Australia, India and Japan are planning to work together on a regional supply chain initiative, in what could be a first step towards addressing China's dominance of the sector.
Trade ministers from the three countries have agreed to launch the initiative later this year, according to a joint statement yesterday.
The initiative is designed to enhance the resilience of supply chains in the Indo-Pacific region "in light of the Covid-19 crisis and the recent global-scale changes in the economic and technological landscape," the trade ministers said.
Other countries in the region are welcome to join, as long as they share a commitment to views including a free, fair and non-discriminatory trade and investment environment, and in keeping markets open, the statement said.
The language appears designed to exclude China. Beijing dominates many regional supply chains, thanks to its huge manufacturing base and control of supplies of rare earths and other specialty metals that are crucial to technology applications.
Australia, India and Japan make up three of the Quadrilateral Security Dialogue (Quad) forum members, together with the US. The Quad group, which was originally formed in 2007 and reinvigorated in 2017, has been pushed by some members of the US administration as a democratic counterweight to China's growing regional power. A meeting of Quad ministers may be held in Delhi this autumn, deputy US secretary of state Stephen Biegun said this week.
All three members of the supply chain initiative have strained relations with China. Tokyo has long-standing disputes with Beijing over natural gas reserves in the East China Sea. China this week banned imports of barley from Australia's largest exporter CBH, the latest move in a growing trade dispute following an investigation into Australian wine exports and unofficial curbs on imports of Australian coal earlier this year.
And India-China relations have deteriorated sharply this year after a deadly clash on their Himalayan border in June. The two countries this week accused each other of further illegal incursions into their respective territories. India has blocked state-controlled companies from using Chinese equipment or buying oil from Chinese firms, although the market impact has so far been limited.
