2nd IBSA Summit in Johannesburg
IBSA is a trilateral, developmental initiative between India, Brazil and South Africa to promote South-South cooperation and exchange. The second 2nd IBSA Summit was held in Johannesburg, South Africa from 15 to 17 October 2007.
IBSA: Creation & Reasons
The IBSA Forum was created in 2003 in order to enhance South-South, development coordination and cooperation between countries perceived to be the leaders of growth in their respective continents. India, Brazil and South Africa joined hands to build and strengthen economic South-South cooperation and for trilateral cooperation in Science & Technology, Information Technology, Health, Civil Aviation and Shipping, Tourism, Trade and Investment, Defence, Energy and Education. IBSA countries have common goals to reach reduction of poverty and more equitable distribution of wealth, a better quality of life, promotion of sustainable use and tapping of rich natural resource base, sharing of technology and expertise, coordination of positions on climate change and bio diversity, meeting of infrastructural requirements, development of peaceful use of atomic energy through supply of technology, equipment and material under appropriate safeguards.
The main objectives of the IBSA Dialogue Forum could be summarized as follows:
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To promote South-South dialogue, cooperation and common positions on issues of international importance
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To promote trade and investment opportunities between the three regions of which they are part
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To promote international poverty alleviation and social development
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To promote the trilateral exchange of information, international best practices, technologies and skills, as well as to compliment each others competitive strengths into collective synergies
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To promote cooperation in a broad range of areas, namely agriculture, climate change, culture, defence, education, energy, health, information society, science and technology, social development, trade and investment, tourism and transport.
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From left, are Mr. Jerry Vilakazi, CEO, BUSA; Mr. Rodrigo Loures, Vice President, CNI; Mr. A P Mull, Leader of the CII Delegation; and Mr. Ganesh Kumar Gupta, President, FIEO and Leader of the Assocham. |
Trade & Investment covering both goods & services
IBSA countries share 20% of the world population, contributing over 4% to the world GDP and about 2% of the world trade. India, Brazil and South Africa are countries with the fast growth rates in their respective countries. The IBSA Governments have agreed to reinforce their economic strength by synergizing their complementarities in industry, services, businesses and technologies and create a market of 1.2 billion people, 1.2 trillion dollars of GDP and foreign trade of 400 billion dollars. The IBSA countries have aimed to increase their trade follows to US$10 billion by the year 2007.
Trade among the three countries and regional groupings have gone up tremendously in the last few years. Two-way trade between India and MERCOSUR more than doubled between 2001 and 2005 from less than one billion US $ to 2.3 billion $. Bilateral trade between India and South Africa has gone up by 133 percent in these four years from 1.3 billion dollars to 3.1 billion dollars.
The three economies compete internationally to export leather, garments and agricultural commodities to developed countries. However, there is immense potential for the three countries to cooperate in numerous sectors only a few of which are biotechnology, pharmaceuticals, ethanol and mining operations, aerospace and atomic energy.
Investment
Though each of the IBSA countries has attracted substantial FDI in 2005: India US$ 5.5 billion, S Africa US$7.2 billion, Brazil US$ 15.5billion, intra IBSA FDI flows have been very low. This is in spite of the fact that Trans National Corporations for the year 2005-06, have ranked India as the second most attractive and Brazil as the fifth most attractive global business location.
India’s potential for enhancing trade in Africa and Latin America is vast. Therefore, India wants to use South Africa as a gateway to trade with the rest of Africa, and Brazil as a route to other Latin American nations. South Africa and Brazil in turn hope to gain entry into South Asia through India.
The Indian industry is looking at large number of sectors for participation, starting from agriculture, agro-processing, small and medium industries in all the sectors, engineering, research and development, as well as in adding value to natural resources in Africa.
As the three countries’ growing economies guzzle more fuel, they agreed to cooperate on developing alternative sources of energy. India would be sharing wind and solar power technologies, while Brazil would help India and South Africa develop ethanol, which it produces in large quantities from sugar cane.
IBSA Trilateral Two Way Trade for the year 2005:
| Exports |
US$ Million |
| India (exports) – S. Africa |
984.04 |
| S. Africa (exports) – India |
2197.67 |
| India (exports) – Brazil |
687.17 |
| Brazil (exports) – India |
792.40 |
| S.Africa (exports) – Brazil |
320.36 |
| Brazil (exports) – S. Africa |
1313.6 |
| Total Trilateral exports |
6286.24 |
Source: India & Brazil – Deptt. of Commerce, MoC & I,
S.Africa & Brazil- Deptt. of Trade & Ind., S. Africa
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Mr. Ajay Sahai, Director General, FIEO; Mr. M C Pandey, Assocham; Mr. Ganesh Kumar Gupta, President, FIEO; and Mr. D.S.Rajora, Assocham. |
The IBSA Economic Cooperation
Complementarities exit between the three countries and the FTA leading to a Comprehensive Economic Partnership Arrangement in:
Trade
- In goods
- In Services
Investment
Other Areas of Cooperation – Simultaneously; the IBSA countries can also cooperate on other sectors that will complement the objectives of augmenting growth in trade and the economy.
(a) Trade in Goods
Top products exported from India to S. Africa (in value terms):
Total = US$ million 984.04
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Light Oils
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Vehicles
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Rice
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Medicines
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Chassis + Engine
Top 5 = 32% of total
Top products of imports to India from S. Africa (in value terms):
Total US$ 2.197 billion
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Aircraft
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Phosphoric acid
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Coal
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Gold
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Wool Pulp
Top 5 = 63% of total
India’s gain under IBSA:
India gains with output and export increases in textiles and garments, meat and fish products, transport equipment, machinery and electronic equipment, metals and minerals.
Top products of Indian exports to Brazil (in value terms)
Total US$ 678.17 Million
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Petroleum (refined)
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Chemicals
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Pharmaceuticals
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Synthetic Fibres
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Machinery
Top 5= 32% of total
Top products of India’s imports from Brazil (in value terms)
Total US$ 792.4 million
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Petroleum (Crude)
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Soy oil
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Sugar cane
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Ethanol
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Petrochemicals
Top 5 = 67% of total
India imports more products from Brazil than it exports to Brazil.
Top products of exports from S Africa to Brazil (in value terms)
Total US$ 320 million
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Alloys
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Iron products
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Coal
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Chemicals
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Autoparts
Top 5= 63%of total
Top products of exports from Brazil to S Africa (in value term)
Total US$ 1313.5 million
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Auto parts
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Frozen chicken
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Tobacco
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Vehicles
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Tractors
Top 5=40% of total
IBSA Trade
Some products have been identified for enhancing trade benefits by applying IBSA as a medium to foster economic cooperation. The following list is only indicative and these sectors may be explored further:
Other agro products and food processing: Coconut, iron ore, coffee, dried leguminous veg. shld, live animals, jewellery
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Mr. G K Pillai, Commerce Secretary (centre) discussing with journalist. On Mr. Pillai’s left is Mr. Ganesh Kumar Gupta, President, FIEO. |
Cooperation in agriculture
Complementarities exist in: India-cereals, Brazil – meat production, S Africa- live animals, fruits
Trade in Services
The sectors that the IBSA group can engage are in: Financial & banking services (including insurance)
At the WTO, the Mercosur countries including Brazil have proposed the elimination of Economic needs Tests in sectors such as financial services, tourism, professional and telecommunication services.
With S Africa having a well developed financial and banking sector, trade by IBSA partners in this sector will benefit.
Information and communication technology (including IT Education) services
With India’s large pool of IT professionals and the demand for literacy in S Africa and demand for more professionals in IT education in Brazil and S Africa, this is a sector that may be considered for inclusion in the IBSA Framework. Export of high tech goods and services is expected to reach US$ 2billion in 2007.
This is a key area for generating employment and exports. The proposal to the WTO from MERCOSUR countries including Brazil has been to promote the liberalization of computer related services and increase the participation of developing countries in trade.
Travel & tourism related services
Great potential is offered by this sector for all the three IBSA countries. Further access may call for eliminating economic needs tests in all sub sectors and modes of supply, elimination of nationality or residency requirement (especially for tour operators), elimination of commercial presence subject to foreign capital limitations, access to technology distribution channels and information networks. In this context, the MERCOSUR countries have asked for specific commitments from developed countries without limitations in hotels and restaurants including catering, travel agencies and tour operators, tourist guide services. India too had asked for removal of barriers by developed countries.
E Health Services
There is potential to develop and increase tele-medicine infrastructure to enable patients to receive health services such as medical diagnosis and advice ordinarily have access. This easily overcomes the obstacle of long distance, associated costs and limitation in the availability of specialists. This is pertinent as both Brazil and S Africa have public health care system. The respective governments are trying to further this concept by initiating projects.
Obstacles/ hindrances to IBSA Trade & Cooperation and Recommendations
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Trade facilitations/ customs measures
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NTBs, standards: Removal of barriers and trade restrictions
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Transport linkages- improvements, reduction of costs
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Lack of business information
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Language barriers
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Commercial presence of banks
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Public and private sectors cooperation
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Other hindrances
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A high level business delegation consisting of Apex Chamber like FIEO, ASSOCHAM, FICCI and CII visited South Africa for three day business meeting with counterparts in South Africa and Brazil from 15 to 17 October 2007. FIEO was represented by Mr. Ganesh Kumar Gupta, President FIEO, who was leader of the delegation of ASSOCHAM also, and Mr. Ajay Sahai, Director General, FIEO. The delegation had wide ranging discussion on cooperation in the field of health and pharmaceuticals, food processing, alternative source of energy, infrastructure, mining and mutual recognition on technical standards to facilitate intra ISBA trade. President FIEO gave an elaborate speech highlighting his vision for ISBA and also issues which need to be addressed to promote trilateral trade. His speech focused on following aspects. |
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| Mr. Ganesh Kumar Gupta, President, FIEO (extreme right) with Mr. Rodrigo Loures, Vice President, CNI (centre) and Mr. Tatiana Lipovetskaia Palermo, President, Brazil-India Chamber of Commerce |
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Need to push FTAs between ISBA members for facilitating trade and investment.
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Such FTA will provide competitive market access to India into Mercosur and SACU, for Brazil into SACU and India and for South Africa into Mercosur and India.
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Joint Venture in food processing, energy, automotive components, pharmaceuticals, leather, gems and jewellery, ores and minerals
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Liberal Visa regime, better connectivity and frequent exchange of business meet essential for promoting intra ISBA trade and investment.
Subsequently to finalise the area of co-operation the Prime Minister of India, H.E. Dr Manmohan Singh, the President of Brazil, H.E. Mr. Luiz Inácio Lula da Silva, and the President of South Africa, H.E. Mr. Thabo Mbeki met in Tshwane, South Africa, on 17 October 2007.The leaders recognised that since its inception in 2003, the IBSA Dialogue Forum provided a strong framework for trilateral cooperation in several key sectoral areas amongst IBSA partners. They noted that IBSA also provides them an important instrument for cooperation on regional and international issues and promoting the interests of the developing countries, thus contributing to the strengthening and deepening of South-South cooperation. The leaders welcomed and fully supported the launch of the Women’s Forum which strengthens participation of women in IBSA and recognised the fundamental contribution of women in the social, cultural and economic development of India, Brazil and South Africa. They reiterated the importance of strengthening the global governance system as it forms a critical ingredient for promoting peace, security and sustainable socio-economic development. The leaders strongly emphasized the need for ensuring the supply of safe, sustainable and non-polluting sources of energy to meet the rising global demand for energy, particularly in developing countries.
The seven agreements signed during the daylong IBSA summit envisage cooperation among the three nations in the areas of public administration and governance, tax administration, arts and culture cooperation, higher education, wind resources, health and medicines and social development.
