Opinion     

BRICS meet may weigh non-dollar trade settlement

Shanghai Daily, March 28, 2012

• OF the emerging economies in the world, BRICS nations, namely, Brazil, Russia, India, China and South Africa, are increasingly taking center stage with their newfound economic and political heft.

  Altogether they boast a gross domestic product of US$14 trillion, accounting for more than half of the world economic output. Over the past decade, their total trade jumped tenfold, with an aggregate growth rate of 28 percent.

  [File Photo]

  As their economies become ever more interdependent, and their common interests overlapped, especially in confronting global challenges, cooperation in the BRICS club has flourished. A summit between national leaders is held every year since 2009 and this year it takes place in New Delhi, India, from today to tomorrow, with discussions on such topics as sustainable development and deeper collaboration within the grouping.

  On the eve of President Hu Jintao's participation in the summit, Fudan University in Shanghai organized a seminar on Friday on the role of BRICS in global governance.

  In the early days since the coinage of the term BRIC (which became BRICS in 2011 with South Africa's entry), it generated few ripples beyond the financial punditry. But as the countries' respective economies mature, together they begin to take on the trade rules set by developed Western countries.

  Although the stalled Doha round of trade talks is disappointing, it has achieved breakthroughs in securing US and EU compromises on reducing agricultural subsidies, Sun Zhenyu, China's first ambassador to the World Trade Organization, said at the Fudan seminar.

  Under pressure from developing nations, the BRICS in particular, the United States promised to axe its agricultural subsidies by 70 percent and the EU, by 80 percent. The deep cuts are proof of the BRICS' growing clout, he added.

  In addition to trade, the BRICS are a strong advocate for reform of big financial institutions like the International Monetary Fund (IMF) and World Bank, in which the developing world is perennially under-represented.

  BRICS nations saw some gains in their voting shares in IMF in 2010. However, its existing structure, and that of the World Bank, remains unfair to less developed nations. So there is a possibility that BRICS can pick their own candidates for the top jobs at these institutions, Yashwant Sinha, ex-finance and foreign minister of India, told the seminar.

  BRICS countries have largely emerged from the 2008 financial crisis on top, and both their successes and failures are enlightening, said Sinha.

  Indeed, BRICS' current priorities should include the analysis of financial, economic, political and social contexts and of new cooperation mechanisms, said Yaroslav Kuzminov, rector of The Higher School of Economics in Russia.

  In light of the differences that exist in so diverse a bloc as BRICS, there ought to be mechanisms to promote unity and coordination between member states when they speak on behalf of the developing world, according to Sun.

  Asked if BRICS can formulate its answer to sub-regional free trade pacts like the Trans-Pacific Partnership Agreement (TPP), Sun said it may be premature to conceive such a proposition, but the possibility can still be explored.

  Sinha was much bolder in proposing ways to deepen the institutional layers of cooperation, such as creating a small secretariat and even a currency union to overcome the disadvantages of trading in dollars, in which most commodities are priced.

  The recent US threat to impose sanctions on India, China and South Korea for refusing to shrink their crude oil imports from Iran has necessitated, in Sinha's view, the need to initiatiate a resettlement regime for intra-BRICS trade using currencies other than dollars.

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