Regional Economic

Integration and
Bangladesh
Lecture 7: Bangladesh in International Business
Regional Cooperation
South Asian Association for Regional Cooperation (SAARC)
The government pursued the expansion of cooperation among the nations of South Asia through
the South Asian Association for Regional Cooperation (SAARC) at a summit gathering of South
Asian leaders in Dhaka in December 1985. Bangladesh has served in the chairmanship of SAARC
and has participated in a wide range of ongoing SAARC regional activities

Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC)
An international organization which includes South Asian and Southeast Asian nations. The
member nations of this group are: Bangladesh, India, Myanmar, Sri Lanka, Thailand, Bhutan and
Nepal. The organization focuses on regional economy, regional development and trade and
investment.

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Regional Cooperation
Developing 8 Countries
Bangladesh along with the seven other nations are all original members and no plans for
expansions have been made. The Developing 8 is an economic development alliance
consisting of Muslim majority states which focuses in multiple areas which are rural
development, science and technology, banking, agriculture, humanitarian development,
energy, environment, health and finance. On May 14, 2006 in Bali, Indonesia,
Bangladesh was the only nation not to sign a preferential trade agreement.

Asia Pacific Trade Agreement (APTA)

In 2005, Bangladesh signed the APTA agreement which would enable it to reduce trade
gaps between itself and other nations such as China, South Korea and its neighbour
India. Another aspect of the agreement is to be given duty-free access to its products.

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The South Asian Association for Regional
Cooperation (SAARC)
The idea of regional political and economical cooperation in South Asia was first
raised in 2 May 1980 by Bangladesh President Ziaur Rahman and the first summit
was held in Dhaka on 8 December 1985, when the organisation was established by
the governments of Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri
Lanka. Since then the organisation has expanded by accepting one new full member,
Afghanistan, and several observer members. States with observer status include
Australia, China, the European Union, Iran, Japan, Mauritius, Myanmar, South Korea
and the United States.
The SAARC policies aim to promote welfare economics, collective self-reliance
among the countries of South Asia, and to accelerate socio-cultural development in
the region. The SAARC has developed external relations by establishing permanent
diplomatic relations with the EU, the UN (as an observer), and other multilateral
entities. The official meetings of the leaders of each nation are held annually whilst
the foreign ministers meet twice annually.

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The South Asian Association for Regional
Cooperation (SAARC)
The South Asian Association for Regional Cooperation (SAARC) is an economic
and geopolitical organisation of eight countries that are primarily located in South
Asia or the Indian subcontinent.
The SAARC Secretariat is based in Kathmandu, Nepal. The combined economy
of SAARC is the 3rd largest in the world in the terms of GDP(PPP) after the
United States and China and 5th largest in the terms of nominal GDP. SAARC
nations comprise 3% of the world's area and contain 21% (around 1.7 billion) of
the world's total population and around 9.12% of Global economy as of 2015.

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OBJECTIVES
1. to promote the welfare of the peoples of SOUTH ASIA and to improve their quality of life;
2. to accelerate economic growth, social progress and cultural development in the region
and to provide all individuals the opportunity to live in dignity and to realise their full
potentials;
3. to promote and strengthen collective self-reliance among the countries of SOUTH ASIA;
4. to contribute to mutual trust, understanding and appreciation of one another's problems;
5. to promote active collaboration and mutual assistance in the economic, social, cultural,
technical and scientific fields;
6. to strengthen cooperation with other developing countries;
7. to strengthen cooperation among themselves in international forums on matters of
common interests; and
8. to cooperate with international and regional organisations with similar aims and
purposes.

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PRINCIPLES
Cooperation within the framework of the ASSOCIATION shall be based on
respect for the principles of sovereign equality, territorial integrity, political
independence, non interference in the internal affairs of other States and mutual
benefit.
Such cooperation shall not be a substitute for bilateral and multilateral
cooperation but shall complement them.
Such cooperation shall not be inconsistent with bilateral and multilateral
obligations

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Agreements
1. SAARC Framework Agreement for Energy Cooperation (Electricity)
2. Agreement for establishment of SAARC Arbitration Council
3. Final Agreement on Avoidance of Double Taxation
4. Final Agreement on Customs Matters
5. CHARTER OF SDF 31 July 2008
6. Agreement on establishing the SAARC food bank
7. Agreement on south Asian Free Trade Area (SAFTA)
8. Agreement on the Establishment of South Asian Regional Standards
Organisation (SARSO)
9. Agreement on Avoidance of Double Taxation

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AGREEMENT ON SOUTH ASIAN FREE TRADE
AREA (SAFTA)
The Governments of the SAARC (South Asian Association for Regional
Cooperation) Member States comprising the People's Republic of Bangladesh,
the Kingdom of Bhutan, the Republic of India, the Republic of Maldives, the
Kingdom of Nepal, the Islamic Republic of Pakistan and the Democratic Socialist
Republic of Sri Lanka hereinafter referred to as "Contracting States"
Motivated by the commitment to strengthen intra-SAARC economic cooperation
to maximise the realization of the region's potential for trade and development for
the benefit of their people, in a spirit of mutual accommodation, with full respect
for the principles of sovereign equality, independence and territorial integrity of all
States;
Noting that the Agreement on SAARC Preferential Trading Arrangement (SAPTA)
signed in Dhaka on the 11th of April 1993 provides for the adoption of various
instruments of trade liberalization on a preferential basis;

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Objectives
The Objectives of this Agreement are to promote and enhance mutual trade and
economic cooperation among Contracting States by, inter-alia:
1. eliminating barriers to trade in, and facilitating the cross-border movement of goods
between the territories of the Contracting States;
2. promoting conditions of fair competition in the free trade area, and ensuring equitable
benefits to all Contracting States, taking into account their respective levels and
pattern of economic development;
3. creating effective mechanism for the implementation and application of this
Agreement, for its joint administration and for the resolution of disputes;
4. establishing a framework for further regional cooperation to expand and enhance the
mutual benefits of this Agreement.

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Principles
SAFTA shall be governed in accordance with the following principles:
1. SAFTA will be governed by the provisions of this Agreement and also by the rules,
regulations, decisions, understandings and protocols to be agreed upon within its
framework by the Contracting States;
2. The Contracting States affirm their existing rights and obligations with respect to each
other under Marrakesh Agreement Establishing the World Trade Organization and
other Treaties/Agreements to which such Contracting States are signatories;
3. SAFTA shall be based and applied on the principles of overall reciprocity and
mutuality of advantages in such a way as to benefit equitably all Contracting States,
taking into account their respective levels of economic and industrial development, the
pattern of their external trade and tariff policies and systems;

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Principles
4. SAFTA shall involve the free movement of goods, between countries through, inter
alia, the elimination of tariffs, para tariffs and non-tariff restrictions on the movement of
goods, and any other equivalent measures;
5. SAFTA shall entail adoption of trade facilitation and other measures, and the
progressive harmonization of legislations by the Contracting States in the relevant
areas; and
6. The special needs of the Least Developed Contracting States shall be clearly
recognized by adopting concrete preferential measures in their favour on a non-
reciprocal basis.

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Problems Regional Integration
SAPTA failed to yield the desired benefits to the members, particularly the LDCs,
due to the following reasons:
1. The tariff cuts were not deep enough.
2. The actively traded goods were not given the tariff preferences.
3. Modalities of removal of non-tariff and para-tariff barriers were not well
articulated in the agreements.
4. The rules of origin criteria acted as an impediment.

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Bay of Bengal Initiative for Multi-Sectoral Technical and Economic
Cooperation (BIMSTEC)

The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation
(BIMSTEC) is a regional organization comprising seven Member States lying in the
littoral and adjacent areas of the Bay of Bengal constituting a contiguous regional unity.
This sub-regional organization came into being on 6 June 1997 through the Bangkok
Declaration.
It constitutes seven Member States: five deriving from South Asia, including Bangladesh,
Bhutan, India, Nepal, Sri Lanka, and two from Southeast Asia, including Myanmar and
Thailand.
The regional group constitutes a bridge between South and South East Asia and represents
a reinforcement of relations among these countries. BIMSTEC has also established a
platform for intra-regional cooperation between SAARC and ASEAN members.

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Objectives of BIMSTEC
1. To create an enabling environment for rapid economic development
through identification and implementation of specific cooperation projects
in the sectors of trade, investment and industry, technology, human recourse
development, tourism, agriculture, energy, and infrastructure and
transportation.
2.To accelerate the economic growth and social progress in the sub-region
through joint endeavours in a spirit of equality and partnership.
3.To promote active collaboration and mutual assistance on matters of
common interest in the economic, social, technical and scientific fields.
4.To provide assistance to each other in the form of training and research
facilities in the educational, professional and technical spheres.

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Objectives of BIMSTEC
5. To cooperate more effectively in joint efforts that are supportive of and complementary
to national development plans of Member States which result in tangible benefits to the
people in raising their living standards, including generating employment and
improving transportation and communication infrastructure.
6. To maintain close and beneficial cooperation with existing international and regional
organizations with similar aims and purposes.
7. To cooperate in projects that can be dealt with most productively on a sub-regional
basis and make best use of available synergies among BIMSTEC member countries.

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BIMSTEC's Principles
The founding principles of BIMSTEC are as follows:
Cooperation within BIMSTEC will be based on respect for the principle of sovereign
equality, territorial integrity, political independence, no-interference in internal affairs,
peaceful co- existence and mutual benefit.
Cooperation within BIMSTEC will constitute an addition to and not be a substitute for
bilateral, regional or multilateral cooperation involving the Member States.

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Asia-Pacific Trade Agreement
The Asia-Pacific Trade Agreement (APTA), previously named the Bangkok Agreement,
was signed in 1975 as an initiative of ESCAP. Being the oldest preferential trade
agreement among developing countries in Asia-Pacific, APTA aims to promote economic
development through the adoption of mutually beneficial trade liberalization measures
that will contribute to intra-regional trade expansion and provides for economic
integration through coverage of merchandise goods, services, investment and trade
facilitation
Open to all developing member countries, APTA is a truly region-wide trade agreement
spanning East and South Asia, with potential to expand to other sub-regions, including
Central Asia and the Pacific. APTA is the first plurilateral agreement among the
developing countries in the region to adopt common operational procedures for
certification and verification of the origin of goods and it has the longest effective
implementation period amongst the trade agreements in the entire Asia-Pacific. Notably,
APTA is the only operational trade agreement linking China and India, two of the fastest
growing markets in the world, and other major markets such as the Republic of Korea.

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APTA Features
Aiming at comprehensively deepening trade cooperation and integration, the Fourth Round of
negotiations extended into areas beyond the traditional tariff concessions, including non-tariff measures,
trade facilitation, trade in services and investment for the first time in the history of the Agreement.

Open to all ESCAP developing member countries, APTA is a truly region-wide trade agreement spanning
East and South Asia, with potential to expand to other sub-regions, including Central Asia and the Pacific.

The only operational trade agreement linking China and India, two of the fastest growing markets in the
world with a 2.6 billion consumer base, as well as other major markets, such as the Republic of Korea.

Simple, common Rules of Origin (RoO) with minimum local value content requirement of 45% f.o.b.
(35% for LDCs).

Special and differential treatment for countries with special needs, including LDCs. Rapidly expanding
trade between the Participating

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APTA

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APTA Agreements

The Participating States also signed and ratified the following

Framework Agreements:
1. Framework Agreement on Trade Facilitation (15 December
2009)
2. Framework Agreement on the Promotion, Protection and
Liberalization of Investment (15 December 2009)
3. Framework Agreement on the Promotion and Liberalization
of Trade in Services (24 August 2011)

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Trade Facilitation
The Governments of the Peoples Republic of Bangladesh, the Peoples Republic of
China, the Republic of India, the Lao Peoples Democratic Republic, the Republic of
Korea and the Democratic Socialist Republic of Sri Lanka.
Participating States of the Asia-Pacific Trade Agreement (APTA) affirming the
importance of sustaining economic growth and development in all Participating States
through joint efforts in liberalizing trade and promoting intra-APTA trade and investment
flows; recognizing the growing importance of cooperation with regard to trade facilitation
for Participating States and the negotiations on trade facilitation of the WTOS Doha
Development Agenda;

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Agreement on the Promotion, Protection and
Liberalization of Investment
Participating States of the Asia-Pacific Trade Agreement (APTA); affirming the
importance of sustaining economic growth and development in all Participating States
through joint efforts in liberalizing trade and promoting intra-APTA trade and investment
flows; recognizing that investment is an important source of knowledge and finance for
sustaining the pace of economic, industrial, infrastructure and technology development;
further recognizing the need to take action to attract higher and sustainable levels of
investment in Participating States.

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Agreement on the Promotion and Liberalization
of Trade in Services
Participating States of the Asia-Pacific Trade Agreement (APTA); recognizing the
growing importance of trade in services for Participating States; affirming the importance
of sustaining economic growth and development in all Participating States through joint
efforts in liberalizing trade in services and promoting intra-APTA trade and investment
flows; recognizing that economic cooperation among Participating States will secure a
liberal trading framework for trade in services which would strengthen and enhance trade
in services among them

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South Asia Sub-regional Economic Cooperation
(SASEC)
The South Asia Sub-regional Economic Cooperation (SASEC) Program brings together
Bangladesh, Bhutan, India, the Maldives, Nepal, and Sri Lanka in a project-based
partnership that aims to promote regional prosperity, improve economic opportunities, and
build a better quality of life for the people of the sub-region.
SASEC countries share a common vision of boosting intraregional trade and cooperation
in South Asia, while also connecting to Southeast Asia through Myanmar, to the Peoples
Republic of China and the global market.

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South Asia Sub-regional Economic Cooperation
(SASEC)
SASEC seeks to strengthen multimodal cross-border transport networks that boost
intraregional trade and open up trade opportunities with East and Southeast Asia. The
program helps build modern and effective customs administrations that speed up the time
and reduce the costs of moving goods, vehicles, and people across borders. Better
connectivity will help unleash the tremendous potential for mutually beneficial trade
between the six SASEC countries, which remain some of the least economically
integrated in the world.
SASEC also assists member countries in improving energy security by developing
infrastructure and promoting intraregional power trade to reduce costs and import
dependence.

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South Asia Sub-regional Economic Cooperation
(SASEC)
SASEC members gather regularly to discuss and address shared interests, creating support
and ownership for the program at the policy level as well as practical collaboration at the
technical working level. Over a decade of successful cooperation has built confidence and
mutual trust through various discussion platforms that decide on coordinated actions for
the benefit of all. ADB serves as the SASEC Secretariat.
Since 2001, SASEC countries have implemented 33 regional projects worth more than $6
billion in the energy, transport, trade facilitation, and information and communications
technology sectors.

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Potential of Regional Integration
There are strong arguments for deeper regional economic integration in South Asia. It is
believed to have potential for generating significant intra-regional trade and welfare gains
for the countries involved. Deeper regional integration is supposed to provide countries in
the region improved market access in each other's markets, and thus help boost their
exports. These will facilitate intra-regional trade and associated investment flows which
will generate more trading opportunities among the countries involved since there will be
tariff differentials due to the most favoured nation (MFN) vis--vis regional tariff
regimes. These are static gains that the countries involved would be able to realise.
Dynamic gains could be even greater due to the possible expansion of the scale of
operation owing to easy access to the large regional market buoyed by increased
investment and more efficient allocation of regional resources.

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Potential
There are now convincing evidences that deeper regional integration is needed for
generating and sustaining economic growth in the South Asian countries, i.e. regional
integration will be a critical factor in the future growth processes of these countries.
Ensuring food security is a challenging issue, and intra-regional trade in agricultural and
food products will be immensely critical. Deeper regional integration through trade and
transport facilitation will increase competitiveness of these countries to better participate
in the global trade. Promotion of regional supply chain will be critical in developing
dynamic comparative advantages of these countries. Finally, the peace dividends, through
intra-country stable political relations, will be immensely high.

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Steps for Enhanced Regional Integration
Transport
Port
Energy
Telecommunication
Investment
Capital Markets
Tourism
Human resource Development

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Steps for Enhanced Regional Integration
Political environment Tariff facilities
Complementarities Testing
Trade reforms and facilitations Rail link
Standardization Infrastructure at L/C stations
Custom co-operations Simplification pre-shipment
Reduction of unofficial trade Movement of vehicles among
countries
Reduction of monopolization Visa
of trade through state
ownership

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Impact of Integration

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Benefits and Opportunities of Integration
Regional integration expands markets and input sources, better allocating
resources across the region and accelerating economic growth.
Regional integration appears to reduce income inequality between countries.
Risk sharing is another possible benefit of integration; unfortunately, there is little
empirical evidence that it happens.

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Costs and Risks of Integration
The cascading effect of the ongoing eurozone crisis is a vivid reminder of the
contagion risk of highly integrated systems.
Trade diversion is another potential risk from regional integration that can damage
peoples welfare.
Integration tends to increase inequality within countries.
When integration leads to lower inequality, government intervention and the
welfare system play a major role.

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TPP and Textile
TPPs Textiles and Apparel chapter will create export opportunities for Made-in-America
clothes, fabrics, and yarns and support jobs in the United States. This objective is
advanced by a yarn-forward approach that requires use of yarns and fabrics from TPP
countries in end products qualifying for preferential treatment under TPPwith some
flexibility so that American businesses and workers whose products depend on inputs not
available within the TPP region can still benefit. The yarn-forward approach also will help
to develop a regionally-integrated supply chain that will promote long-term growth and
investment in this sector in the United States. The Textiles and Apparel chapter also
secures close customs cooperation among TPP Parties to facilitate effective enforcement
of the rules; and ensures that U.S. companies have access to temporary relief if an import
surge causes, or threatens to cause, serious damage to their business.

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TPP Impact of RMG
U.S. textile and apparel industry, having weathered the forces of globalization and the
financial crisis of 2008, has emerged as strong and innovative, with an orientation toward
exports. The industry is a major U.S. manufacturing employer, with employment in the
U.S. totaling more than 370,000 jobs on average in 2014, and the value of industry
shipments rising from $48.7 billion in 2009 to $56.7 billion in 2014. U.S. textile and
apparel manufacturers sold nearly $11 billion worth of products to TPP countries in 2014,
an increase of around 50 percent from 2009, helping to make the U.S. the worlds fourth-
largest exporter of textile products.
TPP will help increase sales of Made-in-America yarns, fabrics, and clothing to some of
the fastest-growing markets in the world. The TPP region is home to hundreds of millions
of consumersfrom the emerging middle class in Southeast Asia to the high-end
consumers of Japan. And textile and apparel industries in the TPP region require many of
the high-technology textile products in which U.S. producers are most competitive,
including those using composite materials and carbon fibers.

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