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BRICS Leaders Meet to Champion Cause of Multilateral Global Trade

Escalating trade tensions, and tariffs from US President Donald Trump’s administration, could give BRICS countries fresh purpose to push forward their trade agendas
China’s President Xi Jinping addresses delegates at a Business Forum organized during the 10th BRICS summit on July 25 at the Sandton Convention Centre in Johannesburg, South Africa.China’s President Xi Jinping addresses delegates at a Business Forum organized during the 10th BRICS summit on July 25 at the Sandton Convention Centre in Johannesburg, South Africa.

China and South Africa urged fellow BRICS governments on Wednesday to fight protectionism and promote multilateral global trade in the face of tariff threats by US President Donald Trump that threaten global trade.

Trump's warnings have given Brazil, Russia, India, China and South Africa fresh impetus to enhance trade cooperation, and officials at a three-day summit that kicked off in Johannesburg on Wednesday found a collective voice championing global trade, news outlets reported.

The meeting of presidents from the trade bloc is the first since Trump's administration launched a push to rebalance trade multilateralism that Trump has deemed unfair, relationships which the United States once championed.

Escalating trade tensions, and tariffs from US President Donald Trump's administration, could give BRICS countries fresh purpose to push forward their trade agendas.

South African President Cyril Ramaphosa opened the 10th annual BRICS Leaders Summit at the Sandton Convention Center on Wednesday. The summit takes place from Wednesday to Friday.

South Africa’s trade minister addressed the summit with a warning that the world’s trading system is enduring “enormous turbulence”.

Rob Davies referred to economic worries related to US tariffs on goods from major trading partners and retaliatory action from those countries. Davies calls it “a moment of crisis for the global multilateral trading system”.

He said Africa’s most industrialized economy was being hurt in collateral damage. “All of us in BRICS agree that this moment in the global economy requires us to strengthen our partnership.”

“This moment is characterized by unilateralism, by a move towards discriminatory policies on tariffs above WTO boundaries applied to some and not to others,” Davies said.

Zhang Shaogang, director general in the Ministry of Commerce of China, told the summit: “It is our sincere obligation to showcase our commitment towards the multilateral trading system, to safeguard the existence of the World Trade Organization and also show our clear and strong position against any unilateral action and protectionism,” Reuters said.

“Trade and investment cooperation is the propeller for overarching BRICS cooperation. We need to make our cooperation more pragmatic and institutionalized.”

 US Tariffs

Last week Trump said he was ready to impose tariffs on all $500 billion of imported goods from rival economic superpower China. But even South Africa—a tiny exporter of steel, aluminum and automobiles to the United States—is facing barriers.

The United States did not grant South Africa an exemption from tariffs of 25% on steel and 10% on aluminum, proclaimed by Trump in March.

Davies said 7,000 South Africans work in jobs affected by the metals tariffs and that an effort to secure an exemption from the US government had been unsuccessful.

He said South Africa was also aware of a threat to impose tariffs on auto imports into the United States. “We have argued against that formally, and also I have met with US Secretary of Commerce Wilbur Ross to make our point,” Davies said.

He said South African poultry import concessions from which US suppliers benefited were linked to the preferential terms South Africa currently receives for auto imports into the US.

 Rejecting Western Dominance

BRICS has sought to reject the western dominance of international institutions, but a lack of unity prevents members from coming up with an alternative solution. Now, with Trump’s duties on imported steel and aluminum set to hurt each BRICS member—Beijing, New Delhi and Moscow have already responded with retaliatory duties—the bloc has fresh purpose to rally together, CNBC reported.

That’s a positive for Beijing, which is now trying to tout itself as a champion of free trade and has claimed it was “forced” to fight back against Trump’s measures with reciprocal tariffs.

“Given the failure of the G-20 finance ministers meeting held earlier this week to defuse the threat to world trade from rising protectionism, the BRICS summit is likely to become a key global forum for galvanizing global support for multilateral trade liberalization,” said Rajiv Biswas, Asia-Pacific chief economist at IHS Markit.

BRICS is an acronym standing for an informal association of Brazil, Russia, India, China and South Africa. Its goal is to develop a consistent, pragmatic and transparent dialogue and cooperation between the countries.

One of BRICS key goals is developing a global financial system, which will be independent from the current institutions relying on the dollar. Among the steps in this direction was the creation of the BRICS New Development Bank and the Contingent Reserve Arrangement.

 

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