USAID Hosts Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) Roundtable on Trade and Infrastructure Connectivity

December 1, 2022

The United States is committed to improving its economic relationships with South and Southeast Asia and ensuring the benefits are broadly shared. This shared prosperity is founded on sustainable, inclusive growth, which cannot happen without increased trade, investment, and integration throughout the Bay of Bengal region. The U.S. Agency for International Development (USAID), in collaboration with the Department of State, has tasked the Private Sector Engagement (PSE) Support Mechanism to implement a trade and connectivity technical assistance program called the Cross-Border Infrastructure and Connectivity (CBIC) activity. CBIC will improve Connectivity by working with regional governments to promote standardized practices, operationalize multimodal linkages, and strengthen regional organizations to realize effective economic Connectivity across South Asian BIMSTEC countries – Bangladesh, India, Bhutan, Nepal, Myanmar, Sri Lanka, and Thailand.

Under the Indo-Pacific Strategy, the United States is committed to fostering an open, connected, prosperous, secure, and resilient region. Vital to this effort is strengthening regional coordination through organizations such as the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). The BIMSTEC framework is central to USAID and State Department objectives to promote economic prosperity and opportunity across South and Southeast Asia.

Trade between BIMSTEC members is increasing. BIMSTEC is already a subregion with few trade or investment barriers for India. However, trade in the region has not reached its optimum level. A regional Free Trade Area (FTA) is the next key step in enhancing overall economic performance in South Asia.

With political momentum gathering to implement the BIMSTEC Charter, in collaboration with USAID, the Department of State, WBD’s Private Sector Support (PSE) Mechanism Contract has designed a roundtable to bring key stakeholders together in Bangkok, Thailand, on December 8-9 to discuss a road map to realize BIMSTEC connectivity objectives. The roundtable will encourage knowledge sharing and advocacy through interactive group discussions to identify challenges, opportunities, and potential solutions.

The event will demonstrate the Thai government’s leadership in setting and achieving pragmatic milestones and objectives for attaining improved regional connectivity consistent with the recent Summit declaration. USAID/CBIC will serve as an organizer and provide technical expertise in support of the Thai government’s BIMSTEC leadership.

This will replicate and build on the success of the USAID/CBIC roundtable held in Colombo on the sidelines of the BIMSTEC Summit.

The roundtable will cover the following themes in order of relevance/priority.

Reducing Trade and Regulatory Barriers for Connectivity: Achieving decisive progress on an FTA among BIMSTEC member countries is a cornerstone of the BIMSTEC Charter. First, the FTA will remove impediments to infrastructure connectivity, as cross-border transactions are still subject to various fees, taxes, and regulations. Second, an FTA focused on deep integration (Connectivity) elements will help businesses access regional and global supply chains and achieve vast untapped potential. The roundtable will provide a platform to present and discuss various modalities on how progress can be made toward:

A negotiating mandate (goods and services)
Recognition of each country’s likely offers and defensive interests
A timeline for the liberalization process

Non-Tariff Barriers (NTB): A major impediment to Connectivity in BIMSTEC is the administrative and regulatory barriers to trade among member countries. Access to each other’s markets in BIMSTEC has been eroded through sanitary and phytosanitary (SPS) issues: Are product quality or performance requirements, testing requirements, labeling requirements, packaging requirements, conformity assessment, and certification requirements more burdensome than necessary? In addition, Port restrictions specifying where goods can enter and cumbersome document requirements stifle cross-border trade. South Asia is also characterized by inefficient or weak custom procedures, which increase clearance time, excessive paperwork requirements, absence of standardized documents, and lack of transparency in inspection and documentation requirements, complicating administrative procedures and increasing border wait times.

The roundtable will facilitate a robust discussion between experts and policymakers on the key non-tariff measures that inhibit trade within BIMSTEC, how to identify, report, and monitor NTBs, and how to eliminate them within the BIMSTEC agreement. The roundtable is also designed to reach an understanding of modalities and pathways for reducing them.

The session will also address the best practices of formulation for trade promoting BIMSTEC rules of origin regime and dispute settlement mechanism under a proposed FTA.

Cross-Border Connectivity – Customs Cooperation and Border Management: Integrated and coordinated border management that encourages customs administrations to further improve their collaboration with partner agencies responsible for border operations is key to improving transactions. Integrated (IBM) and Coordinated Border Management (CBM) programs have been actively promoted globally in recent years, which has enabled some countries to cope effectively with the complex nature of international and regional trade.

Customs cooperation is an integral part of the BIMSTEC connectivity objective. At a Ministerial Meeting in 2018, progress was achieved on BIMSTEC customs cooperation, finalizing the draft text of the Agreement on Cooperation and Mutual Assistance in Customs Matters for the BIMSTEC FTA. The BIMSTEC Trade Negotiating Committee and member states considered the draft text, but a final draft is yet to be accepted by all members. The roundtable will discuss the modalities for the completion of the cooperation agreement.

Digital Connectivity (Paperless Trade): Reducing trade costs by addressing cumbersome regulatory procedures and documentation requirements is an essential reform that enables developing economies to participate in international production networks and use trade as an engine of growth and sustainable development more effectively. This can be accomplished by introducing paperless trade and digitization. The roundtable will include a session on the Framework Agreement on Facilitation of Cross-Border Paperless Trade in the BIMSTEC Region, following the example of ASEAN and the Framework Agreement on Facilitation of Cross-Border Paperless Trade in Asia and the Pacific.

Author: Angela Suresh, WBD Lead Consultant and Head of DEIA