Investment as a new issue in WTO

By RATNAKAR ADHIKARI

The decade of 1990s witnessed an unprecedented rise in the cross border flow of investment. Such a massive growth, lit by economic buoyancy and fuelled by the growth of knowledge-based economy, could not sustain in the early part of this century. However, at present the stock of foreign investment in the world is one of the highest of our times. This underscores the importance of foreign direct investment (FDI) as a vehicle for economic growth.

There are essentially three types of foreign capital a host country could possibly attract. They are: long-term (often sustained) investment in equity known as FDI; short-term (often speculative) investment in equity known as foreign portfolio investment (FPI); and foreign loan, which could be long as well as short term. While the countries do not put much restrictions on FDI and foreign loan, they put quite a number of restrictions on FPI due to its very nature. Countries wish to maintain some degree of regulatory flexibility even in FDI and loans in order to meet their development goals.

Since investment is not really a trade issue, developing countries have been opposing the attempts of the developed countries to include this issue in the negotiations at the World Trade Organisation (WTO). They argue that developing countries are just beginning to understand the issues associated with an investment agreement and its impacts on their countries. Therefore, time is not ripe for any agreement on investment at the multilateral level – let alone its inclusion in the sanction-based mechanism of the WTO.

However, developed countries, led by the European Union (EU) – the principal demandeur of the multilateral agreement on investment at the WTO – insist that it is in the best interest of developing countries to proceed with negotiations on investment at the WTO. An investment agreement, they assert, will stimulate the economies of all WTO members by also spurring investment flows to developing countries, and making international investment easier and more transparent.

Investment is not a completely new issue at the WTO because four agreements of the WTO, namely, Trade Related Investment Measures (TRIMS); General Agreement on Trade in Services (GATS); Trade Related Aspects of Intellectual Property Rights (TRIPS); and Agreement on Subsidies and Countervailing Measures (ASCM) already contain provisions on investment.

Despite the demand from the developing countries not to include investment as an issue to be discussed within the WTO proscenium, developed countries managed to persuade them to agree to establish a Working Group on Trade and Investment during the first Ministerial Conference of the WTO held in Singapore in December 1996. Developing countries rightly feared that the Working Group would be used as a Trojan Horse by the developed countries to include a full fledged investment agreement at the WTO. Looking at the way things are moving of late, it can be safely concluded that their fear was not unfounded.

During the fourth Ministerial Conference of the WTO held in Doha in November 2001, developed countries managed to incorporate investment as one of the possible issues to be discussed at the WTO. However, there is considerable degree of ambiguity in the text of Doha Declaration relating to investment.

As per the text, the negotiations cannot start unless and until there is an explicit consensus among the member countries on the "modalities" for conducting negotiations on this issue. However, the definition of modalities has become a contentious issue. Barring some exceptions, there is a clear division between the developed and developing countries on this issue.

The opposition of the developing countries to such an agreement should be looked at from a number of perspectives, some of which are outlined below:

First, the developing countries feel that they do not want to overload the WTO with too many agendas when the actual implementation of the existing agreements is yet to take place. They feel that inclusion of new issues will constrain the ability of the WTO to perform effectively as a watchdog of global trading order on other issues, which are of critical significance to the developing countries.

Secondly, they do not see any value addition on the investment agreement at the WTO, because they know that there are more than 2,000 bilateral investment treaties (BITs) already in operation, but the countries signing BITs are not necessarily receiving fair share in FDI inflows. This fact has also been substantiated by a recent study conducted by the World Bank. Therefore, they argue that there is no guarantee of increased flow of FDI even member countries of the WTO sign a multilateral agreement on investment.

Thirdly, the investment agreement as envisaged by the developed countries only talks about protecting the rights of the investors and is conspicuously silent on the issue of their responsibilities. This, developing countries fear, will provide extra leverage to the foreign investors, who are already interfering into the domestic affairs of the host country to maximise their profits.

Fourthly, application of general non-discrimination principles (most favoured nation and national treatment) of the WTO to investment will constrain the ability of the host countries to regulate investment. This will be a major roadblock for the developing countries in the pursuit of their development objectives.

Fifthly, it is not clear from the discussions at the WTO whether the rights of foreign investors will be limited to post-establishment or to pre-establishment. If the latter is true, it would tantamount to providing Carte Blanche to the investors to make investment in any sector of the host country’s economy without having to pass through regulatory scrutiny.

Sixthly, it is also not yet clear whether there will be an investment agreement like in the General Agreement on Tariffs and Trade (GATT) – which will provide blanket authority to the investors to invest in any sector and get protected, or the General Agreement on Trade in Services (GATS) – which contains a positive list approach. Developing countries have a strong preference for the latter category because they can pick and choose which sectors to liberalise or which not to, keeping in mind their
domestic interests.

Given the vehement opposition of the developing countries to start negotiations on investment after the Cancun Ministerial Conference, this issue is likely to be shelved for the time being. However, developed countries will once again make an attempt to play "divide and rule" politics and some developing countries might even be tempted to defect. Already countries like Brazil, South Korea and Costa Rica are showing the sign of defection. Such a move could prove a disaster for the developing world as a whole, which can be prevented only if developing countries maintain their common stand till the end.

A salary man

By KAMANA SINGH BASNYAT

I don’t need your sympathy; I know your pity does not have that supremacy over my panicky pressure that will revolutionise the horror-struck environment of my office. Once I cross the threshold of my office I put an artificial smile on my face all set and determined to work. Whatever may be the affair I try to create and try maintaining a healthy environment in my office, I am but unable to be a part of such locale. Small, simple, minor things every now and then give way to disasters.

I don’t know how you would react to this, when all your incoming calls are not being transferred to you, regardless of their urgency. She is one of the oldest colleagues that I am working with. Had she been my boss I would have understood this case better, but she is just another employee like me and she expects her work to be done by me all because I am a newly employed girl. Initially unaware, I took her orders as a part of my new job but later I realised that it was my labour exploitation. What makes me wonder even more is the fact that someone who cannot perform her own duty like transferring calls, is ready to take the burden of cross-checking my assignments. Undoubtedly, she has victimised everyone here in this office, I see others turning deaf ears and superficially respecting this lady in spite of what goes on in their heads, but I simply can’t, as this would be hypocrisy for me.

I have always enjoyed the idea of working, I have always wanted to work, to earn money and in time to earn my own independence. I joined this company with the same intention but I was not aware of the politics that existed, this being my first step as an employer to any office, I feel that I cannot adjust myself to this alien environment. What I initially thought was if I worked, that would be it, but I didn’t know buttering and spooning are well needed too. I am just a girl of 20; what I expected in an office was to simply work, work so hard as to wear myself out. I even decided to quit and get rid of everyday tensions, but again I am sure it wouldn’t solve any of my problems.

This may be the life of every salaried man. Be it a receptionist or an assistant or a kitchen staff, the moment you decide to join a company as a staff, the very first step is to learn to adjust with them. I have learnt a lot now. There isn’t any other alternative but to continue your exertion at the office. Many of you out there might be planning to start working, naïve of the monsters waiting to devour you at your workplace and if you bump into one of these monsters, do not be bothered; do not also let yourself be gulped down by them. Stay away from them, as much as is possible even if you have been adjusted to the same room, mentally staying away will do. Let us take this as a challenge, things can go tough but we are tougher – about to be proved.

Boarding schools come under party politics

By VIJAY KUNWAR 

The end of Rana oligarchy in 1950 and the dawn of democracy paved the way for opening up many schools throughout the nation. Establishment of boarding schools, particularly in the Kathmandu valley was a revolutionary step altogether. Vanasthali Vidyashram at Balaju, Tribhuvan Adarsha at Pharping and Anandakuti Vidyapeeth at Swayambhu were among the few schools generating productive manpower badly needed to meet the developmental demand of the newly emerging socio-economics of Nepal. These schools, in the meantime, had initiated hostel facilities mainly with a view to accommodate students far from the countryside. Adarsha Vidya Mandir, Amar Adarsha, EPS and Bhanu Bhakta along with the Laboratory School, which was in fact a laboratory for the would-be-teachers were among the few schools that were the talk of the whole nation.

There have been many pioneer educationists and legendary figures in the educational history of Nepal. People vowed with great reverence and gratitude before the historical teachers who represented the early era of education. Hem Chandra Karmacharya, Satya Narayan Bahadur Singh, NK Singh, Janak Pyakuryal, and Laxman Rajbanshi are a few names setting the trend of education. Since there were a very few good schools in the countryside, many parents opted to enroll their children in the capital-based schools. Although there have been a few successful schools in the outskirts, which were basically synonymous with the names of their Head Masters. Satyabadi High School of Bajhang, Sita Ram High School of Doti, Amar Jyoti of Gorkha, Karpok Vidya Mandir of Ilam and Adarsha Vidyalaya of Biratnagar are a few reputed institutes that contributed significantly to the system of new educational order. These schools were mostly headed by teachers from Indian towns.

Nepal’s education system underwent a big change with the introduction of a very ambitious plan named as New Education System (NES) in 1971. All of the community run schools were applied a blanket rule and "nationalised" without any rationalisation and were brought under government control. The new system, though, proved a boon for most of the ailing schools, which were dependent on meagre resources provided by the government on a lump sum basis and on the verge of virtual closure. But it gave a serious blow to those schools, which were resourceful and were efficiently managed. With continued trial and error experiments with the education system the NES was abrogated over time. Community managed and private and boarding schools ((PABS) were allowed to operate afterwards vis-a-vis the existence of government financed schools.

After the restoration of democracy in 1990, more PABS were permitted resulting in the creation of various institutions. Schooling of the upper strata children was already in vogue while children from the well-off families were getting good and quality education from the institutes in India. But with the change in the behaviour of the people throughout the country, most of the middle class and lower middle class people also were motivated to enroll their off-springs into the modern institutes inside Nepal as well as in the bordering towns of India.

With the government initiatives to spread basic schooling system throughout the country, many under- privileged people also were motivated to send their children to the basic schools created in their neighbourhood within the VDCs. This, in turn, produced more students as feeders for the high schools. Though only a few of such students were fateful in finding further opportunities of higher education, scope for new and quality education houses increased in course of time. With rising awareness among the common citizenry, scope for more and more and quality education houses rapidly increased over time. As a result, hundreds of such schools were created with the objective of providing better and responsible education.

With the common practice of party politics since the restoration of democracy, school and college students were made active forces to march on the streets with political slogans. Most such demonstrating students came from either the government run schools and or TU managed colleges. PABS were somehow exempted from such rallies. The major contributing factor behind impressive results of the boarding schools was basically the students’ non-involvement in party politics. Owing to this practice also most parents opted for the private schools.

But since the country underwent frequent changes of governments at the centre during the past twelve years, students also increasingly became pawns at the hands of politicians and their party interests. One party played against the other. All of them chose to use the raw force in the form of school students. Schools, in the meantime, were the first targets of any political party which they thought the best places of easy sabotage. The community and government run schools were mainly the first and foremost targets of party interests. PABS were somewhat kept untouched until a few yeas back, barring a few demonstrations. It was during the jana-andolan of 1990, when students in uniforms did parade on the streets of Kathmandu chanting political slogans.

With the introduction of multiparty electoral system, the parties in the parliament but in opposition always chose to frontline school or college students while organising demonstrations. It almost became a common practice, as it was the most convenient way to show off the strength on the part of the organisers to affect all stakeholders of the society: the government, the parents and other political parties all at a time.

With the advent of Maoist politics since last seven years, closure of schools became a very common phenomenon. It has been some two or three years since the Maoist wing of the students suffixed as Revolutionary began targeting the PABS first with the demand of donations and afterwards for the universalisation of the fees structure. One of the most significant achievement(?) of the Maoist persuasion was seen last week, when many people in Kathmandu valley witnessed PABS students joining the Maoist mass meetings. Many PABS had "generously" cooperated with the Revolutionaries by providing school buses, as well.

Now it is the turn of other student wings to lock up PABS offices. If the Revolutionaries have won the hearts and minds of the generous PABS, why should the other wings of the big five political parties remain behind? They also opted to follow the same rules; to sabotage the PABS (other schools were on their finger tips already).

The new breed of enterprising educationists in the face of Rani Kakshapati, Umesh Shrestha, Geeta Rana, Kailash Dewan and Babu Ram Pokharel among others have a challenging days ahead. The early pioneers had a an arduous task of holding of light in the dark, whereas these new torch bearers have their very lives under threat. One chooses to remain ignorant when these educating entrepreneurs had started from mere rags and when investing in the education sector was a big stake. The new breed has proved that total dedication and sincere and efficient management was a paying job. And one more important fact that we miss to recognise is that many Nepalis have been able to provide their children the best education in Nepal itself. Many of thee pass outs of these PABS have been able to compete and survive in this global economy.