The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) is an international organisation involving a group of countries in South Asia and South East Asia. These are: Bangladesh, India, Myanmar, Sri Lanka, Thailand, Bhutan and Nepal.
- 6th June 1997: BIMSTEC was created on and with name BIST-EC (Bangladesh, India, Sri Lanka, and Thailand Economic Cooperation).
- 22nd December 1997: Myanmar joined the organization as a full member at a Special Ministerial Meeting held in Bangkok on , upon which the name of the grouping was changed to BIMST-EC.
- December 1998: By the second Ministerial Meeting in Dhaka Nepal was granted observer status.
- 2004: The Trade Negotiating Committee (TNC) was set up to continue all negotiations on the implementation of FTA.
- February 2004: the framework agreement of BIMSTEC Free Trade Area (FTA) was signed in order to strengthen economic, trade and investment cooperation among the member countries. Full membership granted to Nepal and Bhutan
- 31st July 2004: name of the association to be known as BIMSTEC or the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation.
BIMSTEC uses the alphabetical order for the Chairmanship. The Chairmanship of BIMSTEC has been taken in rotation commencing with Bangladesh (1997–1999), India (2000) Myanmar (2001–2002), Sri Lanka (2002–2003), Thailand (2003–2005), Bangladesh (2005–2006). Bhutan asked for the skip. So it's turned to India (2006–2009). Nepal formally took over the new Chairmanship as on 4 March 2014. Sumith Nakandala of Sri Lanka became the first Secretary General of BIMSTEC.
This sub-regional group was initiated with the goal to combine India’s look east policy and Thailand’s look west policy. As such it provides a unique link between South Asia and South East Asia. According to the Bangkok declaration on the establishment of BIST-EC, the aims and purpose of this sub-regional cooperation are to create an enabling environment for rapid economic environment, accelerate the economic growth and social progress in the sub-region, promote active collaboration and mutual assistance on matters of common interest, promote assistance in the form of training and research facilities, supporting and complementing national development plans in the member states.
The intra-regional trade among the member countries of South Asian Free Trade Area (SAFTA) is hovering round 4–4.5 percent per annum. It is believed that compared to SAFTA, the BIMSTEC FTA will be more promising because unlike SAFTA all the BIMSTEC members are purely guided by economic interests rather than by political interests.
The BIMSTEC co-operates in thirteen priority sectors:
- trade and investment
- transport and communication
- cultural cooperation
- environment and disaster management
- public health
- people-to-people contract
- poverty alleviation and
- counter-terrorism and transnational crimes.
The priority sectors for cooperation have clearly been identified keeping in view the complementarities of the regions and the means to exploit these effectively by establishing road, rail, air and shipping networks.
Features of the Framework Agreement on BIMSTEC FTA.
Though the framework agreement on BIMSTEC FTA was signed in 2004, still it is not fully operational. Unlike many FTA agreements, the framework agreement on BIMSTEC FTA provides more scope for cooperation, going beyond trade in goods to bring trade in services and promote investment cooperation. It provides clear and well-defined deadlines for various stages of economic integration among the member countries.
When the framework agreement was signed, a number of issues like modalities of tariff reduction and elimination, size of the negative list, criteria for rules of origin, mechanism of dispute settlement, safeguard measures, customs operations and negotiations on the agreements on service and investment were not dealt with. For the same, the member countries establish the institutional arrangement for conducting negotiations to finalize these issues, as stipulated in the framework agreement. This negotiation happens through Trade Negotiating Committee (TNC). TNC reports to the BIMSTEC Trade/ Economic Ministers through the Senior Trade and Economic Officials Meeting on the progress and outcome of its negotiations. In order to achieve the objective of BIMSTEC FTA, the framework agreement has set the following instruments.
- Trade Liberalization Program. According to this article, all products, except those included in the negative list would be subject to tariff reduction or elimination. Tariff reduction was to be undertaken following two product schedules, namely fast track product schedule for the least sensitive products and normal track product schedule for the less sensitive products. For both fast track and normal track product, the agreement provides different time frame for tariff reduction for Non-LDC and LDC member countries. When the framework agreement of BIMSTEC FTA was signed in 2004, the member countries decided to establish a free trade area for transaction of goods from July 2006. But due to political reasons and non-cooperation of some of the member countries, the enforcement of BIMSTES FTA was delayed, hence the time frame was amended.
- Rules of Origin. In case of BIMSTEC FTA, the member countries had agreed upon the specific issues of rules of origin such as domestic value addition, regional cumulation and product specific rules at 18th TNC meeting held in June 2009.
- Dispute Settlement Procedures. There is a specific agreement on dispute settlement procedures and mechanism of the framework agreement on the BIMSTEC FTA with specific time table. Bilateral consultation shall be held within 30 days upon a request made by any member. If the consultation failed to settle the dispute within the period of 60 days the complaining member may proceed directly to request for the constitution of an arbitral tribunal. The arbitral tribunal shall have three members. The complaining member shall appoint an arbitrator to the arbitral tribunal within 20 days after making the request for constitution of the arbitral tribunal.The arbitral tribunal shall submit its final report within 120 days from the date of its composition.The member concerned shall promptly comply with the findings and recommendation of the arbitral tribunal.
- Safeguard Measures. BIMSTEC safeguard measures permit member countrieto withdraw the tariff concession to protect domestic industry from serious injury due to increase in import form free trade under BIMSTEC FTA. BIMSTEC safeguard measures are not applicable against any products of LDCs if the import of a product from an LDC does not exceed five percent, provided that LDC members with less than 5 percent import share collectively account for not more than 15 percent of the import share of importing country.
- Cooperation and Mutual Assistance in Customs Matters. The member countries of BIMSTEC through their customs administrations shall provide each other administrative assistance for the proper application of customs law, for the prevention, investigation, legal proceedings and combating of customs offences and for cooperation and technical assistance.
The most significant feature in the economic development activities of BIMSTEC is the proposed Free Trade Area amongst the member countries which expected to expand it later to involve other countries as well as other Regional Trading Blocs. It was the BIMST-EC Economic Ministerial Meeting held in August 1988 which concluded with certain decisions that BIMST- EC should aim to develop a Free Trade Agreement.
At the BIMSTEC Trade, Commerce and Economic Ministerial meeting held on February 8th 2004 in Phuket Thailand, the member countries jointly signed a Framework Agreement to establish a Free Trade Area by 2013 to create a conducive environment for trade for member countries without any barriers. Initially Bangladesh did not sign the agreement due to prevailing domestic issues, but later Bangladesh joined for the Framework Agreement.
The objective of the Agreement is to strengthen and enhance economic , trade and investment cooperation among the members, progressively liberalize and promote trade goods and services and explore new areas.
Prospects of Free Trade Area for Sri Lanka:
BIMSTEC is an important trade agreement to member countries including Sri Lanka, as it is has the potential to bridge for long term trade in South Asia and South East Asia. It covers significant areas of Asia. The BIMSTEC region is a region with US$ 2454 Billion GDP containing 1.5 billion population and US$ 1135 Billion total trade. This organization mixes a diverse cultural, social and economic group. Social and Economically Sri Lanka , India and Thailand are defined as non- less developed countries and other four countries Bangladesh, Bhutan, Myanmar and Nepal are in the LCD category. It is understood now that Japan is willing to help BIMSTEC to make it’s objectives successful. BIMSTEC, the organized trade bloc in South Asia and South East Asia would be fortunate to share the cooperation extended by Japan as the 5th economic power in the world. Sri Lanka has been trading with Japan who is our ninth largest export market with US$ 226 million ( 2013)exports during a long period of time. The possibility of Japan joining BIMSTEC will make a better platform for Sri Lanka to expand her market share in this leading market.
It is thought today that China too would consider extending its cooperation to BIMSTEC. Since 2003, China has entered nine FTA’s and China is still looking forward to have more FTAs with Asia. Presently a few FTAs are in progress of development according to Chinas preference such as China.
Today, cooperation amongst the trading blocs has increased and important discussions are being held regarding free trade facilities in a global social economic scenario. The ASEAN having a FTA with NEW Zealand and Australia is one such case. Some economists predict that in future the ASEAN will cooperate with BIMSTEC to create a wider free trade area in Asia . Thailand and Myanmar as members of the ASEAN has great potential in making this concept a reality.
The Strategic Plan 2010 – 2015 of Sri Lanka Export Development Board, the National Plan for Export Development indicate that one of the targets under the plan is to increase exports to markets other than EU and USA by over 50% by 2015. The increase of 50% exports of export markets other than EU and USA is not an easy target. EDB Strategic Plan 2010 – 2015 also indicate that China Russia and other Asian countries as emergence of friendly nations of Sri Lanka have potential for Sri Lanka exports.
If EDB needs to diversify Sri Lanka export destination from Europe to Asia and other countries, they should utilize these opportunities to its best. After it takes some time to implement FTA, but Sri Lanka should ready to utilize it. Even the promotional strategies should now build up with new tendencies in BIMSTEC counties for long term benefit.
Sri Lanka’s exports to Myanmar value US$ one million ranking 116 the position in the list of export destination. This reveals that very negligible trade is done with Myanmar. The main reason behind is that Sri Lanka maintain only political, cultural relationship as Buddhist country not much on trade. Today Myanmar displays it willingness to politically change it governing system and moving towards a more liberal path. Sri Lanka Government together with the Chambers should develop a new mechanism on how to enter the Myanmar market strategically. It is a timely need to organize trade missions to Myanmar and strengthen the relations with respective counterparts in Myanmar such as Myanmar Sri Lanka Friendship Associations.
Discussions at the third BIMSTEC Heads of Government Summit.
The third BIMSTEC Heads of Government Summit, concluded on the 14th of March 2014 in Nay Pyi Taw , Mynamar where very significant decisions were taken in order to accelerate the economic growth and social progress in the sub-region. The theme of this third BIMSTEC Heads of Government Summit was “Partnership for harmony and Prosperity”.
The hallmark of the BIMSTEC was the initiative of creating free trade area amongst the member countries and expanding it to other countries and regional trade blocs. The declaration of third BIMSTEC Heads of Government emphasizes that the leaders decided to move forward towards finalization of the draft Agreement on Trade in goods with agreed general rules of origin and project specific rules.
Three agreements were signed in the summit.
- Memorandum of Association on the Establishment of the BIMSTEC Permanent Secretariat at Dhaka.
- Memorandum of Understanding on the Establishment of the BIMSTEC Cultural Industries Commission (BCIC) and BIMSTEC Cultural Industries Observatory (BCIO) in Bhutan.
- Memorandum of Association among BIMSTEC Member Countries Concerning Establishment of a BIMSTEC Centre for Weather and Climate at NOIDA.