Summary of Statement by Kshenuka Senewiratne, the High Commissioner of Sri Lanka to India at the CII BIMSTEC Business Summit Special Ministerial Plenary Session
On August 7, 2024, at the Special Ministerial Plenary Session of the BIMSTEC Business Summit, the High Commissioner of Sri Lanka to India addressed the critical topic of advancing the BIMSTEC Free Trade Agreement (FTA). This issue is particularly relevant as it aims to invigorate economic integration within the BIMSTEC region, enhancing regional cooperation.
Historical and Geographical Context
The High Commissioner began by acknowledging Asia's rich history of interconnected trade, diplomacy, and shared cultural heritage. Sri Lanka's strategic position in the Indian Ocean has historically linked it with BIMSTEC member states through maritime routes, facilitating the exchange of goods, cultures, and skills. Despite this historical connection, BIMSTEC remains one of the least integrated regions globally. Although intra-regional trade has grown significantly from USD 4.8 billion in 2000 to USD 35.96 billion in 2022, the region has yet to fully realize its trade and investment potential.
Commitment to Economic Integration
Sri Lanka is committed to strengthening trade relations and economic integration within BIMSTEC. The establishment of the BIMSTEC Free Trade Agreement is seen as a crucial step towards achieving sustainable regional growth. The High Commissioner noted that the Bangkok Declaration of 1997, which established BIMSTEC, aimed to create an environment conducive to rapid economic development. However, the FTA, outlined in the 2004 Framework Agreement, has faced delays. The agreement covers key areas such as tariff liberalization, trade in services, investment, and trade facilitation. Despite ongoing negotiations and 21 meetings of the Trade Negotiation Committees (TNCs), technical, political, and economic challenges persist.
Progress and Challenges
Over 20 rounds of negotiations have made significant progress, though challenges remain. The High Commissioner emphasized the need for member states to address contentious issues with innovative solutions, particularly in trade facilitation and customs cooperation. The recent BIMSTEC Foreign Ministers retreat highlighted the urgency of expediting the FTA and finalizing four key agreements. The High Commissioner called for focused efforts on specific components of the framework to overcome existing hurdles.
Regional Trade Agreements and Bilateral FTAs
In the meantime, member states are encouraged to leverage existing trade agreements and pursue bilateral FTAs to enhance market access. Sri Lanka, for example, is advancing its trade relations with various countries, having recently concluded an FTA with Thailand, negotiating an Economic & Technology Cooperation Agreement (ETCA) with India, and progressing towards a Preferential Trade Agreement (PTA) with Bangladesh.
Role of the Private Sector
The High Commissioner underscored the vital role of the private sector in promoting trade and investment. The establishment of BIMSTEC Business and Economic Fora aims to foster better engagement with the private sector. The current summit, organized by the Confederation of Indian Industry (CII), is an important initiative in this regard. The High Commissioner stressed that private sector support is crucial for concluding the BIMSTEC FTA, as governments often follow the lead of private enterprises in finalizing economic agreements.
Connectivity and Infrastructure
Effective regional market access also requires enhanced connectivity. The BIMSTEC Masterplan on Transport Connectivity, funded by the Asian Development Bank (ADB), is expected to improve regional integration. The High Commissioner highlighted the importance of addressing procedural and institutional aspects of connectivity, including air transport, short-sea shipping, and railway linkages. Increased private sector involvement in connectivity projects is also necessary. Sri Lanka, as an island nation, is well-connected by sea and air, benefiting from these transport links.
Energy Connectivity
Energy connectivity is another critical area for regional growth. The High Commissioner emphasized the need for greater cooperation in sharing energy resources, particularly hydropower and biomass, which are abundant in the region. Enhancing cross-border energy integration could help address energy deficits and contribute to regional development.
Future Prospects
Despite the region's recent economic growth, the High Commissioner noted that there is still potential for better resource utilization and increased investment. The private sector has a significant role to play in addressing these issues and driving further development.
In conclusion, the High Commissioner wished the BIMSTEC Business Summit success, reinforcing the importance of regional cooperation and the pivotal role of the Free Trade Agreement in achieving greater economic integration and prosperity for the BIMSTEC region.
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