Australia urges access to China trial of Rio staff

A man waits to enter the Rio Tinto Limited Shanghai Representative Office in Shanghai March 18, 2010. Australia urged China on Thursday to allow its diplomats full access to the trial of four Rio Tinto staff charged with commercial spying in a case that could hurt political and economic ties. The detention of the four, along with Google's dispute over Internet censorship and hacking complaints, has stoked investors' worries about doing business in China.

CANBERRA (Reuters) - Australia urged China on Thursday to allow its diplomats full access to the trial of four Rio Tinto staff charged with commercial spying in a case that could hurt political and economic ties.

"The world will be watching how this particular court case is conducted," Prime Minister Kevin Rudd told reporters, adding the Australian government would do everything necessary to support the interest of the Anglo-Australian miner's staff.

China's foreign ministry warned Australia against "politicizing" the trial, which begins on Monday.

The detention of the four, along with Google's dispute over Internet censorship and hacking complaints, has stoked investors' worries about doing business in China.

The case initially caused tensions between Australia and China. Ties have since recovered, yet could again be soured depending on the outcome of the trial.

China arrested four Rio staff members, including Australian citizen Stern Hu, last July and will start their trial in Shanghai on March 22 on charges of bribery and stealing business secrets.

The trial will be open to hear bribery charges and closed to deal with charges of infringement of commercial secrets. Foreign Minister Stephen Smith said Australian diplomats should have access to the latter under a consular pact with Beijing.

"I was disappointed that there was an indication from Chinese officials and the court that Australian officials would not be present, or be able to be present, for the commercial information charge," Smith told reporters.

Chinese foreign ministry spokesman Qin Gang said access was a matter of "judicial sovereignty" and had been decided "based on Chinese laws and the circumstances of the case".

"Don't confuse the relationship between China's judicial sovereignty and the consular agreement between China and Australia," Qin said at a regular ministry briefing.

"The China-Australian consular agreement must respect China's judicial sovereignty."

Despite the trial, and the collapse of a $19.5 billion deal with state-owned aluminum firm Chinalco, Rio is now working with Chinalco on potential joint ventures in Mongolia. Chief executive Tom Albanese is to visit Beijing at the weekend.

COMMERCIAL SECRETS

China is Australia's biggest trade partner, with trade worth $53 billion last year. Australia exported $15 billion worth of iron ore to China in 2008, or 41 percent of its iron ore imports.

Under the commercial secrets charge, courts can jail people for up to three years, or up to seven years in serious cases. The bribery charge could draw jail terms of up to 20 years. Rio has said the four did nothing wrong. If convicted, they can appeal.

Foreign and Chinese business communities were initially very alarmed by the detentions when it looked like the four would be charged under opaque state secrets laws, but the case is unlikely to cause anyone not to invest in China, analysts said.

"The more practical thing will be simply extra lawyers' costs, extra time spent and possibly just people being more cautious about the way they gather information," said Stephen Joske, director of the China Forecasting Service at the Economist Intelligence Unit.

"So effectively they'll be getting less information than they would have in the past, which means business won't work as smoothly," he said.

Michael Danby, an influential lawmaker and chair of the Australian parliament's foreign affairs sub-committee, said the detention of foreign businesspeople would ultimately damage China's political and economic relations with other nations.

"I do know that this prosecution is essentially political in nature and that if the Chinese Communist authorities decided that it was in their interests to drop the charges against him, they could and would do so," Danby said in a statement.

A China law specialist in the United States, Jerome A. Cohen, said consular conventions should prevent China from closing parts of the trial to diplomats.

"China used to allow consular access even in secret trials, but in recent years has refused to do so, claiming an exception for secret trials even though none appears in the text of the convention," Cohen told Reuters.

The case has placed a cloud over contentious iron ore price negotiations between China and Rio, its fellow Australian miner BHP Billiton and Brazil's Vale.

Rio's China team managed details of term contracts for iron ore, a necessary raw material for China's vast steel industry, as well as tracking market information.

Traditionally, Asian steel mills accept whatever deal is settled first with the big three global ore suppliers.

China's steel industry association refused to settle on that price last year and this year and the Chinese mills asked the government to step in to the talks. (Additional reporting by Lucy Hornby, Chris Buckley and Maxim Duncan in BEIJING; Editing by Michael Perry and Paul Tait)