This paper situates the agenda of economic integration under the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), focusing on merchandise trade, in a fraught external environment, presents the pre-existing challenges within the region, discusses the implications of extra-regional free trade agreements (FTAs) pursued by member states, and highlights some avenues of advancing regional economic integration. Five key messages are (i) a BIMSTEC FTA will inject momentum into the regional body, but trade-restricting non-tariff measures must be addressed for an FTA to be meaningful; (ii) successfully developing regional value chains and integrating the region into global value chains depend on economic linkages with extra-regional economies as well, through flows of intermediate goods, capital goods and investment; (iii) trade liberalization should be complemented with support for trade adjustment and improving the supply side; (iv) inclusive