ECONOMICS: South-South Network Forges New Links

By Marwaan Macan-Markar Reprint | | Print |

Marwaan Macan-Markar

BANGKOK, Jul 31 2004 (IPS) - In a sign of strengthening South-South cooperation, leaders from seven Asian counties pledged here Saturday to give life to a new free trade bloc and increase ties to profit from the wealth of traditional knowledge and bio-diversity they possess.

The free trade agreement (FTA) negotiations for the seven- member bloc – the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) – will start in September, Thai Prime Minister Thaksin Shinawatra told a press conference.

”We expect the trade volume between the members will increase tremendously and quickly,” Thaksin added.

The current trade volume between the members of BIMSTEC – which include Bangladesh, Bhutan, Burma, India, Nepal, Sri Lanka and Thailand – is estimated at seven billion U.S. dollars annually.

By contrast, China’s trade volume with the Association of South- east Asian Nations (ASEAN), of which Thailand is a key member, was over an estimated 50 billion U.S. dollars last year.

Furthermore, the two-way trade between Thailand and the United States topped 21 billion U.S. dollars in 2003.

It reflects the lack of interest within the BIMSTEC members to trade among themselves, preferring instead to build economic bridges with lucrative markets like the United States, the European Union, Japan and now China.

But the Thai premier led the call echoed by the other leaders at the summit, including India’s new Prime Minister Manmohan Singh, to change this disparity through a new free trade deal to be ready by 2017.

”In the past we did not look to each other but looked to other countries outside the region,” Thaksin said. ”But if we look to (our region) where we have 20 percent of the world’s population we will be able to expand our market.”

In February, ministers from the BIMSTEC countries, who have a combined population of 1.3 billion people, endorsed plans to set up a free trade area to stimulate economic growth.

The deal has in mind plans to relax tariffs and to enable the countries with the weaker economies to protect their key industries in the face of eventual competition from within the region.

Besides trade, the other areas of economic cooperation to be pursued include transport and communications, tourism development, improving the agriculture and fishing sector and strengthening the energy sector.

”We consider the trilateral India-Myanmar (Burma) -Thailand Highway proposal and the proposed Optical Fibre Telecommunication link alongside the highway as projects which would have considerable importance in the BIMSTEC context,” the Indian premier said during Saturday’s opening of the first ever BIMSTEC summit.

Yet at the same time, Bangladesh Prime Minister Begum Khaleda Zia urged her fellow government leaders to ensure that the region’s weaker economies will taste the benefits of this emerging trade deal.

”Our strategies should be supportive of the growing sectors, particularly those facing the challenges of globalisation,” she said during the one-day summit.

Zia’s concern is understandable, given the wide income disparities across the countries that border the Bay of Bengal.

Thailand tops the ranks of the average income per citizen, with a per capita income of 6,400 U.S. dollars in 2003, followed by Sri Lanka, with a per capita income of 3,180 U.S. dollars per year, and then India, with 2,840 U.S. dollars per year.

The rest hovered with a per capita income below 2,000 U.S dollars, with Burma, renamed Myanmar by the ruling military regime, at the bottom, with a 1,027 U.S. dollars per capita income.

On the other hand, India towers over its BIMSTEC members with its economic boom. Through the first quarter of this year, the Indian economy grew two 8.2 percent, which analysts say is the fastest for that country in 15 years.

Thailand also has a muscular economy, with a 6.7 economic growth last year, which made it the fastest growing economy in South-east Asia.

BIMSTEC, which originally stood for the initials of its founding members – Bangladesh, India, Myanmar, Sri Lanka and Thailand – with the last two initials for economic cooperation, was conceived in 1997, the year of South-east Asia’s financial crash.

But as witnessed during Saturday’s summit, the regional bloc appears keen to break new ground seven years after its inception.

Among them is a pledge to protect the region’s bio-diversity and convert the traditional knowledge within each country, such as traditional medicines, to help heal the sick.

During a two-hour closed-door meeting, the government leaders agreed to establish a network to tap into these twin resources for the benefit of the region.

”We agreed to set up a network of national centres of excellence to discuss ways to promote traditional medicine and generic drugs so that the poor would have access to affordable treatment,” Thaksin told the media.

On bio-diversity, the leaders felt there was a need to bring this asset together and combine it with modern technology, the Thai premier said. ”For example, Thailand has incorporated research with China to develop drugs for HIV/AIDS using herbs”