SECTORS OF COOPERATION (PDF)

BIMSTEC provides a unique link between South Asia and Southeast Asia bringing together 1.3 billion people - 21 percent of the world population, a combined GDP of US$750 billion, and a considerable amount of complementarity given geographical contiguity, differing levels of development and resource endowments. A study (2004) shows the potential of US$ 43 to 59 billion trade creation under BIMSTEC FTA.

BIMSTEC is based on mutual interests and common concerns among member countries and complementarities of their economies. As stated in the declaration establishing BIST-EC, its basic objectives are:

Membership Criteria

Eligibility: Countries seeking membership should satisfy the conditions of territorial contiguity to, or direct opening into, or primary dependence on the Bay of Bengal for trade and transportation purposes.

Procedure: All applications should be submitted in writing to the Chairman of BIMST-EC. The decision on admitting new members will be taken on the basis of consensus by all the BIMST-EC members.

Institutional Structure and Arrangements

The BIST-EC Declaration provides for the following institutional mechanisms:

Chairmanship

The Chairmanship of BIMST-EC has been taken in rotation commencing with Bangladesh (1997 - 1999), India (2000) Myanmar (2001-2002), Sri Lanka (2002 - 2003) Thailand (2004- 2005) and Bangladesh (2005-).

Bangladesh has assumed its second Chairmanship of BIMSTEC for one year at the 9th BIMSTEC Senior Official's Meeting held in Dhaka on 31 May-01 June 2005.

The institutional arrangements have evolved as follows:

Charter bodies

Summit

The first Summit Meeting of the Heads of State and Government was held in Thailand on 31 July 2004 in Bangkok. The decision to hold BIMSTEC Summit followed a proposal made by the Prime Minister of Sri Lanka in his opening statement at the 5th Ministerial Meeting in Colombo in December 2002. The Summit was held in two parts - the Inaugural Session where all Heads of State/Government made statements; and the Retreat where they had free exchange of views, moderated by the Chair. The Summit concluded with the adoption of a Declaration. The Chair held a Press Briefing wherein he shared the salient points of discussion at the Retreat. The first Summit decided to hold further Summits as and when deemed essential on the basis of offer by a member state. It was agreed to hold the second Summit in India in 2006 as per offer made by India.

Foreign Ministers' Meeting

The Ministerial meetings, commenced in December 1997 (Bangkok) have been held regularly; December 1998 (Dhaka), July 2000 (New Delhi), December 2001 (Yangon), December 2002 (Sri Lanka), February 2004 and July 2004(Thailand). Until December 2001 the participation was at Deputy Minister of Foreign Affairs level. In December 2001, it was decided to hold it at full Ministerial level. The Ministerial meeting held in Sri Lanka in December 2002 was attended by the Foreign Ministers of all five countries and the inauguration was addressed by Hon. Ranil Wickremesinghe, Prime Minister of Sri Lanka. BIMSTEC ministerial meetings had been held at the level of deputy/ state/ vice foreign ministers until the 5th Ministerial Meeting in Colombo. It was held for the first time at the level of Foreign Ministers at the Phuket meeting in February 2004, which was to be followed by the first BIMSTEC Summit.

As the Summit was postponed and re-scheduled on 31 July 2004, the 7th Ministerial meeting was held in Bangkok on 30 July preceding the Summit. The annual meeting of the Foreign Ministers serves as the main policy body of BIMSTEC as per provisions contained in the formation Declaration, which serves as the Charter. Its format is in evolution. The Ministerial meeting is preceded by a meeting of the Senior Officials and concludes with the issuance of a Joint Ministerial Statement. The Foreign Minister of Bangladesh will take over the chairmanship of BIMSTEC Foreign Ministers from his Thai counterpart at the 8th Ministerial meeting on 19 December in Dhaka.

Senior Officials' Meeting:

The formative Declaration envisaged a Senior Officials Committee; but did not specify its composition. Over the years, two forums have evolved:

Senior Officials' Meeting (SOM)

Senior Officials' Meeting (SOM) comprising Foreign Secretaries/Permanent Secretaries of Ministry of Foreign/External Affairs. The SOM reviews overall progress in BIMSTEC, considers reports of the BWG, and prepares for the Foreign Ministerial Meeting. Bangladesh assumed chairmanship of BIMSTEC on 31 May at the 9th SOM in Dhaka.

Main provisions of BIMSTEC FTA

The BIMSTEC FTA covers three areas - trade in goods, trade in services and investment.

Trade in goods will be liberalized through progressive elimination of tariffs and non-tariff barriers. This will be done in two phases. Products will be identified for (a) Fast Track and (b) Normal Track.

For the Fast Track products the non-LDC parties will eliminate tariffs for LDC parties by 30 June 2007; but among themselves by 30 June 2009. The LDC parties will do so far non-LDC by 30 June 2011; but among themselves by 30 June 2009.

For the normal Track products the non-LDCs will eliminate tariffs for LDCs by 30 June 2010; but among themselves by 30 June 2012. The LDCs will eliminate tariffs for non-LDCs by 2017; but among themselves by 30 June 2015.

In case of Trade in goods Negotiations on specific issues namely Rules of Origin, Sensitive Lists and Dispute Settlement mechanism are to be concluded by December 2005.

The negotiations on Trade in Services and Investment are to commence in December 2005 and to be concluded by the end of December 2007.

The trade liberalization programme in goods is set to commence from 01 July 2006. Agreements for Trade in services and Investment will begin to enter into effect from 01 January 2008.

Trade in goods allows Member States to maintain Sensitive Lists at an agreed number [Article-3]. The Trade in Services is based on "substantial sectoral coverage through a positive list approach". [Article-4]

The Investment regime includes promotion and protection of investments through a positive list approach. [Article-5]

Special & Differential Treatment (S&DT) for LDC States Parties in BIMSTEC FTA

The preambular paragraph 7 recognized that "the least developed countries in the region need to be accorded special and differential treatment commensurate with their development needs".

Article-1 sub-para (d) states that the objective of the Agreement wants inter alia be to "facilitate the more effective economic integration of the least developed countries in the region, and bridge the development gap among the Parties".

Article 2 (d) makes "provision for special and differential treatment and flexibility to the least developed countries in the region".

Article 3.2 (a) and (b) provides for advantages/relaxations of timeframe for tariff reduction by LDCs.

Article-3.2(c) provides that "The number of products in the Negative List shall be subject to a maximum ceiling to be mutually agreed among the Parties, with flexibility to the LDC Parties to seek derogation, in one from or the other, in respect of products of their export interest".

Article-6(3) provides that "The Parties agree to implement capacity building programmes and technical assistance, particularly for the least developed countries of the BIMST-EC, in order to adjust their economic structure and expand their trade and investment with other Parties".

Article-6(4) provides that "The Parties further agreed to provide technical support, to the extent possible, to the LDC Parties in their efforts to comply with the SPS and TBT requirements of the BIMSTEC countries. For this purpose, bilateral negotiations for fast tracking the process of MRAs, conformity assessment, accreditation procedures or any other necessary arrangements will be carried out in parallel with negotiations for FTA in goods".

Article-7(2) provides for special and differential treatment and flexibility for LDC Parties in implementation of the trade liberalization programme.

Reports

° SOM