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FRAMEWORK AGREEMENT ON THE BIMST- EC FREE TRADE AREA

Date : 12 Feb 2004
Location : New Delhi
 

India along with Bhutan, Myanmar, Sri Lanka, Thailand and Nepal have signed the Framework Agreement on the BIMST-EC Free Trade Area (FTA) on 8^th February, 2004 at Phuket in Thailand. The objectives of this Agreement are to strengthen and enhance economic, trade and investment cooperation among the member countries and progressively liberalise and promote trade in goods and services, create a transparent, liberal and facilitative investment regime. Shri Arun Jaitley, Union Minister of Commerce & Industry, signed the Agreement on behalf of the Government of India at Phuket. The Agreement will come into force on 30 June, 2004, by which time the member countries undertake to complete their internal procedures required for this purpose.

The member countries have agreed to negotiate expeditiously in order to establish a BIMST-EC FTA to strengthen and enhance economic cooperation through the progressive elimination of tariffs and non-tariff barriers in substantially all trade in goods; progressive liberalisation of trade in services with substantial sectoral coverage and establishing an open and competitive investment regime that facilitates and promote investments within the BIMST-EC FTA.

Trade in Goods

As per the Agreement, in Trade in Goods, the products except those included in the negative list will be subject to tariff reduction or elimination on the following two tracks:

(a) Fast Track: Products listed into fast track by a member country on its own accord will have their respective applied MFN tariff rates gradually reduced/eliminated in accordance with specified rates to be mutually agreed by the member countries within the following time-frame.

(b) Normal Track: Products listed in the normal track will have the following time-frame:

Trade in Services

The negotiations for trade in services will be directed to:

(a) Progressive elimination of substantially all discrimination between or among the member countries and/or prohibition of new or more discriminatory measures with respect to trade in services between the member countries, except for measures permitted under Article V (1) (b) of the WTO General Agreement on Trade in Services (GATS);

(b) Expansion in the depth and scope of liberalisation of trade in services beyond those undertaken by the member countries under the GATS;

(c) Enhance cooperation in services among the member countries in order to improve efficiency and competitiveness, as well as diversify the supply and distribution of services of the respective service suppliers of the member countries.

Investment

To promote investments and to create a facilitative, transparent and competitive investment regime, the member countries have agreed to:

(a) provide for the promotion and protection of investments;

(b) strengthen cooperation in investment, facilitate investments and improve transparency of investment rules and regulations; and

(c) enter into negotiations in order to progressively liberalise the investment regime through a positive list approach.

Areas of Economic Cooperation

The member countries have agreed to strengthen cooperation in the already identified sectors of technology, transportation and communication, energy tourism and fisheries. The member countries have further agreed to enhance trade facilitation in areas, including but not limited to, the following:

(a) Mutual Recognition Arrangements (MRAs), conformity assessment, accreditation procedures, and standards & technical regulations;

(b) Customs cooperation;

(c) Trade finance;

(d) E-commerce; and

(e) Business visa and travel facilitation.

The member countries have agreed to implement capacity building programmes and technical assistance, particularly for the least developed countries of the BIMST-EC, in order to adjust their economic structure and expand their trade and investment with other member countries.

Time Frames

The negotiations for tariff reduction/elimination and other matters as set out in this Agreement will commence in July 2004 and be concluded by December 2005. For trade in services and investments, the negotiations on respective agreements will commence in 2005 and be concluded by 2007. The member countries will establish appropriate formal dispute settlement procedures and mechanism for the purpose of this agreement by December 2005.

Institutional Arrangement

A BIMST-EC Trade Negotiating Committee (BIMST-EC TNC) will be established to carry out the programme of negotiations as set out in this agreement. The BIMST-EC TNC will regularly report to the BIMST-EC Trade/Economic Ministers through their Senior Trade & Economic Officials Meeting on the progress and outcome of its negotiations.

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SB/PM/MRS