Moving towards a comprehensive economic partnership agreement (CEPA) in BIMSTEC
As the region grapples with economic challenges and opportunities, moving towards a Comprehensive Economic Partnership Agreement (CEPA) within BIMSTEC will represent a strategic move to bolster economic integration and regional prosperity
In an era of unprecedented global connectivity, regional collaborations play a pivotal role in shaping geopolitical and geoeconomic landscapes.
The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) occupies a pivotal position, balancing strategic significance with untapped economic possibilities in the Bay of Bengal region.
Comprising seven member states—Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka, and Thailand—BIMSTEC has the potential to emerge as a pivotal platform for fostering economic cooperation, enhancing connectivity, and promoting sustainable development.
As the region grapples with economic challenges and opportunities, moving towards a Comprehensive Economic Partnership Agreement (CEPA) within BIMSTEC will represent a strategic move to bolster economic integration and regional prosperity.
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BIMSTEC, founded in 1997, aims to foster cooperation across sectors, including trade, investment, technology, and infrastructure. As an organisation, it represents a vibrant and diverse economic zone, with member countries spanning a wide spectrum of economic development and strategic priorities. While this diversity poses challenges, it also provides a unique opportunity for collaborative growth.
The combined economic potential of BIMSTEC member states is substantial. According to recent estimates, the region has a collective population of over 1.5 billion people and a combined GDP of approximately $4.5 trillion.
The economic activities in these countries span a wide range of sectors, from agriculture and manufacturing to services and technology. Such a broad economic base provides a solid foundation for comprehensive economic integration.
BIMSTEC is strategically positioned as a bridge connecting South Asia and Southeast Asia, two regions with burgeoning economies. The bloc offers a unique opportunity to harness the complementarities between these regions.
A Comprehensive Economic Partnership Agreement (CEPA) would be the cornerstone of this economic integration. By eliminating tariffs, reducing non-tariff barriers, and facilitating trade and investment, a CEPA can unlock the full potential of the BIMSTEC region. It can lead to increased trade, job creation, technology transfer, and overall economic growth.
A CEPA is an advanced form of trade agreement that goes beyond traditional free trade agreements (FTAs). While FTAs typically focus on reducing tariffs and facilitating trade in goods, a CEPA encompasses a broader range of issues, including services, investment, intellectual property rights, and regulatory cooperation.
For BIMSTEC, a CEPA would offer several key benefits. For example, by reducing barriers to trade and investment, a CEPA would create more accessible markets for businesses across BIMSTEC countries. This enhanced market access would be particularly beneficial for smaller economies within the group, providing them with opportunities to tap into larger markets.
A CEPA would also establish a more predictable and transparent investment environment, encouraging cross-border investments. This would facilitate the flow of capital into infrastructure projects, technology ventures, and other critical sectors, fostering economic development and regional connectivity.
Investing in transportation and digital infrastructure is crucial for seamless trade and people-to-people contact. Also, identifying and promoting cooperation in sectors such as agriculture, energy, tourism, and pharmaceuticals can yield significant benefits.
Furthermore, a CEPA would address regulatory divergences and streamline standards across member states. This would reduce compliance costs for businesses and improve the efficiency of trade and investment processes. Simplifying customs procedures, harmonising standards, and improving infrastructure are essential for reducing trade costs.
Finally, by integrating economies more closely, BIMSTEC countries can leverage each other's strengths, promote diversification, and reduce dependency on external markets. This would contribute to greater economic stability and resilience.
While the benefits of a CEPA are clear, several challenges need to be addressed to ensure its successful implementation. BIMSTEC member states have varying levels of economic development and different sectoral priorities. Balancing these diverse interests and crafting a CEPA that accommodates all members' needs is a complex task.
Moreover, the regulatory frameworks across BIMSTEC countries vary significantly. Harmonising these regulations and establishing effective institutions to oversee the CEPA will require considerable effort and negotiation. Furthermore, the geopolitical landscape in the region is influenced by various external factors and bilateral relations.
Also, political instability in some member countries can create uncertainties for investors. Navigating these dynamics while maintaining a cohesive regional strategy will be crucial for the success of a CEPA. It is also important to mention that infrastructure bottlenecks, particularly in landlocked countries like Nepal and Bhutan, hinder trade facilitation in this region.
Also, some member states may have limited administrative and technical capacities to implement the agreements effectively. Providing support and building capacity will be essential to ensuring equitable benefits across the group.
However, the biggest challenge is to energise the BIMSTEC cooperation process, which has remained slow and fragmented. Despite numerous promises and its 27 years of existence, BIMSTEC's progress towards deeper regional integration remains limited.
To advance towards a CEPA, BIMSTEC member states can strategically undertake several key steps. First, comprehensive feasibility studies should be conducted to assess the potential impacts of a CEPA on various sectors and economies within the BIMSTEC region. These studies will provide valuable insights and guide the negotiation process.
Second, it is crucial to strengthen negotiation mechanisms by establishing effective working groups. Engaging experts and stakeholders from diverse sectors will facilitate informed and balanced discussions.
Third, promoting inclusivity and capacity building is essential. Ensuring that all member states actively participate in the negotiation process and receive the necessary support for implementation will contribute to an equitable and effective agreement.
Fourth, robust engagement with both public and private sector stakeholders is vital. This engagement will help identify key priorities, address concerns, and garner broad-based support for the CEPA. Finally, fostering regional cooperation and trust-building among member states will create an environment conducive to successful negotiations and the subsequent implementation of the CEPA.
To achieve a comprehensive CEPA, BIMSTEC member countries must demonstrate strong political will and commitment. Regular high-level meetings, technical-level negotiations, and capacity building are essential. Building trust and confidence among member states is also crucial. In addition, the private sector can play a vital role in driving economic integration.
Business associations and chambers of commerce can advocate for trade facilitation measures, identify investment opportunities, and promote regional cooperation. The road to a BIMSTEC CEPA is undoubtedly challenging, but the rewards are immense. By overcoming obstacles and harnessing the region's potential, BIMSTEC can emerge as a dynamic and prosperous economic bloc.
Selim Raihan is a Professor at the Department of Economics, University of Dhaka, and Executive Director, at the South Asian Network on Economic Modeling (SANEM). Email: selim.raihan@gmail.com
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.
