Can India, South & Southeast Asia Counter Trump’s Tariffs With BIMSTEC Free Trade Agreement? Explained

Last Updated:April 04, 2025, 14:06 IST

With focus on regionalism as the post-World War 2 global order continues to come undone under the Trump administration, the countries are expected to adopt Bangkok Vision 2030, which includes a roadmap for conclusion of negotiations for the BIMSTEC FTA

BIMSTEC has five members from South Asia (Bangladesh, Bhutan, India, Nepal, and Sri Lanka) and two from Southeast Asia (Myanmar and Thailand). (X)

Prime Minister Narendra Modi, in Thailand for the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) summit, sought to reset the ties between New Delhi and Bangkok, amid the global uncertainty unleashed by US President Donald Trump’s ‘reciprocal’ tariffs.

“Thailand holds a special place in India’s ‘Act East’ Policy and the Indo-Pacific vision. Today, we have decided to strengthen our ties into a strategic partnership. Also, we discussed establishing a ‘Strategic Dialogue’ between our security agencies," said Modi on Thursday, at a joint press briefing alongside Thai Prime Minister Paetongtarn Shinawatra.

On Thursday, the US imposed a range of tariffs on countries across the world, including India and Thailand, even as BIMSTEC inked a maritime transport cooperation agreement to boost regional connectivity and trade. With focus on regionalism as the post-World War 2 global order continues to come undone under the Trump administration, BIMSTEC is expected to adopt Bangkok Vision 2030, which includes a roadmap for conclusion of negotiations for the free trade agreement (FTA).

Can the BIMSTEC FTA help India and other countries counter Trump’s tariffs? Here’s all you need to know.

WHAT IS BIMSTEC?

BIMSTEC is a grouping of seven member states lying in the littoral and adjacent areas of the Bay of Bengal. It is a unique link connecting South Asia with Southeast Asia – five members from South Asia (Bangladesh, Bhutan, India, Nepal, and Sri Lanka) and two from Southeast Asia (Myanmar and Thailand).

The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) brings together 1.7 billion people – 22% of the world population with a combined GDP of US$ 5 trillion.

The organisation came into existence on June 6,1997 through the ‘Bangkok Declaration’. It was originally formed with four member states with the acronym ‘BIST-EC’ (Bangladesh, India, Sri Lanka and Thailand Economic Cooperation). Following the inclusion of Myanmar in December 1997, it was renamed ‘BIMST-EC’ (Bangladesh, India, Myanmar, Sri Lanka and Thailand Economic Cooperation). With the inclusion of Nepal and Bhutan in 2004, the name of the grouping was changed to BIMSTEC.

BIMSTEC organises inter-governmental interactions through summits, ministerial meetings, senior officials meetings, permanent working committee, joint working groups, and experts’ level meetings.

WHAT IS BIMSTEC FREE TRADE AREA (FTA)?

The Framework Agreement on the BIMSTEC Free Trade Area was signed in Phuket, Thailand on February 8, 2004 and came into force on June 30, 2004.

Article 2 of the Framework Agreement outlines the following areas to be covered by the “Comprehensive Free Trade Area (FTA)":

Progressive elimination of tariffs and non-tariff barriers in substantially all trade in goodsProgressive liberalisation of trade in services with substantial sectoral coverageEstablishing an open and competitive investment regime that facilitates and promotes investment within the BIMSTEC FTAEstablishing effective trade and investment facilitating measures, including, but not limited to, simplification of customs procedures and development of mutual recognition arrangementsEstablishing appropriate mechanisms for implementation of the agreement.

CONSTITUENT AGREEMENTS OF BIMSTEC FTA

The BIMSTEC Trade Negotiating Committee (TNC) was set up with the task of negotiating the constituent agreements of the BIMSTEC FTA. TNC has several working groups under which it is mandated to negotiate the constituent agreements of BIMSTEC FTA.

Following agreements are currently under negotiation:

Agreement on Trade in Goods of the Framework Agreement on the BIMSTEC Free Trade AreaAgreement on Cooperation and Mutual Assistance in Customs Matters for the BIMSTEC Free Trade AreaAgreement on Dispute Settlement Procedures and Mechanism of the FrameworkAgreement on the BIMSTEC Free Trade AreaAgreement on Trade in Services of the Framework Agreement on the BIMSTEC Free Trade AreaAgreement on Investment of the Framework Agreement on the BIMSTEC Free Trade AreaAgreement on Trade Facilitation for the Framework Agreement on the BIMSTEC Free Trade AreaProtocol to amend the Framework Agreement on the BIMSTEC Free Trade Area

WHERE INDIA STANDS

India and Thailand, its current chair, are two of the largest economies in the BIMSTEC.

Indra Mani Pandey, Secretary General of BIMSTEC, was reported as saying that India and the BIMSTEC members will agree to the roadmap for the FTA in the summit.

“Every region needs to look out for itself, whether it is in food, fuel and fertiliser supply, vaccines or speedy disaster response. We are seeing that unfold before our very eyes. Times have indeed changed. Shorter supply chains and immediate neighbours have a salience much more than before," said External Affairs Minister S Jaishankar in his opening remarks at the BIMSTEC summit.

He added: “Colleagues, we meet today in the 28th year of the BIMSTEC. And we do so in very uncertain and volatile times, when the global order itself is under visible churn. This should encourage us to approach BIMSTEC from a more ambitious perspective. The new order, whose outlines have only now started to become visible, is intrinsically more regional and agenda-specific."

In August 2024, Union Minister of Commerce & Industry Piyush Goyal had said that BIMSTEC members should re-examine the priorities of member nations with regards to trade negotiations so that the delayed Free Trade Agreement can be finalised.

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