Wednesday, June 17, 2009

090617 BRIC Summit on Moscow

While America is focused on our internal financial and business issues, the BRIC countries held thier 1st Summit this week in Russia, simultaneously with the Shanghai Cooperation Organization summit. While the Presidents of the Russia, China, India and Brazil met in Moscow with little real news (except that they want to reduce the US' influence on the gloabl economy and that Russia may put some of it's vast oil reserves in "BRIC Bonds"), the SCO moved forward with some tangible tactical plans.

SCO is composed of China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan with Inia, Iran, Mongolia and Pakistan having observer status. Their efforts were to increase economic and security among it's members. Notably absent are the growing former Russian states. It appears that they will work towards specific plans to cooperate economically and that a Foreign Trade Agreement will be developed over the next year or so.

Brazil's President Luiz Inacio Lula da Silva, Russian President Dmitry Medvedev, Chinese President Hu Jintao and Indian Prime Minister Manmohan Singh met in Yekaterinburg, June 16, 2009. Their meeting together may be the biggest news, without G20 countries looking over their shoulders. China's Hu presented a 4 point statment indicating how the BRIC countries should cooperate to gain more control over the global economy, including helping it recover from the current crisis, changing the intl monetary system, solve their own internal structural problems to speed further development, and ensuring a secure food, energy and public health global distribution system.

In the BRIC Summit, China emphasized their focus on their internal development since US and EU markets are not importing as much. China also hopes to push for a more diversified Intl monetary system wile demanding that all major reserve currencies maintain relative stability. Of course, China has allowed some movement of their own currency in the last year, but it still remains very rigid.

It's hard to say whether this BRIC Summit will become an on-going mechanism or just bring emphasis on the resolving the current global recession. Each country has it's own problems (One of my West Indian friends asks what will happen to India when China starts to fight the US for global dominance - he says India will attack Pakistan, of course!)

From a global trade and transportation standpoint, China will continue to be the world's major factory, but the BRIC influences are causing a Regionalization rather than Globalization of trade. CIsco, Apple and other forward looking companies are using this recessionary period to establish buy/sell entities in BRIC countries, leveraging local and regional tax/trade benefits to deliver products within those regions. Global trade & logistics professionals will need to learn more about intra- and inter-regional opportunities to fine-tune their strategies.

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