Timeline:
- 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
- technology
- energy
- transport and
communication
- tourism
- fisheries
- agriculture
- 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.
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