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Grouping to check China's
influence
By Peter Morris
Economic and
foreign ministers from six countries, led by India, signed
a draft agreement on Sunday that paves the way for the
establishment of a trade zone linking India with Southeast
Asia. The agreement calls for tariff reductions and the
creation of a new free-trade area by 2017.
The
regional economic grouping has been dubbed "BIMST-EC"
and includes Bhutan, Nepal, India, Myanmar, Sri Lanka
and Thailand. Bangladesh, which was originally asked to
join the group - the name originally stood for
Bangladesh, India, Myanmar, Sri Lanka and Thailand
Economic Cooperation - decided not to sign on after
expressing concerns about the loss of tariff revenues,
but is expected to sign on at a BIMST-EC leaders' summit
in July.
The free-trade area would span an
enormous cross-section of the globe and represent some
1.8 billion people - 1.3 billion South Asians and 500
million Southeast Asians. Signatories are committed to
progressive tariff reductions beginning in mid-2006,
with tariffs gradually being reduced to zero by 2017.
There will also be "fast track" sectors that have faster
tariff-reduction timelines. In addition, Myanmar, Nepal
and Bhutan will enjoy slower tariff reduction schedules
than India, Sri Lanka and Thailand.
India is
intent on countering China's growing economic clout in
Southeast Asia, a region that is seemingly up for grabs
as Japan, the United States, China and now India have
concluded trade agreements with the Association of
Southeast Asian Nations (ASEAN). At the crucial ASEAN
summit in Bali last October, leaders of the 10-member
grouping endorsed a plan to transform their region into
a giant free-trade zone by 2020, with free-trade
agreements (FTAs) to be completed with China in 2010,
India in 2011 and Japan in 2012. For its part, the US
reached a bilateral FTA with Singapore last year and is
currently working on similar deals with Thailand and the
Philippines. The China-ASEAN trade agreement, the first
phase of which was launched this year, has proved to be
a blessing for both sides, and bilateral trade hit a
record high of US$78.25 billion in 2003, an increase of
42.8 percent year-on-year, according to Asia Pulse.
China's efforts to court ASEAN as a whole is
considered by analysts as a move to establish itself as
the regional hegemon - a security regime that India is
clearly reluctant to accept. The stakes are particularly
high in Myanmar, which both China and India have a
vested interest in by virtue of the country's critical
geographic location. Myanmar is the gateway - both over
land and by sea - between South and East Asia, and its
waters straddle vital oil-shipping lanes that are the
lifeblood of China's economy.
Chinese influence
in Myanmar takes the form of foreign aid,
military-equipment sales and cooperation in a number of
other sectors. To be sure, one of the main sticking
points between China and India is the existence of a
Chinese maritime reconnaissance and electronic
intelligence system on Myanmar's Coco Islands capable of
monitoring Indian military activities, particularly
naval activities in the Bay of Bengal, which China and
India are jostling to control. In fact, India's goal is
to expand the scope of BIMST-EC to include cooperation
on political and security issues.
Indeed, on the
sidelines of BIMST-EC trade negotiations, India agreed
to fund a feasibility study for the conversion of the
Myanmar port of Dawei into a deepsea facility. While the
possibility of BIMST-EC becoming a powerful political
body is debatable, an intriguing development that came
out of last weekend's meeting was Thailand's pledge to
fund a regional technical-support center for the trade
group - in essence a BIMST-EC secretariat. India will
look to the BIMST-EC secretariat to coordinate regional
policies relating to terrorism, security and trade.
India, as part of its "Look East" strategy, is
counting on BIMST-EC to boost its political muscle in
Southeast Asia even as its trade with the region is
growing. It is estimated that trade between India and
ASEAN, which was $12.5 billion in 2003, will hit $30
billion by 2007. Bilateral trade between India and
Thailand, after signing an FTA last October, is expected
to yield "early harvest" benefits from next month. India
aims to promote an India-Thailand-Sri Lanka axis as the
driving force behind BIMST-EC, with the two largest
economies - India and Thailand - pledging to extend
human-resource training to less-developed countries in
the group. One of BIMST-EC's mantras is the "three-plus"
principle, whereby three members plus a fourth can
initiate a project even if other countries are opposed -
although critical policy issues would be decided by
consensus.
The recent BIMST-EC meeting also
finalized agreements for reducing costs for shipping
between regional ports; establishing a regional energy
network based on hydrocarbons and hydro-electricity;
cooperating on the exploitation of fishing grounds in
the Bay of Bengal; and establishing an open skies
regime. A funding scheme for the highway linking
Thailand to India via Myanmar was also approved.
Finally, the ministers said they would launch a business
travelers' card based on the Asia-Pacific Economic
Cooperation (APEC) card that would double as a
multiple-entry visa for business travelers from BIMST-EC
countries.
With an eye on China's growing
influence in Southeast Asia, India has created an
intriguing model of regional cooperation that plays on
the historical, religious and cultural ties between
India and Southeast Asia. More important, BIMST-EC
conveniently lays out an ambitious agenda that will
serve to advance India's security agenda in the region.
(Copyright 2004 Asia Times Online Co, Ltd. All
rights reserved. Please contact content@atimes.com for
information on our sales and syndication policies.)
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