Right now, leaders of the BRICS group of nations are preparing for their annual summit which takes place in Brazil—the country holding the rotating presidency.
Trade and investment are high on the agenda. In May, BRICS trade ministers agreed to “enhance solidarity by enhancing trade and investment cooperation.” They also called for the multilateral trading system to be strengthened and expressed concern about unilateral and protectionist measures that are fragmenting global trade.
The BRICS has five long-standing members (Brazil, Russia, India, China, South Africa) and five newer members (Egypt, Ethiopia, Iran, UAE, and, most recently, Indonesia). Other countries have been invited to join, including Saudi Arabia.
The 10 existing members together make up almost half the world’s population, 27% of global GDP, and about a quarter of global trade.
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The So What
“In recent years, we have seen a rise in protectionist measures that impact businesses’ ability to operate across borders,” says Michael McAdoo, a BCG partner and director specializing in trade and investment. “The BRICS countries have a chance to demonstrate what a more open and predictable trading system could look like.”
In recent years, trade among BRICS nations has been increasing faster than trade between BRICS and G7 countries. However, this growth is driven in large part by hydrocarbons, which represented only 16% of base trade in 2019, but accounted for 30% of trade growth from 2019-2024. And, importantly, this intra-BRICS trade is subject to more trade restrictions than exists between countries in the Global North, before considering recent tariff increases by the Trump administration.
- Average tariff rates among the 10 BRICS members stand at 8.4%, according to World Bank data. The comparable figure for the 37 member states of the OECD, excluding the US, is 1.1%.
- Among themselves, the 10 BRICS nations have imposed some 232 trade-restricting anti-dumping and anti-subsidy tariff measures. This compares with only 124 such measures among the 37 members of the OECD, excluding the US.
- BRICS members also impose more restrictions on FDI. The inward investment regimes of six BRICS members surveyed by the OECD (not including Ethiopia, Iran, Russia, and the UAE) are more restrictive than those of the six OECD members with the highest investment barriers in place.
- Among the BRICS nations, South Africa is a rare exception with a more open FDI regime than the US and some large European economies.
“BRICS countries can put their trade ambitions into action, and send a strong signal to the trading community,” says Trudi Makhaya, a BCG partner in the firm’s Johannesburg office. “There is a clear opportunity to take steps to reduce trade and investment barriers among BRICS members.”
Now What
These are some of the actions to watch for that will demonstrate BRICS nations are making progress on increasing trade cooperation with each other.
- Will there be a roll-back of anti-dumping and other trade restricting measures among BRICS countries?
- Will BRICS countries launch negotiations for a BRICS-wide free trade agreement?
- Will we see a comprehensive proposal for WTO reform with the unanimous support of the BRICS heads of state and government?
- Will BRICS countries—beyond South Africa—take concrete steps to make their economies more open to foreign investment?
“For many decades, Brazil has been an active supporter of the rules-based trading system,” says Daniel Azevedo, a BCG managing director and senior partner in the firm’s São Paulo office. “As host of this year’s BRICS cycle, Brazil can help drive an international trade agenda that shows there is an alternative to a cycle of increasing protectionism.”
