REGIONAL

ECONOMIC
INTEGRATION
BANGLADESH IN
I N T E R N AT I O N A L B U S I N E SS

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 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.
SAARC also home to world's 3rd & 7th largest Economy of world in GPP(PPP)
& GDP(Nominal) terms respectively as well as World's fastest growing major
Economy, that is India. India makes up over 70% of the area and population
among these eight nations.

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THE SOUTH ASIAN ASSOCIATION FOR

REGIONAL COOPERATION (SAARC)
During 2005-10, the average GDP growth rate of SAARC
stood at an impressive 8.8% p.a., but it slowed to 6.5%
in 2011 largely because of economic slowdown in India,
which accounts for nearly 80% of SAARC's economy. But
driven by a strong expansion in India, coupled with
favourable oil prices, from the last quarter of 2014
South Asia once again become the fastest-growing
region in the world.
As of 2015 foreign exchange reserves of SAARC nations
stands at USD 411 billion.
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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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OBJECTIVES
1.
2.
3.
4.
5.
6.
7.
8.

to promote the welfare of the peoples of SOUTH ASIA and to

improve their quality of life;
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;
to promote and strengthen collective self-reliance among the
countries of SOUTH ASIA;
to contribute to mutual trust, understanding and appreciation of one
another's problems;
to promote active collaboration and mutual assistance in the
economic, social, cultural, technical and scientific fields;
to strengthen cooperation with other developing countries;
to strengthen cooperation among themselves in international
forums on matters of common interests; and
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:
a) eliminating barriers to trade in, and facilitating the cross-border
movement of goods between the territories of the Contracting States;
b) 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;
c) creating effective mechanism for the implementation and application
of this Agreement, for its joint administration and for the resolution of
disputes;
d) 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:
a) 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;
b) 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;
c) 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
d) 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;
e) 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
f) 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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ORGANIZATION
STRUCTURE

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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 subregions, 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 SUBREGIONAL

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 projectbased 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 SUBREGIONAL

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 SUBREGIONAL

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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SOUTH ASIA ECONOMIC

CONCLAVE
Bangladesh's economic growth is not possible without a higher level of regional integration in
South Asia, Commerce Minister Tofail Ahmed has said.
He said Bangladesh can achieve its ambitious growth targets only if it can access regional
markets and resources like power from its neighbours without hurdles. "We have a great stake
in the success of South Asian economic integration. Ahmed said a great start has been
made through the BBIN process and the Motor Vehicles Agreement.
"That is a great start to the freedom of travel within the region, but we need that spirit to
percolate to all aspects of regional trade and economy. Ahmed, however, hinted at
Bangladesh's unhappiness at 'some obstacles' created for its jute exports to India.
The commerce minister said Bangladesh took the initiative to create the SAARC because it
'seriously believed in regionalism.
He said Bangladesh's exports were a meagre $ 48 million in 1972-73; it is now touching $32
billion. He said in 2021, Bangladesh is seeking to earn $ 50 billion only from export of
readymade garments. Remittances have touched $16 billion and foreign exchange reserves
have crossed $26 billion. "But our progress can be sustained and our ambitions can be
achieved only if have access to regional markets and to its resources like power," he said.

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ADB PRESSES BANGLADESH FOR

REGIONAL INTEGRATION
FRIDAY, JULY 24, 2009 THE DAILY STAR

The Asian Development Bank president has suggested Bangladesh forge a better cooperation
with its neighbours India and Nepal in transport and energy sectors.
Regional integration on transport and power will substantially benefit the South Asian
countries, especially Bangladesh, Haruhiko Kuroda told a press conference at Sonargaon Hotel
in the capital yesterday.
Pointing to the benefit of regional integration, Kuroda, also a renowned Japanese economist,
said, China, Vietnam, Laos, Cambodia and Myanmar have implemented many regional projects
on transport, energy, communication and water management and become benefited.
South Asian countries are the least integrated in today's highly globalised world. Intra-regional
trade is less than 5 percent despite inking of South Asia Free Trade Agreements (Safta) by eight
nations Afghanistan, Bangladesh, Bhutan, India, th ze Maldives, Nepal, Pakistan and Sri Lanka.
Kuroda also dwelt on the ongoing global recession and its impacts on Bangladesh, governance
and corruption issues. Bangladesh is not so much affected compared to East Asian nations
because it is not so globalised, said the ADB chief. He however said a second round effect is
already felt by Bangladesh with a decline in export growth. Kuroda felt that the country's
exports would not fall like what has happened with electronics and automobiles

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