ASSIGNMENT

ON
CROSS NATIONAL COOPERATION AND AGREEMENT

Bay of Bengal Initiative for

Multi-Sectoral Technical and Economic Cooperation

Semester-Summer 2010
Course Title: International Business
Course Code: ITB301

Submitted to:

Md. Gazi Salah Uddin

Senior Lecturer and Assistant Proctor

Dept. Of Business Administration

East West University

Submitted by:

Name ID Section
Md. Raihan Shourov 2007-2-10-034 3
Rezwanul Karim 2007-1-10-040 3
Saiful Hasan Robel 2007-1-10-084 3
Naznin Sultana 2005-2-14-024 3

Date to Submit: July 10, 2010

EAST WEST UNIVERSITY

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

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

(BIMSTEC) is an international organization 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. Seven members of BIMSTEC
covers 13 Priority Sectors lead by member countries in a voluntary manner namely,
Trade & Investment, Technology, Energy, Transport & Communication, Tourism,
Fisheries, Agriculture, Cultural Cooperation, Environment and Disaster Management,
Public Health, People-to-People Contract, Poverty Alleviation and Counter-Terrorism
and Transnational Crimes.

1. BACKGROUND
On 6 June 1997, a new sub-regional grouping was formed in Bangkok and given the
name BIST-EC (Bangladesh, India, Sri Lanka, and Thailand Economic Cooperation).
Myanmar attended the inaugural June Meeting as an observer and joined the organization
as a full member at a Special Ministerial Meeting held in Bangkok on 22 December 1997,
upon which the name of the grouping was changed to BIMST-EC. Nepal was granted
observer status by the second Ministerial Meeting in Dhaka in December 1998.
Subsequently, full membership has been granted to Nepal and Bhutan in 2003.In the first
Summit on 31 July 2004, leaders of the group agreed that the name of the grouping
should be known as BIMSTEC or the Bay of Bengal Initiative for Multi-Sectoral
Technical and Economic Cooperation.

2. AIMS AND PURPOSES

BIMSTEC was initiated with the goal to combine the 'Look West' policy of Thailand and
ASEAN with the 'Look East' policy of India and South Asia. So it could be explained that
BIMSTEC is a link between ASEAN and SARRC. According to the Bangkok
Declaration on the Establishment of BIST-EC, the aims and purposes of BIST-
EC/BIMST-EC are:
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.
 3. BIMSTEC AT A GLANCE

1. 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.

2. Institutional Structure and Arrangements

The BIMSTEC 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.

• Specialized task forces and other mechanisms as may be deemed necessary by the
senior Officials to be coordinated by Member States as appropriate.

3. Chairmanship

BIMSTEC uses the alphabetical order for the Chairmanship. The Chairmanship of
BIMSTEC has been taken in rotation commencing with Bangladesh, India, Myanmar, Sri
Lanka, Thailand, Bangladesh. Bhutan asked for the skip and it turned to India

4. 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.
 4. BIMSTEC WORKING STRUCUTRE

Summit

Foreign Ministers’ Meeting (MM) Trade and Economic Ministers’

Meeting
Senior Trade and Economic
Senior Officials’ Meeting (SOM) Officials’ Meeting (STEOM)

∕
BIMSTEC Working Group in Bangkok (BWG)

BIMSTEC Center

Technology Transport and Energy Tourism Agriculture

Communication and Fisheries

Sri Lanka India Myanmar India Thailand

Trade and Investment

Bangladesh

5. BIMSTEC MECHANISM
BIMSTEC holds frequent meetings. The Country holding the Chairmanship of
BIMSTEC is responsible for the conduct of regular meetings. The main working
mechanism of BIMSTEC is categorized as follows:

5.1. Policy Making Body

5.1.1 BIMSTEC Summit

5.1.2 Ministerial Meetings (MM)

• Foreign Ministerial Meetings (MM): Responsible for overall policy and summit
of the leaders
• Trade/ Economic Ministerial Meetings (TEMM): Monitors the trade and
investment sector as well as FTA policy.

5.2. Operational Body

Senior Officials' Meeting:

• Senior Officials' Meetings (SOM): is assigned to monitor progress of the
remaining sectors
• Senior Trade/ Economic Officials' Meetings (STEOM): Tasks include the
negotiation of the BIMSTEC FTA, cooperation in the Trade and Investment
Sector and its 15 sub-sectors

5.3. Coordinating Body

• BIMSTEC Working Group in Bangkok (BWG): is attended by the Director-
General or Deputy Director-General of the Department of International Economic
Affairs and the Ambassadors of BIMSTEC member countries to Thailand or their
representatives, as well as representatives from other concerned agencies.

5.4. Expert Group Meeting

The Lead Countries of the 13 priority sectors of cooperation and 15 sub-sectors are to
host expert group meetings of their responsible sectors regularly and report the result to
the BIMSTEC Working Group in Bangkok (BWG) via respective Embassies to Thailand.
The result will then be further reported to the SOM.

6. SECTORS AND SUB-SECTORS

 Six priority sectors of cooperation were identified at the 2nd Ministerial Meeting in
Dhaka on 19 November 1998. After the 8th Ministerial Meeting in Dhaka on 18-19
December 2005, a number of new areas of cooperation emerged. The number of priority
sectors of cooperation increased from 6 to 13. The 7 new sectors were discussed in the
1st BIMSTEC Summit and there has been various activities to enhance those co-
operations ever since. The sectors are as follows:

Sectors Lead Countries

1. Trade & Investment/Sub-sector Bangladesh
2. Technology/Sub-sector Sri Lanka
3. Energy/Sub-sector Myanmar
4. Transportation & Communication/Sub-sector India
5. Tourism/Sub-sector India
6. Fisheries/Sub-sector Thailand
7. Agriculture/Sub-sector Myanmar
8. Cultural Cooperation/Sub-sector Bhutan
9. Environment and Disaster Management/Sub-sector India
10. Public Health/Sub-sector Thailand
11. People-to-People Contact/Sub-sector Thailand
12. Poverty Alleviation/Sub-sector Nepal
13. Counter-Terrorism and Transnational Crime/Sub-
India
sector

Roles and Functions of Lead Country:

01. Where sub-sectors have been identified, the designated Chair Countries will seek to
identify specific projects for facilitating cooperation.

02. The Chair Country will function in consultation with an Expert Group drawn from
member countries.

03. The Chair Country will chair and coordinate the work of the Expert Group, and
perform secretarial functions if the Expert Group in such a way as to ensure the
satisfactory and successful implementation of the projects and to monitor the progress of
the work.

04. The members of the Expert Group will be in regular contact through
correspondence, fax, e-mail, etc. and will meet whenever deemed necessary.

05. The Expert Group will coordinate, monitor and review progress in projects being
implemented and will report on the same to the Sectoral Committee.

06. The Expert Group may invite such representatives from the public/private sector and
regional/international organizations to its meetings whenever deemed
appropriate.
07. The sub-sector Chair Country position will rotate between members every three
years.
6.1 Trade & Investments sector
This Sector is led by Bangladesh
Since there is significant potential of increasing intra-BIMSTEC trade, increased
economic cooperation among member countries will definitely contribute to expansion of
trade and investment flows in the region. A Task Force was constituted to review the
sectors and sub-sectors of economic cooperation by the decision of the STEOM and the
Trade Ministers in their meeting. The Task Force decision which finalized in 2005 is to
restructuring Trade and Investment Sector into 3 main Sub-sector. At present, this sector
is divided into two categories as follows;

6.1.1 Goods and Services consisting of 8 sub-sectors

• Textile & Clothing – Bangladesh

• Drugs & Pharmaceuticals – India
• Gem & Jewelry - Sri Lanka
• Horticulture and Floriculture products – Thailand
• Processed Foods - Sri Lanka
• Automotive Industry & Part – Thailand
• Rubber, Tea & Coffee – Thailand
• Coconut and Spices – India

6.1.2 Trade and Service facilitation consisting of 7 sub-sectors

• Custom Service
• Banking Arrangements
• Standards & Conformity
• Intellectual Property
• Standard of Goods
• E-BIMSTEC
• Business Travel Facility

6.2. Technology Sector

This Sector is led by Sri-Lanka
The 1st and 2nd BIMSTEC Expert Group Meetings on Technology were held in New
Delhi 2000 and 2002, respectively. The “BIMST-EC Agreed Statement on Cooperation
in Technology Sector” was reached at the 1st Meeting, while the 2nd Meeting discussed
the agro-based technology and ICT as appeared in the “Colombo Joint Declaration”
adopted at the Meeting Sri Lanka hosts the BIMSTEC Official website,
www.bimstec.org, and the materials for the said website provided by BIMSTEC Center.
Sri Lanka is waiting for members to convey their views on the Concept Paper.

Sub-Sectors
• Co-operation on technology transfer
Chair Country India
• Information technology products and services
Chair Country India

6.3. Energy Sector

This Sector is led by Myanmar
Current important projects in the energy sector are the development of regional
hydrocarbon and hydropower, energy infrastructure (natural gas), energy information
centre and energy trading network between members. Myanmar already hosted 5 Expert
Group Meetings for the Energy Sector. India hosted the 1st Ministerial Meeting on
Energy in which a joint statement was made and an action plan was adopted.

Sub-sectors
6.3. 1Oil and Gas

The Trans BIMSTEC Gas Pipeline Project was identified.

• Thailand conducted Feasibility Study for Trans BIMSTEC Gas Pipeline Project
• The study on Trans BIMSTEC Gas Pipeline(s) was held in Bangkok in 2006
together with a Workshop on Petroleum Reserves in BIMSTEC Region.

6.3.2 Power

The BIMSTEC Trans Power Exchange and Development Project was identified.

• Thailand was assigned to coordinate a Task Force to initiate the projects

• The Workshop on Harmonisation of Grid Standards held in 2006 in India
• Workshop on remote area electrification by India
• Regional Workshop and Study Visit on Biomass Gasification for Power
Production by Thailand

6.3.3 Non conventional sources of Energy

The BIMSTEC member countries participated in the following new and renewable
sources energy sector cooperation activities in accordance with the Declaration of First
BIMSTEC Energy Ministerial Meeting and Plan of Action for Energy Cooperation in
BIMSTEC.

• Development of New and Renewable Sources

• Small Hydro Project
• Rice Husk Co-generation
• Standard and Testing
6.4. Transportation & Communication Sector
The Meeting on Transport and Communication Sector of BIMSTEC Expert Group
discussed various concerned issues, including Transportation and Cross-border
Facilitation, Multimodal Transport and Logistics, Infrastructure Development, Aviation,
Maritime Transport, HRD, as well as Communication Linkages and Networking.
BIMSTEC members recognized the importance to create air, sea, and land linkages. They
include the open sky policy in BIMSTEC, development of the Tri-lateral Highway
Project between Thai-Myanmar-India and Thai-Myanmar-Bangladesh, which will
facilitate land transport from the Bay of Bengal to the South China Sea. In terms of sea
transport, there are the coastal navigation project and a feasibility study on Tavoy,
proposed by India.

Sub-Sectors
• Identification and promotion of new inter-modal linkages within BIMST-EC
countries. (Chair country India)
• Improving efficiency of international land transport in BIMST-EC countries

6.5. Tourism Sector

This Sector is led by India
Concerns from all member countries on the Terms of Reference for setting up the
Tourism Working Group had been conveyed to the Ministry of Tourism of India. The
comments and suggestions had been compiled for further actions. BIMSTEC has decided
to set up the Tourism Fund with the seed money of USD 10,000 from each country and
the Tourism Working Group will be managing the fund.

6.6. Fisheries Sector

This Sector is led by Thailand
The Department of Fishery of Thailand proposed the “Ecosystem-based Fishery
Management in the Bay of Bengal” as a priority project of this sector, while Bangladesh
proposed 2 other relevant projects, namely the “Study on Impact of Offshore Oil and
Gas Drilling on the Marine Fisheries Resource in Bay of Bengal” and “Marine
Fisheries Stock Assessment, Management and Development of New Fisheries in Bay
of Bengal”. Thailand arranged workshop aiming to have consultation among BIMSTEC
Countries about the past and future cooperation on fisheries. Many fisheries cooperation
needs had been prioritized. For example; Awareness building of potential expansion of
aquaculture and application of appropriate technology and new cultivable species for
aquaculture.

6.7. Agriculture Sector

This Sector is led by Myanmar. This sector of cooperation was first raised and discussed
in the 1st BIMSTEC Summit. It was proposed that cooperation on agriculture be added as
one of the priority sectors. Thailand offered to lead this newly enlarged sector as well as
offered to extend credit lines to BIMSTEC member countries for importing agricultural
products from Thailand. At the 9th Ministerial Meeting held in India in August 2006.
Myanmar has become the lead country of this newly Sector when meeting welcomed and
accepted the offer of Myanmar.

6.8. Culture Sector

This Sector is led by Bhutan
In 2006, the Meeting of BIMSTEC Culture Secretaries/Experts focused their
deliberations on the Concept Paper on Cultural Industries presented by Bhutan. The
Concept Paper articulates a vision, identifies opportunities, drivers and strategies that will
serve as a roadmap for socio-economic development, driven by creative cultural
industries of the BIMSTEC region. In this regard, the Meeting emphasized the need for
the development and promotion of cultural industries towards poverty reduction and
community vitalization. The Concept Paper on Cultural Industries was adopted by the
Ministers and is now referred to as the Paro Initiative. The need to expand the scope of
cooperation in culture to other important areas, including cultural values, diversity and
cultural heritage was also recognized. It was agreed that Bhutan will host the BIMSTEC
Cultural Industries Observatory (BCIO).

6.9. Environment and Disaster Management Sector

This Sector is led by India
Before the first Summit, the National Centre for Medium Range Weather Forecasting
(NCMRWF) of the department of Science and Technology of India had held an
operational Meeting about the examination, prediction, and warning of cyclones and
tropical Monsoons. India proposed cooperation in information sharing on Remote
Sensing for the purpose of agricultural, environmental, and catastrophe management.
Additionally, India has put forward a plan to establish the BIMSTEC Centre on Weather
and Climate in New Delhi. The established centre has been working since August
2004.So far; India has hosted Workshop on Geo-informatics Application in Disaster
Management on in 2007.

6.10. Public Health Sector

This sector is led by Thailand
The Summit discussed the necessity of supporting the cooperation on Biodiversity for an
efficient use of various natural resources found in the member countries in order to
strengthen the existing cooperation. The Summit also considered the issues of giving
legal protection and the agreement to establish a network of national centers of
excellence in the field of traditional medication for helping the impoverished. Thailand
has accepted to lead this sector which includes the issue of generic drugs production as
well.
6.11. People-to-People Contact Sector
This Sector is led by Thailand
One of the issues emphasized in the BIMSTEC Summit was the interaction amongst the
people in the BIMSTEC member countries through various exchange programs.
Consequently, a part of the joint declaration made in the Summit stated that people-to-
people contact was to be immediately supported through different exchange projects.
Accordingly, as a response to the requests made at the Summit, the Thai Ministry of
Foreign Affairs has initiated 4 projects aiming to promote people-to-people contact as
follow :

• Exploring BIMSTEC Cultural Ties in Thailand: It was aimed to enhance

BIMSTEC cooperation in many sectors.
• BIMSTEC Young Ambassador Program: aiming to increase an awareness of
BIMSTEC among the general public.
• Getting to know the new BIMSTEC Member: A Trip to Nepal and Bhutan
including Delegations of officials, expert on history, arts and culture in Thailand
and BIMSTEC Young Ambassadors was held to establish connections and
exchange experiences.
• “BIMSTEC Week Exhibition: It was held to present the history and development
of BIMSTEC, and booths of BIMSTEC countries were also displayed to stimulate
interaction and participation from the visitors.
• BIMSTEC Exhibition: It contained presentation boards on the history and
development of BIMSTEC and BIMSTEC countries booths were also displayed.

6.12. Poverty Alleviation Sector

This sector is led by Nepal
Poverty reduction was the topic to which Leaders devoted the most time during the
Summit Retreat.In this connection, Thailand is prepared to provide credit line to
BIMSTEC countries for importing Thai agricultural products. Each country emphasized
the importance of empowerment, including through education and self-employment, rural
development, access to credit, the role of women, and making poor people bankable.
Furthermore, they recognized the need to improve health care and the involvement of the
private sector. They agreed that these experiences should be taken up at the Ministerial
Meeting on Poverty Eradication. Nepal offered to be the Lead Country for this section.
Bangladesh offered to host the First Ministerial Meeting and the Dhaka's proposal was
approved in the wake of Bangladesh's vast experience with poverty alleviation initiatives
such as the micro-credit. In addition, Thailand’s “Sufficiency Economy” philosophy, a
successful model proven by Thai economic development, was offered to be shared its
experiences in combating poverty.
 7. BIMSTEC FREE TRADE AREA FRAMEWORK AGREEMENT

BIMSTEC member countries agreed to establish the BIMSTEC Free Trade Area
Framework Agreement in order to stimulate trade and investment in the parties, and
attract outsiders to trade with and invest in BIMSTEC at a higher level. All members
became signatories to the Framework Agreement .

Bangladesh joined the Framework Agreement on 25 June 2004. The Trade Negotiating
Committee (TNC) was setup and had its 1st Meeting in Bangkok on 7-8 September 2004.
As stated in the adopted Terms of Reference, Thailand would be the permanent chair of
TNC although the host country shall be rotated. The chair and each country’s chief
negotiator act as TNC’s spokepersons, while TNC’s chairperson will report the result via
STEOM to the Trade and Economic Ministerial Meeting. TNC’s negotiation area covers
trade in goods and services, investment, economic cooperation, as well as trade
facilitations and also technical assistance for LDCs in BIMSTEC. It was agreed that once
negotiation on trade in goods is completed, the TNC would then proceed with negotiation
on trade in services and investment.

As for the Agreement on Trade in Goods, 2 Working Groups have been setup to work on
some technical aspects, namely the Working Group on the Rules of Origin (WG-RoO)
and the Working Group on the Dispute Settlement Mechanism (WG-DSM). Both
Working Groups would have their meetings back to back or parallel with the TNC
meetings.

7.1 Objectives of this agreement are to:

• Strengthen and enhance economic, trade and investment cooperation among the
parties
• Progressively liberalize and promote trade in goods and services, create a
transparent, liberal and facilitative investment regime
• Explore new ideas areas and develop appropriate measures for closer cooperation
among the parties and
• Facilitate the more effective economic integration of the least developed countries
in the region, and bridge the development gap among the parties.

7.2 Measures for Comprehensive Free Trade Area (FTA)

The parties agree to negotiate expeditiously in order to establish a BIMSTEC FTA to
strengthen and enhance economic cooperation through the following:
• Progressive elimination of tariffs and non-tariff barriers in substantially all trade
in goods.
• Progressive liberalization of trade in services with substantial sectoral coverage
• Establishing an open and competitive investment regime that facilitates and
promotes investments within the BIMSTEC FTA
• Provision for special and differential treatment and flexibility to the least
developed countries in the region
 • Flexibility to the parties in the BIMSTEC FTA negotiations to address their
sensitive areas in the goods, services and investment sectors based on agreed
principles of reciprocity and mutual benefits
• Establishing effective trade and investment facilitating measures including but not
limited to simplification of customs procedures and development of mutual
recognition arrangements
• Expanding economic cooperation in areas as may be mutually agreed among the
parties that will complement the deepening of trade and investment links among
the parties and formulating action plans and programmes in the agrees sectors of
cooperation and
• Establishing appropriate mechanisms for implementation of this agreement.

7.3. Facilitation of Investment

To promote investments and to create a facilitative transparent and competitive
investment regime the parties agree to:

• Provide for the promotion and protection of investments

• Strengthen cooperation in investment, facilitate investment and improve
transparency of investment rules and regulations
• Enter into negotiations in order to progressively liberalize the investment regime
through a positive list approach

7.4 Areas of Economic Cooperation

1. The parties agree to strengthen cooperation in the already identified sectors of
technology, transportation and communication, energy, tourism and fisheries.
2. The parties further agree to enhance trade facilitation in areas including but not
limited to the following:
• Mutual Recognition Arrangements(MRAs), conformity assessment,
accreditation procedures and standards & technical regulations
• Customs cooperation
• Trade Finance
• E-commerce
• Business visa and travel facilitation
3. The parties agree to implement capacity building programmes and technical
assistance particularly for the least developed countries of the BIMSTEC in order
to adjust their economic structure and expand their trade and investment with
other parties
4. The parties further agree to provide technical support to the extent possible to the
LDC parties in their efforts to comply with the SPS and TBT requirements of the
BIMSTEC countries.
5. For this purpose bilateral negotiations for fast tracking the process of MRAs
conformity assessment, accreditation procedures or any other necessary
arrangements will be carried out in parallel with negotiations for FTA in goods.
7.5 Withdrawal from the Agreement
1. A Party may withdraw from the Agreement by giving a six months' notice in
writing to the other Parties.
2. Subject to the dispute settlement procedures and mechanisms to be established
pursuant to Article 9, the rights and obligations of a Party which has withdrawn
from this Agreement shall cease to apply six months after the date of such notice.

7.6 Miscellaneous Provisions

1. Any subsidiary agreement or arrangement, which may be concluded by the Parties
pursuant to the provisions of this Agreement, shall form an integral part of this
Agreement and be binding on the Parties.

2. Except as otherwise provided in this Agreement, any action taken under it shall
not affect or nullify the rights and obligations of a Party under other agreements
or arrangements to which it is a party.

3. The Parties shall endeavor to refrain from increasing restrictions or limitations

that would affect the application of this Agreement.

7.7 Dispute settlement mechanism

1. The parties shall establish appropriate formal dispute settlement procedures and
mechanism for the purpose of this agreement by December 2005.

2. Pending the establishment of the formal dispute settlement procedures and

mechanism under paragraph 1 of this article, any dispute arising between the
parties regarding the interpretation, application or implementation of this
agreement shall be settled amicably through mutual consultations.

8. CONCLUSION
BIMSTEC is different from other organizations in a sense that BIMSTEC represent one
of the most diverse regions of the world, be it, way of life, religion, language, culture,
etc. BIMSTEC clearly separates issues of development into 13 Priority Sectors
besides focusing only on economic cooperation which make BIMSTEC covers
all aspects regarding the word 'developing'. However, concerns were raised by the private
sectors at the Economic Forum that trade within BIMSTEC region still remains low in
comparison to the value of trade the group has with the rest of the world. This could
partly be attributed to the inappropriate division of sectors and sub-sectors of cooperation
under the current global circumstances.