The meeting of trade and economic ministers from Brazil, Russia, India, China and South Africa (BRICS) was shrouded by concerns on sanctions-hit Iran. The countries also discussed strategies to tackle the euro zone crisis.
This is the second time trade ministers from the BRICS countries are meeting on the sidelines of the BRICS summit.
The trade and economic ministers reviewed the global economic situation and reaffirmed their commitment to strengthening the group by boosting intra-regional trade and investments. The ministers also underscored the importance of opposing protectionist measures, while adhering to global trading rules under the World Trade Organization.
The trade ministers highlighted problems faced by the BRICS countries due to the global slowdown in the wake of the financial crisis and the subsequent crises in the euro zone.(Click here for charts)
On Iran and rising crude prices
Iran featured in a substantial manner in the inter-ministerial talks. During a closed-door meeting, the countries decided on how to maintain stable trading relations with Iran in the wake of sanctions imposed on the Islamic nation by the US, which were later supported by the European Union (EU).
Commerce & industry and textiles minister Anand Sharma said, “As members of the UNSC (UN Security Council), we respect the UN resolution and none of us are in violation of the resolution. But we must understand the very same resolution does not forbid us from conducting trade or having an economic engagement with any country. Iran has been, and continues to be, one of our important trading partners. We look at such things in a very pragmatic manner.”
He added India’s trade account was “getting stressed”, primarily because of rising oil prices, which have been spiralling since the crisis in Iran began.
Russia’s minister for economic development Elvira Nabiullina said Russia was increasingly worried about the rising crude oil prices.
Chinese minister of commerce Chen Deming said, “Geopolitics should respect a growing business environment and businesses should respect a stable geopolitical development. China has always maintained it will stand by the UN resolution and we did not violate that. However, we believe we should also maintain economic relations with all, especially with Iran. We are not obliged to follow the domestic decision of any one country.”
On the euro zone/ crisis
The ministers were almost unanimous in their proposals to overcome the challenges emerging from the euro zone crisis. Chen Deming said the financial downturn in both the EU and the US had hit Chinese exports. He said, “We are seeing a decline in trade and investments in EU. Our exports to EU have come down to a large extent. But I am sure these would recover soon.” He added the Chinese government had decided to strengthen demand in the domestic economy.
Rob Davies, minister for trade and industry, South Africa, said the euro zone crisis had adversely impacted its exports. Anand Sharma said, “The current turbulence in the euro zone is a cause of concern.”
A common development bank
The trade ministers discussed details on offering credit to BRICS members in local currencies to replace the dollar as the primary unit of trade. A memorandum of understanding on this issue is likely to be signed tomorrow at a meeting of the heads of state of the countries.
The leaders are also expected to announce an expert committee to study the feasibility of having a common development bank or an investment fund for financing projects in BRICS countries.
Brazilian trade minister Fernando Pimentel said, “The creation of a common development bank is important, and we will support hastening of the process.” Rob Davies said a BRICS-led development bank would help promote trade and investment within these nations.