FEATURES NEWS THE RISING NEPAL (DAILY)

By Uttam Maharjan

THE World Trade Organisation (WTO) the world economic body was established on the first of January, 1995 on the heels of hectic negotiations known popularly as the Uruguay Round, which took place from 1986 to 1993. Its establishment was endorsed by commercial ministers in their Marrakesh parley in 1994. General Agreement and Tariffs and Trade (GATT), the predecessor to WTO, functioned as an interim policy-maker since 1947 till its replacement by WTO in 1995. WTO, on the other hand, is a permanent international treaty. Its status is like that of the World Bank or the International Monetary Fund.

Common Forum

WTO is a legal and institutional foundation of multilateral trading systems. It is a common forum for negotiation and settlement of trade disputes and also a protector of global trade rules.
WTO is governed by two important documents: One is General Agreements- a code with 38 articles that ensure open, non-discriminatory trade in goods, services, agricultural products and textiles.
The other is a 500-page Specific Accord. The most favoured nation clause encapsulated in the General Agreements binds all member countries to give equal treatment to goods and services of other member countries. Member countries can, however, suspend their obligations citing their national security or public health issues.

WTO has some units facilitating its administration. The Secretariat is an administrative and research structure with no decision- making powers. Over 500 staff are working for it. The General Council is the main decision-making entity. It meets once a month. The council appoints the Director General in consultation with member countries. The tenure of the Director General is 4 years. The council also appoints the Chairman from among ambassadors for one year. The Chairman is a de facto leader of WTO and outranks the Director General.

The salient feature of WTO is that all decisions are made by consensus by member countries and later ratified by their respective parliaments. Any dispute between member countries is handled by the Dispute Settlement Board through a dispute settlement mechanism. The world body also takes measures to ensure that trade policies of member countries are in conformity with those formulated by it. Thus has helped prevent trade disputes flaring up into serious conflicts between member countries.

WTO is the only international body dealing with global rules of trade between member countries. Its main functions include ensuring smooth and hassle-free trade between member countries, administering trade agreements, acting as a forum for trade negotiations, resolving trade disputes through a dispute settlement mechanism, reviewing trade policies of member countries, assisting developing countries in trade policy issues and cooperating with other international bodies like the World Bank and the International Monetary Fund.

Gaining accession to WTO and enjoying the benefits it provides is not so simple. After being a member, a country will have to reform its tax, legal, infrastructure and service systems. It will have to improve its production system so as to produce quality goods that can compete with similar goods from developed countries. But the point is that developing countries lack adequate capital, skilled manpower and sophisticated technology. This has stymied mass production of quality goods at a cheaper price.

Developing countries have less negotiating power vis-a-vis developed countries. So they are often sidelined in trade negotiation.

Nepal has been trying to join WTO for quite a long time. In fact, the country tried to gain accession to GATT for the first time in 1989, when it was facing trade hassles with India. It is reported that the fifth commerce minister-level meeting to be held in Mexico this year is expected to endorse the country's admission to WTO. In 2002, the working group meeting for Nepal held in Geneva sounded positive on the country's admission to WTO.

It is heartening to note that during the 4th minister-level meeting held in Doha in 2001, India supported Nepal's entry into WTO. Similarly, the USA, Canada, China, Japan, Australia and European countries are also supportive of the country's entry into the world body. What is even more encouraging is that these countries want Nepal to be a representative of LDCs. It is indeed a matter of great pride for the country.

With Nepal being a member of WTO in the foreseeable future, the government and private sector must clearly put forward their views on facing the challenges that will certainly arise after joining WTO. For this, the country must first strengthen its trade regime internally. In this respect, suggestions from entrepreneurs are very important. Moreover, the government must restructure its trade policy and implement it sincerely. The bottom line is that if a country can confront keen competition from other countries, especially developed ones, and keep up its identity in the world market, it can reap benefits from WTO. Otherwise, it will land nowhere. Therefore, all concerned parties-- the government, private sector, civil society and labour organizations-- must brace themselves for the formidable challenges that will accompany accession to WTO.

Grace

It must be noted that once Nepal joins WTO, it will not have to fulfil all the conditions laid down by WTO. Rather, it will have some grace period for it to improve its trade regime. It may also get assistance from developed countries for this purpose.

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