Since the meeting in Fortaleza, Brazil, on 14 June 2014, the Manufacturing Working Group has come together five more times in the following dates:
- Teleconference on 12 November, 2014;
- Teleconference on 13 January, 2015;
- Mid-year meeting in Brasilia, Brazil on 9-10 February, 2015;
- Teleconference on 23 April, 2015;
- Teleconference on 3 June, 2015.
This report seeks to summarize the work and the proposals developed over this period. It is divided in two distinct, but complementary, sections. The first focuses on business promotion. The second, on policy recommendations for the BRICS governments that could deepen economic cooperation.
2. Business agenda
This section comprises three subsections as following:
2.1 BRICS Business Portal
The BRICS Business information exchange platform was created to stimulate and accelerate the exchange of trade, business, and investment information. What is proposed is that the Manufacturing Working Group uses this platform to improve information exchange among BRICS companies. In this market oriented-platform, any company based in one of the BRICS countries would be able to display the following information about the company and its products in a user friendly format:
At a later stage, the platform may be also used to obtain information about official certificates for products. The Secretariat of each chapter should coordinate with the respective government and get government portals providing information on
product certification linked with the portal with contact details of departments and Ministries for BRICS companies to refer to in case of facing any difficulty.
This is an important step to bridge gaps of knowledge and trust that may keep companies of BRICS countries apart. As the BRICS platform gains legitimacy with the participation of a greater number of companies it could, for example, become a channel to facilitate access to credit lines offered by the NDB.
2.2 Priority sectors
The Manufacturing Working Group agreed that member countries would indicate a few priority sectors on which to focus discussions and actions to promote business. South Africa has already indicated the infant formula segment and India has indicated pharmaceuticals & healthcare, mining and agriculture.
The next step would be for the Secretariats of each national chapter to look for interlocutors in their respective market and help arrange sector-specific side meetings during upcoming BBC sessions. The criteria for selecting such interlocutors would be their ability to discuss issues related to that sector and to become a business partner.
It is important to note that these priority sectors should not limit the inclusion of new products or sectors in the discussions and actions of this Working Group.
2.3 Areas of complementarity
This topic was identified as an important one at both the Manufacturing Working Group and BBC levels. It is distinct from the topic covered in previous section to the extent that it involves economic complementarity – and therefore, a more structural approach – rather than the mere identification of sectors of business interest. Further research is needed here.
The Working Group could use as a base for further research the sectors identified in the cross matching exercise carried out by the Brazilian chapter and/or other expressions of interest by members. Further studies would be conducted by a group of universities or think tanks from BRICS countries and would be aimed at identifying complementarities in sectors of interest.
The Manufacturing Working Group would present preliminary suggestions of universities and think tanks that could potentially conduct further research. It would also discuss ways to fund this study and which sectors should be considered first.
Sectors identified in a cross-matching exercise based on expressions of interest of member countries (see annex 1 below):
- Energy and power equipment;
- Electrical appliances;
- Capital goods;
- Transport/Railway technology and equipment;
- Navigation systems.
Sectors indicated in other expressions of interest:
- Glonass – Objectives: To Create unified standard system for BRICS countries.
- Compatible with SIMRAV system (Brazil) and the possibility of creating similar systems in other BRICS countries; unify educational system for specialists in navigation area;
- Process technology transfer and collaborate on joint R&D projects to enhance manufacturing operations and develop new products and technologies in targeted fields (such as green energy, agriculture, clothing, etc). These would lead to world class manufacturing facilities being established in the BRICS member countries to compete against other global suppliers;
- Promotion of generics – BBC should promote co-operation amongst companies in the field of both early stage discovery work as well as clinical trials;
- Companies must enhance exportability of medicines and medical products produced in BRICS nations, especially vaccines and medicines for HIV / AIDS, TB and malaria;
- Closer collaboration amongst our healthcare service providers (hospitals);
- Exchange of best practices and cooperation in agriculture and agro proce
There are pockets of excellence among BRICS pertaining to specific crops – Brazil (sugarcane), China (hybrid rice), Russia (wheat); and
- Joint bilateral and multilateral programs could explore and develop mineral resources in the BRICS nations helping address mineral deficits through mutually beneficial trade and economic relations.
2.4 Fairs and exhibition
The Working Group put together a list of trade fairs, exhibitions and forums, which it views as the most promising for business promotion and would like to see it included in the Business Portal and other appropriate BBC tools and activities. This list is annexed to the BBC Second Annual Report (Annex 1).
3. Public policy agenda
3.1 Non-tariff barriers
The Manufacturing Working Group recommends that governments take steps towards building a more coherent system of certification of manufacturing products among the BRICS countries.
The objective of this action would be to reduce risks of technical standards becoming effectively non-tariff barriers between the BRICS, but also to increase the quality of goods produced in the BRICS countries.
The Working Group proposes that the BRICS Business Portal is used as an on- line platform to provide guidance and information about technical standards and product certification, with the BBC national Secretariats coordinating with their respective governments and providing contact information of relevant government agencies, as indicated in the BRICS Business Portal Section of this report.
3.2. Unfair trade practices
It was brought to the attention of this Working Group by the South African delegation the issue of unfair trade practices in intra-BRICS commerce.
This Working Group recommends, as a manner to help prevent such practices, that BRICS countries make an immediate effort to align actions concerning the creation of their Single Window sites, where, as agreed at the WTO, countries should consolidate their official foreign trade operational platforms (for the filling of forms, requests of licenses and other legal requirements).
The transparency and simplification that would result from this initiative would help prevent potential practices of under-invoicing, misclassification of tariff headings, among others.
In order to generate support material for the BRICS governments to create their Single Window sites, the Manufacturing Working Group could conduct in the next 6 months research aimed at mapping practices that could be prevented through this initiative.
3.3. Authorized Economic Operators
The Authorized Economic Operator (AEO) certificate is an internationally recognized quality mark indicating that the company’s customs controls and procedures are efficient and compliant to applicable rules. This status is granted by a discretionary decision by governments.
While not mandatory, this certificate gives quicker access to certain simplified customs procedures and in some cases the right to ‘fast-track’ shipments through certain Revenue & Customs (HMRC) safety and security procedures.
In order to effectively start the process of mutual recognition of Authorized Economic Operators, it is recommended that national chapters of this Working Group request their internal revenue services or equivalent body begin talks aimed at seeking the standardization of practices and requirements demanded from a company to acquire the AEO status.
3.4. BRICS Business travel card
The Manufacturing Working Group supports the BBC’s initiative to seek the establishment of a BRICS business travel card for executives of BRICS companies. The points the Working Group views as particularly important are:
- The BRICS travel card is intended to facilitate the traveling of business people in such capacity;
- The BRICS travel card will not be utilized as a replacement for the obtainment of the work visa;
- The main objective is to facilitate meeting between BRICS business people and potential commercial partners from BRICS and the related decision- making process;
- The BRICS travel card may configure a new category of visa, and as such it will be issued by the receiving cou
3.5. Promote intra-BRICS trade in local currencies
The Working Group supports initiatives to conduct studies aimed at ascertaining the possibility of implementation of a swap in local currencies that does not generate an overstock of any of the partner’s currencies.
3.6. Investment Promotion Agencies
The Brazilian chapter of this Working Group views positively the engagement and discussion with governments about the creation of a working group on investment with the participation of the official Investment Promotion Agencies (IPAs) of each country. The Brazil chapter has made a first contact with the Brazilian IPA (Apex-Brasil) with positive results, and would appreciate if its counterparts acted in the same direction to bring these interlocutors to the next meetings of the group.
3.7. New Development Bank
The role of the NDB has been discussed by different working groups and the BBC. Since manufacturing has a key role in the advancement of infrastructure projects and sustainable development – due to procurement, development of value chain, and supply industries – this Working Group is of the view that the promotion of the manufacturing sector should be considered as a key component of the NDB.
The Manufacturing Working Group has specific recommendations related to the role of the bank in manufacturing. The recommendations have two main components: the first one is about how the NDB’s resources could foster the value chains located in the BRICS’s countries. The second is about expanding the purview of
the NDB with the objective of reducing costs for commercial transactions among BRICS members. The recommendations are outlined below and also included as an annex to this report (see annex 2) to facilitate their use as a separate piece.
- The Council should work with officials of the NDB, so as to ensure that the projects prepared by BRICS businessmen are in line with the prescribed norms of the Bank.
- The BBC should participate actively, providing input and recommendations, in discussions about the structuring of the NDB.
- NDB should carry out a benchmarking exercise of national development banks in order to tailor proposal of fees, rates and terms of loan
- NDB´s annual report should point out the supply chains involved in the projec
- Propose to the NDB Board of Directors criteria for procurement from extra BRICS
- Adopt an origin verification sy
- The NDB should function as an assurance bank of first class for trade among its memb
- Minimizing the currency risk
3.8. Investment Principles Declaration
This Working Group views positively a Declaration on Investment Principles, such as the one presented by the Brazilian section of the BRICS Business Council.
- Cross-matching exercise
- Recommendations for the NDB
- Annex 2
Recommendations concerning the New Development Bank:
The role of the NDB has been discussed by different working groups and the BBC. Since manufacturing has a key role in the advancement of infrastructure projects and sustainable development – due to procurement, development of value chain, and supply industries – we would also make our recommendations related to the role of the bank specifically in manufacturing.
The promotion of the manufacturing sector should be viewed as a key component of the NDB. These recommendations would be addressed in two ways: the first would be about how the NDB’s resources could foster the value chains located in the BRICS’s countries. The second would be about expanding the purview of the NDB with the objective of reducing costs for commercial transactions among BRICS members.
In order to allow the NDB’s resources to foster the value chains located in the BRICS’s countries in a balanced way, as agreed on the item IV of the 21º article of the Agreement on the NDB, the Board of Directors should implement a model of annual report that show how much resources have been allocated in each country and from where were provided the goods utilized in each project, making available at the earlier date the chosen methodology. This simple action would create an important tool for ensure that the demand created by NDB’s projects is not being diverted to suppliers outside of the BRICS countries.
Another point that this Working Group (WG) thinks is of extreme importance to ensure a transparent and efficient competition among the suppliers of goods for NDB’s projects is the divulgation of a clear definition of which configure a “sustainable development project”. The Manufacturing WG believes that the construction of guidelines around this concept is important to ensure the minimum of arbitrariness in the process of selection of eligible suppliers.
This WG also believes that is necessary that the number of situations that allow the Board of Directors to permit procurement of goods in a non-member country, as specified in the item VI of the 21º article on the Agreement on the NDB, should be detailed in an NDB official document as much as it is reasonable. Once more, our request has the objective to ensure a transparent and efficient competition ambient.
In order to achieve the full potential of the above recommendations, the NDB should adopt a system of certification of origin more strict than the self-declaratory list currently in use.
The manufacturing WG wishes to see the NDB to expand its area of operation in order to start to acting as a first class financial guarantor. Nowadays the necessity to obtain such guarantees from American and European Banks create an extra layer of transaction costs that hampers the development of commerce among BRICS members.