The influential Migrational Council Australia has warned any moves by the federal government to give China special treatment under the 457 visa program as part of a free trade agreement could "undermine social cohesion".

And Clive Palmer, whose party will share the balance of power in the Senate from July, also poured cold water on any loosening of restrictions on Chinese workers, saying that preference for Australian jobs on projects fuelled by foreign investment was a long-held principle.

There have been reports that China has demanded to be allowed to import workers into Australia for projects funded by Chinese investors as part of the FTA being negotiated between Canberra and Beijing.

While the government is unlikely to agree to such an arrangement, it is understood to be considering compromise options including streamlining Chinese firms' sponsorship of 457 visas for some projects in Australia, while ensuring Australian work standards are still met.

Migration Council Australia chief executive Carla Wilshire said Chinese workers could already access 457 visas for Australian projects, allowing them to work here if a job could not be filled locally. There was a danger in changing this system, she said.

"Creating a visa specifically for one country sets a bad precedent, it will change the way we do migration and could undermine social cohesion by privileging nationality above skills and contribution," she said. "[It] would be a retrograde step and would be at odds with our principles of non-discrimination."

Coalition sources insisted that, while the government was keen to finalise the FTA, there would be no "opening of the floodgates" for Chinese workers.

A spokesman for Assistant Immigration Minister Michaelia Cash said the temporary work visas were under review and the types of organisations that should be allowed to become sponsors, such as overseas businesses, was being examined.

Mr Palmer said Beijing's demands to import workers for Chinese projects would be a "dead duck" in the upper house.

He also indicated broad opposition to any preferential treatment of Chinese investment under the 457 program, saying there was a "long-held principle that Australian workers need to be given precedence for working on projects in Australia".

Another key senator, Victoria's John Madigan, slammed the 457 program as a "dog's breakfast", saying he was aware of rorting and exploitation of overseas workers by Australian companies. He said Prime Minister Tony Abbott should be pushing Australian workers' interests in FTA negotiations.

One of the country's biggest resources and industry employer groups, the Australian Mines and Metals Association, urged Mr Abbott to pursue "maximising local employment opportunities".

"As an industry, we are confident that maximising the local employment and economic benefits from new free trade agreements would be front of the Prime Minister’s mind during these negotiations," AMMA executive director of policy Scott Barklamb said.

ACTU secretary Dave Oliver said trade deals could not be negotiated at the expense of Australian workers.

"Removing labour market testing requirements and allowing the use of exploitative visa classes like the 457 is a quick fix for the trade deal and a bad outcome for workers."