BIMSTEC Draft Coastal Shipping Agreement

Member states of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) met in New Delhi to explore avenues for promoting coastal shipping within the region. The Indian Ministry of Shipping has prepared a draft text for a BIMSTEC Coastal Shipping Agreement.

The agreement seeks to facilitate coastal shipping among member countries, with the goal of boosting trade. If ratified and implemented, it could shift cargo movement to a more cost-effective, environmentally friendly, and faster coastal shipping route.

BIMSTEC Coastal Shipping Agreement: Charting a Course for Regional Integration

The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) has long strived to foster closer ties among its member nations. In 2018, a significant step was taken towards enhancing regional connectivity with discussions centered on a draft coastal shipping agreement. This initiative, spearheaded by the Indian Ministry of Shipping, represents a concerted effort to unlock the economic potential of the Bay of Bengal region through enhanced maritime cooperation. The proposed BIMSTEC Coastal Shipping Agreement holds the promise of revolutionizing cargo movement, offering a more efficient, cost-effective, and environmentally conscious alternative to traditional land-based transportation. However, the realization of this vision hinges on the successful navigation of complex political, economic, and logistical considerations, and the unwavering commitment of all member states to a shared vision of regional prosperity.

The Genesis of the Agreement: Addressing Regional Connectivity Gaps

The impetus behind the BIMSTEC Coastal Shipping Agreement lies in the recognition that existing transportation infrastructure within the region is often inadequate to meet the growing demands of intra-regional trade. Land routes are frequently hampered by congestion, poor road conditions, and cumbersome border crossing procedures, leading to delays and increased costs. Rail networks, while offering a more efficient alternative for long-distance transport, are often limited in their geographical coverage and lack the necessary interoperability to facilitate seamless cross-border movement of goods.

Coastal shipping, on the other hand, presents a viable solution to these challenges. The Bay of Bengal, with its extensive coastline and navigable waterways, offers a natural and underutilized avenue for trade. By leveraging this maritime advantage, BIMSTEC member states can significantly reduce transportation costs, shorten delivery times, and enhance their overall competitiveness in the global market.

Understanding BIMSTEC: A Regional Powerhouse in the Making

Before delving further into the specifics of the agreement, it is crucial to understand the context within which it operates. BIMSTEC, established in 1997, comprises Bangladesh, India, Myanmar, Sri Lanka, Thailand, Nepal, and Bhutan. This diverse group of nations shares a common geographical space in the Bay of Bengal region and a shared aspiration for economic and social development.

The organization's primary objective is to promote multi-sectoral technical and economic cooperation among its member states. It identifies fourteen priority sectors, including trade, investment, transport and communication, energy, tourism, agriculture, counter-terrorism, poverty alleviation, public health, environment and disaster management, people-to-people contact, culture, and climate change.

BIMSTEC operates on the principle of consensus-based decision-making, which ensures that all member states have a voice in shaping the organization's policies and priorities. However, this consensus-driven approach can also be a source of delays and challenges, as it requires careful negotiation and compromise to reconcile the diverse interests and perspectives of its members. The BIMSTEC Secretariat, based in Dhaka, Bangladesh, plays a crucial role in facilitating cooperation among member states, organizing meetings, and coordinating projects. The Secretariat's powers are primarily limited to coordination and facilitation, and it lacks the enforcement powers to compel member states to comply with agreements or decisions. This reliance on the goodwill and cooperation of member states underscores the importance of building trust and fostering a sense of shared ownership in BIMSTEC initiatives.

Coastal Shipping: A Primer on its Potential and Challenges

Coastal shipping, as the name suggests, refers to the movement of goods and passengers by sea along the coast, typically within a country or region. It offers several advantages over land-based transport, particularly for bulk cargo such as coal, iron ore, cement, and agricultural products.

One of the primary benefits of coastal shipping is its cost-effectiveness. Shipping goods by sea is generally cheaper than transporting them by road or rail, especially for long distances and large volumes. This cost advantage stems from the lower fuel consumption of ships compared to trucks or trains, as well as the economies of scale that can be achieved by transporting large quantities of cargo in a single vessel.

Coastal shipping is also considered to be a more environmentally friendly mode of transport than road or rail. Ships typically emit less carbon dioxide per ton-kilometer than trucks or trains, contributing to a lower carbon footprint. In addition, coastal shipping can help to reduce traffic congestion on roads and railways, leading to further environmental benefits.

However, coastal shipping also faces several challenges. One of the main obstacles is the lack of adequate infrastructure, including ports, jetties, and handling equipment. Many ports in the BIMSTEC region are ill-equipped to handle large volumes of cargo, leading to delays and inefficiencies. In addition, the shallow draft of some ports limits the size of vessels that can be accommodated, further restricting the potential of coastal shipping.

Another challenge is the regulatory framework governing coastal shipping. Different countries have different rules and regulations regarding vessel registration, cargo handling, and customs procedures, which can create barriers to cross-border trade. Harmonizing these regulations is essential to facilitate the smooth and efficient movement of goods by sea.

The Draft Agreement: Key Provisions and Objectives

The draft BIMSTEC Coastal Shipping Agreement, prepared by the Indian Ministry of Shipping, aims to address these challenges and unlock the full potential of coastal shipping in the region. While the specific details of the agreement are not publicly available, it is likely to include provisions on the following key areas:

• Facilitation of Coastal Shipping: The agreement is expected to outline measures to facilitate the movement of goods and vessels between BIMSTEC member states. This could include simplifying customs procedures, reducing port charges, and streamlining documentation requirements.
• Harmonization of Regulations: The agreement is likely to address the need for harmonizing regulations related to coastal shipping. This could involve adopting common standards for vessel safety, cargo handling, and environmental protection.
• Infrastructure Development: The agreement may include provisions for promoting the development of port infrastructure in the region. This could involve encouraging public-private partnerships to invest in new ports and upgrade existing facilities.
• Capacity Building: The agreement may also address the need for capacity building in the maritime sector. This could involve providing training to port workers, customs officials, and other stakeholders to improve their skills and knowledge.
• Dispute Resolution: The agreement is likely to include a mechanism for resolving disputes between member states related to coastal shipping. This could involve arbitration or other forms of alternative dispute resolution.

The overarching objective of the agreement is to create a conducive environment for coastal shipping, thereby boosting trade, enhancing connectivity, and promoting economic growth in the BIMSTEC region.

India's Role: A Proponent of Regional Connectivity

India has been a strong proponent of the BIMSTEC Coastal Shipping Agreement, viewing it as a key element of its broader strategy to enhance regional connectivity and promote economic integration in the Bay of Bengal region. India's interest in the agreement stems from several factors:

• Economic Benefits: India stands to benefit significantly from increased trade with other BIMSTEC member states. Coastal shipping can provide a cost-effective and efficient means of transporting goods to and from India's eastern and southern ports, boosting exports and imports.
• Regional Influence: By taking the lead in promoting the agreement, India can enhance its regional influence and strengthen its ties with other BIMSTEC member states. This can help India to project its power and influence in the Bay of Bengal region, which is strategically important for its security and economic interests.
• Maritime Security: Increased maritime cooperation can also help to improve maritime security in the Bay of Bengal region. By working together to combat piracy, smuggling, and other maritime crimes, BIMSTEC member states can enhance the safety and security of their maritime trade routes.

India has already taken several steps to promote coastal shipping within its own borders, including investing in port infrastructure and simplifying customs procedures. The BIMSTEC Coastal Shipping Agreement is seen as a natural extension of these efforts, allowing India to leverage its maritime capabilities to promote regional trade and connectivity.

Stakeholder Perspectives: A Tapestry of Interests

While India is a strong proponent of the agreement, other BIMSTEC member states have their own perspectives and priorities. It is important to understand these different viewpoints to appreciate the challenges and opportunities associated with the agreement.

• Bangladesh: Bangladesh, with its extensive coastline and numerous ports, has a significant interest in promoting coastal shipping. The agreement could provide Bangladesh with access to new markets and opportunities for trade, as well as help to develop its maritime sector. However, Bangladesh may also have concerns about the potential impact of the agreement on its domestic shipping industry and the need to protect its maritime resources.
• Myanmar: Myanmar, strategically located between India and Southeast Asia, has the potential to become a major transit hub for coastal shipping. The agreement could help to develop Myanmar's port infrastructure and attract foreign investment in its maritime sector. However, Myanmar may also face challenges in implementing the agreement due to its limited administrative capacity and ongoing political instability.
• Sri Lanka: Sri Lanka, an island nation with a well-developed port infrastructure, has a strong interest in promoting maritime trade. The agreement could help to further integrate Sri Lanka into the regional economy and enhance its role as a major transshipment hub. However, Sri Lanka may also have concerns about the potential impact of the agreement on its domestic shipping industry and the need to protect its maritime environment.
• Thailand: Thailand, with its advanced manufacturing sector and strong export orientation, has a significant interest in promoting regional trade. The agreement could provide Thailand with access to new markets in South Asia and help to reduce its reliance on land-based transport. However, Thailand may also have concerns about the potential impact of the agreement on its domestic shipping industry and the need to ensure that it is consistent with its obligations under other trade agreements.
• Nepal and Bhutan: Nepal and Bhutan, being landlocked countries, rely heavily on transit routes through India and Bangladesh for their trade. The agreement could provide these countries with access to new ports and shipping routes, reducing their transportation costs and enhancing their competitiveness. However, Nepal and Bhutan may also face challenges in accessing and utilizing these new opportunities due to their limited infrastructure and administrative capacity.

The successful implementation of the BIMSTEC Coastal Shipping Agreement will require careful consideration of these diverse stakeholder perspectives and a willingness to address their concerns through dialogue and negotiation.

Historical Context: Echoes of Past Efforts

The BIMSTEC Coastal Shipping Agreement is not the first attempt to promote regional trade and integration in the Bay of Bengal region. Over the years, various initiatives have been launched with varying degrees of success.

One notable example is the ASEAN Framework Agreement on Facilitation of Goods in Transit, which aims to simplify customs procedures and reduce barriers to cross-border trade among ASEAN member states. While the agreement has achieved some progress in facilitating trade, it has also faced challenges due to the lack of harmonization of regulations and the persistence of non-tariff barriers.

Another example is the Bangladesh-China-India-Myanmar (BCIM) Economic Corridor, which aims to promote trade and investment between these four countries through the development of transportation infrastructure and the establishment of special economic zones. While the BCIM Economic Corridor has the potential to transform the region, it has also faced challenges due to political instability, security concerns, and lack of funding.

These past efforts provide valuable lessons learned for the BIMSTEC Coastal Shipping Agreement. They highlight the importance of addressing regulatory barriers, investing in infrastructure, and building trust among member states.

Broader Implications: A Ripple Effect of Cooperation

The BIMSTEC Coastal Shipping Agreement has the potential to generate a wide range of positive implications for the region, spanning political, diplomatic, legal, security, economic, and environmental domains.

• Political: The agreement can contribute to strengthening regional cooperation and integration by fostering a sense of shared ownership and common purpose among BIMSTEC member states. It can also help to build trust and confidence between countries that have historically had strained relations.
• Diplomatic: The agreement can enhance diplomatic relations among BIMSTEC member states by providing a platform for dialogue and cooperation on issues of mutual interest. It can also help to promote a more positive image of the region in the international arena.
• Legal: The agreement can create a legal framework for coastal shipping in the region, providing clarity and certainty for businesses and investors. It can also help to harmonize regulations and reduce barriers to cross-border trade.
• Security: The agreement can contribute to increased maritime security cooperation by providing a framework for joint patrols, information sharing, and capacity building. It can also help to combat piracy, smuggling, and other maritime crimes.
• Economic: The agreement can boost trade and economic growth in the region by reducing transportation costs, enhancing connectivity, and promoting investment. It can also help to create new jobs and opportunities for businesses.
• Environmental: The agreement can promote more sustainable transportation practices by shifting cargo from road and rail to coastal shipping. This can help to reduce carbon emissions and improve air quality.

Connections and Context: Weaving the Threads Together

The BIMSTEC Coastal Shipping Agreement is closely linked to several other ongoing issues in the region, including regional connectivity initiatives, trade facilitation efforts, and maritime security cooperation.

It is also connected to past efforts to promote regional trade and integration in the Bay of Bengal region, drawing on the lessons learned from these experiences.

Looking ahead, the future outlook for the agreement depends on the successful navigation of complex political, economic, and logistical considerations, and the unwavering commitment of all member states to a shared vision of regional prosperity. The potential ratification and implementation of the agreement could lead to increased coastal shipping and trade within the BIMSTEC region, transforming the economic landscape of the Bay of Bengal. Success hinges on addressing the concerns of member states, ensuring effective implementation, and fostering a spirit of cooperation and mutual benefit.