Against the backdrop of waning integration impulses in the developed world, the largest developing economies are forging ahead with new initiatives directed at revitalizing regional integration. China in particular appears to exhibit activism in building new development institutions (AIIB), mega-regional projects (One Belt One Road) as well as new economic alliances across the globe. The latest element in this sequence is China’s initiative to create a BRICS+ circle that according to China’s foreign minister Wang Yi will represent a new platform for south-south cooperation via holding dialogues with other major developing countries or groups of developing countries to establish a more extensive partnership.
"We will widen the circle of friends of the BRICS and turn it into the most influential platform for south-south cooperation in the world," declared Wang Yi.
The new BRICS+ initiative is coming not just at the right time as the BRICS is seeking to find new gateways to development, but it would also perhaps be one of the first truly global undertakings of the developing world in shaping a new, more balanced economic order. In an article written for the Valdai club last month (Re-thinking the BRICS: on the concepts of BRICS+ and BRICS++, February 7, 2017) I advanced the idea of creating the BRICS+ and a BRICS++ frameworks along the following lines: the BRICS+ circle would encompass the BRICS economies and the main regional blocks in which the BRICS play a leading role (for example Brazil in Mercosur or Russia in the Eurasian economic union); the BRICS++ would cover economic alliances of other regional blocks and countries with the BRICS+ circle.
In such a setting the essence of the BRICS+ initiative is not the enlargement of the BRICS core to include the largest developing countries, but rather to create a network of alliances that would be comprehensive and representative of all of the major regions/continents across the developing world. In this respect, the BRICS+ paradigm is more about inclusiveness and diversity rather than about selecting the largest heavyweights. By its very nature of being present in all of the key regions and continents of the developing world the BRICS could perform the unique role of a comprehensive platform for economic cooperation across the globe. Accordingly, the BRICS+ concept is first and foremost about a different approach to economic integration and a different technology of how alliances are structured globally.
In this respect the principle of BRICS+ is in some ways a technological step forward compared to the principle of territorial and exclusive regionalism. A BRICS+ integration framework that is spread throughout the world is much like the “E-Bay” marketplace, which grants all potential members of the network the possibility to exchange preferences and concession regardless of their location. This is different from the regionalism of TTP or TTIP (which may be likened to a giant supermarket) that is circumscribed to a certain location or neighbourhood, however large. Rather than being a drawback in terms of integration, the dispersed and de-centralized nature of BRICS is an advantage in promoting a more open and inclusive integration framework. BRICS+ in that regard is not a territorial, unipolar, civilizational concept – it is a global, multipolar and a cross-cultural paradigm.
In a way BRICS+ could perhaps be termed as semi-globalism, similarly to the combination of TPP and TTIP, which like the BRICS includes five key pillars (also representatively spread across continents), namely the US, Japan, Canada, Australia and the EU. In terms of the relationship with multilateral global institutions, the BRICS+ framework would represent an intermediary layer of coordination and integration between the global level institutions (WTO) and the amalgam of countries and regional blocks. Rather than debilitating or replacing the WTO, it would serve to uphold its principles of open regionalism and strengthen its capability to deal with the challenges posed by the propagation of regionalism. The BRICS+ countries could form a block within the WTO to promote these principles and to assist dozens of other developing nations to become members of the global organization.
The emergence of BRICS+ creates possibilities for varying forms and scales of openness among its economies via multilateralizing existing deals and creating brand new ones. Inside the BRICS+ and BRICS++ frameworks the combinatorics or the various forms of matching of countries and blocks through economic alliances may take a multitude of trajectories. In terms of such alliances a cooperative framework between the BRICS and the ASEAN countries would render the coverage of the BRICS+ and the BRICS++ framework more comprehensive and representative of the main regions of the developing world. In terms of the trajectories of economic integration, trade openness via import tariff reductions is far from being the sole instrument in the exchange of economic preferences and benefits within BRICS+ as these may include reductions in non-tariff barriers, investment agreements, cooperation in building regional and global value chains, and many other possible options.
What about the rest of the world that is not immediately part of the BRICS+ and BRICS++ frameworks? Firstly, there does need to be a framework of cooperation between the BRICS+ circle and the developed world, which is something that can be based on the existing FTAs or comprehensive economic agreements with developed countries formed by the BRICS+ economies (FTA between SACU and EFTA or Japan-India comprehensive economic partnership agreement). Another dimension is the investment sphere and mega-projects connecting the West and the East such as China’s One Belt One Road project. The agenda of investment liberalization with the countries of the developed world could be pursued in the context of such joint projects as well as within the WTO and other global organizations where the BRICS+ economies could form a unified group.
With respect to the developing world the BRICS+ system could focus on filling the gaps in global integration – via addressing insufficient integration in some of the regions of the developing world (most notably in Asia and Africa) the pattern of economic integration could become akin to what may be termed as “balanced regionalism” or “sustainable regionalism” rather than the regionalism that seeks to benefit solely the front-runners of the world economy. Sustainable regionalism could involve assistance to developing economies in reaching the UN 2030 sustainable development goals via obtaining greater access to markets and technology as well as the development of infrastructure.
Given the above, the concept of sustainable regionalism is wider than the APEC’s principle of “open regionalism” and apart from openness should include investment and technological cooperation (to balance the costs of trade liberalization), measures to minimize trade diversion as well as to direct economic integration into areas and regions that have been underrepresented in RTAs around the globe.
Incidentally, the one gaping hole in the entire UN construct of sustainable development is precisely the issue of trade and integration – just as sustainability and diversity are lacking in global economic integration. The key question to ask today is: “What kind of integration and globalization framework do we need for sustainable development?” The answer is to move away from the core-periphery model of globalization that is characterized by extreme global imbalances and high inequality towards a decentralized “no core – no periphery” framework of BRICS+. The BRICS+ framework also needs to recognize that globalization will be inherently incomplete (see Mario Nuti’s work on the concept of incomplete globalization) and thus should seek to emphasize the possibility of varying standards and modes of integration as opposed to the proselytizing approach of enforcing universal standards that is fraught with disruptions and reversals.
In the end, perhaps the new technological platform as well as the new vision of integration in the form of BRICS+ could drag the world economy out of its misery of persistently low growth rates. It appears that new principles and new approaches in advancing openness and integration are needed – to surmount the “new normal” we need to think about integration, growth and globalization in new and in hitherto “abnormal” ways. We need to shift gears from the old “core-periphery” paradigm to veritable sustainable development, which in the integration sphere needs to be based on greater diversity, equality of opportunity and due care with regard to spillover and trade diversion effects.
Yaroslav Lissovolik is Programme Director of the Valdai Discussion Club.