The economists Daan Steenkamp and Jacques Quass de Vos make an important observation about the shortfalls in South Africa’s geo-economic strategy in their latest article. Amongst other things, they argue, correctly, that the BRICS grouping has provided limited economic benefit to South Africa. The exception is China, with which South Africa has deeper trade relations, although more could be done in agriculture and other sectors of our economy if we had a free trade agreement.
But the path forward in this challenge is not necessarily to abandon BRICS, but to elevate its economic ambition.
Currently, BRICS remains a loose informal grouping with no sound economic or trade approach that keeps the countries together. In fact, when one considers the intra-BRICS trade, it quickly becomes clear that very little is happening in the grouping beyond the political matters, with China again being an exception for many countries on trade matters. The constraining factor, as a result of the lack of a BRICS Free Trade Agreement, is the observation that both Steenkamp and de Vos make about the low exports and investment in this region.
Much of South Africa’s economic gains and investments are with the Western world. Still, South Africa doesn’t have the luxury to choose. Our approach should be to balance and retain our existing trading partners in Europe, America, and other parts of the world. At the same time, we must push for an ambitious trade agreement within BRICS and explore ways to attract investments.
Our interests should focus on bettering South Africa, skillfully navigating the complex geo-economic environment of the day.
Q&A with Wandile Sihlobo
Q: Which agricultural commodities hold the greatest potential for expanded trade among BRICS nations, and where do you see the fastest-growing demand?
A: The key agricultural products the BRICS grouping imports are mainly soybeans, palm oil, beef, maize, berries, wheat, cotton, pork, apricots and peaches, sorghum, rice, and sugar. These are products that are produced at scale by some BRICS countries. However, imports to other BRICS members typically originate from suppliers outside the grouping.
Q: What are the biggest obstacles currently limiting agricultural trade within BRICS—such as tariffs, standards, or logistics—and how can these be addressed?
A: The higher tariffs and ambiguous and prohibitive phytosanitary regulations have proven to be a barrier to agricultural trade within the BRICS grouping. Remarkably, some BRICS countries have far more favourable trading terms with other countries outside the BRICS grouping, thus resulting in lower intra-BRICS trade. The need to correct this misalignment in trade is even more urgent with the expanded BRICS grouping to BRICS+. The new BRICS+ members mean that the agricultural market of the grouping is even much broader and thus holds a potential economic benefit for members.
Q: How could deeper agricultural trade within BRICS contribute to global food security, especially in the context of climate change and shifting global supply chains?
A: The deeper intra-BRICS trade on agriculture, with minimal tariffs would ensure that products reach consumers at most possible affordable prices, and thus support food security. Importantly, this would, over time, also encourage an increase in agricultural production within this grouping, which ultimately contributes positively to global food security. Therefore, we must think of achieving global food security through free trade.
Q: With BRICS expanding and seeking to reduce reliance on traditional Western markets, what role do you see agriculture playing in strengthening economic resilience and political influence?
A: The increase in the intra-BRICS trade will be beneficial for the exporting economies within this grouping, and will also lessen the food trade uncertainty. Still, we are nowhere close to such possibility. The first step is establishing a BRICS Agricultural Trade Agreement, which would mean lower tariffs, and removal of non-tariff barriers.
Q: As South Africa is the only African member of BRICS, how can the country leverage its agricultural strengths to gain greater market access and investment from fellow BRICS members?
A: South Africa has an export-oriented agricultural sector. A further opening of the BRICS countries on agricultural trade would be of benefit to the country. South Africa exports just under US$14 billion of agricultural products annually.
Our view is that as BRICS+ matures from the political front, deepening regional economic integration and trade is the most logical step towards expanding the ambition of the group, particularly in agriculture. Another vital benefit of advancing agricultural trade is ensuring food security within the BRICS+ grouping.
Q: What are the current agricultural trade statistics among BRICS countries?
A: The BRICS countries import over US$300 billion of agricultural products annually. China and India account for the lion’s share of these imports.
The key agricultural products the BRICS grouping imports are soybeans, palm oil, beef, maize, berries, wheat, citrus, wine, cotton, pork, apricots and peaches, sorghum, rice, and sugar. These are products that are produced at scale by some BRICS countries. However, imports to other BRICS members typically originate from suppliers outside the grouping.
Q: What is the SA BRICS Business Council, in particular the agriculture working group, doing to bring about greater agricultural trade among BRICS countries?
A: South Africa proposes a formulation of an intergovernmental working group that explores the scope for reducing import tariffs and removing non-tariff (phytosanitary) barriers amongst the members. This group can also develop a term of reference (ToR) that establishes the work of a negotiation platform for a BRICS PTA.
In the medium term, an exploration of a long-term and more ambitious BRICS agricultural trade agreement.
Major agricultural importers should consider encouraging their businesses to import more from BRICS members. This is vital in the current geo-economic context.
