BRICS must now walk the talk

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Bikky Khosla | 18 Oct, 2016
The group of five emerging economies -- Brazil, Russia, India, China and South Africa -- wrapped up its 8th annual summit in Goa last week. These five countries -- which account for 20 percent of global economic output -- together have the potential to alter the order of world trade and the Goa summit -- though held amid the hard reality of slowing growth around the globe and geopolitical tensions in the subcontinent -- reflects their consistent effort to strengthen an emerging market network that can accommodate their own ambitions, not being constrained by the current West-dominated multilateral institutions.

Here are some of the key takeaways from the summit. The Goa Declaration calls for deeper intra-BRICS cooperation in the industrial sector and greater BRICS-BIMSTEC trade and investment. With Indian and Chinese exports to the West declining, this view sounds positive. It also emphasizes on greater cooperation on issues of tax evasion, reiterates the importance of establishing an independent BRICS Rating Agency, and expresses satisfaction over the progress achieved by the New Development Bank. It is also to be noted that an important idea -- BRICS members should trade in their local currencies -- nearly reached fruition in this summit.

As far as the MSME sector is concerned, the BRICS trade ministers, while acknowledging the role of MSMEs in employment generation and export-led growth, agreed on a framework to promote cooperation among MSMEs in crucial areas of trade and investment. In a joint statement following the sixth meeting of BRICS Trade Ministers in New Delhi, it was added that such cooperation could be in the form of information exchange on rules and regulations governing MSMEs; participation of MSME stakeholders in BRICS events; and interface among the major chambers of commerce and industry of the MSMEs. These talks sound good, but I think it is easier said than done.

Over the years, there has been a lot of talk about enhancing trade cooperation among the BRICS economies, but till now not much has been achieved. Politically BRICS has too many contradictions, and economically integration is proceeding at a snail's pace. There is a huge gap between what is happening at the highest political level of BRICS and the ground reality. At present, the block clearly lacks a common regulatory framework. Issues like poor infrastructure and logistics are hampering economic cooperation among these countries. These thing must change if BRICS wants to assume the "global growth engine" status in coming days.

I invite your opinions.