Diplomatist Magazine Diplomatist September 2019 | Page 26

I n d ia & t H E W O R L D
India has also been more active in signing preferential
trade agreements. Brazil is a member of Mercosur; hence
trade negotiations have to be made together with its partners.
This is only one of the reasons why there is a low number
of preferential agreements with third parties (India being
one of the few exceptions). India has signed preferential
agreements with a much bigger number of countries or groups
of countries.
These differences in demographic dimension, in
productive pattern as well as in the intensity of involvement
with external trade, coupled to different historical trajectories
(even in terms of actual military engagement in conflicts with
neighbor countries) and the geographical distance between
the two countries, might suggest that the margins for bilateral
relationship are too limited.
Yet there are potential complementarities between the two
economies, as well as some similarities in their diplomatic
performance.
In generic terms, with over one billion mouths to feed,
India should not disregard the Brazilian capacity to offer
primary goods. With low overall competitiveness Brazil
could in principle benefit from the access to capacity building
in services as well as in specific, manufacturing sectors.
Exchange of technologies is always an issue to be considered.
The bilateral Brazilian export bill is far more concentrated
than the Indian. In 2017 the one hundred most important
products accounted for some 96% of bilateral exports from
Brazil, whereas the one hundred most important bilateral
imports accounted for 63%. Moreover, there are significant
differences in the trajectory in recent years: in 2010 these
figures were 95% for Brazilian bilateral exports and 80%
for its bilateral imports: there has been a remarkable
diversification of the Indian bill, whereas the Brazilian export
composition remained rather constant.
A similar outcome is found in bilateral trade in services. In
2016 the three most important services exported from Brazil
accounted for 58% of total bilateral transactions in services,
whereas in the import side the figure did not surpass 47%.
These figures are bound to influence bilateral negotiations.
With regard to bilateral negotiations in services, it is not
easy to identify what could be a Brazilian demand. From
the Indian side, one might expect a focus on GATS Mode
2 (consumption abroad), as well as Mode 3 (commercial
presence), given the relative importance of information and
communication technologies, as well as services to support
managerial activities.
On the merchandise, side negotiations seem to be more
easily identifiable. As a matter of fact, the small list of
products in the Mercosur-India agreement is indicative of
the need for further negotiations.
Apart from bilateral negotiations, the two economies
have other mechanisms to foster their approximation. Both
countries have over time systematically been active vocals
in multilateral fora, defending the interests of the set of
developing economies.
First and foremost, both countries are members of the
IBSA initiative. This group was formed five years before the
BRICS and has (at least) two important positive dimensions.
This is a more homogeneous set of economies than the
BRICS, with rather approximate degrees of industrialization.
Also, the IBSA agenda comprises a few mechanisms to foster
complementarity more easily identifiable than in the BRICS
agenda. The margins for the convergence of interests seems
to be wider than in other groups.
The formation of the BRICS group has somehow affected
the dynamism of IBSA, as indicated by the seven or so years
without a Summit. A recovery of the mechanism could
provide new channels to facilitate complementarity between
the two economies.
There is little doubt about the importance to be a member
of the BRICS if seen from the viewpoint of potential
opportunities. This group has, from its very beginning,
systematically met a good deal of skepticism. But no one
questions the potential of complementarity among its
members, to be achieved from the moment the group is able
to focus its common agenda more clearly and put into practice
concrete actions that correspond to the interest of the five
partners. A Brazil-India alignment in this group could be a
major contribution in this regard.
The active role played by Brazil and India in the GATT
and more recently in the WTO as representatives of the
interests of the developing economies is widely recognized.
It is inevitable that some specific differences remain in the
negotiating positions, but when the very existence of such
an important institution is being questioned, an explicit axis
of resistance might contribute to the survival of the existing
tools to discipline trade relations.
There are, hence, a number of arguments to motivate a
more proactive identification of common interests and their
conversion into effective action. The next seventy years of
relationship could be far more intense in terms of stronger and
easily identifiable economic links between Brazil and India. n
References:
[1] Data from the World Bank`s World Development
Indicator.
*Author is DPhil in Economics, Oxford University, now
Undersecretary for Foreign Investment, Ministry of Economy,
Brazil.