Before the growth of regional trading blocs, there were the cold-war alliances such as the NATO, the Warsaw Pact, SEATO and CENTO. If it was geopolitics that led to the earlier political blocs, at the core of the recent developments are the compulsions of an increasingly interdependent trade lattice in a globalising world. Although regional groupings had already been in force in South and Southeast Asia in the form of SAARC and ASEAN, an association aimed at fostering economic cooperation between parts of these regions was established in Bangkok in June 1997. BIMSTEC's name originally stood for Bangladesh, India, Sri Lanka and Thailand Technical and Economic Cooperation. After Burma joined the group in December of that year, and Bhutan and Nepal in 2004, the acronym's expanded form was changed to the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation.
Trade liberalisation alone is not a sufficient condition for countries to turn to either single or multiple 'regional integration arrangements' (RIA). The enormous pressures of globalisation are forcing countries to seek greater efficiency through larger markets, increased competition, access to superior technology, and greater investment outlets through RIAs. Within such arrangements, there is also a desire to assist neighbouring nations for mutually beneficial reasons, as well as to take preventive action against the spillover of unrest and mass economic migration. The compelling logic of regional groupings, coupled with the obvious failure of SAARC and the near-debilitating East Asian crisis of 1997, collectively contributed to the formation of BIMSTEC.
BIMSTEC had initially identified six areas of cooperation, for which the respective 'lead' countries were designated: trade and investment (Bangladesh), technology (Sri Lanka), transport and communication (India), energy (Burma), tourism (India), and fisheries (Thailand). Among its most significant goals, BIMSTEC proposes to implement a free trade agreement (FTA) for trade in goods starting in July 2006, and an FTA accord on services and investment in July 2007.
A comparison with established regional blocs reveals the daunting challenge BIMSTEC faces. In 2004, exports among the Association of Southeast Asian Nations (ASEAN) countries were at the level of USD 123.7 billion. As pioneers of regional economic cooperation, the countries that make up the European Economic Community (EEC) traded extensively among themselves, even in the absence of a preferential trading arrangement. Before any liberalisation, intra-EEC imports made up 25 per cent of total imports. Current intra-BIMSTEC trade, for its part, stands at just 4 percent of total trade.