Discussions
The Fifth BRICS Summit and an emerging BRICS trade agenda
Sean Woolfrey, tralac Researcher, discusses the Fifth BRICS Summit and an emerging BRICS trade agenda.
The much-anticipated Fifth BRICS (Brazil, Russia, India, China and South Africa) Summit, held last week in Durban, South Africa, concluded on the 27th of March with the release of the official Summit document, the eThekwini Declaration. In the Declaration, the leaders of the BRICS countries stated their shared aim of “progressively developing BRICS into a full-fledged mechanism of current and long-term coordination on a wide range of key issues of the world economy and politics”. They also used the Declaration to reaffirm their commitment to multilateralism, to express their openness to engagement and cooperation with non-BRICS countries, to emphasise their support for industrialisation in Africa and for African regional integration processes and to stress their concern at the potentially negative spillover effects of developed world monetary policies on the economies of the developing world.
Unlike previous BRICS Declarations, the eThekwini Declaration contains specific commitments to establish BRICS institutions. The most notable of these, and the most talked-about outcome of the Durban Summit, is the agreement by the BRICS nations to establish a New Development Bank, which will focus on financing infrastructure development in developing countries. The process of establishing and capitalising the proposed bank, which many analysts view as a BRICS response to western dominance of the World Bank and the International Monetary Fund, is not likely to be complete for a while yet, however, as the BRICS countries still need to agree on a number of details such as the contributions required from each country, the allocation of voting rights and the physical location of the bank itself.
The BRICS Development Bank was not the only initiative discussed at the Durban meet, however. A Multilateral Agreement on Cooperation and Co-financing for Sustainable Development was concluded between the development banks and import-export banks of the BRICS countries. In addition, the BRICS leaders directed their Finance Ministers and Central Bank Governors to work towards the establishment of a Contingency Reserve Arrangement among the five countries with an initial size of US$100 billion.
The eThekwini Declaration also touched on aspects of an emerging BRICS agenda on international trade by, for instance, reaffirming the BRICS countries commitment to the core principals and developmental mandate of the current ‘Doha Round’ of World Trade Organisation trade negotiations. However, in order to get a better understanding of the BRICS stance on trade matters such as the promotion of intra-BRICS trade linkages and the future of global trade governance, it is necessary to examine the Joint Communique issued following the Third Meeting of the BRICS Trade Ministers held on the eve of the BRICS Summit.
At the Meeting, the Trade Ministers of the BRICS countries emphasised the importance of resisting protectionist tendencies during the ongoing global economic slowdown, and of promoting international trade as an engine for economic growth while also respecting developing countries’ right to use WTO-consistent domestic policy space to pursue economic growth and development. The Ministers also reaffirmed the centrality of the WTO for upholding a transparent, rules-based trading system and noted the continued relevance of the developmental mandate of the Doha Round of trade negotiations and the single undertaking principle of WTO negotiations.
Specifically, the Ministers indicated that while they would be willing to explore “outcomes in specific areas where progress is possible,” they are wary of initiatives which “may undermine the coherence of the Doha Development Agenda and that deviate from the principles of multilateralism”. The Ministers therefore agreed to strengthen their collaboration in the lead-up to the Ninth WTO Ministerial Conference to be held in Bali, Indonesia in December 2013, in order to ensure that the outcomes from the Ministerial are balanced and address the developmental concerns of the poorest WTO members, and to press for the Doha Round to be concluded on the basis of its developmental mandate and the principle of the single undertaking.
This language reflects a concern on the part of the BRICS countries that there will be a push for the conclusion of agreements on specific issues – such as trade facilitation – at the Bali Ministerial, while historically contentious issues such as agricultural subsidies and market access for industrial goods will simply be side-lined in the name of making progress. The language of the BRICS Trade Ministers also supports the view that the BRICS countries are likely to resist any attempts to conclude such issue-specific agreements unless the outstanding issues from the Doha Round negotiations, many of which are of particular importance to developing countries, are also resolved. In addition, the BRICS countries are likely to strongly resist any attempts to push for plurilateral deals at the WTO, as, among other things, such deals could also deflect attention from the outstanding Doha issues.
On the issue of intra-BRICS trade, the Communique from the Trade Ministers Meeting is as notable for what is not addressed as for what is. While the Ministers emphasised the need to work together to “build on the respective strengths of their economies” through initiatives such as “exchanges between industries, trade and investment promotion events and enhanced investment and technical cooperation”, little emphasis was given to the potential for developing more ambitious trade and investment initiatives, and comprehensive trade or investment agreements between the BRICS countries do not appear to be part of the agenda at this stage.
What does appear to be on the agenda, however, is the need to “establish mechanisms that encourage mutually beneficial negotiated solutions amongst the BRICS countries when trade frictions arise”. While this is a particularly topical issue given recent and current trade disputes between BRICS countries – most notably a dispute between South Africa and Brazil over the alleged dumping of frozen chickens by Brazilian producers in the South African market – the WTO already offers a forum for members to consult one another when such disputes arise, and it’s not clear entirely clear what a BRICS forum for such engagement would involve or what value it would add.
Overall, the recent BRICS Summit has given significant impetus to the emergence of the BRICS as an important bloc in global economic governance, and has suggested that there are areas of mutual interest with scope for collaboration between the BRICS countries in terms of the evolving multilateral trade governance framework. What is less clear – at least at this stage – is the extent of the potential for intra-BRICS trade cooperation. Given the increasing weight of the BRICS economies, this is certainly one aspect of the BRICS agenda that needs to be developed further.
Sources:
eThekwini Declaration and Action Plan. Available online at: http://www.tralac.org/images/Resources/BRICS/Fifth%20Summit%20eThekwini%20Declaration%20and%20Action%20Plan.pdf
Joint Communique – Third Meeting of the BRICS Trade Ministers, Durban. Available online at: http://www.tralac.org/images/Resources/BRICS/The%20Third%20Meeting%20of%20the%20BRICS%20Trade%20Ministers%20Joint%20Communique.pdf