The BRICS group expands

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BRICS welcomes new members | Is a “Great Reallocation” on the horizon? | The WTO’s new agreement | Trade tools | More research from Hinrich Foundation

BRICS welcomes new members

The BRICS grouping of countries (currently Brazil, Russia, India, China, and South Africa) has doubled its membership. Is the expanded BRICS bloc a new rival for the G7? Experts from the Atlantic Council offer their opinions. The expansion is no triumph for China, writes C. Raja Mohan in Foreign Policy.  Bloomberg reports on how China’s slowdown presents an upside for BRICS and provides the backstory on how the BRICS became a club that others want to join.  BRICS countries are key sources for China’s commodities imports, finds André Brotto in Global Trade Alert. Lastly, the BRICS expansion is another example of the rise of the middle powers, as described in a new Financial Times series by Alec Russel.

Mentioned publications

1. BRICS is doubling its membership. Is the bloc a new rival for the G7? – The Atlantic Council, August 24, 2023
   Increasing the BRICS membership brings benefits and challenges. 

2. BRICS Expansion Is No Triumph for China – C. Raja Mohan, Foreign Policy, August 29, 2023
   The internal politics of the BRICS states just got a lot more complicated.

3. China’s Slowdown Has an Upside for BRICS Bloc Dealmakers – Bloomberg, August 23, 2023
   China’s economic loss may be a gain for the other BRICS members.

4. How BRICS Became a Club That Others Want to Join – Bloomberg, August 17, 2023
   A history of the BRICS.

5. China, Commodities & the Rest of the BRICS – André Brotto, St. Gallen Endowment Global Trade Alert, August 24, 2023
   China has turned to fellow BRICS states to source commodities without becoming dependent on them.

6. The rise of the middle powers – Alec Russel, Financial Times (five-part series), August 21-24, 2023
   Changing geopolitics creates new opportunities for middle-tier economies. 

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Is a “Great Reallocation” on the horizon?

What does Bloomberg’s report on Apple’s splintering iPhone supply chain tell us about supply chain shifts? Laura Alfaro and Davin Chor, find that US sources for imports are changing, in what they call the looming “Great Reallocation”. A newly updated NBER working paper finds that “bystander countries” are increasing exports as a result of the US-China trade war. What are the prospects for developing resilient global supply chains? Alicia Garcia-Herrero examines the question for the Asian Development Bank Institute.  Higher tariffs from the US-China trade war triggered supply chain adjustments find Kyle Handley, Fariha Kamal, and Ryan Monarch for the National Bureau of Economic Research.

Mentioned publications

1. Apple's iPhone Supply Chain Splinters Under US-China Tensions – Bloomberg News, August 28, 2023
   A visualization of Apple’s shifting supply chains. 

2. Global Supply Chains: The Looming “Great Reallocation” – Laura Alfaro and Davin Chor, Paper prepared for the Jackson Hole Symposium, 24-26 Aug 2023, organized by the Federal Reserve Bank of Kansas City, August 12, 2023
   Recent analysis finds that the US is shifting sourcing for imports. 

3. In U.S.-China Trade War, Bystander Countries Increase Exports – UCLA Anderson Review, August 23, 2023 (summary of NBER working paper The US-China Trade War and Global Reallocations)
   Research finds that “bystander countries” on the sidelines of the US-China trade war are exporting more to the US and the rest of the world. 

4. Resilience of Global Supply Chain: Facts and Implications – Alicia Garcia-Herrero, Asian Development Bank Institute, June 2023
   A study of the nature of global supply chains and the prospects for developing resilience. 

5. Supply Chain Adjustments to Tariff Shocks: Evidence from Firm Trade Linkages in the 2018-2019 U.S. Trade War – Kyle Handley, Fariha Kamal, and Ryan Monarch, National Bureau of Economic Research, August 2023
   New research analyzing how supply chain adjustments to higher tariffs affect imports and exports. 

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The WTO’s new agreement

110 World Trade Organization (WTO) Members have negotiated a new agreement to facilitate investment in developing countries.  Will this agreement mark a meaningful step forward in the evolution of the WTO?  The WTO has found a new and successful approach, says Alan Wolff of the Peterson Institute for International Economics, while the German Institute of Development and Sustainability looks at what is needed for successful implementation.

Mentioned publications

1. Investment facilitation for development – World Trade Organization, July 2023
   The key information on the new WTO Investment Facilitation for Development (IFD) agreement. 

2. WTO members find a new (and successful) approach to negotiations – Alan Wolff, Peterson Institute for International Economics, August 16, 2023
   The WTO successfully concludes the Agreement on Investment Facilitation for Development. 

3. Implementation of the WTO Investment Facilitation for Development Agreement: Identification of Reform Needs and Development Policy Measures – Axel Berger, Ann-Margret Bolmer, Florian Gitt, Zoryana Olekseyuk, Marius Metz, Guillaume Robardet, Julia Schäfer, Marie-Lisa Schneider, Frank Schönberg, German Institute of Development and Sustainability, July 2023
   What do developing economies need in order to implement the WTO IFD Agreement?  

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Trade tools

Want to learn about WTO dispute settlement activity since 1995? Check out these activity figures from the WTO. What about helpful and harmful trade interventions since 2009? Look no further than the global dynamics from St. Gallen Endowment. What do current trade flows look like? See the Kiel Trade Indicator from the Kiel Institute for the World Economy.

Mentioned publications

1. Dispute settlement activity — some figures – World Trade Organization
   A comprehensive resource for WTO dispute settlement activity from 1995 to December 31, 2022.

2. Global Dynamics – St. Gallen Endowment Global Trade Alert
   Key statistics and charts illustrating both liberalizing and harmful trade interventions since 2009.

3. Kiel Trade Indicator – The Kiel Institute for the World Economy
   An estimate of trade flows in 75 countries and regions and in overall world trade.

Mentioned publications from HF:

• China’s Belt and Road Initiative in a post-pandemic world
• India’s carpe diem moment as supplier to the world
• Plurilaterals show a way forward for the WTO

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