Relevance of BRICS in TTIP Era

TTIP or Transatlantic Trade and Investment Partnership is the major initiative of US and EU to lead the standards for global trade without the BRICS nations playing any substantial role.

• BRICS economies helped the world tide through the financial crisis of 2008 and the five nations-Brazil, Russia, India, China and South Africa together account for 43% population of the world, have foreign exchange reserves to the tune of $4.4 trillion and have trade amounting to $282 billion within the group. This measures upto 15% of world trade and 20% of the world’s FDI flows. The facts strongly back the importance of BRICS.
• TTIP has despite the size and significance of BRICS has left the latter with limited options to look for its relevance. TTIP apart from steering 46% of world trade will also define the international trade rules and will continue to dominate the global governance and economic structures. The BRICS trade is largely driven by the demand in the advanced economies which will play a compelling force for these nations to fall in line with the standards set by TTIP. TTIP’s exclusion of developing economies is a major jolt to multilateralism. TTIP will however, boost household income for US and EU which will further translate into greater purchasing power and an increased demand for goods and services. On the flip side, TTIP will also mean a reduced market share for non-TTIP nations i.e. as expected Germany-BRICS trade will fall by 10% while US-BRICS trade would dip by 30%.

Thus, BRICS will have two roads to take-one and the effective one is to establish a BRICS-FTA which will stand to balance the TTIP and put BRICS nation on a world stage. The second is to have a passive engagement and foster closer cooperation among them and ultimately emerge as a powerful trade block. The nations should overcome bilateral economic impediments like currency manipulation, infrastructure disparity etc.