share of mining developments, said Australia’s obligations under international treaties limited local content mandates.
“Relevant WTO provisions include Trade-Related Investment Measure Article 2 which requires that a trade-related investment measure must be consistent with national treatment obligation for like products,” it said.
“An example of inconsistent measure is mandating the purchase or use by an enterprise of products of domestic origin.”
It said any local content moves by WA would trigger retaliatory trade action from other countries.
Earlier this month unions blamed a lack of local content contracts for the 0.4 spike in state unemployment.
While WA still has a comparatively low unemployment of 4.4 per cent, in some parts of the Kwinana industrial strip work for factories has started to dry up.
New apprenticeships in the area have slowed, and in some parts of the region youth unemployment is up to 20 per cent.
Several weeks ago the WA opposition’s proposal to force companies with projects worth more than $200 million to negotiate job agreements was defeated in parliament.