BRICS Summit 2018


The10th BRICS Summit from July 25-27, 2018 held in Johannesburg, South Africa. The heads of state and government of all five BRICS nations ( Brazil, Russia, India, China and South Africa) convened for the summit and issued Johannesburg Declaration at the end of Day 2 of the three-day summit.

The theme of the Summit was: “BRICS in Africa: Collaboration for Inclusive Growth and Shared Prosperity in the 4th Industrial Revolution”.

The theme is reflective of the core priorities of each one of the BRICS members, notably to strive towards the creation of an inclusive society and global partnerships that will bring prosperity to all humankind. The theme is intended to align and ensure strategic continuity with the approved themes for South Africa’s Chairship of both the South African Development Community (SADC) and the Indian Ocean Rim Association (IORA).

The BRICS leaders rejected the growing unilateralism and instead reiterated their commitment to the strengthening of multilateral institutions, calling for stronger intra-trade within member states. The declaration came at a time when the United States and China are deadlocked in a trade war over tariffs.
The leaders affirmed the centrality of the "rules-based, transparent, non-discriminatory, open and inclusive multilateral trading system".
They recognised that the multilateral trading system is facing unprecedented challenges. They underscored 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.
In their Johannesburg Declaration also called on all WTO members to abide by WTO rules and honour their commitments in the multilateral trading system. The grouping said that the WTO Dispute Settlement System is a cornerstone of the multilateral trading system and is designed to enhance security and predictability in international trade.
They noted with concern the impasse in the selection process for new Appellate Body members that can paralyse the dispute settlement system and undermine the rights and obligations of all members.
They urge all members to engage constructively to address this challenge as a matter of priority.
Acknowledging the need to upkeep the WTO's negotiating function, the grouping agreed to constructively engage in further developing the current legal framework of the multilateral trading system within the WTO.
The grouping advocated for the continued use of fiscal, monetary and structural policies in concert to forge strong, sustainable, balanced and inclusive growth.
They expressed concern at the spill-over effects of macro-economic policy measures in some major advanced economies that may cause economic and financial volatility in emerging economies and impact their growth prospects adversely.
They called on major advanced and emerging market economies to continue policy dialogue and coordination in the context of the G20, FSB (Financial Stability Board) and other fora to address these potential risks.
While noting that the global economy has continued to improve, the BRICS nations said that, however, growth has been less synchronised and that downside risks still remain which is reflected in a variety of challenges including rising trade conflicts, geopolitical risks, commodity price volatility, high private and public indebtedness, inequality and not sufficiently inclusive growth.
The BRICS grouping also re-affirmed their commitment to conclude quota reforms at the International Monetary Fund (IMF) while protecting the voice of the poorest countries by the 2019 spring meetings and no later than the 2019 annual meetings.
"Governance reform of the IMF should strengthen the voice and representation of the poorest members of the IMF, including Sub-Saharan Africa," it added.
The grouping also expressed satisfaction on the progress achieved on establishing the BRICS Local Currency Bond Fund. They agreed to further strengthen cooperation on convergence of accounting standards and auditing oversight of BRICS countries in the area of bond issuance.
Further, the BRICS nations stressed the importance of enhancing their financial cooperation to better serve the real economy and meet the development needs. "We will continue to enhance currency cooperation, consistent with each central bank's legal mandate, and to explore more modalities of the cooperation. We will also further expand green financing, so as to promote sustainable development in BRICS countries," the declaration added.
On Sustainable Development
The leaders reaffirmed their commitment to fully implementing the 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs), to provide equitable, inclusive, open, all-round innovation-driven and sustainable development, in its three dimensions — economic, social and environmental — in a balanced and integrated manner, towards the ultimate goal of eradicating poverty by 2030.
On Climate Change
The leaders welcomed the progress towards finalising the Work Programme under the Paris Agreement and expressed their willingness to continue working constructively with other Parties to conclude its related negotiations at the United Nations Framework Convention on Climate Change (UNFCCC) towards the 24th Conference of the Parties (UNFCCC COP24), which is to be held in Katowice, Poland in December 2018.
They further called upon all countries to fully implement the Paris Agreement including the principles of common but differentiated responsibilities and respective capabilities and urged the developed countries to provide financial, technological and capacity-building support to developing countries to enhance their capability in mitigation and adaptation.

The leaders agreed to strengthen BRICS cooperation in energy, especially in transitioning to more environmentally sustainable energy systems supportive of the global sustainable development agenda and balanced economic growth.
They also agreed to strive toward universal energy access, energy security, energy affordability, reduced pollution and environmental conservation.
They also acknowledged that the BRICS Ministers of Energy agreed to establish the BRICS Energy Research Cooperation Platform and to develop its Terms of Reference.
On Agriculture
The leaders reaffirmed their support for the establishment of the BRICS Agricultural Research Platform (ARP) initiated by India in 2016.
They agreed to strengthen the agricultural research collaborative networks among the BRICS countries to enhance the resilience of the collective agricultural and food systems in the face of the changing climate.
They committed to step up intra-BRICS collaboration including within the frame of the Agriculture Research Platform and the Basic Agriculture Information Exchange System (BAIES).
On Environment
The leaders reaffirmed to enhance cooperation and collaboration amongst BRICS countries in the field of biodiversity conservation, sustainable use and equitable access and benefit sharing of biological resources.
On Population
The leaders expressed commitment to the continued implementation of the Agenda for BRICS cooperation on population matters 2015-2020, which was agreed to by the Ministers responsible for Population Matters in 2014.
The dynamics of population age structure changes in BRICS countries pose challenges and present opportunities, particularly with regard to gender inequality and women's rights, youth development, employment and the future of work, urbanisation, migration and ageing.

On Terrorism
The leaders deplored continued terrorist attacks, including in some BRICS countries and condemned terrorism in all its forms and manifestations.
They recalled the responsibility of all the states to prevent financing of terrorist networks and terrorist actions from their territories.
They called upon the international community to establish a genuinely broad international counter-terrorism coalition and support the UN's central coordinating role in this regard.
They called for expeditious finalisation and adoption of the Comprehensive Convention on International Terrorism (CCIT) by the United Nations General Assembly.
To address the threat of chemical and biological terrorism, the leaders emphasised on the need for launching multilateral negotiations on an international convention for the suppression of acts of chemical and biological terrorism, including at the Conference on Disarmament.
On International Peace and Security
The leaders emphasised on the indivisible nature of peace and security and reiterated that no country should enhance its security at the expense of the security of others.
The leaders of China and Russia reiterated the importance they attach to the status and role of Brazil, India and South Africa in international affairs and their support for their aspiration to play a greater role in the UN.
The BRICS leaders further expressed concern over the ongoing conflict and heightened tensions in the Middle-East region and stated that there is no place for unlawful resorting to force or external interference in any conflict.

On Israel-Palestine Crisis
The leaders reiterated the need for renewed diplomatic efforts to achieve a just, lasting and comprehensive settlement of the Israeli-Palestinian conflict in order to achieve peace and stability in the Middle East, through negotiations with a view to creating an independent, viable, territorially contiguous Palestinian State living side by side in peace and security with Israel.
On Arms Race in Outer Space
The leaders expressed serious concern about the possibility of an arms race in outer space and of outer space turning into an arena for military confrontation.
They reaffirmed that the prevention of an arms race, including of the placement of weapons in outer space, would avert a grave danger for international peace and security.

India and BRICS
Prime Minister Narendra Modi, while addressing the Plenary Session of the 10th BRICS summit in South Africa, said that India will work with other member states of the economic bloc to prepare for the Fourth Industrial Revolution.
"India will like to work with the BRICS on the issue of the Fourth Industrial Revolution. We need to together prepare best practices and policies in this connection," he said.
PM Modi spoke about the "importance of technology, skill development and how effective multilateral cooperation creates a better world".
PM Modi reaffirmed India’s commitment to multilateralism, international trade and rules-based world order. 
The Fourth Industrial Revolution (4IR) is the fourth major industrial era since the initial Industrial Revolution of the 18th century.
It is characterised by a fusion of technologies that is blurring the lines between the physical, digital and biological spheres.
India wants to work collectively along with BRICS nations in the area of Fourth Industrial Revolution and all nations must share the best practices and policies on this.
Compliance with laws, the example of better delivery by direct payment technology to beneficiaries of social security and government schemes,” he said.
He said the Fourth Industrial Revolution will have more importance than the capital. “High-skill but temporary work will be the new face of employment. There will be radical changes in industrial production, design, and manufacturing,” Modi said.
He also underline the need for schools and universities to create the curriculum so that they can prepare the youth for the future.

Analysis of BRICS
The BRICS summit completes a full 10 years since its first meeting in 2009 in Russia
When the idea of the BRIC (Brazil, Russia, India, and China) was first coined by Jim O’ Neill of Goldman Sachs in 2001, few took the group very seriously. But it is this group that has come up with a sterling performance in the last 15 years.

China is already the second-largest economy in the world and India has crossed France to become the sixth-largest in terms of real GDP. Both Russia and Brazil have taken a hit with the downside in the commodity cycle but they are still potential powerhouses.

Between India and China, they account for 40% of the world’s population and potentially the world’s largest combined market for all kinds of consumer goods. Moreover, China already accounts for 50% of the demand for all metals and minerals in the world. Thus, the critics were, more or less, silenced.
However, there are still two areas where India has some catching up to do with the other BRICS nations. 

Firstly, India still has a large catch up to do on the GDP per capita front. For example, Russia has a GDP per capita of $12,000, while Brazil and China are above $10,000, and South Africa is close to a per capita of $7,000. India, on the other hand, has the lowest GDP per capita of $2,100. 

Secondly China, Russia, and Brazil run a comfortable trade surplus, while South Africa has trade parity. India, meanwhile, is likely to end up with a trade deficit of nearly $200bn for the fiscal year 2018-19.

Performance of BRICS Countries

There are five key data points that need to be understood to put BRICS in context of the world economy as a whole.
(i) The five BRICS nations comprise 40% of the world’s population and nearly 25% of the world land area. The contribution of the BRICS nations to world GDP has grown from about 8.3% in 2000 to 23% in 2017.
(ii) India and China used globalization to make their economies part of the global supply chain. India became a global hub for services, while China became a global hub for manufacturing. On the other hand, Brazil, Russia, and South Africa used the fruits of globalization to market more of their abundant natural resources.
(iii) Both India and China saw a vast expansion in their middle class and that became a tipping point for the creation of two of the world’s biggest markets. For example, in the year 1990, China accounted for less than 3% of world production but by 2014 it was accounting for 25% of world output. In 1990, China accounted for less than 1% of the world’s middle class but by 2015 China was accounting for 15% of this population class. During the same period, Indian middle class went from 1% of world population to 8% of the world population. But India also built a services hub on the back of a $150bn IT services sector as services came to account for over 60% of the Indian economy.
(iv) However, it is Brazil, Russia, and South Africa that have really lifted people out of poverty. In the decade post 2003, Brazil lifted nearly 29mn people above poverty, while Russia reduced the number of people below the poverty line from 29% to just 11%. On this front, the commodity BRICS nations have done better.
(5) While China and India are the absolute beneficiaries, there are some factors that still make them vulnerable. Recent reports have stated that China and India may be losing their edge in manufacturing and services, respectively, due to rising wage costs. Also, the World Bank estimates that automation threatens 68% of the jobs in India and 77% of the jobs in China.

Tuesday, 31st Jul 2018, 06:18:34 AM

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