A Coordinated Trade Response from BRICS?

Ever since its inception the most important question about the BRICS grouping was whether it would be capable of transforming itself into an effective platform for economic cooperation. And the greatest riddle of all with regard to this fundamental question was the lack of coordinated initiatives in the trade sphere. But with the unprecedented pressure leveled on BRICS by the threat of US tariffs and the plans to discuss a BRICS coordinated response to these challenges, long-awaited changes in BRICS approach to trade policy coordination may finally transpire. In particular, Brazil’s President Lula as the leader of the economy that holds BRICS chairmanship, has initiated discussions on how a BRICS coordinated response could be mustered in the face of mounting protectionism. We proceed with a look at the possible modalities of how such a policy shift could be undertaken by BRICS in the near term.

Thus far mutual trade liberalization has not been facilitated by the BRICS platform, but was rather relegated to bilateral trade negotiations. While there was important progress in raising the intensity of mutual trade among the largest BRICS economies (most notably across such pairs as Russia-China), there were no attempts to multilateralize such trade liberalization impulses across the rest of the BRICS platform, let alone the BRICS+ format. As a result, as of yet, BRICS have no clear-cut road-map for trade liberalization, no mechanism for spreading market openness across the wider BRICS+ framework, and no joint bloc within the WTO’s groups in negotiations.

Admittedly, in recent periods some tacit steps have been undertaken by BRICS in the sphere of trade coordination. In particular, in July 2024 we reported that “during the meeting of BRICS Economy and Foreign Trade Ministers in Moscow, representatives of BRICS economies agreed to coordinate their policies within the WTO. The key priorities of the creation of such a BRICS platform within the WTO include supporting the organization’s viability and effectiveness in resolving trade disputes (given the challenges faced in the operation of the WTO Dispute Settlement Body) as well as in countering rising protectionism”. So far, however, progress has been slow, with BRICS representatives yet to reach consensus on the key trade policy issues.

For BRICS a coordinated stance/consolidated representation in trade talks as a bloc delivers a much stronger bargaining position compared to bilateral discussions of BRICS economies such as India or South Africa with the US, the EU or other global economy heavyweights. The big question is whether the BRICS can agree on trade policy coordination in trade talks as a bloc – something that may be challenging due to the lack of prior coordination and the divergence in the trade regimes across the largest emerging markets. In the past several years, the mounting protectionism in the global economy as well as the widening of the ranks of BRICS core membership have not made the attainment of such consensus easier.

In terms of possible trade strategies that could be jointly pursued by BRICS vis-à-vis the rest of the world there is the well-known “competitive liberalization”[3] approach pursued by the US several decades ago. This strategy would focus on stoking competition for market access to BRICS markets through granting greater openness to those economies that provide the most favorable market access conditions in return. The greater the platform’s market, the more economic growth it can offer and the greater the potential reduction in import barriers (all these conditions being very much present with respect to BRICS) – the more the incentive for economies to compete in granting favorable conditions to such a platform.

Another possible approach could be a joint BRICS motion within the WTO to launch a new round of trade liberalization – contrary to prior efforts that failed to materialize in the past several decades, such a WTO trade round could allow for plurilateral agreements, i.e. those that do not require the participation of all WTO members. A new trade round driven by the BRICS economies could accord due priority to the needs of least-developed economies, including those from Africa. Within this track the BRICS could also attempt to address the issues of WTO reform as well as the re-launching of the dispute settlement mechanisms in the global economy.

Yet another approach for BRICS is to build on the existing network of trade alliances of BRICS economies by multilateralizing them across the BRICS or the BRICS+ platform. This multilateralization could be built on a coordinated framework of regional integration arrangements (that are increasingly driving the trade policies of BRICS economies) in which BRICS economies are members – something that we earlier referred to as the BEAMS platform. The BEAMS framework aims to promote trade agreements across the main regional integration arrangements of the Global South, thus serving to boost South-South trade. In fact, the very concept of BRICS+ advanced in the beginning of 2017 was predicated on a roadmap of trade alliances and market openness across BRICS core members and their regional partners.

The above three options could be pursued separately or in combination of several tracks. The key point about such a BRICS response to higher US tariffs is that instead of prioritizing reciprocal protectionism, it focusses on opening the gateways to greater South-South economic cooperation. But while the focus of BRICS coordinated response should certainly be greater South-South trade, at this crucial juncture for the world economy the ambition of the bloc should perhaps be elevated to targeting a relaunching of the globalization effort, but on a more sustainable basis and with greater regard for needs of the developing world compared to earlier globalization attempts.

In the end, the BRICS may be about to make the first tangible steps towards forming a vision of trade policy coordination and mutual trade liberalization. In such a scenario, the relevance of the bloc’s initiatives for the world economy and the financial markets could increase. Most importantly, however, such steps would start to deliver tangible benefits to households and enterprises across the Global South, while also making a palpable contribution to fostering closer South-South economic cooperation. The ability of BRICS to achieve consensus on trade issues remains an open question, however, particularly given the greater diversity of the bloc after its expansion in membership in the past several years.