Motivated trade figures

Nepal-India trade figures furnished by India’s Directorate General of Commercial Intelligence and Statistics (DGCIS) through their Kathmandu based mission have surprised the business community and government officials. There would have been no surprises had the DGCIS-compiled data shown the real figures. The DGCIS trade figures state that Nepali exports for the year 2000-01 stood at over 16.12 billion rupees, while the total import was less than 11.00 billion rupees. These statistics project a trade surplus of over five billion rupees in Nepal’s favour. However, figures given out by Nepal’s central bank are contrary to what the DGCIS has issued. The trade with India, according to our central bank, is in deficit to the tune of over 19.34 billion rupees. The bilateral trade surplus has never been in Nepal’s favour. In 1987-88, the trade deficit between Nepal and India stood at three billion rupees in favour of India. This figure rose up to 9.79 billion rupees in four years’ time. In 1998-99, the trade deficit increased to 19.59 billion rupees. How can the DGCIS claim that the trade surplus is in favour of Nepal when the truth is so glaringly to the contrary? Why did DGCIS come up with this twisted statistical picture? What is the intention behind such obviously motivated trade figures?

One answer is to undermine Nepal’s argument at the last round of trade talks that the question of surge in particular export items should be seen against the background of the overall huge trade surplus that India enjoys with Nepal. By the end of this month a Nepali team will leave for Delhi for the next round of secretary level trade talks. The twisted figures may also have much to do with a proposed revision of certain provisions of the trade treaty. Unquestionably, there could be some differences in figures. Minor discrepancies are understandable, and might conceivably result from differences of definition and categorisation. But such wide divergence is inexplicable. Nepal’s well established and consistent trade deficit with India has apparently been stood on its head, if one is to go by the Indian numbers. Such suspect statistics would not have been possible had India but conceded the reality of the perennial trade surplus it enjoys with Nepal. These ill-intentioned figures only show determination to cap Nepali exports to India of the five so called surge items and strengthen the Indian bargaining position at the trade talks.

India has never treated the trade treaty signed in 1996 on reciprocal basis. Rather, in a bid to curtail Nepali exports to India, it has accused Nepal of violating the treaty terms. It has recently proposed revision and review of certain provisions of the trade treaty to undermine Nepal economically. India has already begun imposing anti-dumping duty on Nepali items bound for the Indian market. This started after the failure of the trade talks in Kathmandu last month over the question of the so called surge. The anti-dumping duty was in clear violation of the spirit of the trade treaty. The next round of talks must be taken extremely seriously and backed up with thorough homework on our part in view of India obviously playing with the figures and the motives that portend.

Land reform needs integrated approach

By Dinesh B Malla

The phenomenal industrial growth of Japan, Korea and Taiwan can trace its roots to the successful land and agrarian reform programmes which these countries pursued after the Second World War. Today these countries boast of agricultural gross value added ranging from Rs 200,000 to 400,000 per hectare compared to about Rs 20,000 to 30,000 in Nepal today. These countries have proved that the promotion of agricultural productivity through intensified land usage by small owner cultivators can provide a good base for rapid industrialization. Also, these countries decided, early in their development effort, to address the issue of economic equity to avert social and political problems that would certainly erupt if large income disparities began to stalk the people.

Poverty: In Nepal the rather delayed response to equity and land productivity issues has hampered both agricultural and industrial growth. An overwhelming majority of the population remains poor, and unable to purchase goods produced by the industrial sector and make ends meet. The huge increase in population has heightened the pressure on productive resources like land and forests. This has led to the deterioration of these resources through overexploitation and denudation. The dual effect of higher demand from more people and lower resource supply because of depletion has resulted in a worsening poverty scenario in Nepal, particularly in the rural/agricultural sector.

The recent move to reduce the size of land ownership in the country shows the government is planning to do something meaningful for the landless and the absolute poor. But the sudden announcement of limits to land holding size has created a lot of confusion since prior  homework had not been carried out to forecast the impact. However, the primary intention has been to alleviate poverty in the long run.

The growing number of the poor and the persistence of income inequality in Nepal can be attributed to three structural factors: unequal asset ownership, population growth and lack of productivity. To elaborate, several factors are behind the country’s poverty. First there is too much wealth in the hands of a few people. Second, 90 percent of the country’s farmland has been devoted to crops with low value added, namely rice, wheat and corn. The nature of these three low-valued added crops has underutilized the country’s labour force. Third, Nepal has relied too much on national level mechanisms to push development. All major decisions on the planning and execution of development programmes are made in Kathmandu. Fourth, the Nepalese banking system, which is dominated by commercial banks, mostly favours urban
borrowers, industrialists and other non-agricultural sectors.

Steps for land distribution: The recently announced land reform programme can act as a rallying force to galvanize government and non-government efforts towards poverty alleviation, productivity improvement and people’s upliftment. It must not be seen merely as a programme of social equity or land distribution. It must be conceived as a foundation for building a strong country and must go beyond the mere economic emancipation of landless farmers. A similar land reform programme was implemented 37 years ago, but to what extent it was successful in achieving social
and economic equity still needs to be assessed meticulously.

If land or agrarian reform is to be implemented effectively in Nepal, we have to learn a lot from the East Asian experience. In Japan, Taiwan and Korea a pattern evolved which is worth adapting to the local situation. Learning from these countries, Nepal will need to adopt the following for effective and successful execution of the land programme.

First and foremost, there has to be relative speed and wide coverage in land reform implementation. Within a span of five years of the land reform programme in these countries 80 percent of farm households owned their own land.

Second, land distribution has to be buttressed by agricultural support services like credit, market facilities, technical extension and infrastructures. The desired impact cannot be achieved only by land distribution.

Third, the most important component of agrarian or land reform has to be area based cooperatives, which will be indispensable mechanisms for the delivery of support services in bringing about productivity. Committees operating at the village level are to be formed to facilitate implementation.

Fourth, productivity through irrigation, research, technology dissemination and agricultural extension must be promoted.

Fifth, farmers will have to shift to higher value after attaining surplus status in staple products like rice and wheat.

Beneficiaries: In a developing country like ours the assumption today is that the larger the land holding the lesser the productivity. This may not be true in our case. Even today 70 percent of the landholdings are less than 1 ha, but the productivity and the output still remain more or less the same for large and small farm holdings. Now the question arises how many landless or absolute poor will benefit from the imposition of the recently announced land ceiling of 11 bighas in the Terai, 30 ropanis in Kathmandu Valley and 75 ropanis in the hills and mountains. How the excess land will be acquired is also still to be addressed. The total cultivated land in the country is 2.6 million hectares. 70 percent of land holdings and 30 percent of the cultivated area falls below 1 ha. Similarly, out of 2.7 million land holdings less than one percent comprises holdings of more than 11 bigas.

In other words the total cultivated area with land size of more than 11 bigas is less than 15 percent. So the land available for acquisition or distribution is some two hundred fifty thousand bigas. Assuming that each beneficiary family gets half a bigha to eke out a living, the total population benefited is around 1.5 million. Under this scenario only a fraction of the landless section of society is going to benefit. That will happen to the rest? Possibly more frustration and chaos among the landless who have great expectations of obtaining some land under the   new land ceiling.

Many feel that the decision to impose the land ceiling was not a timely since adequate homework had not been done. There has been a lot of resentment among the landowners, particularly in the Terai because of many technical problems like not possessing citizenship certificates. The policy could have been to first experiment with land distribution in selected areas, and demonstrate the ability to methodologically transfer land from landlords to landless, tenants and agricultural workers. As a matter of fact one needs success stories to capture the imagination of the farming communities. And the success areas chosen for demonstration should be areas where (1) the land for distribution is prime farm land, not marginal, idle or unproductive (2) the potential for farmer success is high due to the presence of economic and social support systems (3) landless farmer discontent is high and (4) a very large number of beneficiaries can be involved.

Conclusion: As many imagine, poverty alleviation cannot be achieved solely by land distribution to the landless and the poor. There are other areas on which policy makers and executors of the programmes must concentrate. If this land reform or agrarian reform programme is to be made meaningful, the primary prerequisite is to integrate it with other income generation and social activities. Besides that one has to make sure that the benefit goes to those intended and not like in the past when even the affluent took advantage.

Middle class blues

By Laxmi Sharma

There is a growing sense of depression in middle class society because people’s dreams and aspirations far outweigh their income. On one hand, science and technology have developed so much that almost everything is possible. On the other, black money is keeping market demand astronomically high. Can we single out the biggest sufferer of this highly progressive society? Obviously, it is the middle class! Caught between soaring inflation and innumerable demands, the middle class is in fact struggling to survive. Some have
reached breaking point because the burden is too much.

Business tycoons are however indifferent. They can afford everything and have been living in the lap of luxury. Life for them is meant to be cool and comfy. But for the middle class, life is definitely not so pleasant. Truly speaking, the middle class comprises the most law-abiding citizens - they pay taxes, donate a day’s salary for the government’s calamity fund. But who is thinking about them? They have to maintain social prestige and follow norms, they have to meet an ever increasing list of demands of the family, not to mention an ever tightening purse. Because of the swelling prices even seemingly small dreams turn out to be a big disappointment. Their only entertainment tool is Hindi movies or TV serials, which can help them escape from the daily drudgery. The fantasy provided by Hindi cinema or TV serials bridges the gap between reality and dreams, but not completely. It seems that lower middle class people are in a better situation than the middle class. The lower middle class does not bother about social prestige and dogma and possesses a care-a-damn attitude.

People in the lowest economic rung are concerned over just "today’s" problems: how not to go to bed hungry. Having lost hope for a better economic future, they concentrate on how best to utilize the resources they have to achieve maximum "joy" out of it "now". You will find a labourer at the end of a productive day preparing an expensive evening meal and merrily chatting with family and friends. Such occasions are seldom a reality for the middle-class family, which plans a lot, worries a lot about petty problems, and thus mars the possibility of a happy life. In the hope of a "brighter" future and spending almost everything on the children’s better education, the middle class couple leads a miserable and tense life.

Uncommon SAARC position and Doha conference

By Ratnakar Adhikari

It is customary for the members of each regional cooperation arrangement to meet before the Ministerial Conferences of the World Trade Organisation (WTO). This is not only important to demonstrate a sense of unity but also to avoid any conflicts of interests in a bigger negotiating forum. South Asian Association for Regional Cooperation (SAARC) did this exercise for the first time in Bandos Island, the Maldives during the run-up to the third Ministerial Conference of the WTO held in Seattle in November 1999. The second such meeting was recently concluded in New Delhi.

The Ministers should be congratulated for having signed on the Joint Statement by the SAARC Commerce Ministers on the Forthcoming Fourth WTO Ministerial Conference at Doha. It goes without saying that addressing outstanding implementation issues is the prime concern for the SAARC Members Countries. In the same line, the Statement notes "deep disappointment was expressed on the lack of any meaningful progress (on implementation issues) despite a clear decision in May 2000 by the WTO General Council that these issues have to be addressed and decisions taken for appropriate action not later than the 4th WTO Ministerial Conference."

The statement further asserts that any further delay in addressing these concerns would erode the
credibility of the multilateral trading system. Serious concerns were also raised about the implementation of Uruguay Round of Agreements having further accentuated the inequities and disparities between developed and developing countries.

Built-in agenda items, including Trade Related Aspects of Intellectual Property Rights (TRIPS), Trade Related Investment Measures (TRIMS), Agriculture and Services have been brought under sharp focus in the Statement. Similarly, the Statement reflects collective concerns over new issues such as competition, investment, environment and labour. South Asia being a region, where majority of the members are LDCs, the issues, which are of crucial significance to them, have also been elaborated in the Statement.

However, it is disappointing to note that despite all South Asian Countries having made commitment to various fora not to allow a new round of trade negotiations to take place unless and until implementation issues were addressed, not even a passing remark has been made on this issue in the Statement. One fails to understand whether this is a tactical move by certain countries within the region to trade-in concessions from developed countries, or their desire for not touching upon this issue at all because this is a contentious one. Whatever the case, our silence could be taken by developed countries as our support to the call for a new round of trade negotiations.

Another disheartening matter is as contained in the paragraph nine of the Statement which intends to shut the door for civil society organisations (CSOs) to make any contribution to the international trade policy arena. This does not only reinforce the arrogance of the South Asian politicians (supported by the cobweb of bureaucracy), but also exposes their deep-seated fear psychosis.

The paragraph reads: "Any involvement of NGOs and Civil Society in the decision-making of the WTO, which was an inter-governmental organisation, as also soliciting of amicus curiae briefs in the Dispute Settlement Proceedings was opposed". One has to resolutely look at the choice of word. The SAARC Commerce Ministers were so critical of the process that they chose the word "opposed" instead of "concerns were raised" or the likes.

The underlying assumption of the Ministers could be that the CSOs in the region receive support from developed countries governments, hence they toe the lines of these governments. This fear is not only misplaced but also unfounded. It is not only CSOs, which receive support from the developed countries' governments, but governments of the region also do the same thing. Does it mean that these governments too will have to follow the positions taken by developed countries on each and every issue being discussed at the WTO proscenium?

There are a number of CSOs in the region, which have been able to maintain their integrity and independence irrespective of where they receive funding from. It is a grave mistake to lump all the CSOs together and label them as "anti-social", or even worse "anti-developing countries".

Another unfounded fear could be that allowing participation of CSOs in the decision-making would mean that well resourced Northern NGOs could add weight to their government’s positions on many issues, including labour and environmental standards. This fear is being expressed, unmindful of the strengths of the Southern NGOs, which have forced the Northern governments to bow down to their demands in the past.

WTO is not the only inter-governmental forum in which CSOs are seeking a voice. They are actively participating and contributing to the better decision making of most united nations organisations, including but not limited to, Codex Alimentarius Commission, UNCTAD, FAO and WHO. Why are commerce ministers of the region so fussy about allowing CSOs to participate in the decision making process?

Thus paragraph nine has come as a blow to the CSOs of the South Asia region, which have been articulating in favour of radical reform in the WTO system to make it more equitable, transparent and accountable. At a time when the pressures from CSOs have compelled the WTO to open up, statement such as like this would only add to WTO’s suspicion on whether or not CSOs’ demands are genuine.

Our honourable ministers need not be reminded that in a democratic system, free play of various forces should be allowed and that disrupting them could prove critically counterproductive. Therefore, involvement of CSOs in the WTO decision-making should be taken as a means of enhancing transparency, which will eventually help reduce democratic deficit in the WTO system. This is something our commerce ministers will have to keep in mind during the run-up to Doha, during Doha, after Doha and beyond.