Russia Embarks On A Major BRICS Offensive To Upgrade BIT and Complete EAEU FTA Agreements
Trade meetings with China, Brazil and India are paving the way for a rapid increase in Russia-BRICS trade and underpinning its strengths
Ever since Xi Jinping and Vladimir Putin exchanged views a month ago in Moscow that ‘Changes are coming’, both countries have been ramping up their diplomatic overtures in an unprecedented flurry of activity, and especially within the BRICS grouping.
Shortly after meeting Putin, the Chinese President met the Brazilian President in Beijing. Bilateral trade, use of mutual currencies and a common approach towards global institutions (essentially agreeing a collective policy at the United Nations to counterbalance US influence) were all discussed.
Today, Russia has two senior diplomats – the Foreign Minister Sergey Lavrov, and the Trade Minister Denis Manturov visiting Brazil and India respectively. The missions appear the same: to rapidly increase trade, and to introduce a common approach to deal with perceived US hegemony at the UN and beyond.
Increasing Russia’s Multilateral Trade
Russia, in common with many other major nations, has a significant number of a variety of Trade Agreements. These vary from the basic ‘Bilateral Investment Treaty’ (BIT) to full blown ‘Free Trade Agreements’ (FTA). However, as is also a fairly common occurrence, some of these have become outdated. With BIT, these lay out the mutual protection of trade, and introduce safeguards, such as eliminating the potential for being taxed twice for the same transaction, (double tax provisions) agreeing mutual investment protection in each other’s countries, introducing a tax friendly services regime, (withholding tax) and other specific trade matters between the two parties. In short, they lay down the very basic rules for developing trade.
In fact, Russia doesn’t have a BIT with Brazil, and its India BIT dates back to 1994. Getting these very basic agreements in place, and upgraded, especially considering the significant trade and investment now taking place with these countries is of paramount importance. Get the BIT agreed, and Free Trade Agreements can follow. This is one of the reasons Sergey Lavrov is visiting Brazil.
In terms of Free Trade, India is currently negotiating an FTA with the Eurasian Economic Union, which will also mean supporting that with updating Indian BIT with Kazakhstan (1996), Kyrgyzstan (1997); together with Armenia, and Belarus, which date back to 2003. The fact that these BIT already exist helps, however upgrades are required, and we can expect a follow up series of upgrade discussions as a result between India and the other EAEU members.
This is another primary reason for Russia’s Trade Minister Denis Manturov to be in India – although BIT aside, he will also be mapping out with his Indian counterpart, S. Jaishankar, a Russian-Indian trade roadmap. Details of the Russia-India trade and EAEU FTA discussions can be read on today’s detailed India Briefing article on the subject here.
Sergey Lavrov meanwhile is heading to Nicaragua, Cuba and Venezuela after completing his Brazilian meetings. The Russia-Nicaragua BIT was signed off in 2013, Cuba in 1993 and with Venezuela in 2008. The latter two will certainly be in need of upgrading. Meanwhile, Denis Manurov was in the United Arab Emirates just last month, where the Russia-UAE BIT dates back to 2010.
What can be certain is that Russia – and its ‘friendly nation’ partners are engaging in a massive overhaul of their trade relations in order to lay down the legal basis of handling increased trade volumes. Messrs Lavrov and Manturov are set for a very busy 2023 as Moscow gets its treaty house in order to lay the groundwork for upcoming agreements.
In India with Manturov, India’s Foreign Minister Jaishankar also stressed India’s commitment to a multipolar world in comments that will alarm Washington. Brazil’s President Lula said the same thing when discussing trade with the Russian Foreign Minister, Sergey Lavrov, in Brazil on Monday. Both are members of BRICS, together with Russia and China. Lula met with Chinese President Xi Jinping last week, who the week before had met with Vladimir Putin in Moscow. Developments within BRICS are rapidly progressing amongst a flurry of intra-Bloc activity.
The speed of which changes to the global trade system are occurring are breathtaking, and especially with what can only be described as a massive and rapid strengthening of the existing BRICS bloc. As mentioned, all leaders are currently involved in enhancing bilateral trade discussions: Russia-China; Brazil-China, Brazil-Russia and now India-Russia within the space of a month.
It is apparent that all member countries see BRICS as a hedge against US-EU trade which is viewed as becoming unreliable in terms of sanctions threats spilling over. This is not an end to globalization, but an end to who controls it and decisions taken as to who wants in and who wants out. With the BRICS group already looking at significant expansion – Bangladesh, Egypt and the UAE have all de facto joined with numerous other nations lining up to do the same, the global trade onus is no longer on isolating Russia – as portrayed by the West – but reducing dependency upon the United States and Europe – as is being carried out by significant economies. That the BRICS has already overtaken the G7 in terms of global percentage share of GDP is now ushering in an era where their collective trade might is gaining an upper hand in the battle for multipolarity and a revised world order.
Changes are indeed underway. Russia’s unprecedented activity in having its Foreign and Trade Ministers overseas at the same time is a primary example of how fast these can be expected to manifest themselves as global trade patterns shift.
During these uncertain times, we must stress that our firm does not approve of the Ukraine conflict. We do not entertain business with sanctioned Russian companies or individuals. However, we are well aware of the new emerging supply chains, can advise on strategic analysis and new logistics corridors, and may assist in non-sanctioned areas. We can help, for example, Russian companies develop operations throughout Asia, including banking advisory services, and trade compliance issues, and have done since 1992.
We also provide financial and sanctions compliance services to foreign companies wishing to access Russia. Additionally, we offer market research and advisory services to foreign exporters interested in accessing Russia as the economy looks to replace Western-sourced products. For assistance, please email email@example.com or visit www.dezshira.com