‘BIMSTEC carries more potential than SAFTA’

Financial Express, Bangladesh, January 24, 2015
By Asjadul Kibria

Greater cooperation in trade, connectivity

An international research organisation, based in Jaipur, India, has found the BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral and Technical and Economic Cooperation) to be more potential umbrella for trade negotiations than the SAFTA (South Asia Free Trade Area).

Disappointed about the progress made in SAARC (South Asian Association of Regional Cooperation) on regional connectivity, the research organisation, CUTS International, has advised the Indian government to rely more on the BIMSTEC.

CUTS also pointed out that ‘a deeper economic integration process within SAARC is being affected because of political tensions between India and Pakistan. Such things are less likely to happen in case of BIMSTEC.’

In a briefing note on Trade Potentiality in BIMSTEC, researchers at the CUTS also argued that negotiations under the BIMSTEC umbrella would be easier than under SAFTA because all the BIMSTEC members are primarily guided by their economic rather than by political interests.’

Explaining the issue, Bipul Chatterjee, deputy executive director of CUTS, in an email to The Financial Express, said they are advocating India as well as Bangladesh to concentrate more on the BIMSTEC because things are not moving at an expected pace with the SAARC.

‘Politically it will be easier to foster cooperation among the BIMSTEC group of countries,’ added Bipul.

Bipul also indicated that given the current state of India-Pakistan relations, it is unlikely that Pakistan would agree to even a minimal set of economic cooperation arrangements within the SAARC framework.

In this connection Bipul referred to last SAARC Summit in Kathmandu where Pakistan refused to sign the multi-modal road and rail transport agreement.

BIMSTEC was formed in 1997 comprising of Bangladesh, India, Myanmar, Sri Lanka and Thailand as an economic cooperation bloc to bridge South and East Asia. Nepal and Bhutan joined later. On the other hand, SAARC starts formal journey in 1985 having seven South Asian countries. These are: Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka. Afghanistan joined the regional bloc in 2007.

Interestingly, six SAARC members are also member of BIMSTEC.

The intra-regional trade among BIMSTEC is around 7.0 per cent of the members’ global trade while the same in the case of SAFTA is around 5.0 per cent even 10 after the signing of the deal.

Although volume of both SAARC and BIMSTEC intra-regional trade has increased by three times between 2005 and 2013, BIMSTEC intra-regional trade is significantly higher than that of SAARC.

In 2013, SAARC intra-regional trade stood at around $ 45 billion while the figure for BIMSTEC was around 77 billion.

Mostofa Abid Khan, acting chief executive of Bangladesh Foreign Trade Institute (BFTI), agreed with CUTS proposition that political tension is far less among the BIMSTEC members.

‘So, BIMSTEC has better potential on trade and economic integration,’ Abid added.

Abid, however, said that Bangladesh is not the driver of regional blocs and progress of BIMSTEC depends on large members like India and Thailand.

‘Thailand has defiantly interested as it wants free access to Indian market,’ the trade expert said. ‘But India has already signed free trade agreement with ASEAN. So, it is difficult to say anything about the Indian interest on BIMSTEC now.’

The BIMSTEC region has the potential to transform into a global manufacturing hub as tariff barriers have fallen and countries have opened up more, noted CUTS research.

It argued that production process happens through coordination across national borders with successful industries are the ones which are part of global supply chain network.

CUTS put an example of textile and clothing industry’s supply chains involving from raw cotton to readymade garments (RMG). It said that India could supply cotton bales, Thailand could use these to produce fabrics, Sri Lanka has competitive advantage in textile designs, and Bangladesh could be more competitive in manufacturing readymade garments using those fabrics and designs.
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