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Ibsa partners boost trade, gird themselves for global crisis

Creamer Media’s Engineering News, South Africa

Ibsa partners boost trade, gird themselves for global crisis

By Keith Campbell

28 October 2011

South Africa is achieving significant success in trade with its Ibsa part- ner countries, India and Brazil, President Jacob Zuma highlighted at a press conference in Pretoria last week. (South Africa hosted the fifth Ibsa Dialogue Forum summit on October 17 and 18.)

“I am pleased to note,” he said, “that although South Africa [accounts for] only 8.2% of the combined [gross domestic product], we contributed 25% of Ibsa trade in 2010, and in 2009 we contributed the largest share – 38%.”

He also noted the rapid growth in trade between the three countries. It is esti- mated that trilateral Ibsa trade amounted to $7-billion in 2005. The year before, the Ibsa States had set themselves the objective of increasing their trilateral trade to $10-billion. This was achieved by 2007.

“We then set ourselves a target to reach $15-billion by 2010 and, in fact, reached that total a year early, in the midst of the recession in 2009,” pointed out Zuma. “The target for 2010 was $16.1-billion and all indications point to significantly surpassing that amount in 2011.” The current target, set in 2008, is for $25-billion in trilateral trade by 2015. All three Ibsa heads of State and government – Zuma, Brazil’s President Dilma Rousseff and India’s Prime Minister Manmohan Singh – expressed their confidence that this would be achieved.

In her address at the press conference, Rousseff urged the eurozone countries to reach agreement on how to meet the financial crisis afflicting their bloc. “We know that a credible accord is needed between the European countries to stop this crisis going out of control and affect- ing the world,” she said.

“In November, at the G20 summit, we need to transmit a strong message of political cohesion and macroeconomic coordination,” she stressed. “The priority is to solve the problem of sovereign debt and reverse the situation of global recession. The regulation of the financial system cannot be postponed. It is fundamental to put an end to the mone- tary policies which provoke a veritable [currency] exchange war and stimulate protectionism. It is important to seek fiscal consolidation and solidify banking systems.”

She pointed out that the international financial crisis had revealed the weakness of global economic governance. Further, because of the globalised nature of trade and finance today, developing and emerging countries were being affected by the turbulence in the developed world. As a consequence, however, “we also have the right and the duty to participate in the search for solutions for this crisis situation”.

She referred to the reform programmes now under way at the International Monetary Fund and the World Bank, which would grant the major emerging economies voting powers equivalent to their growing contribution to the world economy, saying they had to be imple- mented. “We have solid credentials to demand new foundations for the global financial architecture,” she affirmed.

Referring to Ibsa partners South Africa and India as well as her own country, Rousseff reported: “We are reinforcing our capacity to resist the crisis by stimulating the strengthening of our internal markets . . . and creating jobs.

“We have proved that fiscally responsible macroeconomic policies are compatible with active income redistribution measures and social inclusion,” she added. “We have made rigorous fiscal regulation and fiscal consolidation prerequisites for the strength of our economies.”

Zuma also highlighted the international cooperation and coordination between the three countries, citing the fact that all three are currently serving on the United Nations Security Council as nonpermanent members. He also stressed their common membership of the Group of 20 leading developed and emerging economies (better known as the G20), the Brics (Brazil, Russia, India, China and South Africa) group, the World Trade Organisation and, regarding climate change, Basic (Brazil, South Africa, India and China).

He further reported that the three leaders had also discussed the reform of institutions of global governance, sustainable development and climate change. “We also noted that the people-to-people fora remain a unique and enriching engagement for the three countries.”

Singh described Ibsa as “a unique organisation” and cited it has 16 working groups and six people-to-people fora, which brought together the three countries’ spe- cialists, experts and people. He stated that, “as three developing democracies, we share very similar aspirations,” that “we have defied the sceptics,” and that their experience so far “suggests we are on the right path”.