By Rhiannon Hoyle
SYDNEY--The head of the world's largest mining company is
pressing Australian leaders to work toward the maximum degree of
free trade with China, playing down concerns over security and
questions about whether Australia is growing too dependent on its
giant trading partner.
As politicians from Canberra continue to negotiate a free-trade
pact with Beijing, Andrew Mackenzie, BHP's chief executive, said
Australia should go as far as possible to accommodating the
resource-rich nation's biggest trading partner, which last year
swallowed up close to 40% of its exports, mainly commodities.
"I think it's a positive step, unquestionably, to more
intimately tie Australia to the main market for resources going
forward," Mr. Mackenzie said in an interview Wednesday. "I look for
politicians to be skillful about how they think about getting
things done which have got longer-term benefits."
Australia hopes to conclude a free-trade deal with Beijing this
year, after talks that have dragged on for almost a decade.
Sticking points have included better access for Australia's
agricultural products, and Beijing's desire for more
direct-investment opportunities, lower manufacturing tariffs and
less-onerous visa arrangements.
Australia completed free-trade deals with both Japan and South
Korea earlier this year. The agreement with Tokyo, following seven
years of talks, gives Japanese car manufacturers and Australian
farmers better access to each other's markets.
Mr. Mackenzie is leading a trade task force for the Business 20,
a private-sector forum which makes policy recommendations to the
Group of 20's annual meeting, and spoke to a B20 meeting in Sydney
on Wednesday.
He said he is keen to see faster progress in Trans-Pacific
Partnership talks as well. Separate negotiations among 12 nations
taking part in the U.S.-led TPP trade talks have been slow, amid
disagreements over tariff policy and agricultural-trading
arrangements.
"Increased ties between Australia and the rest of Asia can only
be good for the health and vibrancy of this economy going forward,"
he said. "A country like Australia can offer them something they
don't have, which is resources."
BHP is among a horde of mining companies operating in Australia,
including Rio Tinto PLC, that have invested heavily in building new
mines and infrastructure to feed industrializing Asia's voracious
appetite for raw materials such as coal and iron ore, which is used
in steelmaking. China's demand for commodities helped shield
Australia from a recession following the 2008 global financial
crunch.
Still, opening up investment opportunities to Chinese companies
remains a contentious issue in Australia, where some lawmakers
worry that the country's security may be threatened. While the
board that reviews such investments has approved the vast majority,
Chinese investors say it presents excessively high hurdles.
Investment in the agricultural sector has been a particular concern
because of the perceived implications for food security.
Many negotiated trade deals haven't gone far enough toward
liberalizing trade, Mr. Mackenzie said in the interview. Talks have
focused too much on tariffs at the expense of removing other
barriers to the free trade of services and intellectual
property.
"We will lose out if, through too much protectionism, that trade
doesn't develop," he said. "I am absolutely convinced if you had a
complete market free-for-all in Asia, Australia would do
wonderfully in terms of resources."
Australia's neighbor New Zealand reached a free-trade deal with
China in 2008 that is credited for having turbocharged New
Zealand's agricultural industry-driving a near fourfold increase in
farm-related exports to NZ$8.6 billion in just four years.
"If China thinks it can get dairy products from New Zealand, it
will spend less money on dairy in China and do other things that
China is good at," Mr. Mackenzie said. "That's good for New Zealand
and good for China, and I think the same thing will be true with
Australia."
Australia's foreign-investment regime requires major investments
to be recommended by the opaque Foreign Investment Review Board, or
FIRB, and approved by the nation's treasurer.
Prime Minister Tony Abbott's conservative government is expected
to agree to allow Chinese companies specifically to make
investments of up to A$1 billion without regulatory scrutiny--a
higher threshold than is applied now, although there will be
tighter controls for state-backed companies.
"I would like there to be less restrictions in those ways," said
Mr. Mackenzie, referring to foreign-investment barriers. "Countries
wanting to be more and more concerned about who can and who can't
invest in their country sounds like a good idea to protect their
country, but it's a shadowy form of protectionism, rather than just
letting the market rip."
China is also unhappy about the treatment of its technology
companies, such as Huawei Technologies Co., which was locked out of
construction contracts for Australia's new national broadband
network on national-security grounds.