BUSINESS

IBSA meet may see pact to boost trade

Boost needed:Intra-IBSA trade in 2012 was $50.5 bn., or only 3.4% of their total trade with the rest of the world.— FILE PHOTO

Boost needed:Intra-IBSA trade in 2012 was $50.5 bn., or only 3.4% of their total trade with the rest of the world.— FILE PHOTO  

The proposal for a Comprehensive Economic Partnership Agreement (CEPA) between India and the two separate customs unions involving Brazil and South Africa – MERCOSUR and SACU respectively – to boost trade and investment ties, is set to get a leg up with New Delhi likely to accord it priority at the forthcoming IBSA Summit.

Also topping the agenda at the sixth IBSA (India, Brazil, South Africa) Summit – likely to be held in India in mid-2017 – would be the three IBSA members enhancing contribution to the ‘IBSA Fund’ to support more developmental projects across the world. The summit could also see the three major emerging market economies strengthening trilateral cooperation on renewable energy projects, sources said.

On trade, India has a Preferential Trade Agreement (PTA) with MERCOSUR (a trading bloc and customs union of Latin American nations, including Brazil) and both the sides are looking to expand its coverage. India is also negotiating a PTA with Southern African Customs Union (SACU) that includes South Africa — though only five rounds of negotiations had been held so far, with the fifth round having been held back in October 2010. A PTA between MERCOSUR and SACU had become operational from April this year.

Expanding scope

In the backdrop of these PTAs, the proposal for an India – MERCOSUR – SACU CEPA is to expand the scope of the PTAs from just trade in goods and then convert them into a comprehensive agreement that will also cover investments, trade in services and areas including intellectual property rights and competition laws among others.

“With the Indian Government planning to promote the IBSA grouping in a big way, efforts should be made to bring the proposal for an India-MERCOSUR-SACU CEPA to the level of an IBSA Joint Study Group. The CEPA can help boost intra-IBSA trade and investment ties,” said Sachin Chaturvedi, Director General of the New Delhi-based think-tank RIS. Intra-IBSA trade (export and import) in 2012 was about $50.5 billion, which was only 3.4 per cent of their total trade with the rest of the world. Though the CEPA proposal was mooted in 2007, talks on it have not yet taken off.

IBSA Fund

On the IBSA Fund, the three IBSA member-nations had in March 2005 agreed that each of them will pitch in with an annual contribution of $1 million to the Fund.

Though operational from 2006, the Fund had received contributions of only about $18 million, sources said, adding that the aim was to enhance it soon to $40 million to assist 25 projects every year, especially in least developed countries.

The Fund, managed by the UN office for South-South cooperation in the UN Development Programme (UNDP), is however sector- and region-agnostic.

According to an RIS report, there is a need for national development cooperation agencies of the three IBSA member nations to assume a larger role in development cooperation through IBSA.

“Instead of over-reliance on UNDP, the ABC of Brazil, DPA of India and SADPA (of South Africa) can jointly manage the Fund and the projects,” it added.

The projects completed by the IBSA Fund include those in Burundi (combating HIV/AIDS), Palestine (sports promotion and rehabilitation of cultural/hospital centre), Sierra Leone (human development and poverty reduction), Cape Verde (health care infrastructure, drinking water), Guinea-Bissau (agriculture development), Haiti (solid waste collection), Cambodia (empowering people with special needs) and Vietnam (rice production).

The IBSA Fund also supported Laos in the formulation of projects and Timor-Leste through a technical exchange.

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