BRICS SUMMIT

Leaders back off strong condemnation of rising protectionism

By Peter Fabricius 27 July 2018

China’s President Xi Jinping (L), India Prime Minister Narendra Modi (2-L), South Africa’s President Cyril Ramaphosa (C), Brazil President Michel Temer (2-R) and Russia President Vladimir Putin (R), during the BRICS Summit ‘family photo’ in Johannesburg, South Africa, 26 July 2018. The summit is held over three days and ends on 27 July. EPA-EFE/MIKE HUTCHINGS / POOL

Indian Prime Minister Narendra Modi ensures the language is toned down.

The five leaders of the BRICS Forum ended their summit on Thursday with a commitment to free and orderly global trade but stopped short of a strong condemnation of rising protectionism in the world.

Chinese President Xi Jinping had been much stronger in his remarks to the BRICS Business Forum on Wednesday, saying the growing trade war – which US President Donald Trump initially launched against China with punitive import tariffs – should be rejected because everyone would be hurt.

We BRICS countries should firmly promote an open world economy, be resolute in rejecting unilateralism and protectionism, promote trade and investment liberalisation and facilitation, and jointly steer the global economy toward greater openness, inclusiveness, balanced growth and win-win outcomes for all,” Xi had said.

But officials said India’s Prime Minister Narendra Modi was unhappy about transferring such strong language into the 106-point Johannesburg Declaration which the five leaders issued after their summit on Thursday.

So the declaration language was softer. The leaders said the multilateral trading system was “facing unprecedented challenges. We underscore the importance of an open world economy, enabling all countries and peoples to share the benefits of globalisation, which should be inclusive and support sustainable development and prosperity of all countries.

We call on all WTO members to abide by WTO rules and honour their commitments in the multilateral trading system.”

It was not clear if Modi wanted the language toned down both to shield its ally the US or because of its own protectionism.

An official said that all four other BRICS leaders had supported stronger language against rising protectionism.

The theme of the overall summit is “BRICS in Africa: Collaboration for Inclusive Growth and Shared Prosperity in the 4th Industrial Revolution” and on Friday the five BRICS leaders are to meet several African leaders and several emerging economy leaders in separate outreach sessions.

One of those leaders is the Turkish President Recep Tayyip Erdoğan. It was reported that dissident Turks protesting his visit outside the Turkish embassy in Pretoria had been attacked by security guards who emerged from the embassy.

More benefits deriving from BRICS for Africa might emerge after they meet the BRICS leaders on Friday but the summit so far does not seem to have offered them very much, despite the theme. The biggest potential benefit for Africa lies in the African Regional Centre of the New Development Bank (NDB) which the BRICS countries set up in 2015.

As Ramaphosa said at the summit on Thursday, the NDB is the most concrete proof that BRICS is not a mere talk shop. NDB president KV Kamath said the bank had already dispersed $5.7-billion for 23 projects in the five BRICS countries and intended to push this by $7.8-billion by the end of 2018.

He also noted that the African Regional Centre of the NDB in Johannesburg was now fully operational. But though the NDB rules already allow it to lend to non-BRICS countries, the leaders have not yet taken a decision for it to do that, Leslie Maasdorp, SA’s representative on the bank told Daily Maverick.

So far, therefore, the NDB may only lend money for regional projects which include South Africa. When Maasdorp was asked to confirm rumours that the bank was planning to finance the second phase of the Lesotho Highlands Water Project, he said that was the sort of project it was contemplating.

The BRICS leaders agreed that an equivalent NDB regional centre for the Americas would be established in Sao Paulo in 2019 and then another regional centre in Russia soon.

In line with the summit theme focusing on the digital or Fourth Industrial Revolution, the Johannesburg Declaration announced that the leaders had decided to establish an advisory group to fully operationalise the BRICS Partnership on New Industrial Revolution (PartNIR) which is designed to increase co-operation “to maximise the opportunities and address the challenges arising from the Fourth Industrial Revolution”.

All five leaders addressed the importance of enhancing co-operation in the Fourth Industrial Revolution. Ramaphosa quoted World Economic Forum head Klaus Schwab in defining the Fourth Industrial Revolution as “ a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres”.

Ramaphosa added that the BRICS countries must ensure the Fourth Industrial Revolution did not benefit only a handful of developed countries but promoted “inclusivity, diversity and co-operation”.

Properly handled, the technologies of the Fourth Industrial Revolution “provide developing and emerging economies with the opportunity to leapfrog the technologies of the preceding revolutions”, he said.

The BRICS leaders said the BRICS Contingent Reserve Arrangement (CRA) which was proposed several years ago as an IMF-like instrument which would serve as a group safety net through which other members would come to the rescue of any member which hit a balance-of-payments crisis, was still being tested. Officials added that the proposed BRICS credit rating agency was also still being tested and so was not yet ready to launch. It is envisaged as an alternative to the US-based private credit rating agencies which have been criticised for lack of objectivity.

The leaders said progress had been achieved in establishing the BRICS Local Currency Bond Fund.

The BRICS leaders also agreed to establish a joint vaccine research and development centre. South Africa hopes to host this but the declaration did not refer to its location. The leaders also agreed to establish a BRICS Energy Research Co-operation Platform, as Russia had proposed and confirmed the establishment of a BRICS Agricultural Research Platform (ARP) proposed by India.

Growing BRICS co-operation has also now extended even to sport and a declaration welcomed the successful hosting of the third BRICS Games by South Africa and noted the progress made in establishing the BRICS Sports Council. Ramaphosa said the other leaders had also supported a proposal by Putin to boost participation by all the BRICS member populations in sports codes which the different members excelled in.

The declaration included the usual call for a comprehensive reform of the UN, including the Security Council, to make it more representative, especially of developing countries. Two BRICS members, China and Russia, have permanent seats on the UN Security Council, and the other three want permanent seats.

The declaration said:

China and Russia reiterate the importance they attach to the status and role of Brazil, India and South Africa in international affairs and support their aspiration to play a greater role in the UN.”

But it did not explicitly say China and Russia actually support South Africa, Brazil and India getting permanent seats. DM

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