In an increasingly multipolar world, regional trade blocs are reshaping the global economic order. With the expansion of BRICS, an influential bloc comprising Brazil, Russia, India, China, and South Africa, now joined by new entrants like Saudi Arabia, the UAE, Egypt, Ethiopia, and Iran, the dynamics of global trade are shifting rapidly. This development raises a crucial question: What’s next after BRICS expansion?
As Western-led institutions like the G7 and WTO face criticism over inclusivity and dominance, regional alliances such as BRICS+, ASEAN, RCEP, and the African Continental Free Trade Area (AfCFTA) are gaining influence. In this blog, we’ll explore how the rise of these trade blocs is transforming global trade, investment, and geopolitical strategies.
What Are Regional Trade Blocs?
Regional trade blocs are agreements between countries, often in the same geographic area, that reduce or eliminate trade barriers to promote economic cooperation. These may involve free trade, customs unions, common markets, or deeper political and monetary integration.
Key Examples:
- BRICS+
- ASEAN (Association of Southeast Asian Nations)
- RCEP (Regional Comprehensive Economic Partnership)
- AfCFTA (African Continental Free Trade Area)
- EU (European Union)
- USMCA (United States-Mexico-Canada Agreement)
These blocs represent a shift away from globalized trade led by the West to regional, multipolar cooperation based on shared interests.
BRICS Expansion: A Game-Changer in Global Trade?
In 2023, the BRICS bloc invited six new members: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE. While Argentina later declined, the inclusion of major oil exporters and African nations has extended BRICS’ economic and geopolitical reach.
Why It Matters:
- BRICS+ now represents over 40% of the world population.
- Covers one-third of global GDP
- Controls a major share of global energy reserves
- Promotes de-dollarization, alternative payment systems, and local currency trade
This expansion signifies a clear challenge to Western financial systems, particularly the dominance of the U.S. dollar in global trade.
The Rise of Alternative Trade and Financial Systems
With BRICS pushing for local currency trade and even discussing a common digital currency, the global financial infrastructure is set to evolve.
Key Developments:
- India-Russia oil trade in rupees
- China’s yuan-denominated commodity deals
- Cross-border payment systems (like Russia’s SPFS and China’s CIPS)
- A shift away from SWIFT dominance
These efforts indicate that BRICS+ may soon lead the charge in establishing regional economic independence.
Other regional blocs are gaining ground.
BRICS isn’t the only player in this global realignment. Let’s explore a few other regional trade blocs making waves:
1. RCEP (Regional Comprehensive Economic Partnership)
- Includes China, Japan, South Korea, ASEAN nations, Australia, and New Zealand.
- World’s largest trade bloc by GDP and population.
- Aims to reduce tariffs and unify rules of origin.
2. ASEAN
- Focuses on Southeast Asian integration.
- Works closely with China, India, and Japan.
- Facilitates fast-growing digital and manufacturing trade.
3. AfCFTA
- Ambitious African trade initiative covering 54 nations.
- Seeks to create a single African market with free movement of goods and labor.
- Potential to lift 30 million people out of poverty by 2035.
What’s Driving This Shift?
Several global trends are accelerating the rise of regional trade blocs:
1. Geopolitical Tensions
- U.S.-China trade war
- Western sanctions on Russia and Iran
- Rising nationalism and protectionism
2. Search for Economic Resilience
- COVID-19 disrupted global supply chains.
- Countries want self-reliance in critical sectors like energy, food, and technology.
3. Technological Connectivity
- Regional integration is easier due to digital trade, fintech, and blockchain.
- Logistics and e-commerce platforms are enabling intra-bloc trade.
Implications for Global Business and Trade
The growth of trade blocs like BRICS+ creates both opportunities and challenges for global businesses.
Opportunities:
- New markets across Africa, Asia, and Latin America.
- Local currency trade reduces forex risk.
- More regional financing and investment platforms.
Challenges:
- Fragmentation of global rules and standards.
- Multiple currencies and payment systems to manage.
- Geopolitical uncertainties affecting cross-bloc trade.
Businesses must rethink their market entry strategies, diversify their supply chains, and stay updated on regional regulations.
What’s Next After BRICS Expansion?
The world is witnessing the emergence of multipolar trade leadership. Here are key possibilities for the next decade:
1. BRICS Common Currency?
A digital or commodity-backed currency could be introduced to compete with the dollar. While politically difficult, it’s under discussion.
2. Increased South-South Cooperation
More trade between developing countries in energy, technology, and infrastructure bypassing traditional Western institutions.
3. Alternative Credit Rating and Financial Institutions
BRICS nations are creating independent financial tools (e.g., the New Development Bank) to reduce reliance on the IMF and the World Bank.
4. New Membership Waves
Countries like Indonesia, Nigeria, Mexico, and Turkey have shown interest in joining BRICS. A broader BRICS+ could become a true counterbalance to the G7.
The expansion of BRICS and the growth of regional trade blocs signal a fundamental shift in global economic power. As countries seek autonomy in trade, finance, and policy-making, we are entering a new era of regionalization and strategic alliances.
For businesses, policymakers, and investors, the key is to understand and adapt to these changing dynamics. The future of global trade won’t be defined by any single power but by a web of interconnected regional ecosystems.
