Political economy of South–South relations: an analysis of BRICS’ investment protection agreements in Latin America and the Caribbean

Abstract

In the late 2000s, the emergence of the BRICS (Brazil, Russia, India, China and South Africa) gave rise to expectations of an alternative for the countries of the Global South in relation to the traditional powers. In this paper, we investigate international investment agreements between the BRICS and Latin America and the Caribbean (LAC). We seek to identify to what extent the BRICS can promote changes in the international investment regime or, on the contrary, reinforce the traditional model of foreign investment protection. To this end, we investigated LAC’s political-economic relations with each BRICS country through document analysis of their models of agreements and secondary data analysis of investment, trade, and credit flows, as well as social and environmental conflicts. We conclude that, although some of the BRICS have promoted important innovations in their investment agreements, the models used by each member with their Latin American counterparts mostly reproduce (except for Brazil) the traditional model. Further, the bloc’s economic relations with LAC have largely reinforced the region’s role as an exporter of raw materials, reproducing asymmetric relations of dependency. Therefore, LAC–BRICS relations, despite representing a geopolitical counterpoint, are limited in contributing to a socially just and sustainable development process.

Keywords:

• BRICS
• Latin America and the Caribbean
• bilateral investment treaties
• foreign direct investment

Disclosure statement

The authors report there are no competing interests to declare.

Notes

1 See https://investmentpolicy.unctad.org/international-investment-agreements/by-economy (accessed December 2021).

2 https://investmentpolicy.unctad.org/international-investment-agreements.

3 Notably, UNCTAD’s World Investment Report for the year 2006 had direct foreign investments from developing countries and economies in transition as its central theme. See https://unctad.org/en/Docs/wir2006_en.pdf.

4 We may note that Uruguay joined the BRICS NDB along with Bangladesh, the UAE, and Egypt in 2021 (NDB 2021). Under the current presidency of China, Argentina has made efforts to join the NDB and the BRICS group itself, but the outcome of negotiations is uncertain (Mercopress 2022).

5 China currently has 124 bilateral treaties and another 24 agreements with investment provision. See https://investmentpolicy.unctad.org/international-investment-agreements/countries/42/china (accessed December 2021).

6 We analysed China’s BITs with all LAC countries whose treaties were available either in English or Spanish, or both, at https://investmentpolicy.unctad.org/international-investment-agreements/countries/42/china (accessed 15 September 2020).

7 China’s treaty with Colombia excludes, among indirect expropriation measures, those related to public health, safety and environmental protection.

8 Authors’ own calculations based on Dussel Peters (2020, 7).

9 Authors’ own calculations based on data from China Global Investment Tracker, available at https://www.aei.org/china-global-investment-tracker/ (accessed 26 September 2020).

10 We analysed Brazil’s ACFIs with Chile, Colombia, Mexico, Suriname, Guyana and Ecuador.

11 Calculations based on data from BCB (2019).

12 According to BNDES, in 2003, because of Resolution 44 approved by the Trade Council of Ministers, Argentina, Ecuador, Venezuela and the Dominican Republic had their financing costs reduced, because the norm mitigated the credit risks of operations in the proportion of up to 7 (worst score) to 1 (best score). However, as of January 2018, payment defaults arose for Venezuela (US$374 million) and Cuba (US$62 million) (BNDES 2019).

13 We analysed India’s BITs with Argentina, Colombia, Mexico and Uruguay.

14 We analysed Russia’s BITs with Guatemala, Nicaragua and Venezuela.

15 We analysed South Africa’s BITs with Chile, Argentina and Cuba. Chile’s BIT presents some particularities.

16 The agreement with Chile provides for a one-year restriction on the transfer of invested capital.

17 The agreement with Chile states that these principles will not be used to extend benefits given by South Africa for the purpose of promoting equality or protecting groups against discrimination on its territory, in reference to South Africa’s Black Economic Empowerment policy.

Additional information

Notes on contributors

Ana Saggioro Garcia

Ana Saggioro Garcia is Assistant Professor at the International Relations Institute of the Pontifical Catholic University of Rio de Janeiro in Rio de Janeiro, Brazil. She is also Professor in the Social Sciences Graduate Programme at the Federal Rural University of Rio de Janeiro. She has published in the areas of international political economy, critical theory, Gramsci, hegemony, imperialism, multinational corporations and South–South relations.

Rodrigo Curty Pereira

Rodrigo Curty Pereira is a PhD Candidate in Geography at the University of Waterloo in Waterloo, Canada. He has a bachelor’s degree in international relations from the Federal Rural University of Rio de Janeiro. His research interests include critical political economy, political ecology of health, and global health in general.