BHP chief Andrew Mackenzie urges G20 to end GFC barriers

THE head of BHP is urging G20 leaders to roll back protectionist trade barriers imposed after the financial crisis of 2008 to help boost trade.

BHP Billiton chief executive Andrew Mackenzie wants an end to protectionist measures. Picture: David Geraghty

THE head of the nation’s biggest company is urging Group of 20 leaders to roll back protectionist trade barriers imposed after the financial crisis of 2008 to help boost trade by $US3 trillion ($3.2 trillion).

In a speech to a closed-door forum last night, obtained by The Australian, BHP Billiton chief executive Andrew Mackenzie revealed that the B20 trade taskforce he chairs will call for leaders to wind back or scrap more than 1500 non-tariff restrictions imposed since the crisis hit and ­expand the G20’s standstill on protectionism to explicitly cover such barriers.

Non-tariff barriers range from local content requirements mandating that a share of goods sold in a country be produced domestically to higher registration charges for imported vehicles, bureau­cratic Customs systems done on paper and export charges such as departure taxes.

Mr Mackenzie told 100 business leaders, academics and policymakers at a Melbourne forum last night to shape this year’s G20 agenda that the taskforce was set to make four recommendations, including that G20 leaders get on with implementing the Bali trade agreement to slash red tape on trade.

The Australian can also reveal that the Trade and Investment Minister, Andrew Robb — who co-chaired the forum — proposed that the G20 agree to wind back crisis-era protectionist barriers. Putting ideas on the table for discussion, Mr Robb flagged making permanent the G20 standstill pledge on protectionist measures.

The pledge to refrain from erecting new barriers to trade was made in 2008 and is due to expire in 2016, but there have been ­concerns that the commitment has been ignored by a number of countries and critics say the situation has gone backwards.

Mr Robb also floated a proposal for G20 donor countries to agree to increase the share of their aid budgets dedicated to “aid for trade”, in line with the Coalition’s approach to the aid program, and negotiating ambitious trade deals.

The comments at the forum are significant as the Abbott government has promised to make growth driven by trade a priority during Australia’s G20 presidency. The B20 is for business leaders to make policy recommendations for the annual G20 meeting, which will be held in Brisbane in November.

Mr Mackenzie, who heads the world’s biggest mining company, said that if the trade taskforce’s recommendations were adopted, this could boost trade among G20 nations by $US3 trillion.

International trade was “the world’s growth engine”, he said. But impediments to trade “lie in the way domestic policies are applied in trading nations around the world”. Since 2011, growth in global trade had flattened despite the recovery of the global economy and tariffs being at an “all-time low”.

“This trade weakness reflects under­whelming trade growth in advanced economies, which is around 5 per cent lower than pre-GFC peaks,” Mr Mackenzie said.

Arguing the case for removing protectionism, he said such barriers undermined the confidence in trade. “While tariff protectionism has successfully been avoided in the wake of the GFC, more than 1500 non-tariff restrictions have been added by G20 countries since 2008,” he said.

He signalled that the B20 trade taskforce would seek to have the G20 protectionism standstill made stronger, by expanding it to explicitly cover non-tariff initiatives and to axe protectionist moves already adopted.

“There is self-interest in addressing this problem head-on,’’ Mr Mackenzie said. “If we expect other countries to buy our goods and services, we need to buy theirs. To state the obvious, trade is a two-way proposition, a fact overlooked by those who would close our border to others and ultim­ately remove the incentives for innovation required of our local companies to be able to compete and trade globally.”

On measures to make trade easier and faster, he said the B20 trade taskforce wanted the World Trade Organisation Bali agreement implemented early as it would improve customs and border procedures.

“We don’t have time to wait for ratification before starting to implement the agreement … unilateral and early action will mean a bigger and earlier pay-off for economies,” he said.

The BHP boss and Mr Robb were talking at a B20-T20 forum. The T20 is made up of think tanks and academics.