Trade, investment key to peaceful Pacific

Japan has been urged to open its economy and step up in the South Pacific as Australia and its allies monitor the growing influence of China.

Former foreign minister Julie Bishop, speaking at an economic forum in Davos, Switzerland, has supported Japan in taking a leading role in regional co-operation and economic partnerships.

Ms Bishop, chancellor of the Australian National University, said Pacific Island nations have key infrastructure needs and also need help to extract more value for themselves from fisheries and other products.

The South Pacific islands have huge territorial waters and urgently need sustainable development for their growing populations, she said on Wednesday.

"Japan has been a key development partner, however I would urge a greater focus on building economic partnerships with island nations rather than focusing on foreign aid," she said.

Ms Bishop said revitalising Japan's economy and leadership within regional co-operation frameworks go hand in hand.

But she warned Japan must expose parts of its economy to greater competition, according to speaking notes seen by AAP.

Foreign investment in Japan remains at relatively low levels compared to other advanced economies.

"I would argue for Japan to embrace deregulation and ensure its business operating environment is internationally competitive," she said.

Difficult and challenging domestic reforms would provide Japan with greater credibility and a stronger platform to argue for other nations to also engage in reforms, Ms Bishop said.

The World Trade Organisation has questioned some of Japan's protectionist policies, including subsidies, that were found to prevent greater competition in agriculture and fisheries.

"One of the most important ways for Japan to take a leading role in regional networks is through promoting greater levels of two-way trade and investment," Ms Bishop said.

Australia will be represented at the forum by Assistant Minister for Trade Tim Ayres, including at a session on getting more out of the Indo-Pacific trade pact Australia joined in 2020 - the Regional Comprehensive Economic Partnership.

Senator Ayers will also have talks with US Trade Representative Ambassador Katherine Tai and global business leaders.

"A key focus will be highlighting Australia's emerging role as a renewable energy superpower to assist the transition of the global economy to net-zero emissions," Senator Ayres said in a statement.

BHP boss Mike Henry has participated on a Davos panel about the infrastructure needed for a "clean energy economy", saying the world needs more copper, cobalt and nickel.

A first timer at Davos, BHP intends to supply the minerals required for decarbonisation and economic growth.

Senator Ayres will also meet WTO head Ngozi Okonjo-Iweala during his trip to Switzerland and Italy this week, as Australia looks to settle trade disputes with China.

China's ambassador to Australia Xiao Qian recently said China was committed to developing its relationship with Pacific Island countries to help improve lives in the region, and could work with Australia to do so.

He also said Japan should not be allowed to re-arm itself because that would be dangerous, and rejected suggestions that China was establishing military bases on Australia's neighbours.