BRICS show unity at summit
BRICS show unity at summit
The BRICS summit here in the coastal city of Fortaleza has assembled each nations' top companies, economic officials, and presidents in an effort to foster political and business ties. Major new initiatives include the formation of a $50 billion BRICS Development Bank and $100 billion currency reserve fund, which are being touted as examples of the group's growing unity and rising clout on the world stage.Kevin Gallagher, professor of international relations at Boston University and author of numerous studies on Chinese investment in Latin America, welcomes the new financial tools as important alternatives to the World Bank and International Monetary Fund. But he says he is still awaiting details on who will be eligible to receive loans and how such distribution will be governed.The more lenders the merrier, he says. The BRICS have repeatedly said they're concerned about US monetary policy, so this is a direct way for the group to respond with firepower.Brazilian President Dilma Rousseff, who is hosting the summit as she holds the BRICS' rotating chair, would appear in a position to highlight trade barriers and challenge leaders to set aside protectionism and stop blocking each other on a host of imports. But that's unlikely to happen given the tensions it would create with major lender China, says Mauricio Mesquita Moreira, principal trade and integration economist for the Inter-American Development Bank.In general, Brazil is still too reluctant to confront China particularly on this issue of trying to improve the composition of trade and trade practices, Mr. Moreira says.China, the world's second largest economy and a major investor in the other BRICS, is in many ways the group's driving political and financial force, contributing the largest share to the new bank and reserve pool. Brazil is more on the receiving end, a fact highlighted by Brazilian Minister of Trade Mauro Borges during the summit. He said the new $50 billion BRICS bank, which will not be open to outside nations, will have a special focus on the infrastructure development that Brazil craves.China, for instance, has built up considerable expertise in building railways, so Brazil can learn from that experience, Mr. Borges told reporters. Infrastructure is critical for us to reach our long term goals and is key to our competitiveness.Trade ministers from each nation met July 14 and pledged to refrain from trade protectionist measures that are incompatible with WTO obligations. Yet at the same time, Brazilian exports of poultry, pork, and beef are restricted by every other BRICS nation in a clear violation of both the minsters' communique and WTO rules.