BIMSTEC - Overview of Trade and Investment Scenario Seventh Meeting of BIMSTEC Business Forum New Delhi, 21st July 2016 Dr. Rajan Sudesh Ratna ratna@un.org

Presentation outline BIMSTEC - brief Overall trade and investment scenario FTA in goods – trade patterns Asia and the Pacific RTAs SDGs

General overview of BIMSTEC

Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) BIST-EC (Bangladesh, India, Sri Lanka and Thailand Economic Cooperation) – formed on 6 June 1997. BIMST-EC (Bangladesh, India, Myanmar, Sri Lanka and Thailand Economic Cooperation) after Myanmar became member on 22 December 1997. 'Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation' (BIMSTEC) after Nepal and Bhutan became members at the 6th Ministerial Meeting (February 2004, Thailand). A fastest growing RTA in region at one point of time, became the slowest. Bridging link between South Asia and Southeast Asia. Several areas of economic cooperation, including Business Forum and Economic Forum.

BIMSTEC FTA The BIMSTEC Trade Negotiating Committee (TNC) has held 19 sessions of negotiations. The negotiations are spread over the areas of (i) tariff concessions on trade in goods, (ii) customs cooperation, (iii) services and (iv) investments. The 3rd BIMSTEC summit was held from 1 – 4 March, 2014 in Nay Pyi Taw, Myanmar. In the Summit Declaration, the Leaders directed the BIMSTEC Trade Negotiating Committee (TNC) to expedite its work for the conclusion of the Agreement on Trade in Goods by the end of 2014, and to continue its efforts for early finalisation of the Agreement on Services and Investments.    

Intra-BIMSTEC Trade as % of BIMSTEC-World Source: World Integrated Trade Solutions

Share of tariff lines with zero duty on total non-agricultural merchandise imports, 2014 Source: World Tariff Profiles, World Trade Organization, 2014 Note: No data on Bhutan

Share of trade with PTA partners (Percentage, average for 2011-2013) Source: ESCAP calculation based on United Nations Comtrade data

Ad-valorem equivalent trade costs in % Source: ESCAP-World Bank Trade Cost Database Note: No data on Myanmar

Ad-valorem equivalent trade costs in % Source: ESCAP-World Bank Trade Cost Database Note: No data on Myanmar

Composition of GDP (2014) Source: World Development Indicators Note: No data on Myanmar’s GDP

Bilateral investment statistics: Share of FDI inflow originating from BIMSTEC Country 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Thailand 0.00 0.03 0.02 0.04 0.01 0.36 1.02 0.21 0.39 0.34 India 0.05 0.08 0.06 Bhutan 0.97 148.56 13.90 73.70 38.66 29.86 Nepal* 100.00 692.40 192.41 139.19 Sri Lanka* 97.30 62.65 112.14 Myanmar 24.13 18.33 99.99 88.71 1.52 4.63 10.73 1.57 0.90 Bangladesh 0.59 1.28 1.67 2.22 0.80 1.10 0.78 1.70 2.29 5.79 5.70 7.30

Bilateral investment statistics: Share of FDI inflow originating from BIMSTEC

BIMSTEC Noodle Bowl SAFTA ASEAN RCEP APTA ASEAN-India CECA Nepal Myanmar ASEAN India Thailand Sri Lanka Bhutan RCEP APTA Bangladesh

Overall scenario of Asia-Pacific

RTAs in Asia-Pacific

Asia-Pacific: Trades in goods and services

Intra- and extra-regional deals Most RTAs are among developing countries in the region However, new S-S deals are growing at a diminishing rate 9 agreements per year (2005-2009)  6.5 trade agreements per year (2010-2014) AP economies are increasingly pursuing deals with extra-regional partners

Preferences for bilateral agreements? The preference among the Asia-Pacific economies has been to sign bilateral deals: 124 out of existing 156 agreements are bilateral 57 out of 124 are with economies outside of Asia- Pacific Even within plurilateral agreements, countries still continue to sign bilateral agreements. (e.g. India with members in the South Asian FTA) Among the agreements currently being negotiated by AP countries, the majority are bilateral (32)

What about plurilateral deals? 23 plurilateral trade agreements with an average of 9.7 members per agreement: In most cases these deals coincide with the sub- regional blocs, which tend to have broader goals than just trade expansion (ASEAN, PACER+, and SAARC) 5 of them comprise basically the same economies but reflect the different stages of their attempt to establish regional blocs Some are inactive or defunct because the lack of effort to annul bilateral agreements between the member states

Sub-regions: trade intensity Number of RTAs and trade intensity among partners not strongly linked: All five sub-regions but ENEA have put in place minimum 1 trade agreement as means of regional integration The levels of intra-bloc trade are low and not growing noticeably in terms of relative size

Types of RTAs: depth of liberalization Based on WTO taxonomy, the order of the agreements from the lowest liberalization/ complexity level: Partial scope agreements Free trade agreements (for goods) and economic integration agreements (for services) Customs unions

RTAs: “next generation” elements Many RTAs have elements of “next generation” or WTO-beyond agreements: The number is still low Usually mega-blocs like TTP, RCEP, and EAEU, but increasingly bilateral agreements as well Positive side: help sort out the “noodle bowl” problems Negative side: potentially undermine existing WTO rules?

Sustainable Development Goals and Trade

Things to look out for Highly unbalanced performance and outcomes: Benefits sharing within and between economies are not equitable  Is trade making the rich even richer, and not benefiting the poor? (see APTIR 2013 for detailed explanation) Country’s exports as a share in global exports do not grow fast enough to prevent marginalization Trade costs are not declining (fast enough) for poorer countries 26

Trade as means of implementation? In addition to a stand-alone goal (17) on the means of implementation for the new agenda, specific means are tailored to each of the sustainable development goals. Emphasis through the Addis Ababa Action Agenda on financing for development. 12 out of the 17 Sustainable Development Goals contain targets that either explicitly mention trade and investment or are closely linked to it. In terms of the number of targets within the SDGs, 35 out of 169 targets either explicitly mention trade and investment or are closely linked to it.

Directly and indirectly trade-related SDGs

Way ahead BIMSTEC now is way behind other RTAs in the region. Services and Investment integration agenda must be pursued. Private sector must play a pro-active role especially in the sector of services and investments. So far the region has been neglected by the private sector. India and Thailand are engaged in RTAs with many countries but other BIMSTEC members are not. Preference erosion could be an issue.29 A true regional integration and seamless connectivity will bring ‘triple win’ to all stakeholders.

Thank you Any questions? ratna@un.org Keep up to date and visit our webpage: www.unescap.org/our-work/trade-investment artnet.unescap.org ratna@un.org