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BIMSTEC free trade area from July next year

Financial Express, Bangladesh

BIMSTEC free trade area from July next year

By Nazmul Ahsan

7 March 2011

The BIMSTEC member countries have decided to establish a free trade area (FTA) for transaction in goods from July next year. If established, the FTA would be two years behind its original deadline, trade official said.

The agreement, styled "the agreement on trade in goods of the framework agreement on the BIMSTEC free trade area," is expected to be signed in Dhaka in December next.

The decision has been taken at a trade negotiation committee (TNC) meeting held recently in Bangkok. Dr. Ruhul Amin Sarker, joint secretary, Ministry of Finance (MoF) led the Bangladesh delegation at the talks.

Official representatives from seven member countries of Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) — Bangladesh, Bhutan, India, Nepal, Myanmar, Sri Lanka, and Thailand — attended the meeting.

The meeting has decided to keep their respective negative lists at 23 per cent of their tariff line of products. The rules of origin criteria for least developed countries of the block has been finanlised at 30 per cent and for those of developing member countries 35 per cent, sources said.

The TNC meeting has deferred the tariff reduction schedule by two years, it is learnt.

"We have made a breakthrough at the 19th TNC meeting in finalizing major issues relating to kicking off the FTA for trade in goods among BIMSTEC member countries," a high official in the MoC said, who attended the crucial meeting.

"The member countries will complete their official formalities by November this year as the agreement is expected to be signed in December, 2011," he added.

Officials said the 18th TNC meeting was held in Bangkok in June, 2009. Since then, the member countries have been apparently inactive to proceed with the negotiation due mainly to lack of BIMSTEC secretariat and difference of opinion in finalizing the negative lists under the FTA.

On February 8, 2004, in Phuket, Thailand, the finance and trade ministers of the member countries of BIMSTEC jointly signed a framework agreement to establish a free trade area by 2012, leading to liberalization of trade in goods, services, and investment, as well as to undertake economic cooperation.

Later, TNC, an expert group comprising senior trade officials of member countries, set the deadline to kick off the FTA from June,1, 2010. However, no member country has so far completed internal official procedures in this regard and TNC failed to reach consensus on major issues relating to the FTA, official sources said.

Trade negotiations substantially cover all trade in goods, in the form of reduction and elimination of tariffs, with more flexibility granted to the LDCs. Tariff reduction/elimination will be divided into 2 tracks: Fast Track and Normal Track, said the draft FTA agreement on trade in goods.

Other than that, some of the products will be placed on the negative list, to which no tariff reduction will be granted at this point. The number of products under the negative list will be subjected to a maximum ceiling that will be mutually agreed upon by member countries. LDCs will be accorded flexibility to seek derogation in one form or another, taking into account products of export interest of respective countries, the draft agreement added.

Meanwhile, Dhaka has taken approval from law ministry for the draft agreement and the same will soon be sent to cabinet for approval, a top trade official said.