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Info Service on Finance and Development (Jul25/02) Geneva, 8 Jul (D. Ravi Kanth) — The Leaders of the BRICS countries on 7 July called for accelerating cooperation among countries of the Global South on several initiatives that are currently underway, while strongly pushing back against unilateral protectionist measures, including the Trump administration’s proposed reciprocal tariffs, and insisting that industrialized countries must pay for their past and current commitments to address climate change. At the end of their two-day XVII BRICS Summit that concluded on 7 July in Rio de Janeiro, Brazil, under the theme “Strengthening Global South Cooperation for a More Inclusive and Sustainable Governance,” the Leaders from the 11 BRICS countries – Brazil, the Russian Federation, India, China, and South Africa (the five original members) plus six new members, namely Egypt, Ethiopia, Indonesia, Iran, Saudi Arabia and the United Arab Emirates – issued a powerful “Rio de Janeiro Declaration” that highlighted numerous global challenges facing the Global South. The Summit was also attended by the BRICS partner countries Belarus, Bolivia, Kazakhstan, Cuba, Nigeria, Malaysia, Thailand, Vietnam, Uganda, and Uzbekistan. “We reaffirm our commitment to the BRICS spirit of mutual respect and understanding, sovereign equality, solidarity, democracy, openness, inclusiveness, collaboration and consensus,” the BRICS Leaders noted in the Rio de Janeiro Declaration, in the face of worsening global trade, climate, finance, and multinational institutional crises. The Leaders further committed themselves “to strengthening cooperation in the expanded BRICS under the three pillars of political and security, economic and financial, cultural and people-to-people cooperation, and to enhancing our strategic partnership for the benefit of our people through the promotion of peace, a more representative, fairer international order, a reinvigorated and reformed multilateral system, sustainable development and inclusive growth”. The Leaders underlined “the significance of the adoption of the BRICS Leaders’ Framework Declaration on Climate Finance and of the BRICS Leaders’ Statement on the Global Governance of Artificial Intelligence, as well as endorse the launch of the BRICS Partnership for the Elimination of Socially Determined Diseases.” UNILATERAL TARIFFS & NTMs In paragraph 13 of the Rio de Janeiro Declaration, the BRICS Leaders voiced serious concerns about “the rise of unilateral tariff and non-tariff measures which distort trade and are inconsistent with WTO rules,” in what appears to be a reference to the seemingly “extortionary” reciprocal tariffs being imposed by the United States on WTO member countries. In this context, they reiterated their “support for the rules-based, open, transparent, fair, inclusive, equitable, non-discriminatory, consensus-based multilateral trading system with the World Trade Organization (WTO) at its core, with special and differential treatment (S&DT) for its developing members.” With the WTO struggling to survive in the face of US President Donald Trump’s seemingly all-out assault on the multilateral trading system, the Leaders emphasized that the WTO, at its 30th anniversary, “remains the only multilateral institution with the necessary mandate, expertise, universal reach and capacity to lead on the multiple dimensions of international trade discussions, including the negotiation of new trade rules.” Highlighting WTO reforms, they recalled “the commitment made at the 12th WTO Ministerial Conference [in Geneva, in June 2022] and reaffirmed at the 13th WTO Ministerial Conference [in Abu Dhabi in March 2024] to work towards a necessary reform of the Organization to ensure its relevance and restore the credibility of the multilateral trading system.” The Leaders focused on a spate of issues that are currently undermining “the multilateral trading system”, which “has long been at a crossroads.” Without naming the European Union, which has decided to impose its carbon-border adjustment mechanism (CBAM) while delaying the implementation of its deforestation regulation, the Leaders stated that “the proliferation of trade-restrictive actions, whether in the form of indiscriminate rising of tariffs and non-tariff measures, or protectionism under the guise of environmental objectives, threatens to further reduce global trade, disrupt global supply chains, and introduce uncertainty into international economic and trade activities, potentially exacerbating existing economic disparities and affecting prospects for global economic development.” The Leaders said they “remain committed to the urgent restoration of an accessible, effective, fully-functioning, two-tier binding WTO dispute settlement system,” while strongly supporting “Ethiopia and Iran’s bid for accession to the WTO.” The US has repeatedly blocked Iran’s accession bid since the 1980s and is unlikely to agree to its admission into the WTO. Significantly, the BRICS Declaration on WTO issues did not include any language on the controversial Investment Facilitation for Development Agreement (IFDA), in which China, Russia, and Brazil are members. However, during the drafting session of the Rio de Janeiro Declaration, India and South Africa may have pushed back against the inclusion of any language on IFDA and other plurilateral initiatives, said people familiar with the development. FINANCE In paragraph 10 of the Rio de Janeiro Declaration, coinciding with the 80th anniversary of the Bretton Woods Institutions (BWI), namely the World Bank and the International Monetary Fund (IMF), the Leaders called for urgent “reform” of these institutions “to make them more agile, effective, credible, inclusive, fit for purpose, unbiased, accountable, and representative, enhancing their legitimacy.” The Leaders called for urgent reform of the institutions’ “governance structure to reflect the transformation of the global economy since their establishment.” They emphasized that “the voice and representation of EMDEs [emerging market and developing economies] in the BWI must reflect their increasing weight in the global economy.” Moreover, they called for “improved management procedures, including through a merit-based and inclusive selection process that would increase regional diversity and representation of EMDEs in the leadership of the IMF and the WBG [World Bank Group], as well as the role and share of women at the managerial level.” It has been followed somewhat religiously that the head of the IMF will be a person from the European countries, while the head of the World Bank Group will be from the United States. “In the current context of uncertainty and volatility,” the Leaders said that the IMF “must remain adequately resourced and agile, at the center of the global financial safety net (GFSN), to effectively support its members, particularly the most vulnerable countries.” “Despite the absence of quota realignment,” the Leaders said “we have provided consent to the proposed quota increase under the 16th General Review of Quotas (GRQ) and urge IMF members that have not yet done so to provide their consent and give effect to the quota increases under the 16th GRQ with no further delay.” They urged “the IMF Executive Board to fulfil the mandate set by the Board of Governors to develop approaches to quota share realignment, including through a new quota formula, under the 17th GRQ at the earliest possible time.” Reaffirming “the 2025 World Bank Shareholding Review, co-chaired by Brazil,” the Leaders said it is “a critical tool to strengthen multilateralism and enhance the legitimacy of the World Bank Group, as a better, bigger, and more effective development finance institution.” BRICS PAYMENTS SYSTEM On the much-delayed BRICS Payments System, which attracted the wrath of President Trump who threatened to impose 100% tariffs on BRICS countries if they sought to de-dollarize global trade payments, the Leaders tasked their “finance ministers and central bank governors as appropriate, to continue the discussion on the BRICS Cross-Border Payments Initiative, and acknowledge the progress made by the BRICS Payment Task Force (BPTF) in identifying possible pathways to support the continuation of discussions on the potential for greater interoperability of BRICS payment systems.” In this regard, they welcomed “the “Technical Report: BRICS Cross-border Payments System”, which reflects members’ revealed preferences, and should play a pivotal role in our efforts to facilitate fast, low-cost, more accessible, efficient, transparent, and safe cross-border payments among BRICS countries and other nations and which can support greater trade and investment flows.” In paragraph 14 of the Rio de Janeiro Declaration, in an apparent reference to the financial and trade sanctions imposed against Russia and Iran, the Leaders condemned “the imposition of unilateral coercive measures that are contrary to international law, and reiterate that such measures, inter alia in the form of unilateral economic sanctions and secondary sanctions, have far-reaching negative implications for the human rights, including the rights to development, health and food security, of the general population of targeted states, disproportionally affecting the poor and people in vulnerable situations, deepening the digital divide and exacerbating environmental challenges.” The Leaders called “for the elimination of such unlawful measures, which undermine international law and the principles and purposes of the UN Charter.” Further, the Leaders stated unambiguously that they “do not impose or support non-UN Security Council authorized sanctions that are contrary to international law.” GLOBAL SOUTH COOPERATION Given the rapid fragmentation of the multilateral architecture on all fronts and emergence of blocs amid rising geopolitical and geoeconomic tensions, the Leaders reaffirmed their commitment to consolidate and strengthen BRICS in line with the group’s “spirit of mutual respect and understanding, sovereign equality, solidarity, democracy, openness, inclusiveness, collaboration, continuity, full consultation and consensus.” They also committed to “strengthening cooperation in the expanded BRICS under the three pillars of political and security, economic and financial, cultural and people-to-people cooperation, and to enhancing our strategic partnership for the benefit of our people through the promotion of peace, a more representative, fairer international order, a reinvigorated and reformed multilateral system, sustainable development and inclusive growth.” The BRICS leaders underlined “the significance of the adoption of the BRICS Leaders’ Framework Declaration on Climate Finance and of the BRICS Leaders’ Statement on the Global Governance of Artificial Intelligence, as well as endorse the launch of the BRICS Partnership for the Elimination of Socially Determined Diseases.” “These initiatives reflect our joint efforts to foster inclusive and sustainable solutions to pressing global issues.” +
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