Subsidies still needed

Most of the Nepalese people continue to live in the mountain and hill regions of the Kingdom, where His Majesty’s Government has not been able to reach the developmental infrastructures. Because of this, the picture in these areas is dismal and heart-rending despite the rise in the per capita income of Nepalese generally. For instance, the people of the Kathmandu Valley and the Terai region, whose per capita income could be well over a thousand dollars, though it has not yet been calculated, pay as little as Rs 29 per a kilo of sugar. The same kilo of sugar is sold at between Rs 80 to 90 in many of the hill and mountain regions. Ditto for all other essential commodities. And the per capita income of people there, also uncalculated so far, could be less than 50 dollars. Is this fair? In an age of competition, all Nepalese must be treated equal and must have equal opportunities. In short, there cannot be competition in the true open market sense until the playing field is really level. Government subsidies must be seen as a short term effort to make that field more level. The alternative is to ask people in the hills to migrate to areas which are connected by road, and have manufacturing units and all the economic infrastructures and employment generating activities.

Against this background it is unfortunate that there should be any difference of view between HMG and the Asian Development Bank regarding subsidies. It is hard to believe that the ADB would be so dogmatic about subsidies at a time when even agencies like the International Monetary Fund have taken a more flexible attitude. The reality of the situation including topography must be taken into account when discussing about subsidies in a country like Nepal which ranks as one of the world’s poorest. Someone has described the topography here as murderous, and without much exaggeration. Topography dictates the way most of our people live and move, and the way they move their goods and belongings. To a substantial degree, it has also dictated the way this country governs itself and goes about bettering its lot through economic development and planning. Much of our developmental investment has gone into neutralising our topographical disadvantages. And we still have a long way to go, quite literally.

Subsidy need not be a dirty word at the ADB or anywhere else. The Americans do it, as do the Europeans in their own ways. The American government has for a long time been paying its farmers money to not cultivate their land. This was in a bid to keep down the glut of grain in the silos and prevent grain prices from tumbling. In the European Community, subsidies for French farmers have been one of the main bones of contention among its members. And it is in agriculture that the question of subsidy has become an issue here in Nepal also. HMG has fallen foul with the ADB over its decision to reintroduce subsidy for shallow tube wells which are vital for irrigation in this predominantly agricultural country. It need not have.

WTO dream, proper homework in Nepal ?

By Dr Hari Pokharel

The WTO is the only international body dealing with the rules of trade between nations. At its heart are the WTO agreements, the legal ground rules for international commerce and for trade policy. The agreements have three main objectives: to help trade flow as freely as possible, to achieve further liberalization gradually through negotiation, and to set up an impartial means of settling disputes. No one doubts that running the World Trade Organisation (WTO) is a challenging job.

With the world now moving towards a closer economic integration, with its attending troubles and problems, the administrators at WTO headquarters in Geneva have their hands full, dousing the bush fires. Small wonder that WTO Director General Mike Moore recently lamented, "There is no international institution less understood, more demonized than the World Trade Organisation."

Observer status: The cursory review of the history indicates that Nepal has been awarded the status of observer right from the establishment of the WTO. Nepal applied for the membership of GATT in 1989 during the trade and transit impasse with India. Nepal had already replied to 363 questions put to us by different member countries. She is also been participating in the WTO ministerial meetings. Although Nepal is holding only an observer status at the WTO, there may be a feeling that implications of the WTO and the subsequent Act of the Uruguay Round of Trade negotiations are not a matter of concern for Nepal. However, Nepal cannot remain aloof from the multilateral trade regime. As such, free trade is a powerful and effective engine of economic development and it would be a great mistake for Nepal to ignore the GATT accord in the changed context of free and liberalized economy the world over. Nepal should make constant efforts to acquire membership of the world trading body WTO. Nepal has taken steps to be its member, the government has expressed its hope that being a WTO member, Nepal would adopt many protective measures in the services and trade sectors and save itself from possible economic and social anomalies.

Ongoing efforts: According to the Ministry of Commerce, the WTO agreement provides direct and indirect grants for agro-goods. Being a least developed country, Nepal will have to dissolve non-financial control and use customs duty and she will be relieved from her responsibilities in this regard. The membership will also provide higher exports opportunity for local readymade garments. As Nepal has moved forward in its open economic liberalization policy after the restoration of democracy, she has to do her best for a GATT or WTO membership as soon as possible. The country can gain much from this liberalized global trade regime. It is believed that this will provide us more opportunity for improving the global competitiveness in our goods and services. Nevertheless, the concerned authorities have to go through the pros and cons of this regime. Certainly, international trade plays a vital role in the development process of the economy of any country. Favourable market access is essential to support efforts of the least developed countries (LDCs) to increase export earning and diversify their commodity -dependent economies.

Negotiations: Since Nepal already has a low effective tariff, one of the lowest in the SAARC region, she is unlikely to downsize the proposed tariff, especially in agriculture, where it has proposed at an average of 60 percent. Officials at the WTO cell are optimistic that the second meeting will further accelerate Nepal’s accession to the WTO. Nepal aims to obtain WTO membership within the next year. The first Working Party, held in Geneva last March, was followed by a round of bilateral negotiations in September, in which India, New Zealand, USA, Sri Lanka, the European Union, Australia and Malaysia participated.

Nepal would have better export opportunities due to a broader market base. The WTO system is a rule based system. So when Nepal becomes a member of this organisation, we would have privileges that all are allowed under the systems. Environmental concerns are gradually being incorporated into the trade sector. Nepal is now in the process of becoming a member of the WTO. As mandated by the WTO sanitary and phytosanitary rules and by the International Standard Organisation (ISO, 14000), Nepal has shown growing awareness towards this direction. Likewise, in the case of trade-related investment measures, every attention is being paid to take into account environmental concerns. Since this is a new area for Nepal, international agencies have been expressing their support in contrast to more traditional kinds of assistance.

Need for more homework : Although Nepal’s accession to the WTO looks more than likely to be a done deal within the next year or so, there are concerns that a lack of adequate domestic rules and regulations to face the challenges of the global marketplace is bound to take its toll on the country’s economy in the future. Despite government claims that the homework needed for Nepal’s accession to the WTO is satisfactory, it has so far neglected to strengthen the country’s legal framework which is necessary for warding off the challenges posed by the global rules based trading system.

As such, the government, until now, has concentrated only on issues relating to binding tariffs and other secondary requirements at the global level, failing abysmally, on the domestic front, to formulate laws that are necessary to protect the country from the impending economic invasion. Nepal’s failure to strengthen its domestic rules and regulations is an indication of its short-sightedness in the way it is handling its WTO accession process.

Some experts opine, among others, that Nepal still lacks effective guidelines for the protection of farmers’ right, has no code on competition and has no law to prevent patenting of indigenous technologies and bio-diversity by foreign firms. Furthermore, Nepal lacks anti-dumping act and countervailing duty, which is bound to put it at a disadvantage once it obtains WTO membership.

Tariff rates: Another disadvantage that Nepal has, as a result of low applied tariff, is the comparatively low binding tariff barriers, around 60 percent for agriculture that it had to propose. Binding tariff rates in some developed economies exceed 200-300 percent for example, 244 percent for sugar in the USA, 213 percent for meat in the European Union, 360 percent for butter in Canada and 388 percent for wheat in Japan.

Nepal, which currently has no non-tariff barriers whatsoever, and with proposed binding tariff at a mere 60 percent, (even this is unlikely to be achieved due to staunch opposition from stronger economies during recent bilateral negotiations) has no avenues left but to come up with stringent domestic laws to protect and promote its domestic economy. As a whole, the opening up of domestic markets to foreign firms and investors, inducing a free flow of goods and services from the international arena, and exposing the country to economics of demand and supply, without concrete preparations, would do nothing more than pose a serious threat to the survival of domestic industries and harm Nepal’s economy.

Gain from WTO: The experts in the field of WTO states that Nepal can expect to have a say in how the global trading rules are shaped in this century. Because decisions are taken on the basis of consensus, every government has a say in what happens in Geneva. Nepal can expect to be able to defend its interests through a system of dispute resolution, which, notwithstanding some problems, is uniquely effective in the world today. Nepal can be guaranteed the highest level of market access offered by 140 member governments. Non-members can be discriminated against, but those in the WTO, receive the most favoured status. This means that Nepali goods and services would not and could not be subject to discrimination. Nepal will also have access to technical assistance and training which is designed to enhance the government’s capacity to take advantage of its right under the multilateral trading system.

Due to free trade, there are doubts that farmers will lose their subsidies and unskilled workers will lose their jobs. In this regard, the specialist in this field is concerned that not all subsidies are banned by the WTO. In fact, a great many are permitted, both in terms of agricultural and industrial products. Although the types of subsidies that the government of Nepal can provide remain the subject of the country’s accession negotiations, it is certain that some agriculture subsidies can be maintained. Developing countries can, for example, provide subsidies to farmers equivalent to 10 percent of the value of production. Developed countries can provide 5 percent. All member governments use subsidies and Nepal would be no different. It is, of course, possible that some unskilled workers could lose their jobs, but what about the potential for job growth that can arise from increased inward foreign investment and trade opportunities arising from WTO membership? And yes, national governments do have a crucial role in providing social safety nets to their citizens.

Talking about positive love

By Sapana Raut

"Ihave no intention of proposing you...". Those were the exact words he used. I was stunned to get such childlike mail from one of my colleagues. And I realized that no matter what people and their mentality might be, they were all still the same. I don’t know how he got the idea that I would ever want him as my man. Honestly I really didn’t have time to think over such matters. But by the grace of my colleague, I started pondering over my past, looking back to those fun-filled teenage days when Tima, Ranjee and I used to get so curious when friends told us about their love stories. Ah! How time flies by.

My Baba who is more like a friend to us used to tell us a lot about this mysterious thing : love. So today I have decided to share his version of love. At a certain age, most people feel they should love somebody and that person should love them back. This feeling about love does have some meaning but at the same time it is as difficult as understanding Sanskrit verse. This thought is like a beam of light which has a certain clarity, and is again misty logic. Tender aged lovers who are more like raw clay feel that love is blind and one should go for it blindly. On the other hand, older people, having gone through many phases of life, know how to weigh things, which young people fail to do most of the time.

Once when I told Baba that I had a crush over a guy in my class he told me if the love which I felt for that boy was going to increase my ability to do objectives things with better efficiency, then such love should not be undervalued. But if it was going to distract the mind from my studies, affect my health and social activities, create hatred for my parents and encourage excessive day dreaming, then such love should be detested and sometimes it may even be prohibited. Finally, I had to drop the idea of falling in love with that boy.

I now realize that love is like a new branch of a tree, which keeps on growing without harming the other branches. Love never requires to break a basic relationship, it continues on with pleasure. Love can be anything you favour... it can be friendship. There is no question about any proposing.

Should Maoists stop indiscriminate killings and begin a dialogue?

The Kathmandu Post and Mercantile Communications conducted a survey on the topic: Should the Maoists stop the indiscriminate killing of policemen and begin a dialogue with the government to resolve their conflict? The survey was done on the Net last week. Of the 1,666 respondents, 75.8% (1,263) said "Yes", 23% (383) said "No" and 1.2% (20) said "Don’t Know".

We regret the inconvenience, if any, due to the original names being kept back by some respondents.

The government has missed every chance in the past to solve the conflict, and now it seems that it is on the verge of losing every control over the crisis. Once the Maoists gain strength, why should they enter a dialogue? If the government does not face the reality immediately, and go for dialogue, it will indeed be a crime against the Nepali people. Is this what the martyrs died for in the People’s Movement in 1990? Was it a total waste?

- Eric

Dialogue is not the only solution. The mobilization of the army to contain the insurgency is the only light flickering at the end of the tunnel. In the name of striving for political consensus, we cannot let them go on killing people.

- Nepali Chhoro

I am terribly disturbed by the inhuman attitude the rebels have in the ‘People’s War’. They are not at all abiding by the principles of war. The indiscriminate shooting of innocent policemen, and more importantly, after they had surrendered is sheer cowardice and a total violation of human rights. The problem wholly lies in the government and that useless opposition which is worse than the terrorist in that they keep denouncing the government every time it tries to deploy the army. The army should have been deployed and the insurgents brought to the straight and narrow years ago. The army needs to be deployed as soon as possible. But without honesty and strong commitment by the government and the army bigwigs, the proposed scheme will be a disaster.

- Well wisher

Dialogue with which government? Do we have a government right now? There is a serious crisis of governance. That’s why the Maoists are not very eager to come to the negotiating table.

- Mohan Adhikari

Dialogue is the only outlet from the Maoist problem. The concept of retaliation and/or military repression has not worked anywhere in the world be it in Macedonia or elsewhere. Rather it has aggravated the problem. The majority of Nepalis, irrespective of their ideology, want
dialogue for a peaceful solution. The Maoists are indiscriminately killing constables and policemen, who are
barely at a sub-subsistence level. But has it in any way disintegrated the corrupt system?

The solution to the Maoist insurgency is not coercion, but good governance. It should be proved that there is no longer corruption, exploitation and discrimination in the country. This is what the Maoists are fighting for. And use of the armed force would only help intensify the Maoist movement.

- Anonymous

After the Dunai assault, the Maoist supremo Prachanda called for a dialogue. Then came the massacred in Lamjung and the very next day Prachanda called for a dialogue. Now after the bloodbath in Dailekh, Prachanda has again called for talks. In between these massacres, there was absolute silence when dialogue was offered to them. Can’t you see Prachanda is not interested in talks? He is only using the word to smoothen a few ruffled feathers after each massacre. Unfortunately, we have an army which does all the useless training with the tax payers’ money, but they are not fulfilling their roles effectively. It is high time they are given an active role to quell the insurgency.

- Rana

Both the government and the Maoists are equally to be blamed at this point. First, the government has no distinct vision to contain the insurgency. The cabinet passed the Armed Police Force ordinance (APF). If the government had been serious about dialogue, it would not have passed such an ordinance, including the posting of regional administrators. Worse, the government is again pleading for the same thing. As most of the leaders in the country have lost their morality, they are psychic, and feel that people will not trust them. This could be the reason they want to (mis)deploy the APF. Hence the government should think seriously about talks and convince the public of its intention. Once the citizens, who are naturally in favour of peace, feel that talks are the only way out, the situation would be easily solved. A bigger challenge is how to deal with the main leaders and how to search for the underpinnings.

- Sonam Sherpa