Rays of hope are seen for implementation of the free trade agreement (FTA) among the BIMSTEC member countries, as they have agreed to resume its stalled negotiation.
After a gap of three years, negotiation on the FTA for the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) will resume in Dhaka next month (July).
The member countries signed the framework agreement on FTA in Bangkok in 2004, triggering the hope for a vibrant intra-regional trade.
But the FTA could not be implemented due to disagreement of some members on certain issues.
"Unfortunately the FTA negotiation faced hurdles for various reasons. The last meeting of the trade negotiation committee (TNC) was held in 2015," BIMSTEC Secretary General M Shahidul Islam told the FE.
"But now the member countries have agreed to resume the process, and the next TNC meeting will be held in Dhaka in July."
"We are expecting a breakthrough in the upcoming TNC meeting, as all the members have agreed to expedite the FTA implementation process," Mr Islam said.
The member countries agreed to implement the BIMSTEC Free Trade Area Framework Agreement in order to stimulate trade and investment among the parties as well as to attract the outsiders to trade with and invest in the states at a higher level.
After the signing of the framework agreement, TNC was setup. It held the first meeting in Bangkok in September 2004.
TNC's negotiation area covers trade in goods and services, investment, economic cooperation, trade facilitations and technical assistance for the least developed countries (LDCs) in BIMSTEC, the secretary general also said.
"As for the agreement on trade in goods, two working groups have been setup to work on some technical aspects. These are the Working Group on the Rules of Origin (WG-RoO) and the Working Group on the Dispute Settlement Mechanism (WG-DSM)."
"Both the working groups would have their meetings back to back or in parallel with the TNC meetings."
The BIMSTEC nations have a population of some 1.5 billion people, or 22 per cent of the global population. They have been able to sustain an average growth rate of 6.5 per cent in the recent years.
The region has a gross domestic product (GDP) of US$2.7 trillion.
The framework agreement for an FTA was agreed upon in 2004, and it covered five areas.
The areas are tariff concessions on trade in goods, customs cooperation, trade in services, investment cooperation, and dispute settlement, Mr Islam further said.
According to the framework agreement, a safeguard measure allows the BIMSTEC members to withdraw tariff concessions for protectionist purposes, in case imports from the member countries through FTA access cause significant harm to domestic industries.
He also opined that the non-tariff barriers (NTBs) would have to be removed to foster regional trade.
For a successful FTA, harmonisation of the standards and dismantling of all the para-tariffs are very much important.
On the issue of Rules of Origin, Mr. Islam said the TNC meeting in June 2009 decided on domestic value addition of 30-35 per cent of freight on board (FOB) value.
For regional aggregate accumulation, the final goods would have value addition of 30 per cent of FOB value for the LDC members, and 35 per cent for the non-LDC members.
In the 19th TNC meeting in February 2011, the timeline for the member states to submit their negative lists and tariff liberalisation schemes was taken up, and the deadline was set for November 2011.
This deadline was not met, however, as some members did not submit their tariff liberalisation schemes.
The whole process dragged on until the 20th meeting in Bangkok in September 2015.
In the meeting, India demanded a new formulation for tariff reduction, as it felt the agreement on FTA, formulated in 2004, had become outdated.
Differences arose between India and Thailand regarding market access for professionals and duty cut on traded goods, and the FTA was again stalled.
Unfortunately, BIMSTEC intra-regional trade has failed to grow at the desired rate.
The countries of the region, on the whole, export less and import more, except for Thailand. India and Thailand together account for 85 per cent of intra-regional exports of BIMSTEC.
[email protected]
