FEATURES NEWS THE RISING NEPAL (DAILY)

By Rajkumar K.C

KEEPING other things aside, if the situation remains the same Nepal’s bid to enter the world trade regime will materialise by next year.

Preparations

Necessary preparations (albeit official) to meet WTO requirements are said to be near completion. After attending the first meeting of the working group on WTO membership held in Geneva on May 22-23 this year, Nepal has at least learnt what further requirements are to be fulfilled. Of course, joining the WTO body can never be denied.

It is indeed the need of today’s global economy which Nepal cannot avoid. But obtaining the membership of the world trade club for a country like Nepal is not easy since WTO is a rules based system and one cannot disregard its binding rules on tariffs, national laws and other provision.

Various regression and correlation of possible challenges that come after joining the body have to be calculated in advance. It seems that Nepal is in a hurry to join the world trade regime. But there arises a question, how far are we ready and capable to join this club? Is our economy strong enough to face the challenges to be brought by WTO membership? These are the questions to be taken into consideration. Besides Nepal should gain an economic height at par with its neighbours to reap greater benefit.

Most of the people even including traders and industrialists are ignorant of its possible economic, social and cultural impact. Even the country’s so-called policy makers bureaucrats, who are in hurry to obtain the membership, are not clear themselves as to what preparations are needed for the nation to benefit.

Though WTO has been a buzz word in developed and developing world, it is still vague as to who is the ultimate beneficiary of the global trade. Who does reap the real benefit ? Will Nepal be in a position to get benefits ? In fact, answers to these questions are still obscure.

In fact, the need for joining such a world trade body was realised when efforts to renew trade and transit treaty with India failed, as a result of which the accession process could not take place in 1989.

Despite its efforts to internationalise the issue Nepal failed to do anything. Nepal however had initiated the process of joining the then GATT in 1989 but the process could not go head with the change of political system in 1990.

The government once again started the process of joining the world trade body in 1995 obtained the Observer Status the same year. Nepal submitted its memorandum of foreign trade regime in 1998.

The GATT metamorphosed into WTO in 1995, but Nepal is yet to identify and work out the possible areas where it can gain. But nothing has yet been done so far.

It is often said that there are still some areas in which Nepal has greater advantage, if preparations are made in the interest of the nation. But it needs commitment as well as skill of negotiations. It can be said that the first meeting of the working group on WTO membership has certainly provided new guidelines to the preparations.

Though none of the questions were made public, Nepal has already submitted the answers to 364 questions of the Geneva based WTO Secretariat, in April last year. And additional questionnaires are said to have been received from the Secretariat and further preparations will be made to meet its requirements.

The concerned ministry will seek ‘diplomatic support’ prior to the second round of the meeting of the membership working group to be held in November - December this year.

During the meeting in Geneva Nepalese delegation also exchanged views with the representatives from SAARC, ASEAN and EC who gave Nepal a positive signal for obtaining membership. Besides, Nepal also presented its views over the protection of indigenous industries in order to boost their competitiveness in comparison to other countries.

Nothing has been made public on what requirements are yet to be met by Nepal and what preparations are
underway. It is already understood that WTO has both challenges and opportunities.

The challenge here is not with ‘openness’, but with fair trade. Nepal still needs to work for fair trade where all goods and services get equal access in the Nepalese market. And the WTO promises the fairness needed by Nepal.

As of now, world trade has grown at an annual average of 6.6 per cent during the 1990s and world output has grown at an average of 3.2 per cent. Foreign direct investment (FDI) has expanded 20 fold in the past 25 years. The expansion of trade is expected to increase global income by up to US $ 500 billion by the year 2001.

Nepal does have some products like handicrafts and carpets which should have a more secure market and the country would have an easier access to other countries on the basis of bilateral trade negotiations among WTO members.

On top of that, LDCs like Nepal will be granted a gestation period until all existing facilities it has been enjoying are taken away for free trade. But there arises a question as to what impact will the lack of existing concessions have in the Nepalese economy, especially after 2005 when the quota system for garments is phased out?

The principles of the WTO recognise that there is a need for positive efforts to ensure that developing countries especially LDCs secure a better share of growth in international trade.

The WTO membership is not all rosy as one would expect. A country has to fulfill the basic requirements before entry. Customs, labour act, existing foreign trade act, economic policy of the government, EXIM policy, bio-diversity etc. are factors that should come within the WTO requirement.

Nepal’s accession to WTO is a challenging one. Trade laws and rules especially with reference to intellectual property rights have to be improved and made compatible with globalisation, the tariff structure has to be rationalised and competitive strengths of enterprises have to be built up.

Fulfilment

Some of these conditions can be fulfilled with domestic efforts. The most important aspect is that Nepal should be able to claim its patent rights over its rich bio-diversity. The government as well as the private sector should work hand in hand to minimise possible challenges of WTO.

Other Stories