Regional Economic Integration

SAFTA and BIMSTEC

Group Members
 Akshaya Agrawal
 Sujita Khadka
 Siddhant Shrestha
 Ojashri Basnyat
 Sajeev Ranjit
What is SAFTA?
 The South Asian Free Trade Area or SAFTA is a pact signed in 6
January 2004

 It would gradually eliminate most tariffs and other trade barriers on

products and services passing between Bangladesh, Bhutan, Nepal,
Pakisthan, Afghanisthan and Srilanka

 The pact would effectively create a free-trade bloc among the eight
countries of South Asia

 SAFTA’s main provisions called for the gradual reduction of

tariffs, customs duties, and other trade barriers between the seven
members, with some tariffs being removed immediately and others
over periods of several years.

 SAFTA ensured eventual duty-free access for a vast range of

manufactured goods and commodities traded between the signatories.
Objectives of SAFTA
 Promoting and enhancing mutual trade and economic
cooperation by eliminating barriers in trade
 Promoting conditions of fair competition in the free
trade area,
 Ensuring equitable benefits to all
 Establishing a framework for further regional
cooperation to expand the mutual benefits of the
agreement.
 creating effective mechanism for the implementation
and application of this Agreement, for its joint
administration and for the resolution of disputes;
Principles of SAFTA
. Governed by the Provisions of this Agreement
1

2. Existing Rights and Obligations

3. Overall Reciprocity

4. Free Movement of Goods

5. Adoption of Trade Facilitation and Other Measures

6. Recognization of the Needs of LDCs

Instruments

 Trade Liberalization Program

 Rules of Origin
 Institutional Arrangements
 Consultations and Dispute Settlement Procedures
 Safeguard Measures
 Any other instrument that may be agreed upon
Trade Liberalization Program
 Rules Of Origin

Non LDC 40% value addition criteria

LDC 30% value addition criteria

 Sensitive list
S. No. Name of the No of tariff lines for No of tariff lines for Consolidated list
Contracting States LDCS Non- LDCS (Total
(total number of number of sensitive list)
sensitive list)

1 Bangladesh 1249 1254 -------

2 Bhutan ----- ----- 137

3 India 744 865 ------

4 Maldives ----- ----- 671

5 Nepal ----- ----- 1335

6 Pakistan ----- ----- 1183

7 Sri Lanka ---- ------ 1065

Likely Effects of SAFTA : Positive Views

 SAFTA will bring significant gains for the small economies of the
region.

 It will attract foreign capital.

 It will be a step toward better political relations and peace.

 Part of the informal trade will be diverted to official channels and

bring revenue and other benefits.

 Elimination of tariffs will increase intra-regional trade by 1.6 times

the existing trade.

 Dynamic gains will be more significant than static gains.

Likely Effects of SAFTA : Negative Views

• SAFTA does not meet the standard economic criteria for successful
integration (other than high pre-FTA tariff and geographical
contiguity).

• Other requisite criteria are high levels of international trade before

the formation of the FTA, high degree of trade complementarity,
secure market access (no tariff, no NTBs).

• Long sensitive lists of members will lower the benefits of trade.

• SAFTA will benefit India the most. Some member countries may
even lose
Likely Effects of SAFTA : Negative Views Contd/1

 Because of similar production structures in member countries, the

expansion of intra-regional trade will be limited.

 SAFTA will lead to trade diversion.

 SAFTA will contribute to the “Spaghetti bowl” phenomenon, where

many applicable tariff rates and multiple sources of origin will
create confusion and difficulty among customs officials and
producers.
BIMSTEC
 BIMSTEC

 Bay of Bengal Initiative for MultiSectoral Technical

and Economic Cooperation (BIMSTEC)

 an international organisation involving a group of

countries in South Asia and South East Asia

 The member countries of this group are:

Bangladesh, India, Myanmar, Sri Lanka, Thailand,
Bhutan and Nepal.
 BIMSTEC has thirteen priority sectors cover all
areas of cooperation. Six priority sectors of
cooperation were identified at the 2nd Ministerial
Meeting in Dhaka on 19 November 1998. They
include the followings:
 Trade and Investment, led by Bangladesh
 Transport and Communication, led by India
 Energy, led by Myanmar
 Tourism, led by India
 Technology, led by Sri Lanka
 Fisheries, led by Thailand
 Agriculture, led by Myanmar
 Public Health, led by Thailand
 Poverty Alleviation, led by Nepal
 Counter-Terrorism and Transnational Crime, led by
India
 Environment and Natural Disaster Management, led
by India
 Culture, led by Bhutan
 People to People contact, led by Thailand
 The aims and purposes of BIMSTEC

 To create an enabling environment for rapid economic

development;

 Accelerate social progress in the sub-region, promote active

collaboration and mutual assistance on matters of common
interest;

 Provide assistance to each other in the form of training and

research facilities;
 Cooperate more effectively in joint efforts that are
supportive of, and complementary to national
development plans of member states;

 Maintain close and beneficial cooperation with

existing international and regional organizations;

 Cooperate in projects that can be dealt with most

productively on a sub-regional basis and which
make best use of available synergies
  Cooperation with ADB
 ADB has become BIMSTEC's development partner since
2005, to undertake a study which is designed to help
promote and improve transport infrastructure and logistic
among the BIMSTEC countries

 So far, ADB has already finished the project so called

BIMSTEC Transport Infrastructure and Logistic Study
(BTILS)

 The final report of the said study from ADB has already
been conveyed to all members and being awaited for the
feedback
 Membership Criteria

 Eligibility: Countries seeking membership should satisfy

the conditions of territorial contiguity to, or direct opening
into, or primary dependence on the Bay of Bengal for trade
and transportation purposes
 Procedure: All applications should be submitted in writing
to the Chairman of BIMSTEC. The decision on admitting
new members will be taken on the basis of consensus by all
the BIMSTEC members
 Institutional Structure and Arrangements
 The BIMST-EC Declaration provides for the following
institutional mechanisms:
Annual Ministerial Meetings, which shall be hosted by the
Member States on the basis of alphabetical rotation;
Senior Officials Committee, which shall meet on a regular
basis as and when required;
A Working Group, under the chairmanship of Thailand and
having as its members the accredited Ambassadors to
Thailand, or their representatives, of the other Member
States, to carry on the work in between Annual Ministerial
Meetings;

And Specialized task forces and other mechanisms as may

be deemed necessary by the senior Officials to be
coordinated by Member States as appropriate
 Economic significance
 The BIMSTEC agreement aimed to create a free trade zone where tariffs would
be brought down to zero by 2012

 BIMSTEC would facilitate improvement in the trade at institutional and people

level, most of the member countries are suffering from the menace of
corruption, so the trade links at institutional and private level be positively
resulted in enhanced trade links

 The members of BIMSTEC realize well that to benefit mutually in emerging

globalization, they are to support and cooperate with each other whole
heartedly

 it is important that all the countries should strive not only for the economic
Cooperation, but also for the cultural and social links so that more closure and
beneficial ties could take place
 Political Significance
 With an aim of economic cooperation, exploiting the potentials available in the
member nations, it provides a useful platform from political point of view

 For the nations of South Asia, it provides an alternative framework for bilateral
and multilateral cooperation other than SAARC

 The political benefits based on the economic cooperation have far-reaching

impact and may result into closure ties

 The success of BIMSTEC depends mainly on the sincere and honest cooperation of
the member nations, keeping aside the political differences if there exist any
Article 2 :measures for comprehensive FTA
Article 3: trade in goods
Article 4:Trade in services
Article 5: Investment
Article 6: Areas of economic cooperation
 SAFTA and BIMSTEC Comparision
 BIMSTEC-FTA is a wide scope agreement covering trade in service,
investment and tourism which are not included by SAFTA

 BIMSTEC aimed to serve as a bridge between the five SAARC

countries and two ASEAN countries whereas SAFTA provisions
called for the gradual reduction of tariffs, customs duties, and other
trade barriers between the eight members of South Asia

 In BIMSTEC 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 whereas in SAFTA no such
tracks are divided for tariff reduction
THANK YOU!!!