SA, India, Brazil trade reaches $7 billion

Speaking at the trilateral India-Brazil-South Africa (IBSA) summit in Johannesburg on Tuesday, 16 October, the minister said South-South trade has been on the increase with trade between South Africa and Brazil having tripled in the last decade.

“The rationale for increased relations between IBSA members is rooted in arguments that call for greater South-South integration.

“Effective South-South trade serves twin purposes of assuring both positive trade and economic growth,” said Mpahlwa at the summit which will see over two hundred business people from the three countries attending discussion groups at the Sandton Convention Centre.

Events leading up to the summit at the Presidential Guesthouse in Pretoria, Wednesday have provided a platform for the formation of trilateral business partnerships.

These are to enhance existing trade among the three member states and develop new partnerships.

President Thabo Mbeki, Brazilian President Luiz Inacio Lula da Silva and India's Prime Minister Manmohan Singh are set to sign six agreements aimed at boosting the South-South existing relationships and creating new programmes for developing neighbours during the summit.

Further targets have been set to increase the figure to $10 billion by the end of 2007 at the second annual IBSA summit.

Increased trade perpetuates Foreign Direct Investment (FDI), infrastructure development and increased competition in the developing countries.

Recent analysis showed that developing countries accounted for about 30% of world trade and that about 40% of that trade was South-South orientated.

The minister said there was a concern that the existence of trade barriers and tariffs often act as a disincentive to investing or trading countries.

Research done by the Organisation for Economic Cooperation and Development (OECD) showed that tariffs affecting South-South trade are about 11%, while there is only a 4% tariff affecting North-South trade.

The lower tariff barriers for North-South trade were an indication that more needed to be done to reduce tariff barriers hampering South-South trade.

The minister said Brazil, India and South Africa are all growing economies and emphasised that more needed to be done to broaden the scope on tariff issues.

Negotiations regarding these issues were underway he said, adding that it was understandable that countries didn't want to open up their markets completely.

“South Africa, India and Brazil are all developing countries with challenges centring around communications, transport, energy, trade tariffs, unemployment and poverty.

“Our industrial development is underway, and each are dealing with issues such as poverty, unemployment and infrastructure development, therefore making it very difficult to open up markets completely,” said the minister.

Last year, President Mbeki attended the first IBSA heads of state summit in Brasilia, Brazil during which a number of co-operation agreements were signed.

These agreements included a pact on renewable energies such as bio-fuels like ethanol, in which Brazil is a world leader.

Another agreement signed seeks to harmonise product standards between the three countries to facilitate trade that is hoped will soon top $10 billion, as well as an agreement on sea transportation of their respective products.

Co-operation agreements in agriculture and information networks also featured.

Article published courtesy of BuaNews