Asia should have bigger say in global trade rules: BHP

UK-Australian resources giant BHP has welcomed the signing of the Regional Economic Comprehensive Partnership (RCEP) free-trade deal and called for larger Asian economies to be given a greater say in shaping multilateral trade rules.

The RCEP, which was signed by 15 Asia-Pacific nations covering almost a third of the global economy including China, Australia and Japan, is designed to reduce tariffs and other trade barriers and to harmonise ways of determining the sources of goods in an attempt to encourage regional trade flows.

The principles of the Bretton Woods agreement - free markets, open trade and economic development - must be reinvigorated and renewed for the challenges faced by the world today, BHP's chief executive Mike Henry said at the virtual Strategic Forum 2020 conference.

"However, in doing so, they must also be modernised. The larger Asian economies should be afforded a greater seat at the table and in shaping the rules of the game. The fact that RCEP nations comprise almost 30pc of global GDP shows how important it is that this be the case," Henry said.

BHP, which is Australia's largest exporter and one of the world's biggest mining firms, sells a large proportion of its iron ore, metals and coking coal output to Asia. Henry's comments come amid rising trade tensions between Australia and China, which have hit bilateral trade in coal and other commodities.

Post-World War 2 global economic architecture is based on a system of well-established rules and norms that has served the Asia-Pacific region well, underpinning the economic success of countries like China and helping lift millions out of poverty, Australian treasurer Josh Frydenberg told the same conference.

"But the economic weight of the world has now changed. And not surprisingly, our current institutions, rules and norms are coming under increasing pressure," Frydenberg said.

This pressure is seen most clearly through the lens of increased strategic competition between the US and China, with the US shifting from seeing China as a strategic partner to a strategic competitor. This is creating a more complex and uncertain environment across the region, including in trade, and countries like Australia are not immune, Frydenberg said.

Australia is ready to engage with the Chinese government in "respectful, mutually beneficial dialogue", he said.

Frydenberg's speech came soon after China's foreign ministry made some of its most detailed and hardline comments yet on its dispute with Australia.

Complaining about "cold war mentality and ideological prejudice", the foreign ministry yesterday attacked Canberra's position on issues such as Hong Kong, Taiwan and Xinjiang; the ban on Chinese telecom firm Huawei from Australia's 5G network; and Canberra's call for an independent inquiry into the origins of the Covid-19 pandemic. This has caused "serious difficulties" in Australia-China relations, it said.

RCEP challenges

The RCEP includes rules that promote Australia's integration into regional production chains and limit Canberra's ability to provide financial assistance to local industries, in a potential challenge to the country's conservative coalition government.

Canberra is planning a gas-led recovery to revitalise the Australian economy after the Covid-19 pandemic sent it into recession for the first time in 30 years.

Other RCEP rules open the Australian economy to foreign investment and restrict Canberra's ability to regulate in the public interest. This comes as public opinion is concerned about the influence of Chinese investment in key parts of the economy, such as power transmission and ports.

By Kevin Morrison