With the completion of the 2023 BRICS summit in South Africa there is a clear sense that a fundamental shift has indeed taken place in the perceptions of BRICS on the international stage. The expansion launched during that summit has certainly raised the attention towards BRICS in the world’s media space, with almost diametrically opposed opinions being levelled as to the bloc’s post-expansion fortunes. In all of this panoply of views the one criticism that does seem valid vis-à-vis BRICS is the lack of economic integration initiatives, most notably in the area of trade liberalization. Indeed, while there may be an important economic side to BRICS expansion, thus far it is the geopolitical lens that has prevailed in the analytical commentary after the summit. For a fundamental change in the perception of BRICS as an economic bloc that is capable of engendering strong economic growth impulses in the world economy a roadmap or at least a discussion of trade liberalization across the BRICS+ platform is needed.
The issue of BRICS trade liberalization, most notably with respect to the African continent, is the main focus of a policy brief authored by BRICS+ Analytics and published after the BRICS summit by the South African BRICS Think-Tank (SABTT). The main points of the policy brief are summarized below: The scope for greater trade liberalisation with respect to Africa is particularly sizeable for the BRICS in the agricultural sector. In particular, according to the World Trade Organisation (WTO), India’s simple average bound tariff totaled more than 50%, while with respect to agricultural products this figure exceeded 113%. The Most-Favoured-Nation (MFN) applied simple average tariff for agricultural goods reached nearly 40% in 2022, while the trade weighted import tariff on agricultural goods reached 48.5%. The comparable figures for China are notably lower than in India, but still higher than in most developed economies – in 2022 the MFN applied simple average tariff on agricultural goods reached 13.9% and 13.1% on a trade-weighted average basis (see WTO, 2022).
– Greater market access is a key competitive edge that the BRICS can wield via-a-vis the developed economies in opening up markets to Africa – to a far greater degree than in areas such as technical assistance, where leading Western economies and Bretton Woods institutions arguably still have a significant edge. What is even more important, is that most BRICS economies currently conduct their trade policy via their priority regional integration arrangements – Russia via the Eurasian Economic Union, South Africa via the Southern African Customs Union (SACU), Southern African Development Community (SADC) and AfCFTA, Brazil via Mercado Común del Sur [Southern Common Market] (MERCOSUR). What this means is that coordination of market liberalisation from BRICS to Africa will necessitate the use of a BRICS+ format in which AfCFTA cooperates in the same inter-regional platform with the respective BRICS regional integration arrangements such as MERCOSUR, Eurasian Economic Union (EAEU) and others. This in turn implies that greater trade liberalisation vis-à-vis Africa will come not only from the BRICS core members, but also from their regional partners in the respective trade arrangements. This is the “multiplier effect” of BRICS+ in terms of trade liberalisation that can be prioritised vis-à-vis African economies.
– Greater market access from the BRICS to Africa will go a long way towards correcting the current trade imbalances in the world economy, whereby there is lower than potential South-South trade (including among South-South regional partners) compared to the trade conducted by developing economies with the West. The BRICS+ multiplier in the BRICS-Africa trade liberalisation could also serve as an important stepping stone to the formation of a free trade area across the Global South. Finally, greater market access coming from BRICS to Africa could be a powerful trigger to boosting not just trade and investment, but also the use of national currencies.
What about the effects of expansion on the prospects for advancing economic cooperation within the BRICS bloc? Does this expansion render future trade liberalization within BRICS easier or more difficult? At this point it is still hard to tell either way. Most of the countries included into the group of new entrants have relatively high import tariffs, which implies that the scope for lowering trade barriers on their part may be substantial – the question will be whether the same could be said of their propensity to liberalize trade. Another possibility is that the inclusion of Saudi Arabia and UAE into BRICS may deliver greater momentum to cooperation among the BRICS regional blocs, with the Gulf Cooperation Council (GCC) possibly becoming an important player in the BRICS+ “integration of integrations” cooperative framework. Another possible angle is that with Saudi Arabia becoming a key BRICS power, it may seek to cement its position in the bloc via intensifying energy sector cooperation with Africa and other parts of the Global South.
By Yaroslav Lissovolik