The member countries of BIMST-EC (Bay of Bengal Initiative for Multisectoral Technical and Economic Cooperation) include Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand.  The Framework Agreement on BIMSTEC FTA was signed on 8 th February, 2004 in Phuket, Thailand and a Protocol to the Agreement was signed on 25 th June, 2004.  The Framework Agreement includes provisions for negotiations on FTA in goods, services and investment. 

As per the Framework Agreement, the negotiations for tariff reduction/elimination for FTA in goods shall commence in July 2004 and be concluded by December 2005. The negotiations will be held to finalise the negative list items, on which no-tariff concessions will be exchanged to begin with.  The tariff liberalisation on rest of the items would be done as per the following two tracks:-

Ø   Fast Track: Products listed in the Fast Track by a Party on its own accord shall have their respective applied MFN tariff rates gradually reduced/eliminated in accordance with specified rates to be mutually agreed by the Parties, within the following timeframe:

Ø   Normal Track: Products listed in the Normal Track by a Party on its own accord shall have their respective applied MFN tariff rates gradually reduced/eliminated in accordance with specified rates to be mutually agreed by the Parties, within the following timeframe :

Ø   Negative List

The Framework Agreement on BIMSTEC Free Trade Area also provides for having products in the ‘Negative List’ and the number of such products shall be subject to a maximum ceiling to be mutually agreed among the Parties.

Current Status:-

Member countries have constituted the Trade Negotiating Committee (TNC) to carry forward the programme, as stipulated in the Framework Agreement.  The texts of the FTA in goods, Rules of Origin, Safeguard Mechanism and Dispute Settlement Mechanism etc. have been circulated and negotiations are being held.  The TNC is presently discussing the Negative Lists under the FTA in goods.

In the last meeting of the BIMSTEC TNC, discussions were held on the approach for tariff reduction and elimination as well as the number of items which can be kept in the Negative List.  Keeping in view that the Framework Agreement provides for coverage of ‘substantially all the trade’ under the tariff liberalisation programme, the TNC felt that the maximum number of items in the Negative List should not be too large.  It was decided that each member country would prepare Initial Indicative Negative List withtotal number of items at HS 6 digit level not exceeding 25% of the total tariff lines. It was also agreed that after exchange of the negative lists, negotiations would be held to prune down the list and a desirable level would need to be finalised, however the total number of items in the Negative List should not be more than 20%.

It may also be noted that the BIMSTEC initiative involves 5 members of SAARC (India, Bangladesh, Bhutan, Nepal & Sri Lanka) and 2 members of ASEAN (Thailand, Myanmar).  Therefore, BIMSTEC is visualized as a ‘bridging link’ between two major regional groupings i.e.  ASEAN and SAARC.  Further, it is worthwhile to note that India already has a Free Trade Agreement with Sri Lanka and also bilateral trade treaties granting duty free access to Nepal and Bhutan.  India is negotiating FTA in SAARC, bilateral FTA with Thailand and FTA with ASEAN and, therefore the negative list should take into account the sensitivity only with respect of the BIMSTEC members.  It may also be noted that the tariff concessions on items of Fast & Normal Track would be available subject to fulfillment of the Rules of Origin criteria as would be negotiated and finalised among member countries. 

For preparing the initial indicative negative list, India will have to prioritise the items which we need to keep in the negative list and such items should not exceed 1200 – 1250 tariff lines at the 6 digit HS level. It may also be noted that items of India’s export interest should not be kept in the Negative List.  Since the Negative Lists will be exchanged among the member countries at the next meeting of the BIMSTEC TNC scheduled to be held in 1 st week of June, 2005, the items in the negative list are required to be finalised by 15 th May, 2005.

A list of 1761 items has been prepared based on inter-Ministerial Consultations, inputs from industry associations without any internal examination of economic logic or justification whether these items are really sensitive or not.  Items identified through a study to keep in India’s negative list are also kept in the list of 1761.  In order to facilitate an informed decision by the Government of India, comments / inputs are solicited on the items placed in the list.