Leaders of the BRICS bloc have signed a declaration Thursday supporting an open and inclusive multilateral trading system under WTO rules, agreeing to fight unilateralism.
BRICS is a conglomerate of five of the largest emerging economies in the world. It stands for Brazil, Russia, India, China and South Africa. Originally it was just called BRIC; but in 2010, South Africa was inducted into the group. The BRICS members are known for their significant influence on regional affairs, and are all members of G20. Together, they represent 3.1 billion people which forms roughly 41% of the world population. As of 2018, these five nations have a combined nominal GDP of US$18.6 trillion. They have contributed more than 50% to world economic growth during the last 10 years.
In 2009, the first BRIC Summit was held in Yekaterinburg, Russia, becoming an annual event since then. Till date, 10 Summits have been held so far, with India hosting two of them - at New Delhi and Goa in 2012 and 2016, respectively.
The total trade of BRICS has almost doubled from US$ 2.8 trillion in 2006 to US$ 5.7 trillion in 2015. It maintains a trade surplus, which has increased from US$ 314.8 billion in 2006 to US$ 644.7 billion in 2015. India has been recording the highest growth rate amongst BRICS economies, according to a KPMG report.
The New Development Bank (NDB), formerly referred to as the BRICS Development Bank was formed as a counterweight to global financial institutions like IMF and World Bank that are dominated by western countries. Its objectives are to promote infrastructure and sustainable development projects, and establish an extensive network of global partnerships with other multilateral development institutions and national development banks.
The 10th BRICS Summit, held from 25 - 27 July 2018 in Johannesburg, South Africa, was themed ‘BRICS in Africa: collaboration for inclusive growth and shared prosperity in the 4th Industrial Revolution’. Leaders from the 5 nations met for the first time since US President Donald Trump threatened to impose tariffs on China. "A trade war should be rejected because there will be no winner. We must work together... to safeguard the rule-based multilateral trading regime, promote trade and investment, globalisation and facilitation, and reject protectionism outright," Chinese President Xi Jinping said at the opening ceremony, urging the leaders to work together.
The 5 states urged all World Trade Organizations members to abide by its rules and in their declaration said, "We reaffirm the centrality of the rules-based, transparent, non-discriminatory, open and inclusive multilateral trading system, as embodied in the World Trade Organisation, that promotes a predictable trade environment and the centrality of the WTO. We recognise that the multilateral trading system is facing unprecedented challenges. We underscore the importance of an open world economy.” The group advocated for the continued use of fiscal, monetary and structural policies to forge strong, sustainable, balanced and inclusive growth. There was added emphasis on enhancing their financial cooperation to better serve the real economy and meet development needs. They also stressed efforts to bolster the NDB.
5 major banks from each country signed a Memorandum of Understanding (MoU) on the creation of distributed ledger technology (DLT) like block chain in the interests of the development of the digital economy.
Russian President Vladimir Putin, who held a controversial meeting with President Trump last week, emphasized closer ties and stronger trade among BRICS members. Meanwhile, Indian Prime Minister Narendra Modi met Putin on the side-lines of the summit. He stated: “India's friendship with Russia is deep-rooted and our countries will continue working together in multiple sectors.” Modi called for the bloc's members to harness technology to develop their economies, and reaffirmed India’s commitment to multilateralism.
While the global economy has continued to improve, growth has been less synchronized and many weaknesses remain, reflected in a variety of challenges like rising trade conflicts, geopolitical risks, commodity price volatility, high private and public indebtedness and inequality.
Meanwhile, there was a protest outside the conference hall where the summit was being held, with activist Trevor Ngwane stating that "none of these heads of state speaks for the working class or the poor".
Our assessment is that BRICS has the potential to re-shape world trade with its renewed emphasis on multilateralism in the face of changing US trade policy. We feel that the current global trade crisis has brought BRICS members closer and the agreement signed at the summit will enable them to strengthen their trade ties in the backdrop of the impending US-China trade war. We feel that it has grown into an important platform for cooperation among emerging markets and developing countries.