Framework Agreement on the BIMST-EC Free Trade Area

PREAMBLE
THE GOVERNMENTS of the Kingdom of Bhutan, the Republic of India, the Union of Myanmar, the Kingdom of Nepal, the Democratic Socialist Republic of Sri Lanka and the Kingdom of Thailand, Member States of BIMST-EC (Bangladesh, India, Myanmar, Sri Lanka and Thailand Economic Cooperation), hereinafter referred to collectively as "the Parties" and individually as "a Party";

TAKING NOTE of the Agreed Conclusions of the BIMST-EC Economic Ministerial Retreat held in Bangkok, Thailand, on 7th August, 1998, that BIMST-EC should aim and strive to develop into a Free Trade Arrangement and should focus on activities that facilitate trade, increase investments and promote technical cooperation among member countries;

MOTIVATED by the need for strengthening economic cooperation in the region to fully realise the potential of trade and development for the benefit of their people;

RECOGNIZING the need to harmonize with the changing global economic environment and the catalytic role that regional trading arrangements can play towards accelerating global liberalization as building blocks in the framework of the multilateral trading system;

CONVINCED that a BIMST-EC Free Trade Area will act as a stimulus to the strengthening of economic cooperation among the Parties, lower costs, increase intra-regional trade and investment, increase economic efficiency, create a larger market with greater opportunities and larger economies of scale for the businesses of the Parties, and enhance the attractiveness of the Parties to capital and talent;

REAFFIRMING the rights, obligations and undertakings of the respective Parties under the World Trade Organization (WTO) and other
multilateral, regional and bi-lateral agreements and arrangements; and

RECOGNIZING that the least developed countries in the region need to be accorded special and differential treatment commensurate with their development needs;

HAVE AGREED AS FOLLOWS:

ARTICLE 1
Objectives

The objectives of this Agreement to:

(a) strengthen and enhance economic, trade and investment cooperation among the Parties;

(b) progressively liberalize and promote trade in goods and services, create a transparent, liberal and facilitative investment regime;

(c) explore new areas and develop appropriate measures for closer cooperation among the Parties; and

(d) facilitate the more effective economic integration of the least developed countries in the region, and bridge the development gap among the Parties.

ARTICLE 2
Measures for Comprehensive Free Trade Area (FTA)

The Parties agree to negotiate expeditiously in order to establish a BIMST-EC FTA to strengthen and enhance economic cooperation through the following:

(a) progressive elimination of tariffs and non-tariff barriers in substantially all trade in goods;

(b) progressive liberalization of trade in services with substantial sectoral coverage;

(c) establishing an open and competitive investment regime that facilitates and promotes investments within the BIMST-EC FTA;

(d) provision for special and differential treatment and flexibility to the least developed countries in the region;

(e) flexibility to the Parties in the BIMST-EC FTA negotiations to address their sensitive areas in the goods, services and investment
sectors based on agreed principles of reciprocity and mutual benefits;

(f) establishing effective trade and investment facilitating measures, including, but not limited to, simplification of customs procedures
and development of mutual recognition arrangements;

(g) expanding economic cooperation in areas as may be mutually agreed among the Parties that will complement the deepening of trade and investment links among the Parties and formulating action plans and programmes in the agreed sectors/areas of cooperation; and

(h) establishing appropriate mechanisms for implementation of this Agreement.

ARTICLE 3
Trade in Goods

1. The Parties agree to enter into negotiations for eliminating the tariffs and non-tariff barriers in substantially all trade in goods between the
Parties, except, where necessary, those permitted under Article XXIV (8)

(b) of the General Agreement on Tariffs and Trade (GATT) 1994.

2. The products, except those included in the Negative List, shall be subject to tariff reduction or elimination on the following two tracks:

(a) Fast Track: Products listed in the Fast Track by a Party on its own accord shall have their respective applied MFN tariff rates gradually
reduced/eliminated in accordance with specified rates to be mutually agreed by the Parties, within the following timeframe:

(b) Normal Track: Products listed in the Normal Track by a Party on its own accord shall have their respective applied MFN tariff rates
gradually reduced/eliminated in accordance with specified rates to be mutually agreed by the Parties, within the following timeframe:

(c) The number of products in the Negative List shall be subject to a maximum ceiling to be mutually agreed among the Parties, with
flexibility to the LDC Parties to seek derogation, in one form or the other, in respect of products of their export interest.

3. Negotiations among the Parties to establish the BIMST-EC PTA covering trade in goods shall also include, but not be limited to the
following:

(a) detailed modalities governing the tariff reduction or elimination programmes as well as any other related matter, including principles
governing reciprocal commitments not provided for in the preceding paragraphs of this Article;

(b) Rules of Origin;

(c) Treatment of out-of-quota rates;

(d) Modification of a Party's commitments under the agreement on trade in goods based on Article XXVIII of the GATT 1994;

(e) Non-tariff measures/barriers imposed on any product covered under this Agreement; and

(f) Detailed procedures for safeguards based on GATT principles;

Part 2