There has been a great deal of media commentary following last week’s BRICS summit in South Africa. Much has been made of the ‘disparate’ nature of the coming additions of the new BRICS Six – Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE to the grouping, which should be completed by early next year and will bring the total number of BRICS countries to eleven.

What many have missed however is that all the BRICS countries – including the new BRICS six – possess significant trade influence within their own backyards. I provide details as follows:

Argentina

Like neighboring Brazil, Argentina is a full member of the Mercosur free trade bloc in South America. Mercosur also includes Paraguay and Uruguay (Venezuela is currently suspended) and associate members Bolivia, Chile, Colombia, Ecuador, Guyana, Peru, and Suriname.

Mercosur’s population is 284 million, while its total GDP (PPP) is US$5.195 trillion. GDP per capita (PPP) is US$18,987.

Egypt

Egypt is the second largest (after Saudi Arabia) member of the Greater Arab Free Trade Agreement (GAFTA), which also includes Algeria, Bahrain, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Qatar, Sudan, Syria, Tunisia, UAE and Yemen.

GAFTA’s population is about 440 million, while its total GDP (PPP) is about US$7.9 trillion. GDP per capita (PPP) varies widely among member countries; but averages out at US$17,270.

Ethiopia

Ethiopia is the second-most populous country in Africa and its sixth largest economy. It is also a member of the Common Market For East & South Africa (COMESA), which also includes Burundi, Comoros, the DR Congo, Djibouti, Egypt, Eswatini, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Somalia, Sudan, Tunisia, Uganda, Zambia and Zimbabwe.

Ethiopia is also a member of the African Continental Free Trade Agreement (AfCFTA) which includes all African nations with the exception of Eritrea. This agreement is phasing in reductions on all intra-African trade on 95% of all products in various stages over the coming 12 years. This eliminates tariffs for pan-African sourcing.

COMESA’s population is about 640 million, while its total GDP (PPP) is about USD918 billion. The average GDP per capita (PPP) varies amongst members but averages out at US$5,173.

Iran

Iran is heavily sanctioned by the West and is not a member of any Middle Eastern free trade agreements. However, it does have an FTA with the Eurasian Economic Union, with the main trade beneficiary within this being Russia.

However, Iran is the key connectivity hub in the International North-South Transportation Corridor (INSTC), which also includes signatories Azerbaijan, India, Russia and Turkmenistan. This hub also directly links to other routes to Europe (West), China (East), the Middle East and Africa (South). It is expected to come into full operational use in 2024, using multimodal rail and maritime connectivity. As the INSTC is cheaper and faster than the Suez Canal routes this places Iran at the hub of East-West, North-South global trade routes.

Iran is also a member of the Shanghai Cooperation Organisation, and is improving its regional ties, especially with Saudi Arabia.

Iran is a significant regional market and economy, with a population of 85 million, and a GDP (PPP) of US$1.692 trillion. Its GDP per capita (PPP) is US$19,548.

Saudi Arabia and the United Arab Emirates

Both Saudi Arabia and the United Arab Emirates (UAE) are members of the GAFTA free trade bloc – along with Egypt (see above for details). They are also both members of the Gulf Cooperation Council (GCC) which also includes Bahrain, Kuwait, Oman, and Qatar. The GCC has CEPA trade agreements with India, Israel, and Singapore and is negotiating with Australia, Chile, China, and the UK.

The GCC has a population of 56.4 million, a GDP (PPP) of US$3.2 trillion and a per capita GDP (PPP) of US$61,506.

The original BRICS and their respective free trade blocs 

The original BRICS members can be summarised as follows:

Brazil – a member of Mercosur (see also Argentina above) with a combined GDP (PPP) of US$5.19 trillion.

Russia – a member of the Commonwealth of Independent States (CIS) and Eurasian Economic Union (EAEU). These blocs also include Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. Their collective GDP (PPP) is US$5.5 trillion.

India – a member of the South Asian Association for Regional Cooperation (SAARC) and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation BIMSTEC. These blocs collectively include India in addition to Afghanistan, Bangladesh, Bhutan, Maldives, Myanmar, Nepal, Pakistan, Sri Lanka, and Thailand. Their collective GDP (PPP) is US$16.63 trillion

China is a member of the Regional Comprehensive Economic Partnership (RCEP) which also includes Australia, Brunei, Cambodia, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. RCEP has a collective GDP (PPP) of US$49.5 trillion.

South Africa is a member of the Southern African Customs Union (SACU) which also includes Botswana, Lesotho, Namibia, and Swaziland. It has a GDP (PPP) of about US$950 billion.

Conclusion

The main point about the expansion of BRICS is the trade and development potential that it brings. With the bloc about to be expanded to eleven members, this actually increases the overall geographic reach of the BRICS to 84 countries by dint of their respective additional free trade agreements with other countries.

In total, these 84 nations now represent a group with an overall combined GDP (PPP) in excess of US$92 trillion, of which China’s RCEP grouping equates to slightly less than 50%.

If we deduct the pro-Western GDP of Australia, New Zealand, Japan, Singapore, and South Korea from the RCEP membership, this equates to an overall collective, neutrally political dynamic of a GDP (PPP) of some US$83.5 trillion that the BRICS countries have considerable trade influence over.

This compares with GDP (PPP) figures for the European Union at US$24.05 trillion and the United States with a GDP (PPP) of US$21.478 trillion, meaning that the real BRICS global trade influence in purchasing power parity (PPP) terms over the collective West is now nearly double – US$83.5 trillion against US$45.53 trillion – as a result of the new expansion.

Planning for future trade flows as a result should be based on these figures as a collective, rather than the overly simplistic BRICS-only data that most commentators have illustrated as a ‘disparate’ group of nations with limited commonality. The reality is somewhat different.

(Source: SILK ROAD BRIEFING)