South Africa seeks trade and investor gains from joining Bric club.

South Africa EXPECTED to gain substantial trade and investment benefits when it joined Brazil, Russia, India, China in the Bric grouping of emerging economies, a top government official said yesterday.

SA appears set to join the bloc after an invitation extended last week by China, which holds the rotating chairmanship.

The invitation was made in a telephone call to International Relations and Co-operation Minister Maite Nkoana-Mashabane by her Chinese counterpart, Foreign Minister Yang Jiechi.

Although SA’s government has long aspired to be in the Bric league, most commentators feel its economy is dwarfed by those of the Bric countries, whose growth rates have been the envy of the developed world especially during the recession.

In a recent commentary, Prof Mills Soko of the University of Cape Town Graduate School of Business said SA should not be "obsessed" with joining.

Prof Soko argued that markets in the rest of Africa, the Middle East and other Latin American countries should not be neglected, and emphasised that the Bric grouping was not in fact an organisation, but the construct of an economist, and did not have a strategy, or clear objectives.

"We cannot engage in an ill- defined, ad hoc manner," Prof Soko said, emphasising SA should understand the trade policies of the Bric countries and how these would affect it, and what competitive pressures these would apply. While Bric countries represented markets for South African goods, they were also competitors in sectors such as steel, clothing and textiles and the automotive industry.

However, in an indication of SA’s foreign policy priorities, President Jacob Zuma has made state visits to each of the Bric countries since coming to office.

Goldman Sachs Asset Management chairman Jim O’Neill coined the term "Bric" in 2001 to describe the four countries whose joint output would, he said, equal that of the US by the year 2020.

China’s "invitation" to SA comes barely a week after Russian President Dmitry Medvedev’s envoy to Africa, Alexei Vasiliev, said his country expected SA to join as early as next year .

SA has argued that its accession would give it some economic and developmental advantage in Africa, while promoting the development of Bric and enhancing co-operation among these emerging market economies.

SA stands to benefit from the potential preferential trade pacts and economic co-operation agreements that could be concluded with Bric countries, whose combined population of 2,5-billion people shares between them an estimated annual gross domestic product of more than 9-trillion.

Sipho Nene, acting director- general of the Department of International Relations and Co- operation, said the department’s motivation to Mr Zuma about joining Bric was that it was for SA’s economic and political benefit. "Since Bric has no secretariat, the body does not yet have financial obligations for our country, but we anticipate huge trade and investment spin-offs from it."

On the economic front, he said SA stood a chance to negotiate positions that would enhance its trade and leverage the potential for direct foreign investment from Bric member states.

"By joining Bric we are not starting from scratch … we are merely building on already established trade agreements, standing binational commissions or bilateral relations and other diplomatic and economic links with Bric countries who are already SA’s strategic partners.

"This membership is aimed at keeping SA as an important player in various organisations outside the United Nations, which is supposed to remain the pillar of cooperation and collaboration for the world," Mr Nene said.

Mr Yang indicated that Chinese President Hu Jintao had also invited Mr Zuma to attend the third Bric leaders’ summit, to be held in China next year.

Ms Nkoana-Mashabane said SA was ready to step up communication and co-ordination with China and other Bric members.

"Our approach to intensifying our relations with emerging powers and other countries of the South is through bilateral engagement," she said.

"We also see the Nonaligned Movement and the Group of 77 as important for South-South interaction, especially in the framework of the United Nations.

"Our trilateral partnership with India and Brazil (Ibsa) will get a better balance, and become even stronger, with SA a member of the Brics. SA’s diversified foreign policy objectives and interests allow both groupings (Ibsa and Brics) to co-exist. The mandates of Brics and Ibsa are complementary," she said.

HOPEWELL RADEBE radebeh@bdfm.co.za http://www.businessday.co.za/articles/Content.aspx?id=130374

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