The Bay of Bengal Initiative for Multi-Sector Technical and Economic Co-operation (BIMSTEC) will step into the 20th year of its formation in 2017. But the regional organisation, now having seven countries as its members, is yet to take off in real terms. Unlike many other regional groupings or blocs, it is a sector-driven co-operative organisation. Initially, there were only six sectors for co-operation among the members. Now there are 14 broad-based sectors, from trade and investment to counter-terrorism and climate change. Over the years, the number of sectors of co-operation has increased, but not the real co-cooperation among the members. This is mainly due to geo-political tension among the members.
REGION OR SUB-REGION: Many have termed the BIMSTEC a sub-regional group or bloc as geographically it shares parts of South Asia and South East Asia. It thus defies traditional definition of sub-region which indicates a kind of grouping of a few small countries with a part or a territory of a big country or countries. Whether it is a sub-regional or regional grouping may be a matter of debate for the purpose of identification. More important is the fact that it is a bridge between South Asia and South-East Asia. Four countries initially formed a regional bloc titled Bangladesh, India, Sri Lanka and Thailand Economic Cooperation (BIST-EC) in 1997. As Myanmar immediately joined the group, it got renamed as BIMST-EC. Six areas were in focus for broader economic co-operation. These are — trade, technology, energy, transport, tourism and fisheries.
Bolstering BIMSTEC regional trade
Very small progress was made in the first few years. Later in 2004, Bhutan and Nepal formally joined the group and it was renamed as The Bay of Bengal Initiative for Multi-Sector Technical and Economic Co-operation (BIMSTEC). Eight additional sectors were selected for co-operation among the member countries. These are: agriculture, cultural co-operation, environment and disaster management, public health, people to people contact, poverty alleviation, counter-terrorism and transnational crime and climate change. The selection of sectors for co-operation reflects reality of the region. In fact, though BIMSTEC has remained stagnant in terms of tangible achievements, it has an ambitious agenda on negotiation that goes beyond just trade in goods and services.
TRADE FOCUS: BIMSTEC Free Trade Agreement (FTA), a framework agreement, was signed in February, 2004 to establish a free trade area in this region. Bangladesh signed the agreement four months later, in June, 2004. The FTA agreement encompasses three areas: trade in goods, trade in services and agreement on investment. So far, only the agreement on goods has been finalised. A draft text on services has been developed and discussion on the text is going on. BIMSTEC members initially agreed on a trade liberalisation schedule which set 2017 as the deadline for the full implementation of the FTA. They also agreed to start the liberalisation process in 2006. But there was no progress as members failed to minimise their differences as well as internal political crisis in some member countries. Later, in 2011, members agreed on a revised schedule to eliminate all tariffs by 2023 latest. Least Developed Countries (LDCs) would eliminate tariffs later (by 2023) while developing countries would do it earlier (by 2021). The decision also faced setback as Sri Lanka delayed in submitting its schedule of tariff elimination and reduction. So, in 2015, the members again revised the deadline of establishing the BIMESTC free trade area by 2027. To do this, elimination of tariff was scheduled to start on July 01, 2016. Meantime, member countries have to transpose their commitment schedule due to update in World Customs Organisation (WCO) Harmonized System Nomenclature. BIMSTEC countries made their tariff reduction and elimination commitment on the basis of 2007 HS classification of WCO which was updated in 2012. It includes 220 sets of amendments: 98 relating to the agricultural sector; 27 to the chemical sector; 9 to the paper sector; 14 to the textile sector; 5 to the base metal sector; 30 to the machinery sector; and an additional 37 that apply to a variety of other sectors. To accommodate the change, Bangladesh has already revised the commitment schedule. The revision is known as transposition. The Harmonized System is generally amended by the WCO every five years. So, the product codes and descriptions in the old HS version need to be transposed precisely into those in the new version of HS nomenclature. It is quite a technical, complex and tricky work. Moreover, another update version of WCO HS classification is due next year. In fact, the 2017 edition of the WCO Harmonized System Nomenclature will enter into force on January 01, 2017 and includes 233 sets of amendments. So, it will be a challenging task for the BIMSTEC members to decide whether to transpose again or continue 2012 HS classification if they failed to start the implementation of tariff reduction and elimination within this year. The members are committed to eliminate 10 per cent of all tariffs on fast track or priority basis. On normal track basis, 48 per cent tariff will be eliminated and 19 per cent will be reduced. Moreover, 23 per cent of the tariff line will be kept under negative list. Besides tariff elimination, BIMSTEC FTA on goods has three other pillars. These are: Rules of Origin (RoO), customs matter and dispute settlement. LDCs get relaxed value addition (30 per cent) while others get 35 per cent under the RoO. So, it is considered as modest compared to many other agreements. Despite some limitations, dispute settlement rules and agreements compel the members to comply with arbitration tribunal findings and recommendations. The delay in implementing the FTA is a major cause for stagnation of the intra-regional trade in BIMSTEC. In value terms, intra-regional trade was $25.16 billion in 2005 which increased to $74.53 billion in 2015. But in comparison with the region’s global trade, the amount is still very small. In 2005, intra-regional trade was 5.4 per cent of the total global trade of the group while in 2015, it stood at 6.2 per cent. Bangladesh’s interest on BIMSTEC trade lies on its ‘Look East’ policy, adopted in 2004. While India is its closest neighbour and one of the leading trade partners, condition of trading with the country is set under the framework of SAARC (South Asian Association of Regional Co-operation). Thus, Bangladesh’s trade interest in BIMSTEC is mostly concentred on Myanmar and Thailand.
GEO-POLITICS: Geo-politics has become the most important driving force of BIMSTEC. India is trying to establish a framework for the economic integration of the wider ‘Southern Asia’ region. To do this, India is pushing BBIN (Bangladesh-Bhutan-India-Nepal) sub-regional bloc and trying to link it with ASEAN economies. The India-Myanmar-Thailand (IMT) Motor Vehicle Agreement (MVA), signed last year, is an important step in this direction as it goes beyond traditional trade agreement. While Bangladesh is a vital partner of BBIN MVA, the country is yet to get any space in IMT MVA. In fact, neither Bangladesh takes any initiative to be a part of the IMT MVA to make it BIMT MVA, nor India provides any space to Bangladesh in this regard. But, IMT MVA will be an important tool for BIMSTEC connectivity in future. Again, Bangladesh has an uneasy relationship with Myanmar due to the pestering Rohingya issue. The Rohingya refugees in Chittagong have already created a socio-cultural problem. Tensions in the borders of two countries are low, but not absent. Thus, geo-political consideration is strong in BIMSTEC with a lot of complexities. Bangladesh needs to handle the issues with care to tap potential trade benefit from the grouping. As trade-related transactions of the country with Bhutan, India, Nepal and Sri Lanka are settled under the agreement on South Asian Free Trade Area (SAFTA), its trade interest under BIMSTEC mostly lies on Myanmar and Thailand.
