Economy News [The Kathmandu Post (Nepal)]

CHAUTARA, Jan 30 - After the increment in customs evaluation three times within a year of raw wool used in the manufacture of Pasmina shawl, import of wool through official channel has started to decline substantially.

Officials at the Tatopani customs agree that repeated increment in the customs evaluations has escalated smuggling of wool into the country from Chinese autonomous region of Tibet. The volume of wool import recorded in Tatopani customs also supports decline in the import. According to customs figure, total wool import, which recorded 1800 kilograms in August- September declined to meagre 210 kilograms in November-December. Import of wool declined further in January.

Since last May, customs evaluation has shot up by over 350 percent. Customs evaluation increased from initial US$ 20 per kgs to US$ 50 per kgs and eventually to current US$ 90. However, government has slashed down the customs rate to 23.5 percent from earlier 33 percent during this period.

Increasing incidents of police raid also justifies the smuggling thesis. Police has so far tracked down over 3 million rupees equivalent smuggled wool and silk yarn since last November. Customs officials agree some discrete incidents of smuggling but deny it as an established practice in the last few months. " Increase in customs evaluation has definitely prompted smuggling but a few such incidents should not be interpreted as escalation in corruption," said Bharat Raj Subedi, Chief of Tatopani Customs Office.

The views of Custom’s Chief also stand a chance of truth. One of the fundamental reasons behind the decline of import of wool is also due to the seasonal nature of the Pashmina industry. Pashmina export to Europe and America has also declined by 90 percent in December compared to the earlier month. The import could have been declined also due to substantial slash in the export of Pashmina to Europe.

KATHMANDU, Jan 30 - A group of experts and NGOs which recently congregrated in the Indian capital New Delhi has recommended suggestions that would help UNTAD to regain its lost global status in the area of coordination and decision making during its tenth Conference to be held soon.

UNCTAD (United Nations Conference on Trade and Development) is going to observe its tenth Conference at Bangkok on February 12-19, 2000, which is going to be the first major conference on the global trade after the failure of WTO’s conference in Seattle last December.

The recommendations came from a meeting jointly organized by Consumer Unity & Trust Society (CUTS) and South Asia Watch on Trade, Economy and Environment, entitled "From Seattle Ministerial to UNCTAD-X: Issues of Concern." Civil society groups from Nepal, Bangladesh, India, Pakistan and Sri Lanka, had assembled in New Delhi to discuss their concerns for being reflected at the ensuing meeting of the UNCTAD-X.

The South Asian recommendations notes that globalization, issues pertaining to market access with a special emphasis on non-tariff measures, decisions making process at the WTO and international financial architecture.

It adds, globalization and liberalization processes should not only address broad macro-concerns of a country but concerns of people at large. "Otherwise such efforts only lead to accelerated marginalization of the poor whilst creating islands of prosperity," says the recommendations received here today.

One of the key requirements for dodging these negative impacts, is to complement domestic institutional reforms with measures that can change the attitude and functioning of international institutions and influential nations vis-a-vis problems of countries in the area of finance, trade, aid, standards, intellectual property, technology transfer, et al.

The growing realization that globalization will have to be effectively managed and shaped to help the peoples of both strong and weak countries reap benefits associated with it. Hence, the conference has suggested UNCTAD-X to adopt a clear time-bound strategy taking stock of successes and failures associated with globalization, and also identify the challenges that would crop up in future and suggesting strategies to deal with them.

There is an urgent need for an agreement on the "Sepcial and Differential Treatment" provisions, which would specify both positive and negative measures to protect developing economies from the perils of indiscriminate liberalization, support their preferential access to Northern markets, says the recommendation.

It is said that discussions on linkages between trade and labour standards should not only focus on child labour issues, but should also look into the impact of labour mobility, immigration policies on trade.

It has said non-trade issues should not be allowed into the WTO acquisition either through the ‘trade related’ or any other route. Instead, they should be debated on UN platforms before being addressed on independent forums, it adds.

Domestic money market:
The yield on 91-day TBs dipped by 9 basis points to 4.92 percent on high demand. The NRB had received 33 bids worth NPR 1810 million against the notified amount NPR 700 million. The rupee was traded higher at 98.83 and lower at 98.74 for 91-day TBs. The NRB announced the auction of 91-day government treasury bills for notified amount of NPR 751 million on February 01, 2000.

Domestic capital market
The NEPSE index-100 moved down sharply by 4.47 point to 273.76 from the previous close of 278.33. Himalayan Bank registered low by 20.5 percent from the previous week’s close opening new account after its book closer for the FY 2055/56. Since the trading is very thin, brokers expect the price of this scrip may fall further in near term. While, the Indosuez Bank bounced back to an all time high at NPR 1115. Brokers had quoted the prices of 52 companies on the trading board but 45 companies were traded.

This week, the index of Commercial bank, Productive sectors, Hotel and Insurance/Finance sector dipped down while Business and other groups improved. Commercial bank groups alone shared 78.0 percent of the total trading amount.

This week, altogether 46950 shares valued NPR 22 million were traded in five working days compared to 55260 shares valued NPR 17.77 million last week. Twenty-two companies improved while only thirteen companies lost. Other ten traded scrips remained unchanged at their previous prices. Bank of Kathmandu, United Insurance and Nepal Grindlays Bank registered first, second and third most traded company trading 12220, 9230 and 3896 shares respectively. Share of Nabil Bank, Nepal B’desh Bank, Everest Bank, Bank of Kathmandu and United Insurance were able to trade in all five working days. Likewise, Nepal Grindlays Bank, Nepal Bank Ltd, Necon Air, Nepal Film Development, People Finance, Nepal SBI Bank and Taragaon Regency Hotel (O) were able to trade in four working days.

Forex round-up:
The USD strengthened against all major currencies over the week. The euro, already soft after key German data disappointed the market and dipped below one-on-one parity with the dollar. However, ECB president reacted at the G7 meeting that he is not aiming at a strong euro and what is important is stability of prices. The NPR depreciated modestly adjusting the price of its close partner INR. Considering INR/NPR at 1.60, the NPR is still over valued by 24 paisas vis-a-vis INR.

Companies	Class	Previous week	This week	Difference
1. Indosuez Bank	A	1065	1115	50
2. Nepal Grindlays Bank	A	1516	1565	49
3. Nabil Bank	A	935	971	36
4. Necon Air	A	251	277	26
5. Nepal Lever	B	1750	1775	25
6. Mahalaxmi Finance	B	112	135	25
7. NEFINSCO	B	270	290	20

Companies	Class	Previous week	This week	Difference
1. Himalayan Bank	A	1700	1350	350
2. Nepal B'desh Bank	A	851	804	47
3. People Finance	B	200	175	25
4. Neco Insurnace	A	300	280	20
5. United Insurnace	A	188	170	18

KATHMANDU, Jan 30 - Royal Nepal Airlines Corporation (RNAC), the only government owned airline operator, issuing a press release on Friday has boasted of 66 percent occupancy in the first six months of this fiscal year.

During the review period, the national flag carrier has served 179 thousand people and transported 1,601 metric tonnes of cargo. The airlines has said that it served 166 thousand passengers last year, and transported 12,266 metric tonnes of cargo.

At present, RNAC has two of its own Boeing 757s in operation and has another leased 757 from China South East Asian Asirlines. It has been providing domestic services with an Avro and 8 Twinotters. The airlines has been operating international services to 12 cities in 9 countries. The red and blue striped plane flies to 30 different destinations within the country.

The airlines has said that over 60 percent occupancy is considered a good performance in the international standard. It has also said that the said low-season of three months also included in the review period.

Although Nepal is yet to become a member of the World Trade Organisation (WTO), efforts are underway to ensure that Nepal gets entry into this club within a year or so. The Chairman of the Working Party on Nepal’s Accession to WTO is in Nepal these days. It is learnt that the purpose of his visit is to assess Nepal’s preparation for WTO membership. Once Nepal becomes WTO member, the nexus between trade and environment has to be looked into more closely and if there are some genuine concerns they need to be addressed.

Trade and environment is not a very novel issue in the WTO. Vocal environmentalists in developed countries during a GATT-sponsored negotiation had argued that free trade without checks would lead to further environmental degradation. They still stick to their argument while free traders have been arguing that increase in income as a result of freer trade will lead to generation of extra resources for environmental preservation in developing countries.

The debate on trade and environment has intensified especially after the formation of the WTO. Trade has a necessary interface with environmental issues which is a relatively untested area in the context of developing and least developed countries. Nepal is no exception to this. Although a number of initiatives have been taken in the developed countries to identify the key areas of work and some useful work are already underway, Nepal is lagging far behind both in terms of identifying the interface and developing a positive work plan to address these issues.

WTO came into existence following the signing of the Final Act of the GATT (General Agreement on Trade and Tariff) Agreement in April 1994 at Marakkesh, Morocco. Committee on Trade and Environment (CTE) was formed with the remit of examining the intricate linkages between environment, goods, services and intellectual property. However, CTE has been moving at a snail’s pace in resolving the problem of this linkage though its two-year term has been extended twice.

However, based on the discussions taking place at CTE, the developed countries have found a new weapon to protect their industries. In their view, issue of environment is a cross-cutting one and therefore there should be a full-scale negotiations on the issue of trade and environment.

Majority of the WTO Member Countries is, however, opposed to linking environmental standards with trade. They fear that the developed countries might use this as a protectionist tool to protect their "sun-set" industries. Even some international environmental groups consider the idea of linking trade sanctions to protect or conserve the global environment absurd. Problems like trade expansion, which has resulted in the use of huge amount of fossil fuel for the transportation of goods, need urgent solution. This will create environmental havoc but neither WTO nor the developed countries are worried about it.

Developed countries are worried to protect sea turtles, but are indifferent to the possible loss of millions of fishermen’s jobs. At a workshop in Seattle on December 1, 1999, noted trade theorist, Prof. Jagdish Bhagwati said that although an interface exists between trade and environment but WTO has not adjudicated the issue. He also mentioned that making market access conditional to proper environmental standard is unfair.

However, the US has been pushing for the inclusion of environmental standards within the sanction-based discipline of the WTO, which will allow them to protect their sun set industries. They do not care howsoever unfair means they have to make use of to achieve this goal. In fact, US president went to the extent of announcing that should an "enforceable" environmental standard not be included in the WTO talks, US would unilaterally impose these standards, supposedly, with the objective of protecting the "global" environment from further damage.

If the Northern countries, especially the US were so much concerned about the global environment, why are they dumping their domestically prohibited goods (DPGs) and toxic substances in the developing countries? Similarly, if the US cared for the conservation of bio-diversity, for instance, why its senate has not so far ratified the Convention on Biological Diversity (CBD) despite the fact that 174 countries have already ratified the Convention? Why has not US ratified the Convention on Climate Change? Why do US leaders make such a remark as "American lifestyle is not up for negotiation", when their unsustainable consumption pattern has caused severe damage to the global environment.

The US has ratified the Montreal Protocol on Phasing out of Ozone Depleting Substance. As a number of studies done in the US have come out with the conclusion that if the ozone layer is not protected from further damage, more than 500,000 people could suffer from skin cancer in the US alone. When it suits their interest, the US is one of the first countries to ratify any international Convention. When it does not, they would go on lingering the process.

Witness the role being played by the US to thwart the efforts of G77 Countries and China (like mined group) to sign the Biosafety protocol being negotiated under CBD for the safe handling, use and transfer of genetically modified organisms (GMOs) across the borders. The US, which is not a party to CBD has been using other allies, namely, Canada, Australia, Argentina, Chile and Uruguay to kill the protocol itself, as it is convinced that signing of this protocol would provide a blow to its globalising biotechnology industries. All these examples are the manifestation of the double standard of the US. In fact, the failure of Seattle Ministerial Meeting of the WTO is partly ascribed to US insistence to link environment with trade.

If developed countries can apply extra territorial jurisdiction of their laws to protect the "global" environment, which they are attempting to do anyway, they should also prosecute their Transnational Corporation (TNCs) violating the environmental standards of the developing countries. If they really care for the "global" environment they should stop the shifting (relocation) of their dirty industries to the Southern countries where environmental standards are much less stringent. But are they prepared to listen to all these arguments?

Therefore, it is necessary for the Nepalese civil society organisations to press for the exclusion of environment from the sanction-based discipline of the WTO. Putting pressure on the government to ensure that high environmental standards are enforced and respected so that developed countries cannot point figures at us and say: "look what Nepal is doing, we should make use of WTO to discipline them".