- On February 8, 2004, in Phuket, Thailand, the ministers of economics and trade of the member countries of the Bay of Bengal Initiative for Multi - Sectoral Technical and Economic Cooperation (BIMSTEC) jointly signed a Framework Agreement to establish a free trade area by 2012, leading to liberalization of trade in goods, services, and investment, as well as to undertake economic cooperation. The BIMSTEC group currently comprises 7 countries : Bangladesh, Bhutan, India, Nepal, Myanmar, Sri Lanka, and Thailand.
- A BIMSTEC Trade Negotiating Committee was formed, with Thailand serving as Chair during the year 2004-2005, to negotiate agreements for trade in goods, services, and investment under the BIMSTEC Free Trade Agreement.
Significant Aspects of the Framework Agreement
Trade in Goods:
- Trade negotiations substantially cover all trade in goods, in the form of reduction and elimination of tariffs, with more flexibility granted to the LDCs. Tariff reduction/elimination will be divided into 2 tracks : Fast Track and Normal Track. Other than that, some of the products will be listed in the Negative List, to which no tariff reduction will be granted at this point. The number of products under the Negative List will be subject to a maximum ceiling to be mutually agreed among member countries. LDCs will be accorded flexibility to seek derogation in one form or another, taking into account products of export interest of respective countries.
Trade in Services
- With a view to expediting the expansion of trade in services, the Parties agreed to discuss progressive liberalization of trade in services with substantial sectoral coverage based on a positive list approach.
- To promote investment and to create a facilitative, transparent, and competitive investment environment, the Parties agreed to provide for promotion and protection of investments, strengthen cooperation in investment and enter into negotiation to progressively liberalize the investment regime through a positive list approach.
Other Sectors of Cooperation
- Negotiations have involved discussions to bring about further progress in various sectors of economic cooperation within the BIMSTEC framework, such as technology, transports and communications, energy, tourism, and fisheries, as well as facilitation of trade through establishment of Mutual Recognition Agreements and cooperation in customs matters.
- The BIMSTEC Trade Negotiating Committee (BIMSTEC TNC) and the working groups on related matters held several meetings during September 2004 and March 2008.
- 1. Tariff Liberalization
- - Members are currently deliberating on the number of items to be placed in the Negative List under the BIMSTEC FTA.
- For goods under Fast Track, member countries have exchanged their lists of items to be liberalized under the Fast Track schedule, comprising 10% of tariff lines using the 6 digit HS level.
- - For goods under Normal Track, tariff reduction/elimination under Normal Track will be divided into 2 categories : Normal Track Elimination (NTE) and Normal Track Reducion (NTR). Member countries are now negotiating the number of products to be included in these groups.
- 2. Rules of Origin
- Members are currently deliberating on the general rules as well as Product Specific Rule (PSR) to determine criteria for country of origins of goods to be applied under FTA.
- 3. Trade in Services and Investment
- Negotiations for agreements on trade in services and on investment are currently in progress.
It is anticipated that negotiations can be concluded expeditiously if members can agree on the number of goods to be placed under the Negative List, Normal Track, and Rules of Origins of Products under the BIMSTEC FTA.
- Framework Agreement
Protocol to the framework agreement on BIMSTEC FTA
- Related Links