Bill Clinton believes Australia should not shut its borders to immigrants and those genuinely seeking asylum but should open its arms to cultural diversity.

Free trade and an open-door policy would bring prosperity, the former US president told a meeting of 35 Australian business leaders in Melbourne yesterday.

"He discussed the immigration issue in Australia and he took a position on it," said Tom Hogan, president of Vignette Corporation, host of the exclusive forum.

"The (former) president believes the world will be a better place if all borders are eliminated - from a trade perspective, from the viewpoint of economic development and in welcoming (the free movement of) people from other cultures and countries," Mr Hogan said.