Establishment of BRICS was one of the most significant political events of the beginning of the XXI century. BRICS is a group of five fast-developing countries: Brazil, Russia, India, China and South Africa. The organization was founded in June 2006 during the St. Petersburg`s Economic Forum with the participation of the Ministers of Economy of Brazil, Russia, India and China.
Before the inclusion of South Africa in 2010, the organization was known as BRIC. For the first time the acronym BRIC was proposed by Jim O'Neill Goldman Sachs`s Bank analyst in November 2001. The sequence of letters in a word is determined not so much with comfortable perception of a combination of letters, but also the fact that the word BRICS consonant with «bricks", thus making the sending of as the designation of a group of countries, due to which will be provided the future growth of the world economy.
Today BRICS consolidates about 3 billion people (43% of the population) on the territory of 39.7 million square km (more than a quarter of the Earth's land surface). The share of GDP of the BRICS countries in world has risen today to 30%. Each of these five countries is located on three continents and has a notable influence in the region and in the whole world. All five members of the BRICS are also members of G20. The economic potential of Brazil, Russia, India and China is so great that they can become the four dominant economies by 2050. China and India will be the dominant global suppliers of manufactured goods and services while Brazil and Russia will also be dominant suppliers of raw materials.
Establishment of the BRICS in many ways is a response to imbalances in the world economy and policy at the beginning of the new century. It reflected the objective tendencies of world development in the formation of a polycentric system of international relations based on the increasing participation in the global regulation of countries representing the major civilizations of the world. The basis for a global "elevation" of BRICS has become a growing economic power of the countries-members, multiplied by their rich natural resources and human potential, and experience in the peaceful settlement of international disputes.
The fundamental aims of the member countries are to solve the main financial, scientific and technical, cultural, political, and environmental issues. Despite the significant difference in the development of these areas of each country, they are united by one common aspect - their growing economy. BRICS objectives include also issues to overcome the economic and financial crisis, improving the living standards of the people and the transition to the use of high technologies in production. The countries have a great potential for achieving their objectives and for their economic development due to the presence of large reserves of natural resources, which has a significant impact on world markets. (BRICS. Ministry of External Relations, n.a.)
BRICS holds annual summits since 2009, which are held in turn by member countries. The first official summit of BRIC countries held in Yekaterinburg and started on 16 of June 16 in 2009.
The most important outcome of the BRICS summit in Ufa was the establishment of the new Development Bank with a capital of 100 billion dollars. It was decided to transfer to national currency trade within BRICS, there was signed the agreement of cooperation between states till 2020 regarding expansion of cooperation between the states in socio-economic terms and in foreign policy. BRICS Summit emphasized the problems of the world economy. The leaders spoke in favor of accelerating the reform of the UN and the IMF, condemned unilateral sanctions, expressed concern about the monetary policy of pumping the most developed economies of the world and strongly condemned the crimes of the terrorist group "Islamic state" and urged the parties to the conflict in Ukraine to comply with the Minsk agreements.
Among the proposed new members of the BRICS experts call South Korea and Mexico, as potential members of the BRICS called Iran, Indonesia (eighth-ninth of the world economy in parity GDP), Turkey. South Korea is one of the most developed countries in the world, so it`s comparison with developing countries such as the BRIC countries, is not correct. Nevertheless, experts say that Korea is the "other" BRIC "in a global sense," suggesting that it stands out among the following eleven countries of G7 and the BRIC by its growth rates. South Korea was not originally included to the BRIC countries, but strong economic growth in the country led to the fact that Goldman Sachs suggested adding Mexico and South Korea to the BRIC acronym and change on BRIMCK. Jim O'Neill also created MINT term for Mexico, Indonesia, Nigeria and Turkey.
The global crisis led to a decrease of economic development throughout the world and led to a large number of problems in many countries of Europe and America, but for the members of the BRICS it has only a minimal difficulty turned crisis. For example, Brazil has experienced minor difficulty. The same can be said about Russia. As for China, the country in general has taken over the work on the removal of the world out of this crisis.
Objectives and results of participation in the BRICS.
India.
This country joined the BRICS for the restructuring its own economy. Since 1990, India began to implement a policy of economic reconstruction, growth rate of production and the fight against corruption. The Indian authorities have carried out privatization and using all available capacity, come to grips with their own development.
Through accession to BRICS and the exchange of experience with other members of this group, India achieved positive results and significant progress, so now it announced itself as an important technology center of the world economy. (Russia and India Report, April 18, 2016)
China.
As a developing country, China is searching for new partners. China's competitors are the US and European countries, which are trying to hold back its development. For this reason, the Celestial Empire is looking for such partners with the help of which it would continue to increase its production.
Interacting with the BRICS countries, China was able to further accelerate the growth of its economy, have found new markets for their products, but also secured the support of new partners in the international area. This fact can be considered as a significant success for the PRC. (The BRICS Post, March 27, 2016)
Republic of South Africa.
Republic of South Africa plan is to join the ranks of developed countries. Currently, this is a country, which plays an important role in international politics, tends in view of its national interests to increase the level of gross domestic production and expand its economy as a whole. This country is the last joined the BRICS group. Taking into account the success in the world of the other members of this group and the level of its development, South Africa made significant efforts to obtain membership in this association, and due to all available possibilities was able to achieve it.
Joining the BRICS was a major achievement of Republic of South Africa’s foreign policy. Having entered into a close partnership with four other members of the group, the country has managed to achieve significant progress in terms of inward investment, growth of gross domestic product, import regulation and privatization. According to World Bank statistics, all this reflects the positive dynamics of economic development of Republic of South Africa. (The Economist, March 29, 2013)
Russia.
After the collapse of the Soviet Union Russia for many years experienced economic stagnation. As the economy become a factor of the collapse of the Soviet Union, Russia, which was tormented by corruption since the Soviet era and which was bankrupt even at the start, resolutely set about resolving the crisis in the economy.
After separation of the union republics, Russia has developed the worst economic situation in terms of the level of domestic production. Over a decade against the backdrop of fierce competition with European countries and pressure from the world economy Moscow experienced tremendous economic difficulties. However, with the formation the BRICS group bringing together the five major world economies, Russia got a second wind and was able to gradually solve its existing economic problems, using the experience of those countries for entry into the WTO. (Russia and India Report, April 18, 2016)
At the same time, Russia has considerable raw material resources, oil, gas and other natural resources, as well as having a wealth of technical capacity, was engaged in forging active trade, economic and technical cooperation with BRICS partners, thus able to enter the world market, have learned well the principles of trade and become a strong country. In other words, in spite of the withdrawal of Russia from the "Big Eight" (because of the conflict in Ukraine), in fact, this country is a world power, and its exclusion from the G8 had political reasons, not economic ones.
Brazil.
30 years ago, Brazil was one of the most heavily indebted among all countries of the world, but now it occupies the sixth place in the ranking of the strongest economic powers. Thanks to the policy pursued by the Party of the working people of Brazil, and the course taken by former President Lula da Silva, in 2013 it became a truly industrial country and passed by its economic indicators even the UK.
Brazil has focused on supporting the domestic production, creating a rapid return on assets and the formation of production and agricultural cooperatives. All this it achieved through cooperation with other members of the BRICS. In fact, Brazil is now on indicators such as agriculture, animal husbandry, industry and technology, considered to be one of the strongest countries in the world and occupies a prominent place within the organization BRICS.
BRICS has proved itself as a very successful international organization. In 2012, the World Bank reported that the BRICS member countries are advanced states of global development. It proves that the members of this group of states were able to achieve significant progress. Now the association announced the creation of the Bank of the BRICS, which is already functioning as a reserve currency reserves. Most likely, in the future we should expect more new members of the BRICS.
In international politics, this group was in favor of reducing the gap between the different countries, and it is likely that it will be able to succeed in this issue.
At the end of 2014, Bloomberg wrote about multidirectional growth of BRICS countries (Russia, Brazil, Republic of South Africa - down, China, India - up). Another news agency, Reuters, notes that "in light of the threat of further economic sanctions Western investors are leaving the Russian market and shift the money into other markets BRICS». The recent devaluation of the Chinese currency has responded by a shock wave throughout the business world and among experts prevalent skepticism regarding the BRICS: China's GDP grew in 2014 by 7.4% (the lowest level in nearly a quarter century); foundered into the scandals Brazil is on the brink of recession, while Russia's GDP is projected to shrink this year by 3.5%. Declare also the outflow of capital in the amount of $ 1 trillion from the BRICS countries for the past 13 months.
However, despite the crisis and criticism of many analysts, the BRICS group has the potential for association with more features than the investment and economic grouping. Union is able to change the balance of forces in the world, we cannot lose out of the sight the considerable progress in cooperation between countries and their obvious desire to develop further cooperation. BRICS countries are located in a unique position and the synergy of efforts and further cooperation will give them a chance to take a worthy place in a changing international system.
No less significant in its influence is the World Trade Organization, which celebrated its 20th anniversary last year.
Twenty-one year ago the Uruguay Round negotiations culminated by the signing the Marrakech Agreement and the establishment of an international organization, which now covers more than 160 members. Today WTO is more than three dozen agreements and commitments on thirty thousand pages and a full-fledged dispute settlement mechanism.
And it's only the tip of the iceberg. By the 21 years of its existence the WTO has turned trade into a tool of social and economic growth, sustainable development, environmental protection, promotion of innovation and creating fair market conditions for business.
Not long ago, the World Trade Organization agreed on a major package of reforms since the inception of the organization in 1995.
Elaboration of plan was executed by the head of the WTO, Roberto Azevedo. Under WTO rules for the approval of reform require the consent of all participants.
It was also reported that the Minister of Commerce and Industry of India Anand Screen declared its readiness to sign eight of ten documents refusing to authorize the termination of food subsidies. Rigid Delhi position associated with the holding of elections in India in the next year: the government wants to enlist the support of the population, which relies on food aid. On the 6 of December it became known that India has finally agreed to approve the reform project, and it was expected that the signing of the document will be announced in the coming hours. However, after being able to obtain the consent of India expressed its objections Cuba, Bolivia, Venezuela, Nicaragua. Consultations with these countries were delayed for many hours and finally the draft was signed on the 7 of December in 2013.
Establishment of the World Trade Organization (WTO) twenty years ago marked also a giving the multilateral trading system a qualitatively new configuration. For the first time in the global legal system of regulation of international trade and economic relations have been included:
- Multilateral agreements on trade in goods;
- General Agreement on Trade in Services (GATS) designed to regulate on the basis of non-discrimination, MFN and national treatment to such dynamically developing branches of the world economy, as the services;
- Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which defines the limits of the applicability of the fundamental principles of international trade to intellectual property rights.
The stability of the multilateral trading system, the GATT / WTO has given an improved dispute resolution mechanism.
The basis of the multilateral trading system remains the General Agreement on Trade in Services (GATS). Fundamental principles of operation of the system are concentrated in this document and consist of following:
- Providing countries in mutual trade, MFN, national treatment;
- The implementation of the regulation of trade with the help of customs tariffs, rather than quantitative restrictions;
- Non-discrimination;
- Providing consultations for the resolution of problems relating to international trade;
- The progressive reduction of customs duties in the course of multilateral trade negotiations.
The General Agreement on Trade in Services was the first in the history of international trade relations instrument for multilaterally fixed principles and rules governing world trade in services.
In the structure of the modern world economy the services sector is one of the fastest growing industries. This is due to the rapid introduction of scientific and technological progress in the processes of creation of new types of services, as well as the development of innovative services and technologies of their transportation.
It should be noted that for the period from 2005 to 2014 in the world about 50% of direct foreign investments were directed to the sector of services.
The main failure of the WTO in recent years can be regarded as a failure of multilateral negotiations "Doha Round" on the further liberalization of world trade. Economically developed countries, especially the US and the EU, opposed the opening of their markets for agricultural goods, refusing to reduce the level of tariff protection and to reduce the level of subsidies for agricultural producers. At the same time the United States and the European Union demand from developing countries, liberalization of national markets for services, further reduction of the level of tariff protection of markets of industrial goods. This position does not suit a group of developing countries led by China, India, Brazil, and South Africa.
However, the most dangerous phenomenon, which is observed in the framework of the GATT / WTO in recent years, is "slipping" of the multilateral trading system in a rut groundless trade embargoes and restrictions. Today, it is, perhaps, the main challenge for the WTO, which was created with the aim of liberalizing world trade, trade facilitation, and enhancing access to world markets, ensure job growth, improve living standards, the expansion of goods production and trade and services with optimal use of the world resources accordance with the objectives of sustainable development. How quickly and successfully will it be able to cope with this challenge will determine the future of the Organization.
Works cited
Information about BRICS. BRICS. Ministry of External Relations. n.a. Web 21 Apr. 2016. <http://brics.itamaraty.gov.br/about-brics/information-about-brics>
China Jan-Feb industrial profits grow fastest since 2014. The BRICS Post. March 27, 2016. Web 21 Apr. 2016. <http://thebricspost.com/china-industrial-profits-grow-fastest-since-2014/#.Vx3OKOZTKsc>
Why is South Africa included in the BRICS? The Economist. March 29, 2013. Web 21 Apr. 2016. <http://www.economist.com/blogs/economist-explains/2013/03/economist-explains-why-south-africa-brics>
Russia considers RIC important cooperation mechanism. Russia and India Report. April 18, 2016. Web 21 Apr. 2016. <https://in.rbth.com/world/2016/04/18/russia-considers-ric-important-cooperation-mechanism-with-china-india_585657>
