BRICS summit needs to focus on breaking Western hegemony

China is hosting the 14th BRICS summit in virtual mode. The focus of the summit will be centred on the conflict and the association’s future.

About BRICS

BRICS is an acronym for the grouping of the world’s leading emerging economies, namely Brazil, Russia, India, China and South Africa.

The BRICS Leaders’ Summit is convened annually.

It does not exist in form of an organization, but it is an annual summit between the supreme leaders of five nations.

The grouping was formalized during the first meeting of BRIC Foreign Ministers on the margins of the UNGA in New York in September 2006.

The first BRIC Summit took place in 2009 in the Russian Federation and focused on issues such as reform of the global financial architecture.

South Africa was invited to join BRIC in December 2010, after which the group adopted the acronym BRICS.

South Africa subsequently attended the Third BRICS Summit in Sanya, China, in March 2011.

The Chairmanship of the forum is rotated annually among the members, in accordance with the acronym B-R-I-C-S.

Significance of BRICS

Economically, militarily, technologically, socially and culturally, BRICS nations represent a powerful bloc.

40 per cent of the world’s population: They have an estimated combined population of 3.23 billion people, which is over 40 per cent of the world’s population.

25 per cent of global GDP: They account for over more than a quarter of the world’s land area over three continents, and for more than 25 per cent of the global GDP.

Two fastest growing large economies: The grouping comprises two of the fastest-growing nations, India and China.

 It has proved its mettle to an extent by establishing the BRICS New Development Bank (NDB) and the Contingency Reserve Arrangement (CRA).

How the Ukraine crisis creates challenges for the BRICS

The leaders of BRICS countries — Brazil, Russia, India, China and South Africa — will navigate the crucial dilemma of evolving a common stance on the Russian-Ukraine conflict.

The primary agenda of BRICS was rebalancing an international system dominated by the West.

However, the Ukraine crisis could act as a distraction from that primary agenda.

The geopolitical considerations of its members can come in the way of attaining the grouping’s original goal.

Target of economic warfare: Some of the BRICS members could be potential targets of the kind of economic warfare deployed by the West against Russia.

 The West has so far not expected the BRICS countries to stringently adhere to its sanctions against Russia.

But it will be naïve to expect that they will persist with this attitude.

Way forward

1] Create institutional arrangement

Challenging the economic might of the West in the near future might be close to impossible.

Despite the group comprising China, India and Russia, intra-BRICS trade accounts for less than 20 per cent of global trade.

BRICS is far from having its own payment mechanisms, international messaging systems or cards.

The Ukraine crisis should drive home the need to create institutional arrangements that can cushion against similar financial turbulence in the future.

2] Recalibrate structure and expand

BRICS requires a recalibration of its structure and agenda.

Creating financial mechanisms and technological institutions could turn BRICS into a G20 for developing nations.

It’s time to revisit the idea of expanding the grouping by inviting new members.

This could also impart new vigour to the BRICS’s developmental goals.

3] Economic cooperation between India and China

Economic cooperation between India and China is vital for the success of any future BRICS endeavour.

The border conflict has created a mistrust of China in India.

In the current situation, New Delhi is unlikely to take an anti-West stance.

India, unlike China, is neither a UN Security Council member nor does it have major sticking points with the West.

At the same time, India is not a part of the Western camp.

That does open up the possibility of New Delhi taking a more proactive position in BRICS.

The two powers need to come together for the sake of global governance reform.

WTO agreement on fisheries is flawed but significant

The recently concluded twelfth ministerial conference of the World Trade Organisation (WTO) adopted the trade agreement called the Agreement on Fisheries Subsidies (AFS).

About the AFS

WTO negotiations on fisheries subsidies were launched in 2001 at the Doha Ministerial Conference, with a mandate to “clarify and improve” existing WTO disciplines on fisheries subsidies.

At the 2017 Buenos Aires Ministerial Conference (MC11), ministers decided on a work programme to conclude the negotiations by aiming to adopt, at the next Ministerial Conference, an agreement on fisheries subsidies which delivers on Sustainable Development Goal 14.6.

The recently concluded twelfth ministerial conference of the World Trade Organisation (WTO) adopted a sustainability-driven trade agreement called the Agreement on Fisheries Subsidies (AFS).

Provisions adopted in the AFS

Prohibits three subsidies: Fundamentally, AFS prohibits three kinds of subsidies:

First, illegal, unreported, or unregulated (IUU) fishing.

Second, fishing of already over-exploited stocks.

Third, fishing on unregulated high seas.

Two-year transition period for developing countries: As part of special and differential treatment (S&DT), developing countries like India have been given a two-year transition period for phasing out the first two kinds of subsidies within their Exclusive Economic Zone (EEZ).

However, the final negotiated outcome, most crucially, lacks the much-needed discipline on subsidies for fishing in other members’ waters and those that contribute to overcapacity and over-fishing (OCOF).

Limited AFS: WTO member countries agreed to a limited AFS sans regulations disciplining OCOF subsidies, which have been pushed to the future and are expected to be completed within four years.

If negotiations fail, the AFS will stand terminated, as provided in Article 12.

Meanwhile, all countries can continue providing most OCOF subsidies, that is, except for fishing on unregulated high seas.

What are the implications for India?

Longer transition period required: India has been demanding that developing countries be given a longer transition period of 25 years to put an end to OCOF subsidies within their EEZ.

Economic growth through ocean resources: Given its long coastline of nearly 7,500 kilometres, the blue economy — sustainable use of ocean resources for economic growth — occupies a cardinal place in India’s development trajectory.

 India has set a target of exporting marine products worth $14 billion by 2025.

Policy space for marine infrastructure: India needs the policy space to invest in developing the marine infrastructure to harness the full potential of the blue economy.

Livelihood concerns: Moreover, India needs to protect the livelihood concerns of close to four million marine farmers, the majority of whom are engaged in small-scale, artisanal fishing, which does not pose a great threat to sustainability.

However, India’s demand for a longer transition period was not acceptable to many countries who insisted on this period being seven years

The disparity between Developed countries and Developing countries

India rightly contends that WTO disciplines should not be developed in a manner that throttles its emerging sector while richer nations continue to negotiate exemptions for indefinite subsidisation and exclusion of horizontal, non-specific fuel subsidies in the text.

Rich countries have historically provided massive subsidies to build capacity for large-scale fishing and fishing in distant waters, thereby contributing the most to depletion.

India provided subsidies worth a mere $277 million in 2018, in sharp contrast to the top five subsidisers: China, EU, US, South Korea, and Japan, whose subsidies range from $7,261-$2,860 million respectively.

Way forward

Comprehensive agreement: For the sake of sustainability, countries need to overcome their differences soon and forge a comprehensive agreement with the inclusion of meaningful S&DT, else they risk the indefinite continuation of harmful subsidies by all players.

One balancing act could be to consider different ways to effectuate such flexibilities while accommodating the demands in a more targeted manner.

Strengthening infrastructure: India could strengthen infrastructure and mechanisms to be able to utilise any future exemptions.

PM to attend G-7 summit in Germany

PM Modi will fly to the Germany as a special invitee to the meeting of G-7 countries.

Group of 7

The G-7 or ‘Group of Seven’ includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.

It is an intergovernmental organisation that was formed in 1975 by the top economies of the time as an informal forum to discuss pressing world issues.

Initially, it was formed as an effort by the US and its allies to discuss economic issues.

The G-7 forum now discusses several challenges such as oil prices and many pressing issues such as financial crises, terrorism, arms control, and drug trafficking.

It does not have a formal constitution or a fixed headquarters. The decisions taken by leaders during annual summits are non-binding.

Canada joined the group in 1976, and the European Union began attending in 1977.

Evolution of the G-7

When it started in 1975—with six members, Canada joining a year later—it represented about 70% of the world economy.

And it was a cosy club for tackling issues such as the response to oil shocks.

Now it accounts for about 40% of global GDP.

Since the global financial crisis of 2007-09 it has sometimes been overshadowed by the broader G20.

The G-7 became the G-8 in 1997 when Russia was invited to join.

Why was Russia expelled?

The G-7 was known as the ‘G-8’ for several years after the original seven were joined by Russia in 1997.

The Group returned to being called G-7 after Russia was expelled as a member in 2014 following the latter’s annexation of the Crimea region of Ukraine.

Since his election in 2016, President Trump has suggested on several occasions that Russia be added again, given what he described as Moscow’s global strategic importance.

Why in news now?

New Delhi is preparing for more pressure from the G-7 countries.

These countries (Canada, France, Germany, Italy, Japan, the UK, the US and the EU) have unitedly imposed sanctions on Russia since it invaded Ukraine.

They want India to cooperate in restricting its purchase of Russian oil, not circumvent the sanctions by using a rupee-rouble mechanism.

It also wants India to lift the ban on the export of wheat.

Relevance of G7 for India

India will get more voice, more influence and more power by entering the G7.

After UN Security Council (UNSC), this is the most influential grouping.

If the group is expanded it will collectively address certain humongous issues in the global order.

Diplomatically, a seat at the high table could help New Delhi further its security and foreign policy interests, especially at the nuclear club and UNSC reforms.

It will further protect its interests in the Indian Ocean.

Challenges for India’s entry

The decision to expand the grouping cannot be taken by the US alone.

There needs to be a consensus.

However, a special invitation to India is no mean achievement.