BRICS Trade Ministers Look to Closer Economic Ties, Issue Support for
Multilateralism
Last
week, delegates and trade ministers from BRICS economies met in Magaliesburg, South Africa to discuss ways to strengthen the
multilateral trade system and foster closer economic cooperation between BRICS member
countries on a range of policy areas, including e-commerce.
The
meeting comes as leaders gear up for the 10th annual BRICS Summit on
the theme “BRICS in Africa: Collaboration for Inclusive Growth and Shared Prosperity
in the 4th Industrial Revolution,” which will be held in Johannesburg
later this month.
The
BRICS are a grouping of major emerging markets comprising Brazil, Russia, India,
China, and South Africa, and together account for 22 percent of global GDP. The
coalition began including South Africa in its meetings in 2010.
Systemic issues
Ministers
focused on identifying means to support the multilateral trade system amid mounting
global trade tensions. The bloc has been affected by Washington’s decision to implement
steel and aluminium tariffs on national security grounds,
though Brazil was granted an exemption and instead faces a combination of quotas
and tariffs, depending on the sector involved.
China
and Russia have already filed WTO disputes on the subject, as have various other
WTO members, with Switzerland being the latest to file a request for consultations at the global trade club.
Furthermore,
US tariffs of 25 percent targeting additional Chinese products went into force on
Friday, following an investigation into China’s intellectual property practices
and alleged forced technology transfers. Beijing applied its own measures on US$34
billion worth of US products the same day.
“We
are deeply concerned with the systemic impact of unilateral measures that are incompatible
with World Trade Organization (WTO) rules and that put the multilateral trading
system at risk,” read the joint communiqué issued following the BRICS meeting.
The
meeting came just as the WTO announced that 39 new trade-restrictive
measures were introduced by G20 countries between mid-October 2017 and mid-May 2018,
double that of the previous review period. The news has caused trade watchers to
ramp up their warnings on the state of global trading system, and the risks it could
create for consumers, producers, and the overall frameworks that have governed world
trade for decades.
Chinese
Assistant Minister of Commerce Li Chenggang urged the BRICS to continue to lead
economic globalisation efforts and lend their backing
to the multilateral trading system, according to a press relese issued by the Chinese Ministry
of Commerce (MOFCOM).
“We
reaffirm the centrality of the rules-based transparent, non-discriminatory, open
and inclusive multilateral trading system (MTS), as embodied in the WTO,” ministers
said in the communiqué, pledging to “make all efforts to strengthen the multilateral
trading system and make the WTO more responsive to the needs of its members.”
Ministers
also underline the role of trade in supporting development, noting that the development
dimension must remain a central component of WTO’s work. The coalition has made
similar comments in the past, both in the BRICS formation as well as at the WTO
in their individual capacities or as part of other negotiating groups.
“The
BRICS Trade Ministers emphasise the need for inclusive
growth and global trade rules that facilitate the effective participation of all
countries in the multilateral trading system,” according to the BRICS Statement
of Support for an Inclusive Multilateral Trading System, issued as an annex after
the meeting, along with the communiqué.
The
statement highlights the importance of special and differential treatment; capacity
building efforts, including via the WTO’s Aid for Trade Initiative; and preservation
of policy space for developing members to pursue their development objectives. It
also emphasises food security and the need for agricultural
reform as a priority area.
Deepening intra-BRICS economic cooperation, including on e-commerce
Ministers
discussed pathways to improved cooperation in the bloc across a range of areas,
including trade facilitation, investment, trade in services,
e-commerce, intellectual property rights, trade promotion, and small and medium-sized
enterprises (SMEs).
The
grouping pledged to enhance cooperation on e-commerce, underlining “the need to
address the digital divide.” E-commerce proved to be a key component of the meeting’s
deliverables, with ministers endorsing a non-binding Cooperation Framework on Inclusive
E-Commerce Development, aiming to exchange experiences as well as lessons learned
in “promoting development through e-commerce.”
They
also pledged to examine possible policy tools to harness and control “the potentially
disruptive effects of e-commerce.”
Other
elements of the framework include developing a better understanding of e-commerce
in cooperation with international organisations; developing
ICT infrastructure with a view to enhanced connectivity; and sharing experiences
with regard to regulating data flows.
The
discussions built on previous progress in BRICS cooperation on e-commerce, including
the endorsement in 2015 of the Framework for BRICS E-Commerce Cooperation and the
BRICS E-Commerce Cooperation Initiative in 2017, followed by the establishment of
the BRICS E-Commerce Working Group.
According
to a 2017 report from the International Trade Centre
(ITC), a joint UN-WTO agency, and the UN Industrial Development Organization (UNIDO),
BRICS countries are seeing e-commerce play an increasing role in their overall economies,
though the report also notes differences in the volume of e-commerce sales across
the group.
“The
analysis of the BRICS e-commerce ecosystem indicates that certain challenges are
common to all BRICS countries. This includes bureaucratic procedures, unfavourable tax regimes, underdeveloped delivery infrastructure,
a lack of e-commerce skills in SMEs, hindering their ability to compete with larger
companies, and adequate mechanisms for ensuring privacy and security of data,” the
report says, while noting that each country also has individual circumstances to
deal with.
BRICS
trade ministers last week also pledged to strengthen collaboration on trade in services,
given that BRICS members made up only 12.1 percent of global trade in services in
2016. The BRICS agreed to enhance information sharing and communication across organisations charged with gathering trade in services statistics,
and thus get a better sense of the current situation.
BRICS
countries further agreed to work together to support micro, small, and medium enterprises
(MSMEs) in the economy, urging information sharing on regulating MSMEs, and facilitating
their access to finance and public services as part of the BRICS MSME Cooperation
Framework.
Ministers
encouraged cooperation on trade facilitating measures aimed at increasing intra-BRICS
trade, including through endorsing the Working Mechanism on technical regulations,
standards, methodology, and conformity assessment procedures.
They
also endorsed the terms of reference for a review of the BRICS 2013/14 joint trade
study aimed at identifying opportunities to promote trade in value-added products
between BRICS.
“The
BRICS cooperation is at a key stage of development at present,” read the MOFCOM
press release, encouraging members to explore new modes of collaboration to capitalise on the opportunities of the digital economy and contribute
to the BRICS’ shared interests.
For
its part, “China will continue to relax market access by a large margin, strengthen
intellectual property rights protection, actively expand imports, and create an
easy and orderly investment environment for entrepreneurs across the world including
the BRICS countries,” according to the same press release.