India's quest for South-South cooperation

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Sameer Pushp | 22 Sep, 2011
Global economic recession and instability that we witnessed recently has given rise the need to forge new mutually beneficial business partnerships which will ultimately act as engine of economic growth and socio-economic development. The older alliances and cooperation seems to be withering out and failing to meet the need of the changing times. The quest for the exploration of the newer paradigm led to the birth of an idea called South-South Cooperation (S-S Cooperation) - it’s about the tremendous force of solidarity, which can help overcome even the biggest challenges confronting the world.

S-S Cooperation has potential to bridge the gap between haves and non-haves and ensure distributional justice in terms of resource, opportunities and distribution. While we continue to recognize North-South cooperation as fundamental for our development and expect that solidarity, understanding, cooperation and real partnership from the North would remain intact and grow stronger. But need of the time is to diversify and search new markets with the conviction that development needs are met.

Advantages of S-S cooperation
Market proximity, similarity in products and processes and business culture affinity offers investors from developing country greater opportunities in terms of trade and investments. The WTO Ministerial Conferences and sustained setback in the implementation of the Doha development agenda demonstrated the urgent need for a better representation of the developing country’s interests in the international trading system and great solidarity amongst our countries to achieve this goal. In this regard, we undertake to display the highest degree of unity and solidarity in global issues towards a greater articulation of our concerns and interests. Deeper South-South interaction and collaboration will help in having commonality of approaches to major issues of international importance including climate change, UN reforms, reform of the international financial system, dealing with the global financial crisis. So India reaffirms that South-South trade should be enhanced and further market access from developing countries must continue to stimulate South-South trade.

Emerging economies and S-S cooperation
Today, as the global economy rebalances its position and the US and EU economies are shaking, developing economies have emerged as the engines of global growth. According to the IMF, emerging economies grew 7.3% in 2010 as compared to 3.0% in advanced economies. The projections for 2011 and 2012 stand at: 6.5% for emerging economies and about 2.5% for advanced economies. Middle East and North Africa are forecast to grow at over 4%, while sub-Saharan Africa is estimated to expand by almost 6%. In fact, it is estimated that developing countries have contributed about 70% of the world’s growth in the last decade. Exports from developing countries now constitute 37% of global trade, of which about half relates to south-south trade and export growth of emerging economies in 2010 was 14.5% and will be almost 9% for the next two years. Similarly, imports of emerging economies will be close to 10% for 2011 and 2012.

There are opportunities to address the shared challenges of capacity-building, skill development, job creation and combating disease, which are essential for achieving inclusive growth. Potential sectors where the developing countries can expand their business ties and relationships, are particularly the sectors of minerals and mining, Agriculture, Agro-business and Agriculture Technology, Information Technology, Construction and Engineering including Roads and Highways, and Railways, pharmaceuticals, Micro Finance and SMEs, Textiles, renewable energy, space science, etc. Now the developing countries have become regional and global engines of international trade growth by virtue of a massive up-scaling of their productive capacities. A similar pattern has emerged in international investment flows attracting unprecedented levels of FDI and themselves becoming exporters of capital and outward FDI to both developed and other developing countries. By virtue of the adaptable, affordable and appropriate technologies emanating in recent times from emerging economies like India, S-S Cooperation has come to assume a much larger significance in the area of economic cooperation in the world at large. Many economies of the south have larger economies but have very low per capita incomes. They are assisting the less endowed with whatever they can. This does not in any way make them equivalent to traditional OECD donors.

The importance of South-South cooperation to the 47 LDCs (The Least Developed Countries) needs a special mention as they are the most vulnerable to disease and destitution and the process of capacity building in these countries is more effective under S-S Cooperation. We are aware of the discrimination and differential treatment that the developed world has been rendering to the developing and least developing countries, S-S merchandise trade faces tariff and non-tariff barriers. Lack of trade capacities and high transportation costs cause additional barriers to trade. Individual tariff rates vary widely across the South, and the poorest countries tend to be those with the highest tariffs. At present, barriers to S-S trade are higher than those governing Southern trade with other partners, and distance-related costs are higher.

India and S-S cooperation
As regards to India’s position it sees S-S cooperation a supplement to the North-South cooperation not as a substitute to it. We are engaging multilaterally with South Africa through the IBSA Summit and the BRICS Summit. Both platforms have emerged as vital for inter-regional dialogue and to consolidate cooperation. We are mindful of the fact that the BRIC-IBSA will be an effective instrument for promoting closer cooperation and coordination on global issues between the major and diverse countries of all major continents which comprise the BRIC-SA. As the representative of the South, it would also be the voice of the developing country’s people in the global fora.

India has taken the initiation and early conclusion of negotiations for finalizing trade and investment related bilateral and multilateral Agreements; especially the Bilateral Investment Promotion and Protection Agreements (BIPPA), the Free Trade Agreements (FTAs)/ Comprehensive Economic Cooperation Agreements, Double Taxation Avoidance Agreements etc. that we have been engaging would provide a real impetus to our trade and investment. We are also reinforcing our efforts to promote between them Foreign Direct Investment (FDI), development of Small and Medium-scale Enterprises (SMEs), greater market access and investment facilitation. India by moving to the cleaner and greener technologies, sharing of technology in developing and utilizing green and renewable sources of energy has displayed their will and intent for a cleaner and sustainable world.

By creating an overlapping network of government to government initiatives, business to business linkages as well as joint initiatives by government and business, institutionalized dialogue at the Ministerial level on issues relating to trade and investment, energizing of the existing inter- governmental mechanisms, trade facilitation through commercial missions, information dissemination regarding entrepreneurship opportunities available, improved connectivity in terms of maritime and civil aviation links as well as facilitation of trade and investment ties India can collectively meet the global challenges that are confronting us.

We are stepping up of business engagements to identify opportunities for working together in trade, manufacturing and in the services sectors, through steps like Increased trade promotion activities through business events, business conclaves and organizing and participating in trade fairs and exhibitions, Promoting the export of SME products, including projects on turnkey basis, development of public-private partnerships in infrastructure development. In time to come it will surely be paying rich dividends.

It is necessary for emerging economies to set in place greater synergies to build common positions on multi-fora and ensure faster movement of global trade which can be more fair, transparent and free. Therefore, S-S economic partnership is inevitable and an imperative quest to work upon in the current global economic scenario.

* The views expressed by the author in this feature are entirely his own and do not necessarily reflect the views of SME Times.