There has been much debate over the necessity of Brics, since it is largely a political group whose members are miles apart geographically with fairly limited economic ties.
But the reality is that in an environment of rising geopolitical tensions, with the ever-present threat of new tariffs from the US, this body has never been more vital to the economies of its members.
The grouping, first suggested by Goldman Sachs economist Jim O’Neill in 2001, is relatively new and was formed in 2009 at its inaugural meeting in Yekaterinburg in Russia. South Africa was included in 2010 and recently new countries have been added, including Egypt, Ethiopia, Iran, Indonesia and the United Arab Emirates (UAE).
The Brics summit was held in New Delhi last week, culminating in a joint statement calling for “maximum restraint” in the Middle East war, condemning “attacks on civilian infrastructure” and raising concerns over “indiscriminate rising tariffs”.
Given that several Brics members are on different sides of the Middle East war, notably Iran and the UAE, this is perhaps the most forceful outcome possible.
But others in the group, notably Chinese President Xi Jinping, called for greater co-operation among Brics countries on innovation and development, singling out AI initiatives and urging members to lead the way in global peace and stability.
I participated in the South African chapter of the Brics Business Council, where I chair the agribusiness working group.
The Brics Business Council’s final report, which was tabled for consideration, spanned a number of issues specifically affecting agriculture. They ranged from the impact of climate change, food security, innovation and research co-operation and food security to international trade.
It’s no surprise that the South Africans called for deepening intra-Brics trade. As it is, Brics now accounts for about half of the world’s agricultural imports, so it’s clear why expanding exports within this bloc would be economically advantageous to everyone.
The thing is, these Brics partners are major agricultural importers but don’t source agricultural products from South Africa. The original four Brics countries, largely led by India and China, account for less than 10% of South Africa’s agricultural exports. By comparison, Southern African Customs Union countries account for about 20%.
There are reasons for this besides geography. Higher tariffs for exports to other Brics countries and phytosanitary barriers are the main obstacles to deeper penetration of South African agricultural products.
On the issue of tariffs, it is precisely because the Brics group lacks formal economic ties that we find a situation where some countries have more favourable trade terms with nations outside it than those within the bloc.
But since Brics has expanded, creating a broader potential export market for agriculture and other products, the need to correct this trade misalignment is more urgent than ever.
As the association matures politically, it is only logical that trade and economic integration should follow. And since agriculture is one of the central outputs of its members, it is a natural place for this to begin.
In the end we might very well see a “Brics comprehensive free trade agreement”, though the process of getting there would be protracted. A more immediate policy solution would be some kind of trade area that establishes preferential market access for agricultural products among countries, lowers import tariffs and removes phytosanitary barriers.
As it stands Brazil, South Africa and Russia typically have large product surpluses that India and China import from the world market. Cutting import tariffs and other nontariff barriers, or opening tariff rate quotas for specific agricultural products, would be a meaningful way to initiate a process of deepening trade.
This would also be due recognition for the courageous step taken by China in May, when it slashed tariffs on goods from Africa under the China-Africa Economic Partnership Agreement. Brics countries such as India could build on this.
The South African agribusiness working group I’m part of is clear that far more ambitious economic integration through trade is key to the group’s long-term sustainability. This is why South Africa has always argued for a Brics agricultural trade agreement or, at the very least, more active bilateral agreements that would boost Brics intra-trade.
Other countries, however, are not keen just yet — but it seems to be only a matter of time.
Last week, China took over from India as chair of the Brics Business Council and outlined a few agricultural areas it would prioritise, notably trade. This is recognition that in future, Brics won’t just be politically useful, the group is also a potential key ally when it comes to expanding our exports.
Sihlobo is chair of the agribusiness working group in the Brics Business Council (South Africa Chapter) and the presidential envoy on agriculture and land
