BRICS nations sign pacts to promote trade in local currency
In an initiative to promote trade in local currencies, the BRICS nations signed two agreements to provide line of credit to business community and decided to examine the possibility of setting up a development bank on lines of multilateral lending agencies.
The agreements were signed by officials of five countries -- Brazil, Russia, India, China and South Africa -- at the fourth BRICS summit in New Delhi.
"The agreements signed today by development banks of BRICS countries will boost trade by offering credit in our local currency," Prime Minister Manmohan Singh said in a media statement after the meeting.
The Master Agreement on Extending Credit Facility in Local Currency and the Multilateral Letter of Credit Confirmation Facility Agreement are being perceived as a step towards replacing the dollar as the main unit of trade between them.
Such intra-BRICS initiatives, according to officials, will not only contribute to enhanced trade and investments among the nations but would also facilitate economic growth in difficult economic times.
As regards the initiative to set up a BRICS Development Bank on the lines of multilateral lending agency, Dr. Singh said the proposal would be examined by the finance ministers.
"A suggestion has been made to set up a BRICS development bank, we have directed our FM to examine the proposal and report back by next summit," Dr. Singh said.
The initiative to set up a BRICS Development Bank on the lines of the World Bank would allow the member countries to pool resources for infrastructure development and could also be used to lend during the difficult global environment.
Intra-BRICS trade is about USD 230 billion and has the potential of more than doubling to USD 500 billion by 2015.
Expressing concern over protectionism in a difficult economic environment, the BRICS countries on Wednesday said the developed nations are undermining the global food security by distorting trade through agriculture subsidies.
Ahead of the BRICS Summit in New Delhi on Thursday, trade ministers from Brazil, Russia, India, China and South Africa said in a joint statement, "subsidies in agriculture by some developed countries continue to distort trade and undermine the food security and development prospects of developing countries".
Such protectionism should be shunned, the statement said, after the trade ministers' meeting.
"The ministers emphasised the need to resist protectionist tendencies...," it added.
They have also agreed for a pact to extend cross-country credit in local currencies of the member countries. The MoU in this regard would be signed on Thursday, a Commerce Ministry official said.
Commerce and Industry Minister Anand Sharma, in a joint press conference, said it should be possible for the intra - BRICS trade to more than double to USD 500 billion by 2015. At present, it is USD 212 billion.
Concerned over the fallout of the European sovereign debt crisis, BRICS countries called for collective efforts to deal with the problem.
"Adversity of financial crisis is being faced by all. There is a need to work together to overcome from this problem," Sharma said on Wednesday.
China's Trade Minister Chen Deming said, his country would make "due contribution" to a fund to bail out the euro zone from the financial crisis.
"There is a large untapped potential for intra-BRICS trade and investments...that would facilitate economic growth at a time when the global economy is hobbled by uncertainty," Sharma said.
Further, the joint statement said that the Ministers also directed their officials to explore ways to enhance intra-BRICS cooperation in areas of customs, trade facilitation, investment promotion for small and medium enterprises, trade data collection and intellectual property rights.
They also directed their officials to explore ways to enhance intra-BRICS cooperation in areas of customs, trade facilitation, investment promotion for small and medium enterprises, trade data collection and intellectual property rights.
Ministers also asked officials to enhance trade in higher value-added manufactured products to support industrialisation and employment in their countries.
Expressing "deep concern" over the current impasse in the Doha Development Round, ministers said that there is a need to explore outcomes in specific areas where progress is possible.
"It is of utmost importance that negotiations on any components of the Doha Round are consistent with the existing mandates. The Ministers did not support any plurilateral initiatives that go against the fundamental principles of transparency, inclusiveness and multilateralism," it added.
The Ministers agreed to coordinate their positions at the WTO and in other multilateral fora such as the forthcoming meeting of the G20 Trade Ministers.
"At a time when the global economy is in crisis, the Doha trade Round is at an impasse and multilateralism is under challenge, it is vital for UNCTAD to strengthen its role of policy dialogue, consensus building and capacity building for developing countries," it said.
They also took note of the discussions in the Contact Group on Economic and Trade Issues (CGETI) on Russia's proposal for setting up BRICS Projects Platforms/ technology pool for joint projects development.
Meanwhile, officials said that the BRICS group may launch on Thursday a joint development bank and steps to bring their stock exchanges closer.
The move would allow the member countries to pool resources for infrastructure development and could also be used to lend during the difficult global environment, the officials added.