The BRICS and the G20: Building global governance for the future

Marina Larionova, head of the Center for International Institutions Research at the Russian Presidential Academy of National Economy and Public Administration, explains how closer collaboration between the G20 and BRICS will help facilitate Society 5.0

The G20 and BRICS have explicitly committed to reform the global governance architecture to meet the needs of the 21st century. Both have consistently engaged with international organisations. The International Monetary Fund, the international financial institutions and the World Trade Organization are among the top 10 most frequently referenced organisations in the discourse of both the G20 and BRICS, as measured by the share of references in their summit outcome documents.

The G20 is third in BRICS discourse, confirming its support for the G20’s central role in advancing the reform of the international monetary system, curbing protectionism, and improving the international environment for trade and investment. At their second summit, in Brasilia in 2010, BRIC leaders (not yet with South Africa as a member) expressed their full support for the G20 as the premier forum for international economic coordination and cooperation of all its member states.

The G20 and BRICS have exerted a catalytic influence, stimulating, endorsing, compelling and supporting the reform of the IMF, multilateral development banks and the WTO. However, their pursuit of the reform of international monetary and trade systems has not brought fundamental changes.

The causes are the structural disparity between the weight of emerging and developing countries in the global economy and their role in the global governance architecture, which is deeply rooted in the foundation of these western-centric international institutions. As the past 10 years have shown, the G20 alone cannot ensure their transformation into a truly multilateral system, given the G7’s interest in safeguarding its members’ influence, their weight in the G20 and the recent discord among members on trade issues.

Amid low expectations for the 2018 G20 Buenos Aires Summit, and rising tensions in the multilateral trading system, at their Johannesburg Summit in July 2018, the BRICS leaders reaffirmed their commitment to strengthen the WTO. They urged all WTO members to engage constructively to address the impasse over filling the vacancies in the WTO’s appellate body and to develop the legal framework within the WTO for multilateral trade.

It is unknown whether the BRICS leaders projected a consolidated position in the Buenos Aires negotiations, but despite a tough struggle, at Buenos Aires the G20 leaders stated their support for the necessary reforms of the WTO to improve its functioning, and agreed to review progress at their next summit. Therefore, the world looks forward to the 2019 G20 Osaka Summit to deliver on that promise, with firm backing by the BRICS.

The BRICS should continue to support the G20’s central role in advancing the reform of the international monetary and trade systems, curbing protectionism, and improving the international environment for trade and investment. The BRICS should also strengthen coordination within the G20 and beyond. Otherwise the international community faces repeating the failure of global negotiations for restructuring the international economic system initiated in the late 1970s by the G77 of developing countries and then stifled by the G7.

To provide a new impulse for building inclusive global governance, the BRICS should consolidate its strategy of combining catalytic influence on international organisations and setting up its own institutions, especially in those areas where the gap is widening between increasing multipolarity in international relations and persistent unilateralism in global governance.

Efforts to reform financial institutions should be supplemented by building up the resources and competencies of the New Development Bank. The Contingent Reserves Arrangement should be transformed into a BRICS monetary fund, with increased resources, loans decoupled from the IMF programme, surveillance capacities and closer cooperation between the BRICS central banks. Efforts to strengthen the multilateral trading system should be augmented by negotiations on a BRICS trade and investment agreement open to other countries.

The new institutions should be collectively owned and open to other participants, with a positive international agenda targeted at creating global public goods for the society of the future.

These processes are strategic, long term and complex. But they will contribute to developing global governance and will provide additional venues for cooperation on issues that demand true multilateralism: trade and investment, infrastructure development, digital transformation, and sustainable, balanced and inclusive growth.

The BRICS initiatives, coupled with stepped-up collaboration with the G20 and the established international organisations, will advance the achievement of the ambitious goals that Japan’s G20 presidency seeks to promote: making the digital transformation work for all and realising Society 5.0 and the Sustainable Development Goals.