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

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

3. General overview of BIMSTEC

4. 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.

5. 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.    

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

7. 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

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

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

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

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

13. 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

14. Bilateral investment statistics: Share of FDI inflow originating from BIMSTEC

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

16. Overall scenario of Asia-Pacific

17. RTAs in Asia-Pacific

18. Asia-Pacific: Trades in goods and services

19. 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 ( )  6.5 trade agreements per year ( )
AP economies are increasingly pursuing deals with extra-regional partners

20. 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)

21. 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

22. 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

23. 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

24. 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?

25. Sustainable Development Goals and Trade

26. 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 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

27. 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.

28. Directly and indirectly trade-related SDGs

29. 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.

30. Thank you Any questions? ratna@un.org
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