BRICS: Can they block the unilateral wave?
• This year during their 11th Summit, BRICS nations are expected to discuss unilateral sanctions and its remedies and how they can collaborate to counter its threat.
• BRICS will look at strengthening an alternative mechanism for currency reserve to facilitate a trade and payment mechanism amongst BRICS countries during November 13-14 of this year.
• Projections indicate that the BRICS will continue to account for more than half of global economic growth by 2030, signifying their importance at global trade forums.
• However, there is no major increase in the intra-regional trade among BRICS nations. Some harmonization is indispensable for achieving the unrealized trade potential.
A wave of protectionism is clearly visible in global trade as there have been series of sanctions and counter-sanctions. This issue is actually acting as a deterrent in practicing liberal trade. This year in the run-up to the 11th BRICS Summit, unilateral sanctions and its remedies are a major agenda for discussion as emphasised by Russian Deputy Chief of Mission to India Roman Babushkin, “We are against unfair means of competition. What US is doing (against Huawei) is inappropriate.” The grouping will look at strengthening an alternative mechanism for currency reserve to facilitate the trade and payment mechanism amongst BRICS countries ath the Summit during November 13-14 of this year.
BRICS countries have since traversed a remarkable journey together on their respective development paths ever since they came together 13 years ago. Currently BRICS as a region is consisting of 43% of the population, 29.3% of worlds GDP and 17.7% of world’s trade.
For India, BRICS provides an auxiliary opportunity to discuss significant geopolitical concerns with Russia and China, as well as share its concerns about terrorism to a wider audience. For China, the grouping is vital to forge strategic ties with key partners in each region of the world. More importantly, BRICS is a key building bloc of a much larger project to adapt in terms of physically establishing manufacturing units. During the 10th BRICS Summit scheduled last year, major themes which were discussed included multilateralism, respect for international law, promoting democracy and the rule of law in international relations, addressing common traditional and non-traditional security challenges and various ways to bolster regional trade.
While many observers still regard the BRICS Summit through an unhelpful ‘West vs. Rest’ lens, it will become increasingly cogent that successful intra-BRICS cooperation is to be welcomed and has a positive impact on global order. Making use of the untapped potential of trade between BRICS countries will be key to avoid “secular stagnation” and enhance trade between countries that are not as reluctant to embrace globalization as many Western powers. In addition to this, more effective strategic cooperation between India and China will be crucial to avoid geopolitical tensions or even armed conflict in Asia. No doubt, five countries alone, of course, are not enough to address such a monumental and long-term challenge but promoting intra-BRICS cooperation is certainly a step in the right direction.
Projections indicate that the BRICS will continue to account for more than half of global economic growth by 2030. Continued implementation of structural reforms will enhance BRICS’s growth potential and balanced trade expansion among BRICS members will further contribute to strengthening international trade flows.
Having said that, BRICS is not integrated as a block to the extent it should be. Intra-EU exports are 67% of total exports of EU to the world compared to 7.5% in the case of BRICS. So, while BRICS is not a common market, it desires to increase its exports to the world. The challenge lies in identifying & adopting the best practices in this arena as soon as possible.
Source: ITC Trade Map
Source: ITC Trade Map
As per the data we can clearly see that there is no major increase in the intra-regional trade among BRICS nation. Some harmonization is indispensable for achieving the unrealized trade potential.
Comprehensive framework to improve strategic cooperation in economic and trade issues among BRICS may include:
i. Standardization amongst trade practices & maintaining customs cooperation.
ii. Interbank local currency credit line agreement to boost financial system by common currency exchange regime
iii. Developing transportation, logistics & communication infrastructure
iv. Establishing Green corridors of easy access
v. Transparency through exchange of information & data intelligence
vi. Boosting confidence through enforced law arbitration
A quick preview of trade marriers as NTMs in BRICS nations
|ECONOMY||2009||2010||2011||2012||2013||2014||2015||So Far NTMS|
|China||26||17||43||09||No additional NTMs were implemented||377|
|India||32||50||73||15||No additional NTMs were implemented||272|
|Russia||07||78||27||82||92||109||78 & 71 (2016)||595|
|South Africa||Non-Tariff Barriers imposed by South Africa is not reported in TRAINS, UNCTAD Database.|
Source: UNCTAD TRAINS Database
Also BRICS discussions will pay major attention to transparent, non-discriminatory, open, free and inclusive international trade. It is planned to work constructively with all WTO Members on the necessary reform of the Organization, with a view to better addressing current and future challenges in international trade, thus enhancing its relevance and effectiveness.
Currently, exporters of all the BRICS economies are facing tedious trade issues in the form of Non-Tariff barriers. Cooperating on establishing standardization and conformity through exchange of information based on requirements of the BRICS nations will certainly help to boost intra-regional trade within BRICS nations. Greater collaboration on intra-regional trade will strengthen their effectiveness as a counter to unilateralism.