2017 BRICS Xiamen Summit Final Compliance Report 6 September 2017 to 5 July 2018 Prepared by Alissa Xinhe Wang, Angela Minyi Hou, Brittaney Warren and the University of Toronto BRICS Research Group and Irina Popova, Andey Shelepov, Andrei Sakharov and Alexander Ignatov and the Center for International Institutions Research of the Russian Presidential Academy of National Economy and Public Administration, Moscow 23 July 2018 2017 BRICS Xiamen Summit Final Compliance Report Contents Research Team .................................................................................................................................................... 3 University of Toronto Research Team ....................................................................................................... 3 Country Specialists .................................................................................................................................... 3 Compliance Analysts ................................................................................................................................ 3 RANEPA Research Team ............................................................................................................................ 3 Compliance Analysts ................................................................................................................................ 3 Preface ................................................................................................................................................................... 4 Introduction and Summary ................................................................................................................................ 5 Methodology and Scoring System ............................................................................................................... 5 The Breakdown of Commitments ............................................................................................................... 5 Table 1: Distribution of BRICS Commitments across Issue Areas, 2009-2017 ............................. 6 Selection of Commitments ........................................................................................................................... 6 Table 2: 2017 BRICS Xiamen Summit Priority Commitments ......................................................... 7 Compliance Scores ......................................................................................................................................... 8 Table 3: 2017 BRICS Xiamen Summit Final Compliance Scores ..................................................... 8 Compliance Trends ........................................................................................................................................ 8 1. Trade: Anti-protectionism ............................................................................................................................. 9 2. Development: African Infrastructure Development ............................................................................... 18 3. Macroeconomics: Industrialization and the New Industrial Revolution ............................................. 33 4. Terrorism: Terrorist Financing ................................................................................................................... 47 5. Crime and Corruption: International Cooperation ................................................................................. 65 6. Information and Communications Technology: Infrastructure and Connectivity ............................. 76 7. Energy: Natural Gas ..................................................................................................................................... 85 8. Finance: Local Currency Bonds .................................................................................................................. 91 9. Regional Security: Iraq ................................................................................................................................. 95 10. Health: Surveillance and Medical Services ............................................................................................ 100 Appendix: BRICS Compliance over Time .................................................................................................. 110 BRICS Research Group 23 July 2018 2 2017 BRICS Xiamen Summit Final Compliance Report Research Team Dr. Marina Larionova, Co-director, BRICS Research Group Professor John Kirton, Co-director, BRICS Research Group Brittaney Warren, Director of Compliance, BRICS Research Group University of Toronto Research Team Alissa Xinhe Wang, Chair of Summit Studies, BRICS Research Group Angela Min Yi Hou, Editor-in-Chief, BRICS Research Group Renata Xiutong Ma, Director of Public Relations, BRICS Research Group Country Specialists Edward Ji Ho Kim, Brazil Country Specialist Maria Zelenova, Russia Country Specialist Ian Stansbury, China Country Specialist Courtney Hallink, South Africa Country Specialist Compliance Analysts Flavian Berneaga Adolphus Lau Tarun Sharatkumar Wai Yan Chan Hongxi Li Bruno Siqueria Jamie Huiyi Chen Juntian Li Wing Ka Tsang Lucia Dafana-Mabika Tracy Luong Renze Wang Andres Dovale Mary-Anne Meersabeer Tiffany Wang Benjamin Falconer Ramsha Naveed Anushree Warrier Jerry Gao Anton Rizor Aaron Wilson Dion Hu Marina Aragao Santos Sisi Zhu Kelley Prendergast Dwitipriya Sanyal RANEPA Research Team Irina Popova, Moscow Team Leader Alexander Ignatov Andrei Sakharov Andrey Shelepov Compliance Analysts Anastasia Kataeva Anna Tsvetkova Nikita Efremov Vadim Agroskin BRICS Research Group 23 July 2018 3 2017 BRICS Xiamen Summit Final Compliance Report Preface The BRICS Research Group has been assessing progress made by the BRICS members in implementing commitments their leaders make at each standalone meeting since the 2011 Sanya Summit. These reports monitor each member’s efforts to implement a carefully chosen selection of the many commitments produced at each summit. They are offered to the general public and to policy makers, academics, civil society, the media and interested citizens around the world in an effort to make the BRICS’s work more transparent, accessible and effective, and to provide scientific data to enable the meaningful analysis of the causes of compliance and the impact of this important informal international institution. Previous reports are available at the BRICS Information Centre at www.brics.utoronto.ca/compliance and at the Center for International Institutions Research of the Russian Academy of National Economy and Public Administration at www.ranepa.ru/eng/ciir- ranepa/research-areas/brics/analytics. This report analyses compliance performance by BRICS countries with 10 priority commitments selected from the 125 commitments made by the leaders at the Xiamen Summit on 3-5 September 2017. The report covers actions taken between 6 September 2017 and 5 July 2018. The BRICS Research Group relies on publicly available information, documentation and media reports for its assessments. To ensure accuracy, comprehensiveness and integrity, we encourage comments from stakeholders. Indeed, scores can be recalibrated if new material becomes available. All feedback remains anonymous. Responsibility for the contents of this report lies exclusively with the authors and analysts of the BRICS Research Group. John Kirton and Marina Larionova Co-directors, BRICS Research Group BRICS Research Group 23 July 2018 4 2017 BRICS Xiamen Summit Final Compliance Report Introduction and Summary The 2017 BRICS Xiamen Final Compliance Report, prepared by the BRICS Research Group (based at Trinity College in the University of Toronto and the Center for International Institutions Research of the Russian Presidential Academy of National Economy and Public Administration [RANEPA]), analyses compliance performance by BRICS countries with 10 selected priority commitments drawn from 125 commitments made by the leaders at the Xiamen Summit on 3-5 September 2017. The report covers actions taken by the BRICS countries during the period from 6 September 2017 to 5 July 2018. Methodology and Scoring System This report draws on the methodology developed by the G7 Research Group, which has been monitoring G7/8 compliance since 1996. The same methodology has been adopted for monitoring G20 performance since 2008. The use of this time-tested methodology provides for cross- institutional, cross-member and cross-issue consistency and thus allows compatibility and comparability of the compliance performance by different summit institutions and establishes a foundation for evidence-based assessment of the effectiveness of these institutions. 1 The methodology uses a scale from −1 to +1, where +1 indicates full compliance with the stated commitment, −1 indicates a failure to comply or action taken that is directly opposite to the stated goal of the commitment, and 0 indicates partial compliance or work in progress, such as initiatives that have been launched but are not yet near completion and whose final results can therefore not be assessed. Each member receives a score of −1, 0 or +1 for each commitment. For convenience, the scientific scores reported in the tables in this summary have been converted to percentages, where −1 equals 0 and +1 equals 100%.2 The Breakdown of Commitments At Xiamen the leaders paid significant attention to the issues of information and communications technology (ICT), regional security, development and support to the least developed countries (LDCs) with special emphasis on Africa. They made the commitment to enhance joint BRICS research, development and innovation in ICT, to promote the most effective use of fossil fuels and wider use of gas, to promote the development of BRICS local currency bond markets and establish a BRICS local currency bond fund, and to improve surveillance capacity and medical services to combat infectious diseases. Members also pledged to promote BRICS industrial cooperation, including on industrial capacities and policies, new industrial infrastructure and standards, and among small, micro- and medium-sized enterprises. They committed to strengthen cooperation with Africa and help the continent to promote infrastructure development, and to support strengthening international cooperation against corruption, including through the BRICS Anti-Corruption Working Group. They agreed to standstill and rollback protectionist measures and to intensify cooperation in the Financial Action Task Force and similar regional bodies. 1 Informal summitry institutions are defined as international institutions with limited membership, relatively low bureaucracy and reliance on open, flexible and voluntary approaches. Regular meetings of the heads of states and governments who engage on a wide range of international, regional and domestic politics stand at the pinnacle of such international arrangements, which involve many actors operating according to established procedures on two levels: domestic and international. Commitments contained in the collectively agreed documents are not legally-binding but their implementation is stimulated by peer pressure. Among such bodies engaged in global and regional governance are G7/G8, G20, BRICS, APEC and others. 2 The formula to convert a score into a percentage is P=50×(S+1), where P is the percentage and S is the score. BRICS Research Group 23 July 2018 5 2017 BRICS Xiamen Summit Final Compliance Report The commitments of the BRICS, as a group of major emerging economies, fall mainly into the areas relevant for the five countries (see Table 1). In particular, members’ priorities for stimulating domestic economic recovery are reflected in the large share of trade and development commitments. Decisions on international cooperation and the reform of international institutions, which remain at the core of the BRICS agenda, also constitute a substantial share at about 10% of the total. At the same time, each presidency strives to incorporate its own priorities in the agenda and can thus substantially influence the breakdown of commitments. Table 1: Distribution of BRICS Commitments across Issue Areas, 2009-2017 Issue Area 2009 2010 2011 2012 2013 2014 2015 2016 2017 Energy 5 9 1 2 6 Finance 3 1 6 6 5 9 Climate change 1 6 3 1 1 1 1 3 Macroeconomic policy 1 5 1 5 7 6 4 4 Trade 3 5 9 4 4 5 2 6 International cooperation 1 2 5 3 6 8 30 7 21 Socioeconomic 1 1 3 2 7 5 2 Development 1 5 1 3 10 4 4 2 11 Natural disasters 1 1 1 Food and agriculture 3 1 1 1 17 5 ICT 2 1 17 3 12 Science and education 1 1 1 2 5 Health 1 1 1 6 2 6 Human rights 1 1 2 5 2 Accountability 1 Regional security 1 1 4 8 6 6 4 12 Terrorism 1 1 2 2 1 4 7 Culture 1 3 1 2 3 Sport 1 IFI reform 1 2 1 2 9 8 3 2 5 Non-proliferation 1 1 2 Crime and corruption 4 10 3 8 Environment 1 1 1 3 Tourism 1 Total 15 31 38 32 47 68 130 45 125 Note: IFI = international financial institution; ICT = information and communications technology. Selection of Commitments For each compliance cycle (that is, the period between summits), the research team selects commitments that reflect the breadth of the BRICS agenda and the priorities of the summit’s host, while balancing the selection to allow for comparison with past and future summits.3 The selection also takes into account the breakdown of issue areas and the proportion of commitments in each one. The primary criteria for selecting a priority commitment for assessment are the comprehensiveness and relevance to the summit, the BRICS and the world. Selected commitments must meet secondary criteria such as measurability and ability to comply within a year. The tertiary criteria include 3 Guidelines for choosing priority commitments, as well as other applicable considerations, are available in the Compliance Coding Manual. BRICS Research Group 23 July 2018 6 2017 BRICS Xiamen Summit Final Compliance Report significance, as identified by relevant stakeholders in the host country and scientific teams. Of the total of 125 commitments made at the 2017 Xiamen Summit, the BRICS Research Group has selected ten priority commitments for its compliance assessment (see Table 2). Table 2: 2017 BRICS Xiamen Summit Priority Commitments Issue Area Commitment 1 Trade: Anti- We recommit to our existing pledge for both standstill and rollback protectionism of protectionist measures and we call upon other countries to join us in that commitment 2 Development: African We reaffirm our commitment to strengthen cooperation with Africa Infrastructure and help the continent to promote infrastructure development 3 Macroeconomics: We reaffirm our commitment to BRICS industrial cooperation, Industrialization including on industrial capacities and policies, new industrial infrastructure and standards, and among small, micro and medium- sized enterprises (SMMEs), so as to jointly seize the opportunities brought about by the new industrial revolution and expedite our respective industrialization processes 4 Terrorism: Terrorist We seek to intensify our cooperation in FATF and FATF-style Financing regional bodies 5 Crime and Corruption: We support the strengthening of international cooperation against International Cooperation corruption, including through the BRICS Anti-Corruption Working Group, as well as on matters related to asset recovery and persons sought for corruption 6 Information and We will enhance joint BRICS research, development and innovation Communications in ICT including the Internet of Things, Cloud computing, Big Technology: Data, Data Analytics, Nanotechnology, Artificial Intelligence and Infrastructure and 5G and their innovative applications to elevate the level of ICT Connectivity infrastructure and connectivity in our countries 7 Energy: Natural Gas We will work together to promote most effective use of fossil fuels and wider use of gas … which will contribute to the transformation toward a low emissions economy, better energy access, and sustainable development 8 Finance: Local Currency We agree to promote the development of BRICS Local Currency Bonds Bond Markets and jointly establish a BRICS Local Currency Bond Fund, as a means of contribution to the capital sustainability of financing in BRICS countries, boosting the development of BRICS domestic and regional bond markets, including by increasing foreign private sector participation, and enhancing financial resilience of BRICS countries 9 Regional Security: Iraq We congratulate the people and Government of Iraq for the recovery of Mosul and for the progress achieved in the fight against terrorism and reaffirm our commitment to Iraq’s sovereignty, territorial integrity and political independence and our support for Iraqi government and its people 10 Health: Surveillance and We agree to improve surveillance capacity and medical services to Medical Services combat infectious diseases, including Ebola, HIV/AIDS, Tuberculosis and Malaria, as well as non-communicable diseases BRICS Research Group 23 July 2018 7 2017 BRICS Xiamen Summit Final Compliance Report Compliance Scores The overall compliance by commitment (79%) is lower than in previous year, but higher than the average score for all summits (75%). The highest level of compliance (+1 or 100%) was registered for several commitments in the areas of development (African infrastructure), ICT, macroeconomics (Industrialization), terrorism (Terrorist Financing), energy (Natural Gas), health (Surveillance and Medical Services). BRICS compliance performance for these commitments shows the success of implementation of decisions in key spheres of cooperation as well as growing role of BRICS countries in cooperation for development. They were followed by the commitment on trade (Anti- protectionism) at 80%. Lower scores were registered for three commitments: crime and corruption with 0 (50%), regional security with −0.20 (40%) and finance with −0.60 (20%). The score for the commitment on finance is the lowest. It can be explained by the fact that this commitment implies the long-term process of establishing the BRICS local currency bond fund and internal measures on development of national currency bond market which are hard to implement. Thus, for the period from 6 September 2017 to 5 July 2018, the BRICS countries achieved an average final compliance score of +0.58 (79%). The final compliance scores by commitment are contained in Table 3. Table 3: 2017 BRICS Xiamen Summit Final Compliance Scores South Issue Areas Brazil Russia India China Africa Average 1 Trade: Anti-protectionism 0 +1 0 +1 +1 +0.60 80% 2 Development: African Infrastructure +1 +1 +1 +1 +1 +1.00 100% 3 Macroeconomics: Industrialization +1 +1 +1 +1 +1 +1.00 100% 4 Terrorism: Terrorist Financing +1 +1 +1 +1 +1 +1.00 100% 5 Corruption: International Cooperation 0 0 0 0 0 0.00 50% 6 ICT: Infrastructure and Connectivity +1 +1 +1 +1 +1 +1.00 100% 7 Energy: Natural Gas +1 +1 +1 +1 +1 +1.00 100% 8 Finance: Local Currency Bonds −1 −1 0 0 −1 −0.60 20% 9 Regional Security: Iraq 0 0 0 0 −1 −0.20 40% 10 Health: Surveillance and Medical Services +1 +1 +1 +1 +1 +1.00 100% +0.50 +0.60 +0.60 +0.70 +0.50 Average +0.58 79% 75% 80% 80% 85% 75% Note: ICT = Information and Communications Technology. Compliance Trends This is the sixth BRICS compliance report produced by the BRICS Research Group (see Table 4). The 2012 Delhi Summit, at +0.28 or 64%, was a dip between the 2011 Sanya and 2013 Durban summits both at +0.48 or 74%. The 2014 Fortaleza Summit achieved a score of +0.40 (70%), close to the average for all five summits assessed (75%). The average score for compliance with the Ufa Summit commitments was +0.56 or 78%. BRICS members demonstrated the highest compliance score for the Goa Summit — 89%. The final compliance score for Xiamen summit is 79%. BRICS Research Group 23 July 2018 8 2017 BRICS Xiamen Summit Final Compliance Report 1. Trade: Anti-protectionism 2017-57: “We recommit to our existing pledge for both standstill and rollback of protectionist measures.” BRICS Xiamen Leaders Declaration Assessment No Compliance Partial Compliance Full Compliance Brazil 0 Russia +1 India 0 China +1 South Africa +1 Average +0.60 Background Trade protectionism was on the agenda since the first 2009 BRICS summit in Russia and has been discussed frequently since then. BRICS members endorsed the fight against trade protectionism, recognised “the important role played by international trade and foreign direct investments in the world economic recovery,” urged all parties to “work together to improve the international trade and investment environment,” and encouraged the international community “to keep the multilateral trading system stable, curb trade protectionism, and push for comprehensive and balanced results of the World Trade Organization’s (WTO) Doha Development Agenda.”4 In 2011, BRICS trade ministers met during the eighth WTO ministerial conference in Geneva as a follow-up to their meeting leading up to the BRICS Sanya Summit. BRICS members wished to further South-South cooperation by expanding economic trade and investment ties amongst themselves, thus helping promote global economic growth. They recognised the need to reform rules and structures and address the concerns of developing countries in order to achieve universality at the WTO. The trade ministers were entrusted with proposing an institutional framework and concrete measures to expand economic cooperation between BRICS countries and developing countries writ large. They also acknowledged the huge growth in trade flows among developing countries, and the potential for further future cooperation in investments. They sought to enhance and further intra-BRICS coordination with regards to issues such as customs, trade facilitation, trade data collection and harmonisation, e-commerce, and intellectual property rights cooperation.5 The trade ministers agreed that the BRICS should enhance their intra-group trade, including trade of higher value-added manufactured products, in order to support industrialisation and employment in their respective countries. With the joint efforts of all BRICS members, intra-group economic and trade cooperation mechanisms have improved, and pragmatic cooperation has deepened.3 In 2013, under the Durban Trade and Investment Cooperation Framework, the BRICS trade ministers pledged to the promotion and facilitation of mutual trade and investment as a goal among BRICS members. This includes enhancing information exchanges on trade and investment policy, 4 Joint Communique, BRICS Information Centre (Yekaterinburg) 16 May 2008. Access Date: 14 November 2017. http://www.brics.utoronto.ca/docs/080516-foreign.html 5 Ministerial Declaration of the BRICS Trade Ministers, BRICS Information Centre (Geneva) 14 December 2011. Access Date: 10 November 2017. www.brics.utoronto.ca/docs/111214-trade.html BRICS Research Group 23 July 2018 9 2017 BRICS Xiamen Summit Final Compliance Report reducing barriers to the communication and spread of information, and importing high value-added products. BRICS members further pledged to strengthen cooperation with the WTO, and to conduct regular meetings regarding trade and investment-related matters among high-level BRICS officials in multilateral and international organizations. As per the 2013 Strategy for BRICS Economic Partnership, in order to achieve sustainable economic growth, it is imperative that BRICS deepens and strengthens intra-BRICS trade and investment ties, making anti-protectionism the priority. As WTO members, BRICS members have emphasized the benefits of multilateralism in trade since the first BRIC summit, and have campaigned against protectionism in the best interests of emerging and developing economies. At the 2017 Xiamen Summit, BRICS members pledged to cooperate in facilitating interconnected markets via the creation of infrastructure and financial integration, as well as increased policies promoting market access and free-trade. Members further pledged to pursue the promotion of financial market integration through financial service coverage within BRICS countries and through existing WTO obligations, as stipulated in previous agreements and organizations such as Agreement on Trade-Related Intellectual Property and the Organisation for Economic Co-operation and Development. Commitment Features This commitment aims to achieve a rules-based, transparent, non-discriminatory, open, and inclusive world economy that is firmly opposed to protectionism, as embodied by the WTO. BRICS members emphasize the importance of an inclusive, multilateral trade system, which enables all countries and peoples to share the benefits of globalization. The BRICS calls upon other countries to accede to the WTO immediately, and participate in a joint effort to enforce anti-protectionist measures. In order to achieve compliance to this commitment, the BRICS member must demonstrate resistance to trade protectionism and refrain from imposing new barriers on investment or trade in goods and/or services. The WTO defines “tariffs, non-tariff measures, subsidies and burdensome administrative procedures regarding imports” as barriers that limit global flows of goods and services.4 Protectionist measures refer to government actions and policies that restrict or restrain international trade, often with the intent of protecting local businesses and sectors from foreign competition. Typical methods of protectionism include tariffs and quotas on imports, subsidies, or tax cuts granted to local businesses.9 There are two aspects to this commitment. The first is the standstill aspect. Standstill means not taking any trade-restrictive or distorting measures inconsistent with the provisions of the General Agreement on Tariffs and Trade (GATT). It is characterized by the absence of state action. The halt in implementing new protectionist measures shows improvement and commitment to the process of anti-protectionism. The second part of this commitment is the rollback aspect. Rollback means that all trade-restrictive or distorting measures inconsistent with GATT provisions shall be phased out or brought into conformity within an agreed timeframe, no later than by the date of the formal completion of related negotiations. This part of the commitment takes into account multilateral agreements, undertakings, and understandings, including strengthened rules and disciplines reached in pursuance of the aforementioned negotiation objectives.5 Rollback denotes action to repeal, dismantle, or otherwise diminish the effect of protectionist regulations. In order to achieve full compliance, the BRICS member must comply with both parts of the commitment. It ought to reduce and cease to implement additional trade barriers, defined as any non-conforming actions to the Multilateral Agreement on Investment. With both standstill and BRICS Research Group 23 July 2018 10