Policies embedded with United States President Donald Trump’s plans to restructure the global economy appear to be having the exact opposite effect to those intended. There’s growing concern that Trump 2.0 has ignited a watershed pivot by Asian economies to abandon their traditional neutral hedging stance between the U.S. and China.
Growing concern over U.S. policies is pushing more Southeast Asian economies to explore closer ties with the BRICS trading bloc.
Established in 2009 by five founding members, Brazil, Russia, India, China and South Africa, BRICS expanded its membership in 2023 by including Egypt, Ethiopia, Iran, and the United Arab Emirates (UAE).
While Argentina and Saudi Arabia have also been invited to accept membership, they are yet to officially join.
BRICS is growing
Even before Trump’s ascent to the White House last year, BRICS expanded yet again when four key Southeast Asian economies: Thailand, Malaysia, Indonesia and Vietnam were added as partnering countries.
Over time, these four newcomers are expected to eventually become official BRICS members.
It is growing concerns over U.S. policies which could see a growing cadre of SE Asian economies take participation in the BRICS trading bloc more seriously.
Underscoring their concerns is Washington’s absence from multilateral trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership.
Trump’s protectionist trade policies aside, there’s also concern by ASEAN countries over the U.S. commitment and economic leadership in the Indo-Pacific, plus plans by the U.S. president to weaponise economic power.
Upside for SE Asian economies
Jamil Ghani of the S. Rajaratnam School of International Studies (RSIS) views the creation of a BRICS Grain Exchange as just one example of an opportunity for SE Asian economies to diversify and stabilise export markets.
“This is appealing for Malaysia and Indonesia, which produce about 80% of palm oil globally,” said Ghani.
“For Thailand and Vietnam, its participation in BRICS may help Bangkok and Hanoi diversify its rice export markets and provide resilience against price volatility.”
While Vietnam appears sensitive to compromising its relationship with the U.S. or the EU – the two largest importers of its product - other SE Asian countries have their own unique agendas for joining.
In the case of Malaysia, joining BRICS aligns with the country’s economic and trade interests with BRICS member states.
It also complements Prime Minister Anwar Ibrahim’s foreign policy of balancing between two major powers.
By comparison, Indonesia membership to BRICS plays to the ambitions of President Prabowo Subianto to increase the country’s leverage as a global middle power, while increasing its influence in the global south.
Could Australia join BRICS?
Given that Australia's two-way trade with ASEAN nations is greater than our trade with Japan or the U.S. - passing $183.7 billion in 2023 – it’s now worth asking that previously forbidden question:
Could Australia join its key Asian trading partners in the BRICS trading bloc at some future point?
Australia has always wanted to be a partner of choice with its closest geographic neighbours in Southeast Asia.
According to Melissa Conley Tyler, an executive director at the Asia-Pacific Development, this means Australia needs to understand the motivations behind SE Asian countries moving closer to BRICS.
What SE Asian economies are ultimately doing by joining BRICS, according to Tyler, is strategically maintaining autonomy and offsetting uncertainties and challenges from Trump’s protectionist economic policies.
Could Australia join a trading bloc that includes Russia?
At face value, there’s no reason why Australia shouldn’t look to do the same.
However, what remains to be seen is whether Australia has the ability to balance its western alliances while diversifying partnerships through BRICS.
Given that China is Australia’s largest trading partner, accounting for around 30% of our total exports, it makes economic sense to belong to an emerging economy trading bloc led by China.
However, given that BRICS includes Russia, the $64,000 question is whether Australia needs to keep treating participation with BRICS as a binary choice between loyalty to the U.S. and collaboration with emerging powers.
As well as strengthening Australia’s ties with non-Western powers, access to BRICS' New Development Bank (NDB) could provide an alternative source of funding for large-scale projects.
BRICS global reach
As a trading Bloc, BRICS accounts for around 30% of the global economy and 40% of the world’s population.
To help put the size of the BRICS into better perspective, in 2018, it overtook the G7 countries' share of the world’s total gross domestic product (GDP) in terms of purchasing power parity.
