Bhutan ratifies BIMSTEC charter, boosting regional cooperation and trade potential

New Delhi: Bhutan, a long-standing member of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), has recently taken a significant step forward by ratifying the BIMSTEC Charter.

This crucial development paves the way for the country to fully reap the benefits of the organization's initiatives. The unanimous vote in favour of the Charter by all 44 members of the National Assembly on June 13 signals Bhutan's commitment to BIMSTEC's goals and objectives.

With the Charter now ratified, BIMSTEC, an influential intergovernmental organization comprising seven member countries - India, Bhutan, Bangladesh, Myanmar, Thailand, Nepal, and Sri Lanka - gains a solid foundation for fostering discussions and collaborations on various fronts.

It includes free trade agreements, grid connectivity for electricity trade, motor vehicle agreements, and maritime transport among BIMSTEC members. While the specific details of these collaborations are yet to be finalized, their implementation is expected to bolster trade, enhance economic cooperation, and improve inter-border connectivity within the BIMSTEC region.

BIMSTEC offers a wide range of avenues for cooperation in areas such as trade, investment, development, environment, climate change, agriculture, and food security, among others.

The ratification and enforcement of the Charter by all member states will establish a formal framework and clear guidelines for the functioning of BIMSTEC, providing a solid legal foundation. This development brings much-needed clarity to the scope and operations of the organization, setting the stage for further growth and cooperation.

However, it is worth noting that while Bhutan's ratification of the Charter is a significant milestone, it still requires the same step from the remaining two member states to come into full force.

The Charter outlines the legal and institutional framework for BIMSTEC, defining how the intergovernmental regional organization operates. Importantly, the BIMSTEC Charter allows for flexibility in expanding the organization's agenda, enabling countries to adopt both hard and soft laws to operationalize various areas of cooperation.

India, with its diplomatic influence, has played a key role in the progress of BIMSTEC. Despite facing several obstacles, the group finally obtained its Charter in 2022, after 25 years of existence. BIMSTEC recently celebrated its 26th anniversary, having been established in 1997 as a critical instrument of regional cooperation, connecting five South Asian countries (Bangladesh, Bhutan, India, Nepal, and Sri Lanka) with two ASEAN (Association of Southeast Asian Nations) countries - Myanmar and Thailand.

BIMSTEC serves as a sector-driven cooperative organization, encompassing a wide range of sectors such as communication, leather, textiles, transport, fisheries, human resource development, tourism, agriculture, investment, technology, and commerce. Each member country voluntarily leads one or more sectors, while India takes charge of counterterrorism and transnational crime, as well as telecommunications and transport.

Members of the BIMSTEC are in the strategic Bay of Bengal region and having headquarters in Bangladesh, BIMSTEC holds immense untapped potential. With its seven member states from South and Southeast Asia, the organization offers a distinctive sub-regional initiative, benefitting from its unique political geography and proximity to the Bay.

India currently contributes the most significant share to the BIMSTEC secretariat budget; however, additional funds need to be allocated for the smooth functioning of the organization.

While the long-awaited BIMSTEC Free Trade Area (FTA) is yet to materialize, recent steps, including the passage of charters and their ratification by most member states, have increased the prospects of realizing this goal. The negotiations for the BIMSTEC FTA began in 2004 and are still ongoing. However, positive strides have been made to enhance regional connectivity, trade facilitation, and maritime cooperation, which can propel the finalization of an FTA.

Nevertheless, much work remains to be done. As highlighted by a study from the Asian Development Bank, the establishment of a BIMSTEC FTA would not only promote intra-regional trade but also bolster the region's participation in global value chains (GVCs). Developing robust GVCs necessitates binding rules not only on trade but also on investment protection to stimulate economic growth.

For India, BIMSTEC assumes greater significance as SAARC (South Asian Association for Regional Cooperation) faces dysfunctionality due to strained relations between India and Pakistan. BIMSTEC allows India to pursue three core policies: Neighbourhood First, prioritizing the country's immediate periphery; Act East, connecting India with Southeast Asia; and the economic development of India's northeastern states by linking them to the Bay of Bengal region through Bangladesh and Myanmar. Additionally, BIMSTEC provides a means for India to counter China's expanding influence in countries surrounding the Bay of Bengal, as seen in its Belt and Road Initiative (BRI).

Various challenges, such as the Rohingya refugee crisis and the border conflict between Myanmar and Thailand, pose obstacles to the development of BIMSTEC. However, with the ratification of the Charter and ongoing efforts to enhance cooperation, BIMSTEC stands poised to strengthen regional integration, trade, and connectivity, unleashing the immense potential within the Bay of Bengal region.