Importance of the BRICS trade and investment agenda
CAPE TOWN - The year 2018 marks the 10th anniversary of the BRICS Partnership. Since its inception, BRICS co-operation has expanded to a wide range of issues - trade, industry, international co-operation and security, science, health, energy, water, environmental affairs, and agriculture, among others.
With a combined gross domestic product of $15trillion (R205trln), BRICS countries account for 19.3percent of gross global product; 25.7percent of the world land area; 42.7percent of the world population; and have contributed more than 50percent to the world's economic growth during the last 10 years.
Intra-BRICS trade has grown from $567billion in 2010 to $744bn in 2017. Similarly, South Africa-BRIC trade has grown from $28bn to $35bn over the same period.
Both South Africa exports to and imports from other BRICS countries have grown at a rate faster than South Africa’s global trade, thus increasing the importance of other BRICS countries in South Africa’s trade basket.
Combined, the BRICS countries account for 15.4percent of South Africa’s global exports, and 25.4percent of the country’s imports.
The BRICS Trade and Industry Ministers’ meetings are taking place at a time when the multilateral trading system is facing unprecedented challenges.
This includes the rise in unilateral measures that are incompatible with the World Trade Organisation (WTO) rules that put the multilateral trading system at risk.
Of key concern is the disregard of the multilateral rules and principles that underpin international trade.
We are also witnessing a shift that seeks to question the continued relevance of development focused multilateralism.
In addition, the Fourth Industrial Revolution is transforming the global economy.
New technologies and approaches are merging the physical, digital and biological worlds in ways that will fundamentally transform humankind.
The extent to which that transformation is positive will depend on how we navigate the risks and leverage the opportunities that arise along the way.
The Fourth Industrial Revolution is based on distributed smart systems, integrated in the “Internet of Things”, that include high levels of digitisation, automation and networking.
Cyber-physical systems are an essential feature of the technical infrastructure. This is expected to lead to disruptive changes in production and services, which require appropriate regulatory frameworks, infrastructure, and skills to support and enable the Fourth Industrial Revolution.
In the context of these global developments, South Africa’s membership of BRICS has been one of the key strategic partnerships of the democratic South Africa and is a key platform for promoting South-South trade and investment. South Africa’s drive to attract $100bn investment over the next five years requires leveraging trade and investment partnerships to achieve this objective.
South Africa is relatively well represented as a destination country for intra-BRICS investment. In 2016 it attracted 6.2percent of intra-BRICS investment, at R34.5bn.
This mainly originated from India and China. South African companies utilised investment opportunities in other BRICS countries, mainly Brazil and China, to the value of R22.6bn.
BRICS countries are important developers of technology, sometimes embodied in investment. Investment promotion aims to contribute to the creation and development of hi-tech industries and move South Africa towards a knowledge economy. Our objective is to also promote investment into South Africa’s special economic zones.
South Africa’s chairmanship of BRICS presents an opportunity for collaboration among BRICS countries on the Fourth Industrial Revolution with a view to share and exchange views on regulations and policies to shape markets, including learning best practice from other BRICS members to ensure businesses in the respective countries can effectively participate in the Digital Industrial Revolution.
While BRICS countries are competitors in the trade and investment sphere, there is agreement to advance co-operation on the basis of complementarity.
South Africa’s participation in BRICS, therefore, provides opportunities to build its domestic manufacturing base, enhance value-added exports, promote technology sharing, support small business development and expand trade and investment opportunities. This is more likely to be achieved through participation in the value chains of these countries.
In relation to the multilateral trading system, the BRICS Trade and Industry meetings present an opportunity for the development of a co-ordinated message on the centrality of a rules-based multilateral trading system, as embodied in the WTO.
Global trade rules should facilitate effective participation of all countries in the multilateral trading system in order for developing and least-developed countries to secure a share in the growth of world trade commensurate with the needs of their economic development. In this regard we continue to work with our BRICS partners to advocate for an inclusive multilateral trading system that promotes inclusive growth, integration of developing countries in the global economy and sustainable development.
What makes BRICS more significant is the expansion of its institutional framework, including the establishment of the New Development Bank (NDB) and the development of a Strategy for BRICS Economic Co-operation. The NDB aims to finance among others infrastructure projects in developing countries. This presents an opportunity for collaboration in the development of key infrastructure projects that contribute to regional integration in the African continent and facilitates the creation of regional value-chains to boost industrial development.
Rob Davies is the Minister of Trade and Industry.