JAKARTA (TheInsiderStories) – A series of decisions by the United States (U.S) to impose trade tariffs on various major trade partners, including the BRICS member countries, China, India, Russia, Brazil and South Africa, have catapulted the world towards escalating trade protectionism amidst rising retaliatory ‘tit-for-tat’ tariffs as well as non-tariff measures.
According to Rajiv Biswas, Asia Pacific Chief Economist at IHS Markit, a U.S-China trade war has already begun, and U.S-European Union (EU) trade tensions are escalating. The negative impact of U.S tariff measures for world trade will be at the top of the agenda for the BRICS Summit, he added.
Given the failure of the G-20 Finance Ministers meeting held earlier this week to defuse the threat to world trade from rising protectionism, the BRICS Summit is likely to become a key global forum for galvanizing global support for multilateral trade liberalization. The BRICS nations will also seek to gain broader global support from developing countries for a global trade liberalization agenda.
Divisions within the G-7 and G-20 on global trade policy have hamstrung their ability to foster world trade growth, increasing the geopolitical importance of the BRICS Summit as an international forum for building support for world trade liberalization.
The importance of developing countries in world GDP has risen significantly in recent decades, from 24 percent of world GDP in 1980 to around 40 percent of world GDP today. The BRICS Summit will seek to build consensus among developing countries for greater trade liberalization to boost South-South trade and investment flows.
An important part of the policy agenda will be to negotiate more bilateral and multilateral free trade agreements among developing countries, as well as with like-minded pro-trade advanced economies such as Australia and New Zealand. The EU is also accelerating efforts to negotiate FTAs with developing countries, such as the EU-Vietnam FTA.
Many developing countries, including the BRICS members, are particularly vulnerable to such rising global trade protectionism, given the importance of exports for their economic growth as well as balance of payments.
while, many emerging markets, notably East Asian economies such as South Korea, Taiwan, Malaysia and Singapore, are also vulnerable to the collateral damage from an escalating U.S-China trade war due to the integrated global manufacturing supply chain and the rising importance of China as a key export market.
The South African government is to be hosting the 10th BRICS Summit, starting on July 25 to 27. The Inter-Ministerial Committee on BRICS, set up by President Cyril Ramaphosa, has been meeting ahead of the Summit, and concluded its last meeting yesterday.
Heads of State and Government will participate in the Summit such as Michel Temer, President of the Republic of Brazil; Xi Jinping, President of the People’s Republic of China; Narendra Modi, Prime Minister of the Republic of India; and Vladimir Putin, President of the Russian Federation.
The other leaders to participate are Mauricio Macri, President of the Argentine Republic; Recep Tayyip Erdoğan, President of the Republic of Turkey; and Andrew Holness, Prime Minister of the Republic of Jamaica.
The 10th BRICS Summit will be an important milestone as it represents a decade of BRICS cooperation. The Summit will culminate in the adoption of the “Johannesburg Declaration” which will include joint commitments for the year ahead.
Although will focus much on intra-BRICS cooperation, the leaders are also aware of the fact that BRICS exists within a broader global political and economic environment. With this understanding in mind, its expected that the leaders will review the political and security environment globally and express views accordingly.
South Africa will remain Chair of BRICS until Dec. 31, 2018. The next Chair is the Republic of Brazil.