South Africa
Author: Philani Mthembu
Source: www.iol.co.za

The year 2018 will be one of South Africa's busiest on the diplomatic calendar since democratisation in 1994. While it offers many possibilities and opportunities for newly sworn in President Cyril Ramaphosa and his administration, it will also test the state's strategic thinking when it comes to utilising its international partnerships to achieve domestic and regional priorities.

While South Africa maintains a large diplomatic presence in the world, question marks persist on whether the country's foreign policy brings about tangible benefits for the broader society. This question is especially pertinent in tough economic and political times.

South Africa finds itself chairing the Brics (Brazil, Russia, India, China, South Africa) group of countries, the Southern African Development Community, the Indian Ocean Rim Association and has recently put through its bid for a non-permanent seat in the UN Security Council in 2019-2020.

These multiple responsibilities place an obligation on the foreign policy community to craft a coherent and consistent strategy in line with the country's domestic and regional priorities. While the Department of International Relations and Cooperation remains the central focal point for South Africa's international relations, sub-national spheres of government such as cities and provinces have become increasingly important foreign policy actors.


The task of the South African state will thus be to ensure a coherent, whole-of-government approach underpinned by a clear grand strategy on South Africa's international relations. The state will thus have to demonstrate an ability to co-ordinate within and outside of government to make use of the available human resources involved in thinking through and implementing South Africa's foreign policy.

During the recent State of the Nation address debate on February 19, Minister of Science and Technology Naledi Pandor noted that under South Africa's Brics chairship, the country would prioritise the promotion of value-added trade and intra-Brics investment into productive sectors, while pointing out that under its chairship of the SADC it would prioritise implementing the SADC industralisation strategy and developing an infrastructure roadmap.

Given the focus of the Brics New Development Bank in funding sustainable infrastructure, the country will have to explain to its African partners to what extent the Africa Regional Centre of the Bank now headquartered in Johannesburg would contribute to filling the infrastructure gap in the region.

While some within and outside of South Africa have argued that the country's Brics membership constitutes a turn towards the East (read China) and a shunning of relations with partners in the North (read EU and the US), Pandor sought to dispel this line of argumentation. She states that "(a)s we work to further strengthen the Brics partnership, we will certainly not neglect other valued and established partnerships such as the one with the European Union, which continues to be an important trading, investment, development co-operation and dialogue partner for South Africa".

Her balancing act is more in line with the empirical reality of South Africa's international engagements, where more than 70 percent of the country's foreign direct investment continues to come from countries in the EU. This line of reasoning also takes into consideration the reality the EU remains the number one source of funding for regional economic communities and the African Union.

Perhaps this signals a more pragmatic approach that balances the country's engagement with global reformers in the Brics and established powers in the global North. In this approach, Brics is not romanticised as heralding an overturning of the global system, but instead plays a role in the country's overall grand strategy and positioning in global politics.

The real pressure thus lies in crafting a pragmatic foreign policy, yet one still defined by a stronger normative underpinning drawing from the country's domestic values.

Whether one is a Brics optimist or a sceptic, and there remains many sceptics within and outside of South Africa, the reality is that South Africa is a member of the Brics grouping, and its 2018 presidency will usher in the beginning of the second decade of the Brics partnership.

The only way to allay the anxieties of sceptics will be to demonstrate a type of diplomacy that sees Brics membership not as an end goal in itself, but as part of a web of international engagements synchronised with delivering on South Africa's domestic and regional priorities.

Those responsible for implementing the country's foreign policy must use 2018 to inculcate a culture of strategic thinking and engagement on the global stage that brings about tangible benefits to the country's citizens.

* Mthembu is Executive Director, Institute for Global Dialogue.

** The views expressed here are not necessarily those of Independent Media.

South Africa
Author: Philani Mthembu
Source: www.iol.co.za

The year 2018 will be one of South Africa's busiest on the diplomatic calendar since democratisation in 1994. While it offers many possibilities and opportunities for newly sworn-in President Cyril Ramaphosa and his administration, it will also test the state's strategic thinking when it comes to using its international partnerships to achieve domestic and regional priorities. While South Africa maintains a large diplomatic presence in the world, question marks remain on whether the country's foreign policy brings about tangible benefits for the broader society. This question is especially pertinent in tough economic and political times. South Africa finds itself chairing the Brics (Brazil, Russia, India, China, South Africa) business communities, the Southern African Development Community (SADC), the Indian Ocean Rim Association and recently put through its bid for a non-permanent seat in the UN Security Council for 2019-20.

These multiple responsibilities place an obligation on the foreign policy community to craft a coherent and consistent strategy in line with the country's domestic and regional priorities. While the Department of International Relations and Co-operation (Dirco) remains the central focal point for South Africa's international relations, sub-national spheres of government such as cities and provinces have become increasingly important foreign policy actors, while the role of Parliament remains crucial in ensuring oversight. Non-state entities such as think tanks, research centres, the private sector, NGOs and broader civil society also cannot be ignored. The task of the state will thus be to ensure a coherent whole of government approach underpinned by a clear grand strategy on international relations.

The state will have to demonstrate an ability to co-ordinate within and outside of government to make use of the available human resources involved in thinking through and implementing South Africa's foreign policy.

During the State of the Nation address debate on February 19, (then) Minister of Science and Technology Naledi Pandor laid out the foreign policy priorities of the Ramaphosa administration. She made mention of the implementation of the Tripartite Free Trade Area, which combined the markets of 26 countries and more than 600million Africans as a key priority, while noting the importance of negotiating the Continental Free Trade Agreement to secure value as a block for African interests in the global political and economic landscape.


Pandor noted that during its chairship of Brics, South Africa would prioritise the promotion of value-added trade and intra-Brics investment into productive sectors, while pointing out that under its chairship of SADC it would prioritise implementing the SADC industrialisation strategy and developing an infrastructure road map.

Given the focus of the Brics New Development Bank in funding sustainable infrastructure, the country will have to explain to its African partners to what extent the Africa Regional Centre of the bank headquartered in Joburg would contribute to filling the infrastructure gap in the region. This will remain a focal point given the expectation on the continent that projects funded would not only be located in South Africa, but have a regional focus.

Pandor called on the country to address the notion that it did not share the benefits of Brics sufficiently, nor those derived from its G20 membership.

While some have argued that the country's Brics membership constitutes a turn towards the East (read China) and a shunning of relations with partners in the North (read EU and the US), Pandor sought to dispel this line of argument. She stated that "as we work to further strengthen the Brics partnership, we will certainly not neglect other valued and established partnerships such as the one with the EU, which continues to be an important trading, investment, development co-operation and dialogue partner for South Africa." Her balancing act is more in line with the empirical reality of South Africa's international engagements, where more than 70% of the country's foreign direct investment continues to come from the EU.

This line of reasoning also takes into consideration the reality that the EU remains the biggest source of funding for regional economic communities and the AU. Perhaps this signals a more pragmatic approach that balances the country's engagement with global reformers in the Brics and established powers in the global North.

In this approach, Brics is not romanticised as heralding an overturning of the global system, but instead plays a role in the country's overall grand strategy and positioning in global politics.

Given the contemporary geopolitical landscape, characterised by continued unipolarity of the US in the military realm, and multipolarity in the economic sphere, this may be a more welcome approach to foreign policy given that the country does not face any real pressure to choose between North and South.

The real pressure thus lies in crafting a pragmatic foreign policy, yet one still defined by a stronger normative underpinning drawing from the country's domestic values.

Whether one is a Brics optimist or sceptic, the reality is that South Africa is a member of the Brics grouping, and its 2018 presidency will usher in the beginning of the second decade of the Brics partnership. While some will remain sceptical of the country's role in Brics, the only way to allay the anxieties of sceptics will be to demonstrate a type of diplomacy that sees Brics membership not as an end goal in itself, but as part of a web of international engagements synchronised with delivering on South Africa's domestic and regional priorities.

Philani Mthembu is executive director, Institute for Global Dialogue.

China
Author: Wang Yi
Source: www.chinadaily.com.cn

The first sessions of the 13th National People's Congress, China's top legislature, and the 13th National Committee of the Chinese People's Political Consultative Conference, the country's top advisory body, will be held soon. Again, the eyes of the world will be on China.

Over the past year, under the strong leadership of the Communist Party of China Central Committee with Comrade Xi Jinping at its core, China's diplomacy has honored its solemn commitment with real actions to serve the Chinese Dream of national rejuvenation with a strong sense of mission and contribute to the world dream of lasting peace and shared prosperity in a pioneering spirit.

We have forged greater synergy for the Belt and Road Initiative. The first Belt and Road Forum for International Cooperation yielded over 270 outcomes and facilitated a number of major cooperation projects, creating a strong momentum of extensive participation from around the world. Today, the Belt and Road has become the biggest platform for international cooperation and a most welcomed international public good.

We have made great efforts to steer globalization in the right direction. On various occasions from Davos to Geneva in Switzerland, and from Hamburg in Germany to Danang in Vietnam, President Xi Jinping presented to the world China's vision of greater balance in economic globalization and of a community with a shared future for humankind. He also elaborated on China's proposals for an open world economy and for greater economic integration in the Asia-Pacific. Those remarks instilled confidence and positive energy into the international community.

We have explored more avenues to advance our mutually beneficial relations with other countries. New progress has been made in our coordination and cooperation with other major countries such as the United States and Russia, and with Europe. Mutual trust and cooperation with our neighbors has been strengthened, and more substance has been added to our partnerships with other developing countries. China's preference for dialogue and partnership over confrontation and alliance has created greater resonance, which opens up exciting possibilities for this new approach to state-to-state relations.

We have initiated a new model for BRICS cooperation. At their summit in Xiamen, Fujian province, BRICS leaders decided to forge a closer, broader and more comprehensive strategic partnership and to further upgrade BRICS cooperation. The new "BRICS plus" approach of the summit will turn BRICS into a new platform for South-South cooperation with global influence.

More cooperation, fewer frictions expected this year

The year 2018 is the first year following the 19th CPC National Congress and marks the 40th anniversary of China's reform and opening-up policy. The world is watching closely how China will handle its relations with other countries in this new era.

My message is, China's diplomacy will follow the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, stay committed to peaceful development, work with other countries to build a new form of international relations and a community with a shared future for humankind, and make new progress in major country diplomacy with Chinese characteristics.

In 2018, we look forward to a world of greater openness and less isolation. The green shoots in the new round of global growth must be nurtured by all countries. What China has learnt in its 40 years of reform and opening-up is that prosperity only comes to those who embrace the world with open arms. China will remain committed to opening-up as a fundamental policy and a mutually beneficial strategy.

We will get more in line with international economic and trade rules, significantly widen market access, open the services sector, especially the financial sector, wider, and create a more appealing investment environment. We will promote trade and investment liberalization and facilitation, and develop the global governance system to make economic globalization more open, inclusive and balanced so that its benefits can be shared by all. We will work on the Belt and Road Initiative by implementing the deliverables of the first forum and starting preparations for the second one.

This will enable us to break new ground in opening-up. We will host a number of events, including the annual conference of the Boao Forum for Asia, the Summit of the Shanghai Cooperation Organization, the Summit of the Forum on China-Africa Cooperation, and the China International Import Expo, to add momentum to the trend of openness and development.

In 2018, we look forward to a world of more cooperation and less friction. In this age of globalization, the world is in fact a global village. Instead of showing off power by flexing muscles, countries should embrace cooperation to face common challenges and make the pie of shared interests larger. In that spirit, China will expand its global network of partnerships and build a framework for major country relations featuring overall stability and balanced development. With regard to our relations with neighbors, we will follow the principles of amity, sincerity, mutual benefit and inclusiveness.

We will broaden cooperation and narrow differences with them to jointly build a community of shared future in Asia. We will uphold justice while pursuing shared interests for greater solidarity and cooperation with other developing countries. We will add new dimensions to our cooperation mechanisms with Africa, Latin America and the Caribbean, and Arab countries to keep the mechanisms vibrant in changing circumstances.

Such efforts will enable us to set an example for a new type of international relations. With a commitment to extensive consultation, joint contribution and shared benefit, we will take an active part in multilateral cooperation and the establishment of a global system of governance.

Finding solutions to thorny issues

In 2018, we look forward to a world of more trust and less estrangement. To navigate the complicated international landscape, countries need to have more mutual trust and less suspicion. Efforts must be made to find political solutions to long-running hotspots and thorny issues and bring about outcomes that are in the interest of all parties.

The current momentum of de-escalation on the Korean Peninsula presents all parties with an opportunity to demonstrate greater sincerity for dialogue and negotiation and to facilitate constructive interactions. To put it more broadly, as a partner that all sides can count on, China will continue to uphold the equality of countries regardless of their size, strength and wealth, stand for dialogue and consultation as the only approach to solving disputes and differences, support political settlement to regional hotspots and act constructively to that end. It is our sincere hope that dialogue and cooperation will prevail in our world.

Given that China is still the world's largest developing country, serving development at home remains the top priority on its diplomatic agenda. We will act upon the new development philosophy, present Chinese provinces, regions and cities to the world under the theme "China in the New Era", and contribute to the coordinated development of the Beijing-Tianjin-Hebei region, the planning and development of the Xiongan New Area and the hosting of the 2022 Winter Olympics. We will explore a mechanism for protecting the safety and security of Chinese nationals and entities abroad to effectively safeguard our legitimate rights and interests. China will work with the parties involved to properly address trade disagreements on the basis of mutual respect, equality and mutual benefit.

The year 2018 is the Year of the Dog. In another Year of the Dog 120 years ago, when China was poor and weak because of domestic turmoil and foreign aggression, a group of patriotic Chinese pushed for a "Hundred Days' Reform". They tried but eventually failed to find a way to national rejuvenation and prosperity. Today, 120 years on, China has not only found a path of socialism with Chinese characteristics but also achieved a remarkable transformation－it has stood up, grown rich and is becoming strong.

A sea change has taken place in China, which represents new opportunities for the peace and development of the world. The world that we look forward to is what we will strive for in our diplomatic work in 2018. I encourage our friends around the world to continue to follow China's development and diplomacy. Together, let us write a new chapter in the win-win cooperation between China and the rest of the world.

The author is minister of foreign affairs of China.

Germany
Author: Tamara Naidoo
Source: www.fes-connect.org

China's Belt and Road Initiative (BRI) delivers a final blow to South Africa's foreign policy claim to be the gateway to the African continent. As China boosts its preferred Silk Road partners, it leaves South Africa at a loss for its very own foreign policy identity—and opens up a murkier future for the African continent.

On 16^th of February 2018, South Africans eagerly watched their new President Cyril Ramaphosa deliver the State of the Nation address in a drought-stricken Cape Town. The speech left foreign policy experts underwhelmed as to the strategic vision of the country.

South Africa is part of the international trend that has seen several powerful states turn inwards in response to an allegedly unjust global economic system. Within this trend Ramaphosa in his speech effectively reduced foreign policy to a type of economic diplomacy (link in English) that would assist the country in its pursuit of economic transformation, capable of addressing the country's triple challenge of poverty, inequality and unemployment.

"The country [South Africa] added legitimacy to the Global South grouping not just by its own inclusion, but also by its representation of wider African interests in an unjust and skewed global economy."

Experts comparing the country with the heyday of former President Nelson Mandela, see this as another instance of South Africa abandoning the human rights stance that earned it acclaim in its relations with the Global North, and moving towards a more self-interested position. More specifically, the country is called out for gravitating towards China through the Comprehensive Strategic Partnership with Beijing, its trade relationship that has seen China become South Africa's largest trading partner for eight consecutive years and its burgeoning relationship in BRICS, the association of emerging national economies where South Africa joins Brazil, Russia, India and China.

But seemingly at odds with this alliance of mutual benefits and win-win rhetoric, Beijing's most ambitious foreign policy agenda, the Belt and Road Initiative (BRI) is delivering a tough blow to South Africa's international standing, especially as China forges its path alone through the rest of Africa.

South Africa's Africa focus

Notwithstanding its history and stance regarding human rights, at the heart of South Africa's foreign policy (linkin English) is a deep-set recognition of how closely the country's own trajectory is tied to that of the African continent. In fact, South Africa's entrance in 2010 to the BRIC group of countries (Brazil, Russia, India and China) relied on lobbying (link in English) that the country added legitimacy to the Global South grouping not just by its own inclusion, but also by its representation of wider African interests in an unjust and skewed global economy.

South Africa's relative economic strength and pan-African footprint allowed it to adopt the role of gateway (linkin English) to the African continent. South African foreign policy actors promote the country's self-appointed role as gatekeeper to the continent was its raison d'étre for its prominent international standing. This self-perception by South Africa is propped up by international business ventures and grand diplomatic gestures such as the launch of the China-South Africa High Level People-to-People Exchange Mechanism in 2017 (link in English). But the onset of the BRI is exposing fissures in the BRICS grouping (link in English) that even South Africa cannot overlook in its alliance with China.

"Support in Africa [for the BRI] is not unanimous. Interest is dependent upon proximity to the BRI and the availability of alternative options for economic growth."

At the centre of the BRI are two physical routes linking Asia, Africa and Europe. While cynics scrapped the idea as fantasy, China is pulling followers, engaging countries as far afield as Latin America and the Caribbean (link in English). Certainly, there are challengers to this plan especially from within BRICS, where India and Russia are the most prominent obstacles for China. On the other hand, many enjoy China's perceived inclusive approach (link in English), a strategic move from China, which needs to pull together a whopping 4 trillion US dollars in future funding (link in English).

Africans more readily embraced the plan and its expected ripple effects, perceived as a necessary step for economic growth on the continent. Still, support in Africa is not unanimous. Interest is dependent upon proximity to the BRI and the availability of alternative options for economic growth.

BRI supporter and China-Africa expert Yu-Shan Wu at the South African Institute for International Affairs, argues that the BRI is favourable for Africa because it is in line with the development objectives of the Agenda 2063 of the African Union (AU). Other critics, such as Ronak Gopaldas of the Institute for Security Studies, suggest that a grim fate awaits African states who risk falling for China's debt-trap-diplomacy (link in English).

BRICS is a prime vehicle for South African ambitions

South Africa's own foreign policy aspirations are not only geared towards African prosperity. Rather, it is ambitiously aiming to re-write global financial rules towards more equitable global governance institutions. BRICS, the grouping tied by a common normative underpinning (link in English), is the prime vehicle for South Africa's foreign policy execution. South African Sherpa for G20 and BRICS Dr Anil Sooklal maintains that despite being the smallest emerging market in the forum, South Africa is an equal partner (link in English).

Others have observed that this influence translates to a voice at the BRICS table for the African continent. "With South Africa as a permanent member, Africa is not left out of major decisions made by other developing nations," writes Singapore-based management consultant Richard Li (link in English). "Africa instead, has the opportunity to contribute to the decision-making process and Africa stands to reap the benefits from the economic cooperation among the BRICS nations."

South Africa also stepped up to ensure access to the bloc by African leaders, inviting representatives to the coastal South African city, Durban, during the fifth BRICS Summit in 2013. This extension did not raise eyebrows as it is common practice for neighbours of the host country to be invited to the summits. But the dynamic changed after China unveiled the BRI in 2014, and started to pursue its continental agenda without going through South Africa.

"During the Chair of the AU Commission, China and the AU signed memoranda of understanding (MOUs) for the BRI that included cross-continental infrastructure development. It is unclear how these AU MOUs affect, overlap and intersect with national interests, national expressions of authority and national MOUs with China."

First, Beijing made clear its growing affinity for other African states connected to the BRI, notably Kenya, Tanzania, Djibouti, Ethiopia and other emerging hubs in East Africa.

Second, China's insistence on including BRI in different forums, especially BRICS and the Forum on China–Africa Cooperation (FOCAC) where there is no coherent African response, means there is no measure to control China's influence in continent-wide development. Typifying the lack of synergy within Africa is that during the Chair of the AU Commission (link in English), China and the AU signed memoranda of understanding (MOUs) for the BRI that included cross-continental infrastructure development. It is unclear how these AU MOUs affect, overlap and intersect with national interests, national expressions of authority and national MOUs with China.

Third, China seems to be outgrowing the parameters of the BRICS and is exploring new formations. China seems to be exploring two options, either by expanding BRICS to a BRICS Plus Approach where the likes of Egypt and Kenya are stakeholders—which compete with South Africa's standing within BRICS. Alternatively, China will focus an increasing amount of energy on BRI and less on the aims of BRICS or on its loyalty to the commonly articulated world vision with South Africa.

South Africa's international standing without its Africa clout

With other African states in favour with China today, South African-based experts (link in English) no longer speak of South Africa as a gateway to the continent, nor do experts acknowledge that there is any contest for the spot by other African nations. Instead, the convergence is that several points of access are already present in Kenya, Nigeria etc.

Tales are slowly coming to the fore of China's debt-trap diplomacy or the consequences for those who dare to threaten the One China Policy which South Africa is now experiencing

As South Africa struggles to find a new role on a stronger continental plane, China is poised for partnership, armed with its improved set of public relations. As for what this means for African states, tales are slowly coming to the fore of China's debt-trap diplomacy or the consequences for those who dare to threaten the One China Policy (link in English) which South Africa is now experiencing.

Ultimately, as China primes certain African partners, it is in China's control to decide which African states rise with it. As such, without the guiding hand of pan-African institutions, Africans are encouraged to compete against each other for economic relations with China and essentially, influence on the continent. This reality opposes the widespread African consensus that the best strategy for a prosperous Africa is pursuing external relationships as a unified Africa.

"Disarmed of its identity, we must ask what will happen to the wider African continent when South Africa is unable to perform its role, depicted at best as protector of the African continent or, more cynically, as self-proclaimed gatekeeper."

South Africa tried to corroborate a proactive African narrative (link in English) to relations with China through FOCAC under its chairmanship. Though it is to be reviewed whether South Africa had any success, it is promising news in 2018 that AU adopted institutional reforms (link in English) to ensure coherent external relationships with the continent in future. However, the implementation of the BRI continues and time is against Africa.

Tamara Naidoo (left), at "China – Africa: High time for a common integrated African policy on China
Symposium" held by the Institute for Global Dialogue (IGD) associated with UNISA, Africa-China Reporting Project (ACRP), and Friedrich Ebert Stiftung (FES), 20th July 2017, Johannesburg. Photo by FES.

In the end for South Africa, without the Mandela glow to enhance its international standing nor its claim as a gateway to Africa, there is little left of its foreign-policy identity. Disarmed of its identity, we must ask what will happen to the wider African continent when South Africa is unable to perform its role, depicted at best as protector of the African continent or, more cynically, as self-proclaimed gatekeeper. It is, worryingly, South Africa's loyalty to China within BRICS, South Africa's one visionary foreign policy project, that ironically delivers this final blow to its international standing in what may be a calculated game to direct the continent's future.

In the midst of South Africa's preparation for the 10th BRICS Summit this year, the onus falls on South African civil society to push President Ramaphosa into ruffling some feathers in BRICS. South Africa can no longer afford to meander without strong foreign policy positioning—this may require re-evaluating its approach to some friendships. ###

Tamara Naidoo is programme manager for international affairs at Friedrich-Ebert-Stiftung South Africa. In 2017, FES South Africa worked with partners on a report with recommendations for a pan-African policy and strategy to guide Africa's engagement with China. For more information about the current work focus and activities visit the country office website.

United Kingdom
Author: Savita Kulkarni
Source: impakter.com

This article is the fourth of the series: Pipe dream or achievable vision: How can we deliver on the 2030 Agenda?

The 2030 Agenda foresees a bright future for humanity, one in which everyone enjoys peace and prosperity on a bountiful planet. But, with nationalism, populism and protectionism on the rise, how can we deliver on this utopian vision? This series of articles looks at what the international development system needs to do to deliver on this incredibly complex task – from rebuilding trust in multilateralism to bringing in the trillions of dollars needed each year to finance change.

The first article can be found here: "Trust or bust: The UN must put its house in order to attract finance for development". The second article – "How 2030 Agenda Provides Chance for Countries to Escape "Middle-Income" Trap and Help Finance Global Development". The third article – "Global Food Systems and Aid for Trade: a Good Mix for Financing the SDGs".

Brazil, Russia, India, China and South Africa (BRICS), five of the world's most important emerging economies, are increasingly flexing their muscles on the world stage as power dynamics shift, making them key players in the prospects of success for the 2030 Agenda for Sustainable Development.

The bloc is presenting a strategy for creating a world order that includes a bigger role for developing nations and is becoming a meeting place for developing countries and the platform for South-South cooperation.

The BRICS are members of the G20, accounting for 43 percent of the world's population, at least 23 percent of global GDP, and at least 16 percent of world trade. In their first decade of partnership, the BRICS countries have become a cohesive force with a strong desire to advance their development strategies by coordinating macroeconomic policy.

Their influence is seen in many areas. In 2016, Russia became the largest wheat exporter in the world. China has the globe's largest industrial and manufacturing capacity. India is to the fore of the scientific, technological and pharmaceutical fields. Brazil is endowed with abundant mineral, water, biological and ecological resources, and South Africa abounds in natural resources.

The past decade has seen growing cooperation among the BRICS in trade, infrastructure finance, urbanization and climate change. There has been progress in people-to-people connections and an improved understanding of each other's industry, academia and government through platforms such as the BRICS Academic Forum and Business Council.

Additionally, a new international mechanism for financial opening and macro-control is forming, focusing on spreading the application of projects such as Shanghai's new smart energy demonstration project, Brazil's renewable energy transfer project, India's renewable energy power supply and loan project, South Africa's transmission network and other new energy projects.

With the implementation of the 2010 International Monetary Fund (IMF) reform, an important step has been taken in further boosting the influence of the BRICS. They need to continue pushing forward the reform of the Bretton Woods institutions to increase the voice and representation of emerging markets and developing countries in global economic governance.

The above developments mean that the BRICS are well positioned to take a leading role in helping to achieve the 2030 Agenda. The trick is to ensure that they work with the traditional "Western" powers rather than each viewing the other with a competitor's eye.

BRICS IMPACT ON AID ARCHITECTURE AND DEVELOPMENT FINANCE

Two components make up the financial architecture of BRICS: the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA). Their institutionalisation has been the BRICS' most-notable achievement, marking a shift from rhetoric to results and offering credible alternatives to the Atlantic system of global governance.

BRICS+ – through which Indonesia, Turkey and Mexico could become members – speaks for the majority of developing countries and seeks development assistance for them. It has set up emergency foreign exchange reserves, established the NDB, and expanded into other types of cooperation. After the issuance of renminbi bonds for the first time in China, these will also be made available in India, Brazil, and Russia. The NDB could be an opportunity to involve experts and equipment from the BRICS countries, in contrast to projects financed by the IMF or the World Bank, which usually deploy resources from western countries.

Development financing from the BRICS perspective tends to differ from that of Russia and traditional donors, which emphasise the role of aid in poverty reduction. The other BRICS countries, on the contrary, provide financial assistance based on mutual benefits, in line with the principles of South-South cooperation.

BRICS, in particular, China, avoid policy conditionality on the grounds that it interferes with the recipients' sovereignty, and tend to provide non-cash financing in order to circumvent corruption. Traditional donors, on the other hand, view policy conditionality as a means to ensure the efficient use of aid.

There are also different views on obtaining debt sustainability. Some BRICS countries lean towards micro-sustainability and growth, while traditional donors pay more attention to macro-sustainability in the long term. The gap, however, is narrowing, as the BRICS increasingly realize the importance of overall debt sustainability and traditional donors see the need for investing in physical capital and obtaining results.

THE ROLE OF INDIA

A gradual revolution is underway in global development. Development assistance offered by western states is usually based on a hierarchical relationship between donor and recipient. Emerging economies like India are evolving new financial instruments and institutional arrangements to facilitate development cooperation.

India avoids terms such as 'donor' and 'aid', and frames its programmes in the context of a mutually beneficial partnership that is demand-driven and politically non-conditional. India has transformed from a poor recipient country to a development partner with global interests and ambitions. It now provides relief assistance to bilateral partners, has cancelled the debts of some heavily indebted countries, and launched the India Development Initiative to provide grants, loans and project assistance to developing countries in Asia, Africa and Latin America.

Since the early 2000s, reflecting its growing economic interests, India has also begun to use Lines of Credit (LOC) or export credits as one its key development partnership instruments. These, together with trade and investment, technology, skills upgrade and grants, significantly raise the total amount India pledges towards development partnerships.

The recent liberalisation of labour and environmental regulations at central and state government levels, coupled with generous new financial incentives for investment, should result in deep structural changes that boost growth in India. Policies are being redesigned to attract additional foreign investment into the manufacturing, hydrocarbons, insurance, defence and railways sectors.

At the BRICS meeting in Xiamen, China, in September 2017, Prime Minister Narendra Modicommented that the group contributed "stability and growth in a world drifting towards uncertainty", and asked BRICS to team up with the International Solar Alliance (ISA), which brings together a coalition of 121 countries for mutual gains through enhanced solar energy utilisation.

He called for the speeding up of the creation of a BRICS credit rating agency, for which an expert group has already been constituted, and exhorted Central Banks to further strengthen their capabilities and promote cooperation between the Contingent Reserve Arrangement and the IMF. Modi said a strong partnership among member-nations on innovation and the digital economy could help spur growth, promote transparency, and support the sustainable development goals.

He also underlined the need for scaling up cooperation in skill development and exchange of best practices, with a particular focus on Africa, adding that "India would be happy to work towards more focused capacity-building engagement between BRICS and African countries in areas of skills, health, infrastructure, manufacturing and connectivity".

India, Modi said, was in "mission-mode" to eradicate poverty and ensure health, sanitation, skills, food security, gender equality, energy and education. He indicated that women empowerment programmes were "productivity multipliers" that brought women into the mainstream of nation-building.

BRICS AND THE LICS Such actions are a clear sign that the BRICS can help lift up less-prosperous nations. Economic relations between low-income countries (LICs) and BRICS have strengthened over the past decade and both sets of countries have found it beneficial to boost their economic cooperation.

Rapid economic expansion in BRICS and the strong economic complementarity between the two groups of countries have underpinned the rapid growth and high intensity of bilateral trade – many LICs have a strong comparative advantage in commodities, while most BRICS countries are competitive producers of manufactured goods.

Despite its small overall volume compared with OECD financing, development financing from BRICS has enabled many LICs to increase power generation and transport networks, alleviate infrastructure bottlenecks and reduce poverty.

Given the relatively low saving rates and lack of technology and skills in most LICs, more Foreign Direct Investment (FDI) is needed to help strengthen domestic productive capacity and improve competitiveness. Continued efforts should be made to improve the business environment, upgrade labour skills, foster technology transfer, and integrate FDI firms into local economies.

Embracing policy reforms to meet these challenges will place LICs in a stronger position to reap the long-term benefits of global integration.

ADDRESSING POVERTY THROUGH RURAL DEVELOPMENT

Poverty today is primarily rural, so accelerating rural development – with a big focus on agriculture – will be key to achieving the Sustainable Development Goals. In low-income countries, growth originating from agriculture is twice as effective in reducing poverty as growth originating from other sectors. It is important that the tools, approaches and technologies developed are useful and accessible to poor family farmers in developing countries so that they can increase production and productivity.

Information and Communication Technologies (ICTs) also help to address many of the challenges smallholders face accessing information on prices, weather forecasts, vaccines, financial services, and so on. FAO is collaborating with the G20, the OECD and the International Food Policy Research Institute (IFPRI) to make sure these technologies benefit smallholders.

Agricultural growth requires investments in R&D, and the BRICS could play a leading role in this, as all five countries have strong agricultural research systems that are working on many of the challenges faced by developing countries, such as feeding a growing population in a sustainable way. Biotechnology could also play a key role in these advances, as could agroecological approaches. Climate-smart agriculture will be essential to adapt to the uncertain changes that farmers face. This will rely heavily on cutting-edge research.

Of course, agricultural growth on its own cannot eradicate hunger and poverty. It needs to be accompanied by social protection programmes, which have poverty reduction and health benefits and can also strengthen the confidence of family farmers, encouraging them to become more entrepreneurial. Brazil's Fome Zero and India's National Rural Employment Guarantee Act are global references in this regard.

It is now necessary to consolidate the gains for the BRICS and move forward towards an inclusive and global Agenda 2030. To do so it is important that BRICS and the West see each other as partners and not competitors.

Zimbabwe
Source: thebricspost.com

The message that Zimbabwe is open for business was conveyed by banners and many government officials at the Zimbabwe Mining Investment Conference 2018 held at the Meikles Hotel in Harare, Zimbabwe.

Zimbabwe has 800 mines which have the potential capacity to earn US$18 billion per year

In this case, however, it is not mere words, as Minister of Mines Winston Chitando told more than 300 delegates that his ministry and the Chamber of Mines held weekly meetings to remove obstacles to doing business.

The recently announced National Railway of Zimbabwe deal with South Africa's state-owned logistics firm Transnet to recapitalise rolling stock and locomotives showed that the government was keen on making it easier to do business in Zimbabwe.

Lyudmila Dyba from the Russian-based Liberation Mining that in her view the two biggest obstacles to mining in Zimbabwe were infrastructure constraints, in terms of logistics and power supply, as well as the slow pace of regulatory response.

"In Russia we are used to getting a response from bureaucrats within hours or days, but here it takes weeks and sometimes months to get an answer," she said.

In response to a question from The BRICS Post as to BRICS interest in Zimbabwean mining and whether Zimbabwe would participate at the BRICS Summit in South Africa in July, Chitando said there was interest from several BRICS mining companies, but rather than visit each BRICS country in turn, the government was organising an international investment conference in London, the United Kingdom, from 14 to 17 March.

"All BRICS mining companies are welcome to attend that conference as I will only be one among many ministers at that conference, as Zimbabwe is open for business and we want to attract investment as fast as possible, especially in the graphite and lithium sectors. As to whether we will attend the BRICS Summit, I do not know," he said.

According to consultancy Mining Report, Zimbabwe has 800 mines which have the potential capacity to earn $18 billion per year, but the sector has stagnated since 2009 with annual turnover only at $2 billion.

Zimbabwe's mining sector has a great opportunity for growth with the prospect of attracting $12 billion over the next 5 years.

Zimbabwe's vast mineral wealth is based on the Great Dyke with over 60 minerals and it has the second largest platinum and chrome deposits in the world, and is the fifth largest producer of lithium. Mining contributes 13 per cent to the economy and is responsible for 68 per cent of foreign exchange earnings.

Zimbabwe is targeting to produce at least 10 per cent of global lithium output within the next four years, following the discovery of new deposits of the mineral in different parts of the country.

The discovery of new deposits in areas including Kamativi, in Matabeleland North Province, and in Mashonaland Central Province, has resulted in the country seeing a scramble for lithium exploration and extraction licences by foreign investors.

Earlier this year, Australia-based Prospect Resources raised US$ 10 million to accelerate development of its Arcadia Lithium Mine, located about 38 kilometres east of Harare.

The Zimbabwe government has already declared the Arcadia Lithium Mine, which is expected to start production in the third quarter of 2018, as a priority project, to take advantage of growing global demand due to the use of lithium in lithium-ion batteries for electronics and electric vehicles.

The Zulu Mine located about 80 km from Bulawayo, Zimbabwe's second largest city, was at an advanced stage of development. The Zulu Mine project is being spearheaded by Premier African Minerals.

In his closing remarks to the conference, Stuart Comberbach, the Permanent Secretary in the Office of the President and Cabinet, said there remained a great deal still to be done.

But the actions of the past hundred days has shown that the new government had learnt the harsh lessons of the past and was busy making up for lost time.

India
Source: www.thehindubusinessline.com

With China pushing for greater cooperation in e-commerce amongst the BRICS group, New Delhi will stress on keeping issues of micro small and medium enterprises (MSMEs) de-linked from online retail, at a meeting of the contact group for economic and trade issues (CGETI) of the five-member bloc in Johannesburg this week.

"This is first of the two CGETI meetings that South Africa will host this year which will be followed by the BRICS Summit. Since China has been promoting e-commerce at BRICS with increased fervour, New Delhi has to ensure that ambitions don't rise in the area and countries are not forced to take on commitments under the garb of providing market access for MSMEs," a government official told BusinessLine. The BRICS includes Brazil, Russia, India, China and South Africa. Together the nations represent more than 40 per cent of the world population and an estimated 22 per cent of the world GDP.

The CGETI, which includes trade officials from all five nations, reports to Trade Ministers. It proposes institutional frameworks and measures to expand cooperation on economic and trade issues.

China, which held the presidency of BRICS in 2017, did its bit to officially expand the scope of e-commerce discourse amongst the five countries last year. It played a key role in setting up of the BRICS e-commerce working group. While the agenda of the working group largely talks about just promoting cooperation and enhancing interaction amongst BRICS stakeholders on e-commerce, under the category head of research on e-commerce a number of market access issues have also been included. "China is eager to include all issues under e-commerce talks including participation of MSMEs, existing barriers to cross-border e-commerce among BRICS and regulatory and legal framework," the official said. India is also resisting China's attempts to include negotiations on e-commerce rules at the World Trade Organisation.

New Delhi will focus on the issues of cooperation amongst MSME, cooperation between service suppliers, business visas and a framework for curbing non-tariff measures at the meet, the official added.

There would also be discussions on development of e-ports to improve trade efficiency between BRICS, but it has already been decided that setting up such ports would be voluntary.

"Intellectual property rights is also on the agenda, but discussions are expected only on exchange of information on existing frameworks," the official said. The CGETI in Johannesburg will be held during March 1-2.

South Africa
Source: www.bizcommunity.com

SA's cultural goods exports are growing faster than imports, according to a new report that examined the growth and structure of the country's cultural and creative industries trade between 2007 and 2016.

The report, released by cultural think tank the South African Cultural Observatory (SACO), highlights the need for a promotion of value-added trade in cultural goods and services, both with BRICS and other trading partners.

"International trade is an important driver of the economies of many African countries, and has the potential to create higher value-added employment. This report provides a clear understanding of the country's cultural goods trade trends over the past decade," said Prof Jen Snowball, SACO chief research strategist, co-author of the report with Rhodes University trade expert, Nicolette Cattaneo.

Rapid growth in trade

The global data on the sectors is improving and the creative economy is now recognised as one of the most rapidly growing sectors of the world economy. World trade in creative goods and services more than doubled between 2002 and 2011 with an average annual growth rate 8.8%.

Although cultural trade is largely dominated by developed countries – with North America and Europe accounting for 49% of the world's cultural exports – recent UNESCO reports have found that developing country export share in world trade grew steadily between 2002 and 2011 with an average annual growth of 12.1%. They also found that world flows of cultural trade doubled between 2003 and 2014, despite the 2008/9 financial crisis which resulted in many countries suffering a recession.

"In South Africa, cultural goods exports accounted for 0.46% of the country's total commodity exports in 2016, while cultural goods imports accounted for 0.66% of total commodity imports," Cattaneo and Snowball said.

Despite a significant slowdown in South Africa's total cultural goods trade in 2015, in line with slower growth in the economy more broadly, there was evidence of a comfortable recovery in 2016, the report notes.

Visual Arts and Craft significant traded domain

"Cultural goods exports grew faster than cultural goods imports for much of the post-crisis period, reducing the country's trade imbalance in cultural goods markedly. The Visual Arts and Crafts domain was a significant driver of this trend," Cattaneo and Snowball said.

"Visual Arts and Craft is a significant traded domain on both the export and import side in South Africa's trade with its BRICS partners. On the export side, Cultural and Natural Heritage is an important domain, together with Books and Press. With respect to imports, Visual Crafts and Arts, Performance and Celebration, and Books and Press are significant domains."

Although the report focused on cultural goods trade, it also emphasised that the role and significance of trade in cultural services is likely to increase with online digitisation affecting a number of CCI product categories.

"Since cultural services trade is likely to grow in relative importance under digitisation, better services trade data for the CCI sector is also needed to facilitate growth in this area," Cattaneo and Snowball added.

United States
Author: Patrick Bond
Source: www.counterpunch.org

Cyril Ramaphosa Relaunches Neo-Liberalism

Cyril Ramaphosa's soft-coup firing of Jacob Zuma from the South African presidency on February 14, after nearly nine years in power and a humiliating struggle to avoid resigning, has contradictory local and geopolitical implications. Society's general applause at seeing Zuma's rear end resonates loudly, but concerns immediately arise about the new president's neo-liberal, pro-corporate tendencies, and indeed his legacy of financial corruption and class war against workers. There is still a lack of closure on the 2012 Marikana Massacre, in spite of his February 20 speech to parliament pledging atonement. New legislation Ramaphosa supports will limit the right to strike, while the new budget has cuts and tax increases that hurt the poorest.

Internationally, the emergence of the Brazil, Russia, India, China and South Africa alliance in 2010 (when Beijing invited Pretoria on board) was Zuma's main legacy, he believed: BRICS offered enormous potential to challenge abusive Western hegemony. The reality, however, has been disappointing, especially in the most unequal and troubled of the five countries, South Africa, where Moscow-trained leadership expertly talked left… but walked right.

After Zuma, more extreme fiscal austerity and a return to mining-centric accumulation under Ramaphosa will amplify the misery locally – while likely leaving South Africa's commitment to the BRICS project in the doldrums. The first evidence of this came on February 21 when Ramaphosa's inherited finance minister, the corruption-tainted Malusi Gigaba, imposed austerity and liberalized exchange controls.

The end of Zuptanomics

Zuma's fall was due to a balance tipping in recent weeks between, on the one hand, patronage-based support within his African National Congress (ANC) leadership, mainly as a result of large-scale corruption paid for by a fast-rising public debt (from 28 to 55 percent of GDP since 2009). On the other, the resulting threat to ANC electoral prospects in 2019 came from the often farcical way Zuma fused dubious personal ethics, an ethnic traditionalism founded on patriarchy, and capital accumulation via criminal syndicates.

Two months ago, the ANC's leadership narrowly voted in Ramaphosa (against Nkozasana Dlamini-Zuma, who had last served as African Union commissioner and was considered loyal to her ex-husband) with the hope he can restore the party's prestige, won in the ANC's 1912-1994 era as a liberation movement and then during the 1994-99 presidency of Nelson Mandela. Yet Ramaphosa is himself also guilty of sustained corporate tax-dodging during his leadership of Lonmin's platinum mines and the continent's largest cellphone company (MTN). Also contributing to his riches were his controversial Shanduka coal mining house and the local McDonald's and Coca Cola franchises – all of which were divested by 2016 when his estimated wealth of $550 million was placed in a blind trust.

Now Ramaphosa has little more than a 15 month window in which to erase the electorate's visceral memory of the so-called 'Zupta' circuits that – along with Ramaphosa-aligned 'White Monopoly Capital' – so malevolently influenced the South African state over at least the past decade.

The Zupta nickname fuses Zuma's family and cronies, operating under the direction of three often vulgar-rich brothers, the Gutpas, who are Indian immigrants. The latter 'state capture' strategy began in the early 2000s but only came to the citizenry's attention during a luxurious Gupta family wedding in 2013 which notoriously violated immigration and airport security regulations for Indian guests. Moreover, to pay the $2.5 million bill, the Guptas and their allies – apparently including the new ANC secretary general, Ace Magashule – raided an agricultural support fund meant for black farmers in the Free State province, whose official leader is still Magashule.

In ANC balloting last December, Magashule barely beat Ramaphosa's running mate for the top organisational job. But his fate rests on the extent of prosecution of the Guptas and whether testimony emerges as to his involvement in raiding provincial coffers on their behalf. If the Guptas avoid arrest in South Africa and hence do not offer damning testimony about Magashule, he may retain the job for months or even years to come, the way Zuma did in spite of widespread concern about his probity.

Nearly $1.25 billion per year was lost to Zupta looting, reckons former finance minister Pravin Gordhan, particularly via the big energy and transport parastatals. To be sure, however, that is a small fraction of the $22 billion lost annually to overcharging on state procurement contracts by what is the world's most corrupt business elite, as ranked by PricewaterhouseCoopers. In the Johannesburg, Cape Town, Stellenbosch and Durban circuits of White Monopoly Capital, PwC reports that "eight out of ten senior managers commit economic crime," especially procurement fraud, money-laundering, asset misappropriation and bribery.

Upon winning the ANC leadership last December, when Ramaphosa defeated former African Union chairperson Nkosazana Dlamini-Zuma (an ex-wife of Jacob), the new leader graciously thanked his predecessor. Only two legacies were mentioned: promoting the 2012 National Development Plan (NDP), and providing four million South Africans with free AIDS medicines.

The latter accomplishment did indeed raise life expectancy by 12 years from the early 2000s trough of 52. But the Treatment Action Campaign's world-historic battle against Big Pharmacorp profiteering and former president Thabo Mbeki's AIDS denialism had already been won largely without Zuma's visible assistance back in 2004, long before he assumed the presidency in 2009.

Ramaphosa himself will proudly enforce the NDP in coming years, as he was its co-author. Lacking climate-change consciousness, the plan's top priority infrastructure commitment is a $75billion rail line, mainly to export 18 billion tons of coal, entailing 50 major projects of which 14 have already begun. The rail agency, Transnet, has a $5 billion credit from China to finance Chinese-made locomotives that are sufficiently strong to carry 3 kilometre-long coal trains, though Zupta corruption is already a major problem with the acquisitions.

Indeed a wicked combination of patronage politics and neo-liberalism is likely to continue, given that on February 26, Ramaphosa announced a new cabinet that includes the return of two former finance ministers celebrated by the financial markets – Nhlanhla Nene and Pravin Gordhan – and a deputy president, David Mabuza, who ran the eastern Mpumalanga province since 2009.

Mabuza's predecessor in that job, Mathews Phosa – also a former ANC national treasurer – was scathing about his reputation as a corrupt thug: "He's engulfed in this cloud of scandals and let me tell you it's going to follow him where he is today… People fear him. They talk about the killings in the province, when they talk about them, they link them with him… I don't think the ANC will win the 2019 elections."

The leader of the new SA Federation of Trade Unions (second largest after the ANC-supporting Congress of SA Trade Unions), Zwelinzima Vavi, was just as critical of the new ministers: "Ramaphosa's appointment has changed nothing. He has reshuffled names but remains rooted in the corrupt and pro-business ANC led by his predecessor. In particular it is incredible that he has appointed a deputy president, and therefore potential president, who has for years been implicated in of some of the most serious crimes when Premier of Mpumalanga. These crimes included alleged bribery in the awarding of contracts for World Cup facilities, threatening and spying on journalists and drawing up a hit-list of political opponents, of whom at least 15 were assassinated while no-one was arrested for any of these murders."

However on the positive side, Ramaphosa fired Zuma's closest cabinet ally – energy minister David Mahlobo – and as a result, Pretoria's attempted $100 billion purchase of eight nuclear energy reactors from Rosatom is now highly unlikely. This is largely due to Pretoria's worsening debt crisis, so that really leaves just one accomplishment as Zuma's legacy: annual networking with leaders in Beijing, Brasilia, Delhi and Moscow.

BRICS reforms?

Conventional wisdom, as expressed by foreign policy scholar Oscar van Heerden late last year, is that Zuma "ensured our ascendency into the BRICS Geo-Strategic grouping, made up of Brazil, Russia, India and China: the emerging economies in the world. This is important because in the pursuit of a more equitable and fairer world order, this grouping provides a counterweight to the dominant Western powers. BRICS provides access to better trade relations as well as better global security arrangements."

Zuma has also articulated this pride, in part through his avatar, the politician-businessman Gayton McKenzie who authored a Fire and Fury-type tell-all, Kill Zuma by Any Means Necessary.

But both conventional wisdom and Zuma apologists need a reality check: in spite of repeated rhetorical gestures from Pretoria to the contrary, the BRICS have amplified unfair and inequitable world order processes. While three of the BRICS played host to the corruption-riddled FIFA World Cup from 2010-18 – which is the most glaringly obvious, albeit superficial case of sub-imperial assimilation into (Sepp Blatter's football) imperialism – just as revealing is the BRICS ' pursuit of global governance 'reforms':

+ In world finance, the International Monetary Fund's 2010-15 board restructuring left four of the BRICS much more powerful (China by 37%, Brazil 23%, India 11% and Russia 8%) but most African countries now have a far lower voting share (e.g. Nigeria's fell by 41% and even South Africa lost 21%). Does a higher BRIC voting share – not quite the 15% required for a veto – make any difference? After all, the bloc's directors thrice (in 2011, 2015 and 2016) agreed with Western counterparts to endorseIMF leadership by Christine Lagarde, even though she was prosecuted – and in 2016 declared guilty of negligence – in a $490 million criminal corruption case dating to her years as French finance minister. Lagarde's free ride suggests that the BRICS not only her neo-liberalism but the appearance of systemic political bribery at the top of the world financial order. Moreover, the BRICS' $100 billion Contingent Reserve Arrangement – a notional bailout fund – strengthens the IMF by compelling borrowers to first get an IMF loan and structural adjustment programme, before accessing the other 70% of their quota contributions during times of financial emergencies. And leaders of the BRICS New Development Bank – which has no civil society oversight – brag of co-financing and staff sharing arrangements with the World Bank.

+ As for global warming, the 2015 Paris Climate Agreement left victims without any 'climate debt' options against the West and BRICS, since legal claims for signatories' liability are prohibited. The Paris emissions cuts commitments are too small and in any case non-binding – as witnessed when Donald Trump exited last June with no official punishment. Military, maritime and air transport emissions are not covered. Carbon markets – the 'privatisation of the air' – are endorsed. Thus climate catastrophe is inevitable, mainly to the benefit of high-carbon industries in the rich and middle-income countries.

+ Regarding global trade, the 2015 Nairobi World Trade Organisation (WTO) summit essentially ended agricultural subsidies and hence food sovereignty thanks to crucial alliances made with by Brasilia and New Delhi representatives with Washington and Brussels negotiators. The pro-corporate WTO leader is Brazilian, suggesting that the simple replacement of Northern elites with Southern elites will continue to hurt the GlobalSouth.

BRICS leaders were vital allies of the West in each of these recent sites of global malgovernance. However, short-term deals that benefit their neo-liberal, pollution-intensive corporations and parastatal agencies do come at a difficult time. The allegedly 'better trade arrangements' that van Heerden identifies in the BRICS era, in reality, accompanied a major relative decline in trade measured in relation to GDP.

Although 2017 provided higher trade volumes, from 2008-16 global trade/GDP declined slightly, from 61% to 58%. It was the BRICS which led the slide: China's trade/GDP rate fell from 53% to 36%; India's from 53% to 40%; South Africa's from 73% to 60%; Russia's from 53% to 45%; and Brazil's from 28% to 25%. In the first two BRICS, the crash was a function of rebalancing through higher domestic consumption rather than export-led growth.

But declining trade shares for South Africa, Russia and Brazil reflect peaking commodity prices just before the global financial meltdown that year, followed by subsequent recessions. Since early 2016, a rise in commodity prices boosted extractive-dependent countries, even pulling Brazil, Russia and South Africa out of recessions, But the renewed world economic volatility of 2018 – e.g. trillions of dollars evaporating from stock markets practically overnight earlier this month – threatens a return to extreme vulnerability for primary commodities, as witnessed in the wild price swings of 2007-15.

Geopolitical turmoil

Ironically, regarding the supposedly 'better global security arrangements,' the world is much more dangerous since the BRICS took their present form in 2010: in Syria and the Gulf States, Ukraine and Poland, the Korean Peninsula, the Sahel and Horn of Africa, and the South China Sea. Even the Chinese-Indian border is rife with confrontations, as fighting between the two giants nearly derailed the mid-2017 BRICS annual summit.

Narendra Modi's boycott of the Belt and Road Initiative summit last May was due to Beijing's mega-project trespassing on what New Delhi considers its own Kashmir land, now held by Pakistan. For Xi it is the crucial turf linking western China to the Arabian Sea's Gwadar port.

As a geopolitical bloc, the BRICS' public security interventions have occurred strictly within the context of the G20. First, in September 2013, the BRICS prevented Barack Obama from bombing Syria using pressure at the larger group's St Petersburg summit. Second, six months later in Amsterdam, the BRICS supported the Russian invasion (or 'liberation') of Crimea once the West made threats to expel Moscow from the G20 – just as the U.S. and Europe had thrown Vladimir Putin out of the G8, now G7. However, when Donald Trump came to last July's G20 summit in Hamburg, the BRICS leaders were extremely polite notwithstanding widespread calls to introduce anti-U.S. sanctions due to Trump's withdrawal from global climate commitments just a month earlier.

Fortunately, military and political security in the Southern African region has improved from prior eras. More than two million people were killed by white regimes and their proxies in the frontline anti-colonial and anti-apartheid struggles during the 1970s-80s, especially in Mozambique and Angola. More millions died in the eastern Democratic Republic of the Congo (DRC) during the early 2000s' period of extreme resource extraction. The two recent armed interventions by Pretoria in the region were to join United Nations peacekeeping troops in the DRC (2013-present) and aid the beleaguered authoritarian regime in the Central African Republic (2006-13).

These are considered sub-imperialist political-military failures insofar as violence continues in both sites. In the latter's capital city Bangui, more than a dozen of Pretoria's troops were killed in March 2013 defending Johannesburg firms pursuing lucrative contracts, just days before the BRICS' "Gateway to Africa" summit in Durban, South Africa.

As for local security, major upsurges of protest against injustice in each BRICS country have been met with crackdowns and extreme surveillance. The worst moment in South Africa was August 16, 2012, when three dozen mineworkers were massacred by police. They were "acting pointedly" at the explicit request (by email the day before) of the main local shareholder of the Lonmin platinum mining company, who demanded "concomitant action" against the "dastardly criminals" – i.e., 4000 mineworkers on a wildcat strike over miserable pay and living conditions. That shareholder was Cyril Ramaphosa.

Ramaphosa's 2017 apology for the email phrasing was dismissed by victims' families as posturing, not genuine. His legally-binding commitment – as board head of Lonmin's Transformation Committee in 2010-13 – to build 5500 houses for mineworkers was never met; during his reign only three were built, leaving the shack settlements of Wonderkop and Nkaneng without basic sanitation and electricity notwithstanding vast pylons overhead providing power to the platinum smelter a few hundred meters away.

His excuse was alleged financial shortfalls after the 2008 world economic meltdown, yet the World Bank game him a $100 million loan for that purpose. Ramaphosa instead chose to use company funds to purchase $100 million worth of marketing services in Bermuda, via his Shanduka firm's control of Lonmin's main Black Empowerment partner, a firm that, in the words of Lonmin's lawyer, "for very many years refused to agree to the new structure" to halt the Bermuda tax dodge – just as he utilized tax havens for his other firms.

BRICS poison

So most conventional wisdom about the BRICS' anti-Western agenda remains dubious. And even at the level of personal security, several leading South African politicians are worried. Zuma himself regularly claimed his near death from the toxic compound ricin in 2014, before rapidly acquiring treatment over two weeks in Russia, was BRICS related.

Last August, he told his rural home constituency ANC members in KwaZulu-Natal (the site of scores of political assassinations), "I was poisoned and almost died just because South Africa joined BRICS under my leadership." Zuma repeated the allegation three months later in a national television interview, implying a Western plot. In the days before he was fired, his family regurgitated the notion that 'the West' was responsible for his fall.

Is Ramaphosa the antidote to Zuma's gaming of his BRICS accomplishments? Yes, according to the BRICS Post, whose South African correspondent called for an immediate leadership replacement. The South Africa chapter of the BRICS Business Council, led by local newspaper magnate Iqbal Survé, offered surprising cynical headlines after Zuma's speech to the ANC congress in December: "Vintage Zuma delivers a vengeful swansong, devoid of any responsibility" and "Ramaphosa prepares to confront South Africa's bleak future." Such headlines joined the cacophony of business and civil society complaints about Zuma which, along with a rapid power shift within the ANC, led to his ouster.

The BRICS also became a factor in domestic politics, for just hours before he left office on February 14, Zuma told the national broadcaster, "When the summit comes, the BRICS, I should be in a position to introduce to you (Ramaphosa) to other leaders to say this is the comrade who is taking over from me. So also to remove the perception out there that Zuma is being elbowed out." And according to Zuma, his successor "agreed. He said this is a good proposal. We all agreed." The double-cross on that agreement came a few days later.

The collective sigh of relief that came from most quarters of South African society – mostly from the bourgeoisie and petty bourgeoisie – is tempered on the left by a terrible knowledge: of Ramaphosa's commitment to extreme mining. It's quite possible that – even though he has looked to Western corporate power and wealthy South African whites for his funding flows and franchising opportunities to date – Ramaphosa will also turn to new BRICS allies, especially if he winds up with more dirty responsibilities such as imposing fiscal austerity.

More likely, though, is that after reluctantly hosting the BRICS summit in Sandton, he will simply give it a half-hearted, tokenistic nod. And this is the way Ramaphosa will very likely govern within South Africa too: going with the flow so as to not upset the capitalist cart. In a country with the world's worst inequality, it's a different but not unrelated kind of persistent poisoning.

Talk left, budget right

On Tuesday 20 February, Ramaphosa offered these fine words in a formal reply to critics of his State of the Nation Address in the country's main legislative chamber: "The most important people in this country are not those who walk the red carpet in parliament, but those who spend their nights on the benches outside its gates."

On Wednesday 21 February, in spite of claims to the contrary, Finance Minister Malusi Gigaba's tax strategy disproportionately hurt the nearly two thirds of South Africans who survive below the poverty line (not the 55% claimed by StatsSA, for the agency uses a poverty line at least a fifth lower than it should be, according to the University of Cape Town SA Labor and Development Research Unit). And for those above it with savings, an additional $43 billion of the country's $843 billion in institutional investor funds could soon move abroad as a result of looser exchange controls.

The Value Added Tax (VAT) replaced a general sales tax in 1991 at the behest of the International Monetary Fund, in spite of vigorous protests by the Congress of South African Trade Unions. At least Cosatu demanded – successfully – that a few basic foodstuffs be zero-rated. And due mainly to labor's subsequent lobbying, the last VAT increase was in 1993. Cosatu president S'dumo Dlamini recalled: "The apartheid government succumbed because they were under pressure as the country was in a transition to democracy. Now, 25 years later, we are increasing VAT. It's not good at all for the poor. It's not good for those workers who are toiling every day."

Moreover, observed Business Day's Carol Paton, "on the spending side it was poor communities that were the biggest losers, with cuts made to public entities such as the Passenger Rail Service of SA and infrastructure grants to provinces and municipalities savaged."

Added the SA Communist Party, "It is simply untrue to argue, as the Minister of Finance did, that the 20% poorest will be unaffected by the VAT hike. What is more, other indirect taxes, like the increase in the fuel levy, will further impact on the cost of living especially for the poor."

One of the most respected anti-poverty NGOs, the Pietermaritzburg Agency for Community Social Action (Pacsa), surveys a monthly low-income consumer's food basket and now finds that since fewer than half its 38 items get a zero-rating, monthly food-related VAT alone will now cost $19 (the 1% VAT increase translates to $1.30). As Pacsa researcher Julie Smith observes, "In order to provide a meal working class households don't just use zero-rated foods. A mother does not send her child to school with a few slices of brown bread; she sends her child to school with a sandwich that in addition to the brown bread will require margarine, peanut butter, or jam, cheese, polony – these are all subject to VAT."

The monthly Child Support Grant rises 6.6% to $35.50 per month by October, as against an expected 5.4% inflation rate. However, Pacsa argues that for more than 12 million children reliant on the grant, inflation has been rising much faster: "Over the past six months the cost of feeding children aged between 10-13 years a basic but nutritional diet increased by 8.8% to $51." The old age grant to 3.4 million pensioners also rises above the official inflation rate, to $148 per month by October, but that is still below the current food inflation rate.

As for winners, several years of fierce university student protests were rewarded with an average $1.65 billion annual increase through 2020, so that at least the beginning of free tertiary education is budgeted.

"A full-blown neo-liberal assault"

But revealing where the society's real power lies in the world's most unequal major country, Gigaba imposed no substantive wealth tax. Obviously pleased, John Campbell of Chartered Wealth Solutions remarked, "There were no changes to the marginal rates of individual income tax, the rate of tax on trusts (45%) or the rate of tax on companies (28%). Transfer duties on the sale of properties remained unchanged too."

To be sure, those in higher income brackets will suffer because inflation-drag on personal income tax will result in a further $600 million take, but that's less than a third of the $1.9 billion raised from the regressive VAT increase. A few other tax hikes, including $0.05 per litre of petrol, will raise an additional $600 million.

As a result, Gigaba has shifted the total debt/GDP ratio from a trajectory rising from today's 53% to just 55% in 7 years' time, instead of the 63% he had projected last October. That alone is expected to appease Moody's credit rating agency so that it does not deliver the final junk rating on South African bonds that was threatened within a month.

The leader of the South African Federation of Trade Unions, Zwelinzima Vavi, criticized Gigaba for leaving the main business tax at half its 1994 level: "Corporate taxes are not being touched and it's a full blown neo-liberal assault on the poor. This is being done in the mistaken belief that if the rich are spared they would then invest their money and that the poor will eventually benefit. It's the whole notion of a trickle down economy which has proven to be a disaster."

Indeed Gigaba's trickle-out permission for insurance and pension funds to remove another 5% of their assets offshore also bears examination. Last October, the Johannesburg Stock Exchange's ratio of market capitalisation to GDP hit an all-time high, at more than R16.2 trillion in share values against 2017's R4.6 trillion GDP, a 350% ratio (more than three times higher than the world level). Hence diversification would be welcome.

But to let the investors search abroad for higher returns than the 8.1% that South Africa's own state bonds pay – still amongst the world's highest, equivalent to Russia and Venezuela – is to invite yet another financial tragedy. With part of the Old Mutual insurance company now returning to the JSE for a primary listing in the wake of its messy ordeals on the London Stock Exchange, and immediately following the multi-trillion dollar meltdown on the world bourses earlier this month, should such international financial volatility not be met with exchange control tightening, instead of liberalisation?

Gigaba admits that "high foreign debt redemptions" will hit hard within a year, but at close to $160 billion (48% of GDP) as measured by the SA Reserve Bank, South Africa's total foreign debt is now way beyond any historical precedent, including when PW Botha defaulted (at a debt rate of just 42% of GDP).

Given that Ramaphosa says he is committed to fighting Illicit Financial Flows – and his own record of promoting tax havens at Lonmin, MTN and Shanduka suggests a certain familiarity with tax dodging – it would have been more logical for Pretoria to follow Beijing's lead: sharpening not blunting the state's residual capital controls. But that reversal is consistent with Ramaphosa's stated commitment to the poor, also sabotaged by Gigaba's budget.

In all these respects, Ramaphosa may fit in easily with other neo-liberal tendencies emerging within the BRICS, as the mantle of pro-globalisation policies and projects shifts from the U.S. to China. Even if he will never adopt the faux anti-imperialism of Zuma, Ramaphosa can be expected to turn to nationalist themes given his extraordinary record in student politics, organized labor and the ANC. But it is the record of an uncaring, unpatriotic bourgeois that Ramaphosa must live down. And it is in the likes of Gigaba – unless he is fired alongside ministers of energy, mining, social development, local government and public services who all were Gupta allies – that a new nickname may stick to this government for the period ahead: the Ramazupta regime.

China
Source: english.sipo.gov.cn

The 3rd BRICS Intellectual Property Examiner Training Seminar & 5th BRICS Intellectual Property Coordination Group Meeting closed in Beijing on February 9th, 2018. SIPO Deputy Commissioner He Zhimin attended the closing ceremony and awarded a Certificate of Completion to all participants. Officials in charge of SIPO's International Cooperation Department, Human Resources & Education Department, and Patent Documentation Department also attended the closing ceremony.

Examiners from China, Brazil, Russia, India, and South Africa attended the seminar; and members of the BRICS Intellectual Property Coordination Group attended the group meeting. The seminar provided the examiners with multiple courses covering the examination of a patent application in China and the basic knowledge of Chinese patent documentation and public service. Extensive discussion was done at the seminar about issues such as the implementation progress of projects and future cooperation under the BRICS intellectual property cooperation road map, the BRICS intellectual property cooperation website, current intellectual property hotspot problems, and the 10th Meeting of BRICS Heads of Intellectual Property Office (BRICS HIPO).

He Zhimin recognized the fruitful achievements obtained by the seminar and the group meeting in his speech. He pointed out that the seminar offered a valuable exchange platform for BRICS examiners and hoped the BRICS intellectual property cooperation provide more learning and exchange opportunities to more examiners. The coordination group meeting had laid a solid foundation for the success of the 10th Meeting of BRICS Heads of Intellectual Property Office (BRICS HIPO). And he hoped that with the concerted effort of all parties concerned, BRICS intellectual property cooperation will achieve more substantial results and bigger influence worldwide.(Translated from SIPO Website Chinese Version)

South Africa
Source: www.gov.za

Brand South Africa in collaboration with RapidLion Film Festival also known as the South African International Film Festival, will host its third annual festival, at the Market Theatre between 3rd – 10th March 2018.

2018 is turning out to be an exciting year for South African films, this was made evident in the huge support for the film Inxeba which generated debates on culture, and South African stories. The growing industry has thus seen both local and international co-productions becoming a regular offering on theatrical exhibitions.

It is with this backdrop that this unique film festival focusing on films from the African continent and BRICS nations, to be taking place in Johannesburg again this year. The opening night will debut a South African film called– "Catching Feelings" by comedian Kagiso Lediga.

Brand South Africa's collaboration and participation in the Rapid Lion programme is one way of showcasing the positive image of the Nation Brand. A Nation Brand's global reputation is to a large extent positively influenced by its people, their culture and their stories told through the film industry.

Further discussion on the film industry's impact will take place during the festival when Brand South Africa will host a research consultation session on the 6th of March. The session themed: Closing The Loop - A Strategy towards a sustainable, independent and prosperous South African film industry, aims to interrogate, and provide feedback, input, and ideas on better developing the industry.

Speaking on the research session, Brand South Africa's General Manager: Research Dr Petrus De Kock said; "creative industries, and in particular, film, play a major role in enhancing the reputation and global visibility of Nation Brands. In this workshop Brand South Africa will engage with filmmakers on what the best strategy is to develop a film industry that the country can rely on to promote South Africa internationally on a long-term basis".

Furthermore, this platform allows for Brand South Africa to achieve two strategic objectives, being:

1. Entrenching the principle of intra-African contact, creative collaboration, and integration;
2. In a year that South Africa is hosting the BRICS Summit, the platform allows Brand South Africa an opportunity to celebrate cultural contact and exchange among BRICS societies ", adds Dr De Kock.

The festival features films of multiple genres and varying lengths, Q&A sessions with South African filmmakers from films like Inxeba, She is King, Catching feelings, The Hangman, The recce, Children of the drum: The Legacy of Black Journalists in Apartheid-era South Africa to name a few.

United Kingdom
Source: www.industry-networker.com

European economies emerge on top when it comes to attracting, developing and retaining top talent, according to a major new study by the World Competitiveness Center at IMD, the leading global business school.

It was back in 1997 that Steven Hankin of consultancy firm McKinsey & Company coined the term 'war for talent', describing the increasingly competitive landscape for recruiting and retaining talented employees. Two decades on, securing skilled workers remains a strategic business challenge and a critical driver of corporate performance. In IMD's World Talent Ranking for 2017, Europe continues to dominate in that respect, with 11 out of the 15 most talent-competitive economies based on the continent. Switzerland, Denmark and Belgium remain the most competitive countries, with Austria, Finland, the Netherlands, Norway, Germany, Sweden and Luxembourg all making up the top 10.

The study draws on an in-depth survey of thousands of executives from 63 different economies, and more than two decades' worth of data from the IMD World Competitiveness Center. The ranking is based on countries' performance in three main categories – investment and development, appeal, and readiness – and an assessment spanning a wide range of areas (education, apprenticeships, workplace training, language skills, cost of living, quality of life, remuneration and tax rates, among others).

It is the outstanding education systems in European countries that set them apart from the rest of the pack, according to IMD's study. "On average, each has a high level of investment in education accompanied by a superior-quality educational system, from primary to tertiary levels," the report notes. "This allows them to develop local talent and at the same time attract foreign, highly-skilled professionals, which many European businesses rely upon to perform."

Europe's talent powerhouse

The research suggests that Germany, Europe's economic powerhouse, continues to play a starring role in sustaining the continent's talent competitiveness.

"Germany is one of the largest exporters of talent, and the country also attracts talent from across the world," observes Arturo Bris, Director of the IMD World Competitiveness Center. "Despite criticism from some quarters surrounding immigration, Germany's policies sustain its access to the international talent pool. However, with the European crisis still taking its toll on the German economy, the country has slightly decreased its total expenditure on public education."

Elsewhere in Europe, Ireland ranks 14th, the UK 21st, Portugal 24th, and France 27th. Spain is 32nd, followed by Italy (36th) in the lower half of the ranking.

In Eastern Europe, Estonia is the highest-ranking country at 29th, followed by Lithuania (33rd) and Poland (34th). Those nations' fairly robust performance comes mostly from their emphasis on the investment and development factor, with Estonia also ranking relatively high on the readiness factor.

USA – could do better

Meanwhile, the USA risks losing some of its global competitiveness if it does not increase investment in public education, the report states.

On average, America invests less in developing local talent when compared with its peers on the global stage. However, the USA has outperformed most other countries when it comes to appealing to foreign talent through quality of life, opportunities for career advancement and a high level of remuneration.

Lagging in Latin America

Latin America faces challenges in developing and retaining a highly-skilled workforce, according to the IMD study. Developing domestic talent is the biggest problem facing Latin American economies today. Performances in the investment and development, and readiness categories highlight a lack of investment in education and issues in retaining a qualified workforce in the region.

Chile remains the highest-ranked Latin American economy at 44th, largely because of its performance in the appeal factor. Argentina also performed relatively well (50th place) followed by Brazil (52nd), Colombia (55th), Mexico (56th), Peru (57th) and Venezuela (63rd).

The need to build skillsets in BRICS

Looking specifically at the BRICS, South Africa must increase its investment in developing local talent if it is to deliver the high-quality workforce its businesses need to thrive.

Among the BRICS countries, South Africa ranks in the middle position – 48th – performing better than India (51st) and Brazil (52nd) but lagging behind both China (40th) and Russia (43rd).

South Africa's strengths are in total expenditure on education (4th), cost-of-living index (1st), personal income tax rate (2nd) and labour force growth (7th). Its main weaknesses are in the pupil-teacher ratio (primary education, 61st), implementation of apprenticeships (61st), availability of skilled labour (60th), capacity of the educational system to meet the talent needs of the economy (60th) and emphasis assigned to science in schools (60th).

Other indicators that may also help us understand South Africa's low ranking are health infrastructure (52nd); worker motivation (57th); brain drain (58th); attracting foreign, highly-skilled personnel (52nd); and availability of competent senior managers (50th).

It is noteworthy that South Africa is the only African nation to appear on the list – as Dr José Caballero, Senior Economist at the IMD World Competitiveness Center, points out: "The IMD considers new entries for its competitiveness study on the request of interested countries. Unfortunately we have not received requests from other African countries," he told us.

Middle Eastern appeal

Qatar ranks 22nd in the 2017 IMD World Talent Ranking. Like other small, high-performing economies, Qatar relies heavily on attracting and retaining foreign talent, scoring well in the appeal (9th) and readiness (18th) factors. Although Qatar continues to lag somewhat behind in investment and development (47th), it uses its expenditures efficiently – total public expenditure is low (54th) but in education the country performs exceptionally well, with class sizes being very small (9th and 11th).

Meanwhile, the UAE ranks 25th in the Ranking, performing better than last year. It relies heavily on attracting and retaining foreign talent, which it manages extremely well, scoring highly in the appeal (3rd) and readiness (7th) factors. As well as being attractive to employees the UAE also ranks 4th in attracting foreign students. However, the country continues to lag behind in investment and development (58th).

Saudi Arabia is a new entrant to the IMD World Talent Ranking in 2017. The nation performs consistently well in the overall rankings (26th) and all the three main categories (investment and development – 26th; Appeal – 31st; Readiness – 26th). Investment in education is impressive, setting the groundwork for future home-grown talent.

Losing the talent contest

Besides Mongolia and Venezuela, which capture the last two positions in the IMD World Talent Ranking, the lower places are dominated by Eastern European countries like Croatia, Romania and the Ukraine. While the decline in the latter is due in part to the political crises that characterises the country at present, Croatia and Romania's decline is partially explained by the decrease in the appeal and readiness factors.

Back up at the top of the rankings, all the leading economies share similar attractiveness indicators. They invest significantly in their outstanding educational systems, they offer a superior quality of life, and they offer substantial opportunities for career advancement throughout the entire professional lifespan.

Access the full report here: https://www.imd.org/globalassets/wcc/docs/talent-ranking/Talent_Ranking_2017_web.pdf

Iran
Author: Ehsan Rasoulinezhad and Farkhondeh Jabalameli
Source: www.e-jei.org

ABSTRACT

This study explores the similarities of trade integrations in the BRICS member countries. Using time series data from 2001 to 2015 and employing the Panel-Gravity trade model approach, we utilized the separate disaggregated trade data of manufactured goods and raw materials of each BRICS member with United Nations-defined regional groups: the African group, the Asia Pacific group, the Eastern European group, the Latin American and Caribbean group, and the Western European. The analysis results revealed that Russia's manufactured goods and raw material trade integration based on the Heckscher–Ohlin framework with these five regional groups is not similar to that of other BRICS members following the Linder hypothesis. Furthermore, the dominance of China in total trade flows of BRICS has made the Chinese Yuan's effects on trade with partners from different groups stronger than other BRICS members' national currencies impacts. Geographical distance as a proxy for transportation cost has a weaker negative effect on the manufactured goods and raw materials trade patterns of China and India than it does on other countries, creating dissimilarity in the trade patterns of BRICS countries.

United States
Source: jii.iijournals.com

Abstract

The Silk Road has valid historical significance between nations that have conducted trade for centuries. In recent socioeconomic trends, the re-emergence of the New Silk Road is outlined with perceived implications for investment strategies. Investment portfolios of exchange-traded funds (ETFs) resembling the Silk Road nations are constructed to analyze performance and diversification benefits and are benchmarked against the Brazil, Russia, India, China, and South Africa (BRICS) ETF. The results reveal mixed performance: lower correlations with developed markets and an increase in capital inflows, as reflected in ETF subscriptions. Causality testing with developed markets shows a bidirectional causation. Unidirectional causation is also found, running from the Silk Road basket to both BRICS and the MSCI Emerging Market ETF. Moreover, using a hedging approach to investigate effective diversification in a global portfolio, evidence is found of effective international diversification when adding the basket of Silk Road markets. This article puts forward the argument that investors should consider an alternative to BRICS and divert investment attention toward cohesive, frontier economic blocs.

France
Source: www.oecd.org

Governance Frameworks to Counter Illicit Trade Executive Summary

Executive Summary

Transnational criminal networks profit from trafficking and illegal trade in narcotics, arms, persons, tobacco, counterfeit consumer goods, and wildlife. Billions of dollars from these activities flow through the global economy each year, distorting local economies, diminishing legitimate business revenues, eroding social conditions and fuelling conflicts. This report on governance frameworks to counter illicit trade was prepared under the OECD Task Force on Countering Illicit Trade (TF-CIT). It promotes tractable policy reforms and fosters international cooperation aimed at the reduction and deterrence of the risk of illicit trade. It draws on a network of specialists from multiple countries and economies, as part of the OECD High Level Risk Forum (HLRF), which works with governments to better understand the full range of complex risks and threats.

Effective action to counter illicit trade and support for governance frameworks to lower the incidence of such trade are key policy concerns for governments as they support the promotion of economic prosperity. The growth of world trade that has been facilitated by the reduction of tariffs, trade barriers and regulatory burdens and by technological and logistical advances has provided benefits for both business and consumers. At the same time, freer trade has provided opportunities for criminals engaged in illicit trade to expand their operations. Their activities undermine economies by reducing government tax revenues, lowering firms' profits and their innovation incentives, while also jeopardising public health and security.

Governments have taken actions to counter illicit trade, but they are often uncoordinated and/or poorly implemented. In addition, criminal networks have been able to react quickly and dynamically to avoid detection and circumvent law enforcement. As a result, governments need to re-examine their institutional capacities to counter the illicit trade.

The first part of this report provides a general overview of enforcement challenges, analysing the adequacy and effectiveness of sanctions, investigating in more depth the issue of small shipments and focusing on the misuse of free trade zones as hubs for managing trade in illicit products. The second part of the report focuses on some enforcement practices in BRICS economies. Emerging economies, including BRICS, are important players and their active engagement in developing governance strategies to counter illicit trade is essential.

Part One: countering illicit trade, enforcement challenges

The first part of this report provides an overview of key institutional capacities, before assessing in more detail three areas where the strengthening of institutional capacities is urgently needed to improve efforts to counter illicit trade. The three areas include:

(i) enhancing the effectiveness of penalties and sanctions for countering illicit trade,
(ii) finding ways to improve the screening of the rising volume of small shipments for illicit products, and
(iii) eliminating criminal activities related to illicit trade that are carried out in free trade zones.

In each area the report identifies policy actions that need to be taken to improve the ability of governments to assess the risk of illicit trade in various guises, and to target, deter, and eventually interdict the activities of criminal networks.

Penalties and sanctions are key deterrents for illicit actors, as these actors will prefer to trade in goods where rewards are highest, and the risks are lowest. Criminal networks, particularly those associated with transnational organised crime, respond to changes in the risk-reward structures. Such structures are affected by international legal frameworks, national legislation and enforcement policies. The environment is one of a constantly evolving "interdictionadaptation" cycle, where customs and criminal networks respond to the changing tactics of each other to gain an upper hand. Success depends on the i) sanctions available for offences, ii) the ability of law enforcement to enforce legislation and iii) the capacity to investigate and, where appropriate, cooperate with foreign authorities.

Regarding the policies to enhance the effectiveness of penalties and sanctions these actions include:

Strengthening co-operation and expanding the scope of international frameworks, including existing international treaties to counter illicit trade.
Raising the risk/reward ratio by expanding the scope of penalties to include ancillary legislation.
Developing and implementing national strategies to counter illicit trade.
The sharp growth in the use of postal and courier streams as a delivery method for smuggling small packages containing prohibited or restricted goods has significantly impacted the institutional capacities of governments to effectively screen and interdict the goods.

Online sales of products have further complicated the situation, providing a means to boost trade in small shipments as consumers are able to purchase items directly from suppliers, in small, individualised quantities. In effect, the importance of large firms and retailers as importing agents has declined, with consumers becoming far more active in this regard. This shift has affected the regulatory and policy framework for law enforcement, and the ability of customs, police and other relevant government agencies to stop illicit trade.

There are a number of policy actions that could be taken by governments to counter trade in illicit products via small shipments, by, for example:

• Engaging courier and postal intermediaries in efforts to detect and interdict trade in illicit products.
• Building on best practices identified in pilot projects to improve i) the quality of small shipment data available to customs authorities, and ii) risk assessment techniques.
• Expanding capacity for accessing, integrating and evaluating datasets from stakeholders.
• Engaging e-commerce platform operators in efforts to detect online transactions in illicit products.
• Strengthening efforts to move against parties engaged in online trade of illicit products.

Free trade zones facilitate trade by providing advantages to business with respect to tariffs, financing, ownership, taxes and other regulatory measures that would otherwise be applicable in the host country. The reduction in regulatory and legal burdens, "red-tape" and tariffs are key in this regard. The limited institutional capacities to oversee FTZs activities in many countries can often lead to growth of illicit trade, and other forms of criminality, such as fraud and money laundering. These activities benefit from the lack of sufficient oversight within FTZs, enabling illicit businesses to reap the financial benefits of zones, with lower risks of measures being taken to curb their activities. Without further actions from governments to increase oversight and transparency in FTZs, criminal elements will continue to use zones to exploit the shortcomings in institutional law enforcement capacities. The analysis identifies a number of policy areas to combat illicit trade and related criminal activities in FTZs, including:

• Formalising the definition of FTZs. • Improving zone supervision, by i) expanding information requirements for goods moving through zones, ii) penalising misuse of zones, iii) enhancing security screenings, and iv) maintaining adequate numbers of officials with ex-officioi authority to supervise or control FTZs (or free zones) within their customs territory and according to the applicable provisions.
• Strengthening cooperation with stakeholders and encouraging of development codes of conduct for FTZs.
• Enhancing formal responsibilities of zone operators.
• Streamlining customs procedures.
• Ensuring wide participation of countries in FTZ-related discussions.

Part two: Survey of some enforcement practices in BRICS economies

The second part of the report focuses on some enforcement practices in BRICS economies related to intellectual property (IP). Ensuring effective enforcement of intellectual property laws and support for governance frameworks are key policy concerns for promoting innovation-driven economic prosperity and for disrupting criminal networks. The intangible assets embodied in patents, trade secrets, copyrights and trademarks that support economic development are vulnerable to unauthorised use even though they are protected by laws enforcing intellectual property rights. Effective governance frameworks that enable efficient IP management and protection and enforcement are therefore critically important.

While efforts to implement effective IP governance frameworks are underway worldwide, counterfeiting and piracy continue to pose threats to rights holders, businesses, and consumers. Economies have worked together, multilaterally and through international organisations, to develop IP frameworks that balance, protect and enforce the interests of rights holders with those of other stakeholders within and across jurisdictions. Despite these efforts, infringement of IP rights remains a significant problem. According to a 2016 OECD - EUIPO report that assesses the magnitude and scope of counterfeiting and piracy worldwide, the total volume of trade in fakes was estimated at up to USD 461 billion, or 2.5 % of world imports in 2013.

This is a global and rapidly evolving challenge. The 2016 OECD-EUIPO report shows that counterfeit and pirated products are prevalent in virtually all economies, on all continents. These products are delivered through complex trade routes, with numerous intermediaries. Counterfeiters are exploiting modern logistical technologies in their operations, and are taking advantage of e-commerce platforms to enhance their commercial activities.

Emerging economies, including BRICS, are important global players and their active engagement is essential in responding to this threat. The OECD-EUIPO report highlights that middle-income and emerging economies tend to be the most important players in these markets for fake goods. Consequently their active engagement in developing governance strategies against counterfeit trade is essential. The five BRICS economies are involved to varying extents. China is by far the largest source economy of counterfeit and pirated products in the world, both in terms of value and volume, far ahead of all other economies. Between 2011 and 2013, some 67% of the total value of counterfeit and pirated world imports, and 63% of the number of global customs seizures originated in China. India ranked 6th, accounting for 6% of the total seized value of counterfeit and pirated goods worldwide, and 2% of the total number of customs seizures. Russia ranked 36th; Brazil, 60th; and South Africa, 86th.

Weak enforcement of IP laws, the low risk of detection, combined with the high profitability of counterfeiting and piracy operations and relatively low penalties are key factors 4 undermining effective counterfeiting-related IP protection and enforcement. The assessments of the effectiveness of the IP regimes carried out by governments and industry indicate there is scope for considerable improvement in most of these jurisdictions. The US government and the European Commission have identified four of the countries (Brazil, China, India and the Russian Federation) for close monitoring, and they are supporting continuous engagement with them to improve their performance in combatting counterfeiting and piracy. Strengthening performance requires multiple actions, including:

• Examining the adequacy of enforcement. This includes the continuing review of the level of resources devoted to enforcement systems and the tools available to governments and private right holders. International sharing of experiences on this front could help improve the situation significantly.
• Reviewing the deterrents to counterfeiting, including the effectiveness of penalties and the implementation of these penalties through criminal justice systems.
• Exploring ways to step up public reporting on counterfeiting and piracy-related IP infringement.
• Promoting accession and effective implementation of international IP agreements by the countries covered in the report.
• Examining ways to expand education and public awareness campaigns.

In recent years some progress has been made in all the BRICS economies in enhancing IP legal frameworks. Efforts have been made in the BRICS economies to i) enhance the role of IP in promoting innovation and ii) strengthen measures to protect IP from infringement. Relative to the other BRICS countries, China has been at the forefront in initial efforts of developing and implementing programmes to boost development of IP frameworks and to strengthen institutions for protecting and enforcing IP rights.

In general, legal systems in the BRICS countries provide de jure authority for parties whose IP rights have been infringed to seek to have the infringing acts stopped and the counterfeit and pirated goods confiscated and, eventually, destroyed. In addition, laws generally provide that compensation can be sought through civil actions. Where statutory damages can be sought in lieu of actual damages, however, the levels of compensation are far lower than those provided for in, for example, the United States. The de facto reality in BRICS countries is that parties are often unable to effectively enforce their IP rights in the courts or other government administrative fora, and are often left without effective remedies.

The developments of legal frameworks are complemented by educational campaigns. Each of the economies covered is taking steps to promote the role of intellectual property in their jurisdictions. Attention is being paid to raising public awareness of the negative effects of counterfeiting and piracy. Campaigns have been carried out to raise awareness of the importance of buying original products and the penalties arising from the purchase of pirated and counterfeit products.

Despite the progress made there is scope for further action. While appreciation of the economic importance of IP is growing in the economies covered, and measures are being taken to better protect IP rights, there is clearly scope for further action.

i The term ex-officio here refers to the inherent authority of a public office in its remit to initiate an investigation of a violation of law, as opposed to possessing authority to act only when notified by a third party.

Governance Frameworks to Counter Illicit Trade

This report examines governance frameworks to counter illicit trade. It looks at the adequacy and effectiveness of sanctions and penalties applicable, the steps partiesengaged in illicit trade take to lower the risk of detection - for example through small shipments - and the use of free trade zones as hubs for managing trade in illicit products. It also identifies gaps in enforcement that may need to be addressed. The report provides an overview of selected enforcement issues in BRICS economies (Brazil, China, India, the Russian Federation and South Africa).

Contact: Piotr.stryszowski@oecd.org