Author: Andrew Elek

The Organisation for Economic Co-operation and Development (OECD) has published a useful policy brief on trade policy developments in the BRIICs (Brazil, Russia, India, Indonesia, China and South Africa) (available here).

The report documents the considerable reduction in border barriers to trade by these economies. An interesting table on page 5 of the report assesses the relative contributions of unilateral, multilateral, preferential liberalisation and the contribution of donors policy conditionality. They attribute most of the opening to unilateral action, mostly before the late 1990. Since then bilateral and regional trade negotiations have increased in relative importance.

However, the table describes these as ‘trade-light preferential trade agreements’, noting that:

these accords are driven more by foreign policy than commercial strategy. These arrangements may create complications for business and for the development of multilateral rules, and it is unclear whether they are likely to spur regional or global integration.

The report presents data on the increasing importance of these economies in global trade, which show that during the past two decades the BRIICS have been expanding their exports much faster than the leading developed countries.

The OECD brief points out that

… progress in opening markets has been achieved mostly through reductions in applied-border measures, or so-called “first-generation” reforms. These reforms are easier to implement than “second-generation” reforms that tackle cumbersome domestic, but trade-related, regulations.

Consistent with the experience of APEC, the report notes that:

Compared to the first generation [trade policy} reforms, there is little consensus on how to implement these more difficult reforms and thus great scope for discussion and exchange of experiences.

All of the BRIICS participate in the G20 process, so they can pursue such reforms in a cooperative manner using that forum as discussed in my recent posting, G20 economies which also participate in APEC could help act as pathfinders for the new global process.