Digital technologies create opportunities for an inclusive trade system. For example, digital e-commerce platforms open avenues for small businesses and underrepresented economic sectors to participate in global trade.
Enhanced accessibility and efficiency allow developing countries to unlock their trade potential, attract investment, and foster economic growth.
However, there are risks that need attention to ensure truly inclusive growth. BRICS countries need to grapple with these risks to ensure mutually beneficial trade that supports sustainable (i.e. sustained growth) that is inclusive.
These risks include centralised control of data and market power; dependency on proprietary technologies; erosion of local value chains; suppression of labour market development; and regulatory challenges.
Key Considerations for BRICS countries
BRICS countries should resist the push by the global technology giants for digital transactions to be exempt from tariffs. The advance of digital technologies potentially weakens the position of industrialising countries as international firms can bypass import duties, local taxes, and other domestic regulations.
To enhance regulation, BRICS countries should work together to develop frameworks for appropriate regulatory and competition rules for digital platforms, including addressing data privacy and ownership, which draw on international experience, such as the measures taken by the EU and India to ensure a level playing field for local businesses in e-commerce and online search activities.
The key principle for these regulations should be a fair distribution of extraction in line with value creation.
To enhance capacity building in trade digitalisation, BRICS countries can focus on strengthening digital literacy, promoting digital infrastructure, fostering collaboration and knowledge sharing, and encouraging policy coherence.
Collaboration with other multilateral institutions for capacity building, including the WTO, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the United Nations Commission on International Trade Law (UNCITRAL) to provide technical assistance to BRICS nations on digitalised trade, is imperative.
Other institutions that could be considered for technical assistance include the United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT), the World Customs Organisation and the World Bank.
BRICS countries may need to assist second- and third-tier firms in obtaining affordable digital technology licences or developing alternative models to lessen the licensing burden. Establishing a ‘Catalogue of BRICS Digital SMME Suppliers’ through an open and competitive digital market platform to align specific technology and production services demand and supply across industry value chains could be beneficial to SMMEs.
De-risking SMME investments in new technologies and products by using combined technology services and hybrid financing models (such as matching grants and pre-commercial procurement) could also facilitate the inclusion of these firms within traded industrial value chains.
*This article is based on remarks made by Busi Mabuza, chairperson of the South African BRICS Business Council, during a panel discussion at the BRICS Business Forum in Rio de Janeiro.
