The annual BRICS Summit bringing together the leaders of Brazil, Russia, India, China, and South Africa has been concluded in the Chinese seaside city of Xiamen with the issuance of the Xiamen Declaration, which summarizes the points of consensus reached by the BRICS countries in various fields of their cooperation. While BRICS annual summit declarations are traditionally lengthy documents covering a wide range of subjects, present note highlights five specific issues of economic cooperation, which bear a unique imprint of the BRICS “partnership without alliance” and are expected shape the BRICS economic cooperation during its “second golden decade”.
First, the BRICS countries reaffirmed their commitment to a rules-based, transparent, non-discriminatory, open and inclusive multilateral trading system as embodied in the World Trade Organization (WTO). The agreed to ensure full implementation and enforcement of existing WTO rules and to continue working together to further strengthen the WTO. This commitment is especially important during the rising protectionist sentiments under the new US administration, and the abandonment or renegotiation of the major free trade deals such as Trans-Pacific Partnership, Transatlantic Trade and Investment Partnership and the North American Free Trade Agreement.
While the BRICS countries are not yet linked by a multilateral free trade agreement, their trade relations evolve largely under the WTO framework. In this sense, the BRICS countries currently appear as the strongest supporters of this multilateral trade governance platform. Their adherence to the WTO principles and mechanisms can be demonstrated by the mere fact that jointly the BRICS nations have participated in about 60% of all cases resolved through WTO dispute settlement mechanism. While acting predominantly as third parties, the BRICS countries managed to coordinate and align their positions on a number of trade-related issues. During their 2013 Summit in Durban, the BRICS leaders unanimously welcomed the change in leadership brought by the election of the new WTO Director General, the Brazilian national Roberto Azevêdo who embarked on the uneasy task of moving forward the Doha Development Agenda.
Second, the BRICS nations have encouraged the New Development Bank (NDB) to fully leverage its role and enhance cooperation with multilateral development institutions including the World Bank and the Asian Infrastructure Investment Bank (AIIB) as well as with the BRICS Business Council. It is a rather symbolic coincidence that the Agreement on the NDB has been signed on 15 July 2014, which marked the 70th anniversary of the signing of Bretton Woods accords establishing the International Monetary Fund and the World Bank.
The founding members have decided to share equal stakes in the newly established bank, which reflects the principle of equality among the BRICS countries and their desire to distinguish the NDB from the traditional multinational development banks (MDBs) where higher capital shares carry greater voting rights. The NDB has already approved seven projects covering all BRICS countries in the amount of USD 1,5 billion. For example, in Russia, the NDB has joined forces with the Eurasian Development Bank and International Investment Bank to support the construction of small hydropower plants in the Russian north-western region of Karelia. It remains to be seen whether and how the NDB will be able to engage the AIIB and other MDBs to support its projects.
Third, the BRICS countries reiterated the importance of competition protection to ensure the efficient social and economic development, to stimulate innovative processes and to provide quality products to their consumers. They noted the significance of the interaction between the competition authorities, in particular, in identifying and suppressing restrictive business practices that are of a transboundary nature. One should recall that the BRICS competition authorities have already accumulated a substantial record of interaction and experience sharing, mainly through the biennial BRICS International Competition Conferences.
In 2016 this dialogue has culminated in the conclusion of the Memorandum of Understanding among the BRICS competition authorities, underlying the directions of future cooperation in this field. In addition to engaging in a discussion of emerging issues in the field of competition law and policy, the BRICS competition authorities have engaged in more systematic information exchanges and communications. For example, the BRICS Working Group for Research of Competition Issues on the BRICS Markets of Social Importance, led by the Russian Federal Anti-Monopoly Service, has declared its objective to be the promotion of a competitive environment in markets of social importance and the support of competitive price formation in such markets.
Fourth, the BRICS countries have welcomed the outcomes of the BRICS Health Ministers Meeting and High-Level Meeting on Traditional Medicine, and commended the establishment of a long-term mechanism for traditional medicine exchanges and cooperation in order to promote mutual learning of traditional medicines and pass them down to future generations. Due to their social, cultural, and historical traditions, the BRICS countries are uniquely placed to promote the development, production, use and regulation of traditional medicine, which could become a viable complement to the conventional medicine currently dominating the health care systems worldwide. One of the decisive steps in that direction has been undertaken by China as a part of its national health care system reform. Its Plan for the Development of Traditional Chinese Medicine Health Service (2015–2020) aims to establish traditional Chinese medicine health service system by 2020, making it an essential component of the health service industry as well as an important force for transforming the economic mode.
Fifth, the Xiamen Declaration has tabled the proposal to consider the establishment of the BRICS Public-Private Partnership (PPP) Project Preparation Fund. The PPP mechanism will become increasingly important as the BRICS countries further their investment cooperation, including the infrastructure projects financed by the NDB and other MDBs such as AIIB. Large infrastructure projects such as hydro-electric dams, electricity transmission lines, highways and railways often involve long-term investments by foreign companies, both state-owned and private, or financing by foreign or international institutions, which are highly dependent on the existing laws and regulations for their protection and economic feasibility.
China has been already exploring the PPP mechanism for its investments projects along the Belt and Road Economic Corridors. The PPP project preparation facility has been launched by the Asian Development Bank in 2016 in order to help developing countries to prepare, structure, and place bankable PPP projects. The European Union launched the MED 5P, an advisory facility created to support its North African partners in the preparation, procurement and implementation of PPP infrastructure projects. It remains to be seen how the BRICS countries will build on these experiences and what innovative elements they could introduce with their own PPP project preparation facility.
While numerous skepticisms have been raised concerning the BRICS’ ability and determination to achieve the objectives highlighted in their annual declarations, the up-to-date progress in their implementation indicates that political will and convergence of national interests push forward certain initiatives while slowing down the progress of other. There is a Chinese proverb mentioned by the President Xi in his speech at the opening of the BRICS Business Forum: “Dedicate yourself, and you will succeed”. Although the above mentioned ambitious economic cooperation objectives may have important long-term implications for global governance beyond the BRICS countries, it is the dedication and commitment of the BRICS countries which will eventually determine their outcome.
Dr. Alexandr Svetlicinii is Assistant Professor of Law at the University of Macau. He is co-editor of The BRICS-Lawyers’ Guide to Global Cooperation.