The Bangladesh-China-India-Myanmar Trade Corridor

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By Nathan Barlow

Jun. 7 – A trade corridor is a specific trading route that utilizes common trade agreements and infrastructure of the involved nations to increase the flow and productivity of trade. The establishment of a trade corridor by the Bangladesh–China–India–Myanmar Forum for Regional Cooperation (BCIM) was an idea originally developed by Chinese scholars in Kunming at the end of the 1990s, then called the ‘Kunming Initiative’.

The ‘Kunming Initiative’ evolved into the BCIM Forum for Regional Cooperation during its first meeting in 1999, with the objective to:

  • Create a platform where major stakeholders could meet and discuss issues in the context of promoting economic growth and trade in the BCIM region;
  • Identify specific sectors and projects which would promote greater collaboration amongst the BCIM nations; and
  • Strengthen cooperation and institutional arrangements among the concerned key players and stakeholders to deepen BCIM ties.

The forum primarily emphasized track II coordination (non-government actors), yet unfortunately only lead to minimal action or tangible results. During the 2011 meeting it was agreed a multi-track initiative was needed, adding track I coordination (government actors), which would entail a “high-level official meeting system and joint government workforce system.”

Recent Developments
The most recent development to the BCIM came to fruition during the meeting between Chinese Premier Li Keqiang and Indian Prime Minister Manmohan Singh last month. Li’s visit marked the first time high-ranking officials had discussed the trade corridor, giving the project new life.

“The consensus of constructing BCIM economic corridor jointly proposed by China and India receives much attention from all walks of life… [The corridor] will surely release enormous growth energy and provide new vitality for the Asian economic integration and global growth,” said Chinese Foreign Minister Wang Yi, speaking of Li’s recent visit to India.

Benefits of the Trade Corridor
The economic advantages of the BCIM trade corridor are considerable, most notably: access to numerous markets in Southeast Asia, improvement of transportation infrastructure and creation of industrial zones.

The corridor would cover 1.65 million square kilometers encompassing an estimated 440 million people in the regions of Yunnan, Bangladesh, Myanmar, West Bengal, Bihar and states in Northern India.

The construction of industrial zones will have a twofold benefit. Firstly, it will lead to industrial transfer boosting industries such as processing, manufacturing and commerce logistics. Secondly, as labor costs rise in China, labor-intensive industries such as textile and agroprocessing will eventually be shifted out of China. These industries will need to be transferred to new regions with lower labor costs. Companies operating in China will likely give priority to the trade corridor region given its established infrastructure, improved logistics and ease of access.

Yunnan University professor of International Studies Bi Shihong argues that the building of industrial zones along the corridor “will stimulate the economic growth of large and medium-sized cities along the corridor.”

Interaction with the ASEAN Free Trade Area
The economic corridor would present a new age of interconnectedness in the region. Through linking the ASEAN Free Trade Area, ASEAN-China Free Trade Area and the ASEAN-India Free Trade Area, the corridor would constitute as one of the largest free trade areas.

Bangladesh, China, India and Myanmar hope to create a corridor that would effectively combine road, rail, water and air linkages in the region. This interconnectedness would facilitate the cross-border flow of people and goods, minimize overland trade obstacles, ensure greater market access, and increase trade.

Implications of the talks between China and India
The recent discussions regarding the BCIM trade corridor is promising: now that top Chinese and Indian officials have begun discussing the practicalities of such a project, it can become a reality.

“The two sides appreciated the progress made in promoting cooperation under the BCIM Regional Forum… The two sides agreed to consult the other parties [Bangladesh and Myanmar] with a view to establishing a Joint Study Group on strengthening connectivity in the BCIM region for closer economic, trade, and people-to-people linkages and to initiating the development of a BCIM Economic Corridor,” read a joint statement regarding their discussion.

The numerous economic opportunities and benefits for all BCIM nations will be the driving force in the creation of the trade corridor.

China will play a decisive role in the creation of the corridor as it faces economic slowdown and its need to expand into new markets becomes more urgent. Therefore, it is essential for China to maintain positive diplomatic relations with India and stress the tangible advantages of such an endeavor for the lesser-developed nations of Myanmar and Bangladesh.

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