Delhi Accord: BRICS for Fair Play
TRANSCEND MEMBERS, 2 Dec 2013
Recently the competition authorities of the BRICS countries signed the Delhi Accord, in which the members expressed “resolve and commitment to exchange views on different aspects of competition policy.” The Accord perhaps the first of its kind between the members of this powerful multilateral body has mainly two fold objectives. Since its foundation the group has argued for a fair trade regime in the world with reform in international financial bodies. The multilateral accord will add to the grouping’s resolve in that direction. The other advantage, not delinked from the first one the accord, is it will help coordinate the internal policies of these countries by encouraging transparent trade practices.
India’s Prime Minister, Manmohan Singh, who delivered the inaugural address to the conference articulated the challenges the group face. Fiscal mismanagement is one of the major problems that grapple all these economic to varying degrees. Singh rightly argued that in the era of globalization in which “business and money know no geographical boundaries,” it is necessary for the competition authorities of the group to coordinate policies to keep pace with “the increasing integration of the world economy in the form of multi-jurisdictional mergers and cross-border anti-competitive conduct”. This takes on greater significance in view of the increasing trade flows among BRICS nations. While exuding confidence that the BRICS countries at nearly $14 trillion GDP and $4 trillion foreign exchange reserve, Singh argued, “maintaining a sustainable fiscal policy, while incurring significant public expenditures to raise the standards of living of a large population, is also a task that we have to grapple with continuously.” The coming together of the five countries to deliberate the fair trade practices and agreeing on common principles in this direction is no mean achievement. In that sense, Delhi Accord emphasizes multilateralism, than on unilateralism and bilateralism. It also needs emphasis that multilateralism is one of the core virtues of BRICS.
Singh argued for a sound architecture of policy in which “the beneficial effects of markets can be maximized by action to prevent market failure.” And for the development of such a policy it is but necessary that the member countries adopt a sound competition policy. The other issue he articulated is infrastructure. In terms of infrastructure development, perhaps except Russia all the four countries of the group have huge gaps in their national goals of development and infrastructure capacity to fulfill those goals. Coordination between the five countries to coordinate policies and exchange expertise can help address these challenges. The idea of BRICS bank and contingency reserve arrangement as mooted during the Delhi summit last year was to, among other things, support infrastructure development activities. Indian Prime Minister revealed that “two of the most significant agreements in the pipeline (among the BRICS members) are those that will result in the setting up of a BRICS Development Bank and a Contingency Reserve Arrangement.’’ The bank with the reported initial capital of $100 billion will be a big boost to infrastructure development in member countries. BRICS countries realize that in order to keep pace the fast growth rate it is essential to have necessary infrastructure.
Speculative capital flow is another major issue that was raised during the conference. Some of the BRICS countries have recently witnessed a slow down in the rate of economic growth. For instance in case of India while cheap capital flows and global liquidity might have helped its economy but they are not delinked from international uncertainties such as the speculation about the US Federal Reserve’s tapering strategy. In a recent statement, one of the top officials of the International Finance Corporation, the World Bank’s private sector financial arm, argued that cheap capital may not be helpful unless the government does not initiate necessary reforms and develop local capital markets. He also argued that the reforms process need to be linked with infrastructure development and poverty alleviation. The recent slowdown has also led downgrading of exchange value of currency against dollar and low investor confidence in the economy. The signing of the Delhi Accord has perhaps taken place in an appropriate time as members reiterated their common resolve to address this issue. As India’s Competition Commissioner, Ashok Chawla argued, the coordination among BRICS countries “would enable (their) competition authorities to become more effective institutional ombudsman for fair play in the market.”
The need for building credible institutions for sustainable and equitable growth was factored during the deliberations. One of the scorns that the group encounters is that they lack transparent institutions. Delhi Accord rightly emphasized on building credible institutions. The grouping which is poised to play a global role needs to have credible and transparent institutions at home. This will not only enhance global standing of the group, but also help build strong and vibrant economies at home, and equip them with a stronger voice to raise the issue of a fair global order, at political and economic planes.
The Delhi Accord signed during the third BRICS International Competition Conference on 22 November 2013 will go a long way in promoting multilateralism and in promoting a fair global trade regime. The coordination among the members to meet the challenges will be a necessary step in that direction. It can be hoped that by the next biennial conference in South Africa the multilateral coordination among the members will bring higher economic growth with effective strategies to cope with national and international challenges.
Dr Debidatta Aurobinda Mahapatra is a member of the TRANSCEND Network and an Indian commentator. His areas of interests include India-Russia relations, conflict and peace, and strategic aspects of Eurasian politics.
This article originally appeared on Transcend Media Service (TMS) on 2 Dec 2013.
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