As world trade shifts to invitation-only clubs, Australia is facing tough choices

Global trade is shifting from inclusive agreements to exclusive “economic security agreements,” prioritizing geopolitical competition. The US is leading a critical minerals bloc, excluding China, to enhance economic security.

A profound shift is underway in global trade. Governments are moving beyond traditional free trade agreements open to all countries and embracing what are increasingly called “economic security agreements”.

This means the international trading system is moving from a club open to all prospective members who can meet the rules, to invitation-only clubs where security competition between nation states determines who can join or is excluded.

An example of this new type of economic security agreement is the US-led initiative to create a critical minerals trade bloc aimed at diversifying global supply of critical minerals currently concentrated in one country: China.

Critical minerals are hard-to-make niche metals essential to the production of smart phones, semiconductor chips, electric vehicle batteries and a wide range of high-tech military products.

The United States has invited more than 50 countries – including Australia – to discuss a club for critical minerals economic security. Only invited countries may participate, and China is not on the list.

Why are the US and partner countries building an exclusive minerals club? And what benefits and risks could it pose for the world?

The US and China view each other as geopolitical rivals competing for influence over regional and global affairs. In my research, I analyse how this competition plays out as reduced economic dependence and more strategic trade policies.

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