At the 10th BRICS round table discussion at Moses Mabhida stadium in Durban, this week, were Musa Makhunga, president of the Durban Chamber of Commerce; Balduino Bwanga, Angola Consul General in Durban; Fawzia Peer, eThekwini’s deputy mayor; Anil Sooklal, South Africa’s ambassador to BRICS; Wang Jianzhou, China’s Consul General in Durban; and Shashank Vikram, India’s Consul General in Durban. The writer takes a look at the five-year cycles of the BRICS outreach programmes.
WITH South Africa’s chairmanship in BRICS this year and its 10th summit expected to take place next month, the group has come full-circle in its outreach efforts vis-à-vis other developing economies.
In 2013, it was South Africa that launched the first outreach exercise with respect to its regional partners in Africa. The onset of the new five-year cycle marked by South Africa’s chairmanship will build on China’s earlier innovations with BRICS+ and will feature new approaches pointing to qualitative transformations in its dialogue with the developing world.
The outreach exercises at the outset were framed in a regional context, with all core BRICS (Brazil, Russia, India, China, and South Africa) members inviting their regional partners to take part in the 2013-2018 summits.
Further innovations along the BRICS+ road may involve progression to forming a unified platform of regional integration arrangements that featured in the outreach activities of the past five-year cycle of summits.
Such an aggregation of regional arrangements from the past summits for each member would then feature the AU, Mercosur – Argentina, Brazil, Paraguay, and Uruguay (given the difficulties experienced by Unasur – Union of South American Nations), the Eurasian Economic Union, the Shanghai Co-operation Organisation (SCO) as well as Bimstec (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Co-operation).
The resulting acronym – BEAMS is suggestive of the role of the aggregating platform of regional integration blocks as supporting structures to the edifice built on BRICS. The BEAMS platform is to denote the aggregation of regional integration groups, with BRICS+ being a broader concept that incorporates other forms of BRICS interaction with developing economies such as platforms of regional developing institutions or regional financing arrangements.
BEAMS is a direct, almost one-for-one reconstruction of the sequence of BRICS outreach exercises with their regional partners throughout the 2013-2017 period. In effect it is the “revealed preference” of the BRICS economies with respect to the composition of the BRICS+ aggregating platform of regional integration groups.
The contribution from China was that of launching a diversified, global approach within the BRICS+ format that, taken together with earlier outreach exercises, lays the foundations for what China’s foreign minister Wang Yi termed as the “most extensive platform for South-South co-operation with a global impact”. In other words, BRICS+ and BEAMS as its sub-component, is a synthesis of earlier BRICS experiments and innovations in the field of building ties with the Global South.
While in the case of the BRICS grouping the key criterion was the selection of the largest heavyweights in terms of gross domestic product and market size across EM, in the case of the BEAMS/BRICS+ platform of “integration of integrations” the criterion is more geared towards selecting those groups of countries that are the closest allies to the respective BRICS core members.
Nonetheless, looking at the league table of regional arrangements formed by developing countries, it does appear that the regional groupings in the BEAMS platform such as in Eurasia, or Mercosur in South America are among the largest in terms of GDP in their respective regions. Accordingly, one may also consider the BEAMS/BRICS+ platform as the aggregation of some of the largest regional integration groups across the developing world.
The IMF’s and World Bank’s figures for 2016 suggest that the BEAMS platform comprising Bimstec, EAEU, the AU, Mercosur and the SCO would account for 27.4% of global GDP, well above 15% of the International Monetary Fun quota and 66% of the global population. This is a notable improvement compared with the BRICS core, which accounts for 22.3% of global GDP, less than the 15% benchmark for the IMF quota and 42% of the population.
Interestingly, both modifications are roughly on par in GDP terms with the largest regional integration arrangements in the world, namely Nafta (North American Free Trade Agreement), which in 2016 accounted for 28.1% of global GDP and only 6.5% of the world’s population. At the same time in terms of GDP size BEAMS is notably behind such potential platforms as Trans-Pacific Partnership (TPP) (together with the US) and Transatlantic Trade and Investment Partnership (TTIP) – these account for 38.3% and 46.5% of global GDP respectively.
The way for an alliance of developing economies to edge closer to these levels of aggregated GDP weight would be to bring together all of the main regional trading arrangements of the Global South on top of BEAMS/TRIA such as Asean (Association of SouthEast Asian Nations) and the Gulf Co-operation Council. This in turn would also serve to bridge the gap with what currently appears to be the largest potential alliance in the world, namely a combined TPP and TTIP platform which would account for more than 60% of global GDP.
Aside from the quantitative considerations of the size of GDP and populations, compared to the BRICS core, the BEAMS/BRICS+ framework presents a qualitatively more diversified structure, which dilutes the prominence of one single country and presents greater diversity and variety of economic models and types of regional integration.
An “extended format” for BRICS via expanding economic co-operation with regional partners also renders such a platform more promising for increasing the use of national currencies across the developing world. The formation of the BEAMS/BRICS+ platform also allows participating economies to exploit the sizeable potential of reducing the South-South protectionism – the signing of the African Continental Free Trade Area is one of the most important recent advances in this area.
In this respect the regionalism (including mega-regionalism) of the Global South offers more scope for trade liberalisation and variability in integration patterns and formations compared with the largely structured and in some respects ossified regionalism of the developed world.
Perhaps the most important reason the BRICS+ platform based on aggregating regional groups is expedient and urgent is due to the trends observed in the world economy, namely the formation of mega-regional blocks such as the TPP and TTIP. While the formation of the latter has been postponed by tensions between the US and the EU, there are signs that the TTP partnership is brought back to life. The main race in the world economy today is the creation of aggregated platforms of regional integration arrangements that have enough mass and leverage to attract trade and investment flows from across the world economy.
In this respect the BEAMS formation may be the best that the Global South can come up with in terms of building a large enough platform (in effect its own mega-regional platform) to limit the adverse impact of trade diversion and losses in investment flows emanating from the emergence of other mega-regional blocks.
Lissovolik is the Eurasian Development Bank’s managing director of research. He is a member of the advisory council of the Central Bank of Russia, a member of the council on foreign and defence policy and a member of the Bretton Woods Committee