— Keshab Badal

Keshab Badal is a former minister and immediate past president of All Nepal Peasants Association (ANPA) – the largest farmers’ group in the country. A standing committee member of the Communist Party of Nepal –Unified Marxist Leninist, Badal has been involved in the farmers’ movement for the last three decades. He spoke to SANJAYA DHAKAL on Nepal’s membership of the World Trade Organization (WTO) and its likely implications on the agriculture sector. Excerpts:

As a person involved in farmers’ movement, how do you see the Nepal’s membership of WTO?

I see the Nepal’s membership of the WTO as a sad but compulsory development. Nepal could not have remained isolated and not joined WTO. That was simply not possible when around 147 countries around the world, including our two neighbors, have become its members. However, there is a nagging fear that by becoming a member without adequate preparation and strength, we could lose more than gain.

What kinds of challenges do you foresee the Nepalese farmers will have to face in the days ahead?

At present, over 76 percent of Nepalese people are engaged in agriculture. But we do not have adequate agriculture infrastructures in place. The feudal land ownership prevails – nearly 19 percent of our farmers (around one million people) still do not own any land. Infrastructures like irrigation, road, banking facilities, cooperatives, agro-industries, market relations, technology, etc are all in middle-age rudimentary stage. The cost of production is not competitive. At a time like this when we will now have to come out in the unavoidable situation of open competition, we are terribly concerned that the days ahead could be far more difficult for our farmers.

What kinds of benefits could the farmers get from the WTO membership?

We are concerned that the developed countries like the United States and European nations, who have modern and developed agriculture sector, would use the WTO to protect the interest of their farmers only. These countries provide protect to their farmers. They impose huge custom tariffs on agricultural goods they import from other countries. For example, the USA, Canada and EU impose heavy tariffs on milk products and wheat products – up to 200 and 300 percent. In such a situation, one can only imagine how competitive our products are going to be when we don’t have basic infrastructure and when the state is withdrawing all kinds of subsidies. This is our major worry. However, if a level playing field is guaranteed, we can also compete. If we also get concessions on power, road, finance, market, technology and so on, we can compete effectively. In fact, Nepalese farmers do not enjoy support from the state even when compared to neighboring India.

Do we have some competitive advantages?

We do have some advantages. For instance, we are quite rich in terms of biodiversity. Compared to the geographical area we cover, our biodiversity is 17 times more. Such diversity is evident in the plants, seeds as well as wildlife. We also have tremendous indigenous experiences particularly in herbal medicines. But we need to protect these natural and intellectual properties by registering their patents. Otherwise, we may stand to lose our advantages.

Are Nepalese farmers ready to enter the global free trade regime? Are they aware of the WTO and its implications?

Apart from few business houses and a few farmers who live close to urban areas, overwhelming mass of them do not have a clue on what free trade is all about. Moreover, let alone the global free trade, the Nepalese agriculture sector is yet to be fully integrated in domestic front. The price of a sack of fertilizer in Birgunj will rise by five to six times when it reaches Jumla district. Likewise, if the cost of transportation of a quintal of rice from Terai to Kathmandu is Rs 500, the same will cross Rs 8000 when transported to Humla – which do not have a road access. When we do not even have market connection, how can we talk about market economy.

Has the ANPA organized programs to sensitize the farmers?

ANPA has been informing the farmers about the economic readjustment programs for the last ten years. Since the last ten years we have been meeting with the concerned ministries and agencies to tell them about our issues. We have been constantly urging the government to protect our interests.

What are your views about the agricultural subsidies?

We are for time-bound subsidies. We are not asking for subsidies for indefinite period. There are 6000 rivers and streams in the country but it is a pity that the irrigated land is less than 20 percent of the total land used by farmers. The state must invest in irrigation and here farmers will need subsidy. Likewise, due to lack of transport facilities, the farmers of remote areas must be provided with subsidy in transport charge. For instance, why cannot the government provide subsidy in the transportation of apples of Jumla for at least four months a year? Similarly, subsidies are necessary in fertilizers, electricity used in cold storage and so on. These subsidies are pre-requisite if we want to compete with farmers of neighboring India, who enjoy all these things. Not only India, these days, we can see gingers and garlics from China flooding in our market. The costs of these products are highly competitive and are displacing Nepalese products.

So what do you suggest the government needs to do at this juncture?

For the development of agricultural economy, the state needs to develop the integrated use of water – as in drinking water, irrigation, hydropower, fisheries and so on. The state also needs to establish local rights on our natural resources. A revolutionary land-reforms and redistribution would add energy to this process. This will also usher in dense farming. At present, an average farmer family owns less than 0.8 hectares of land; most of them do not have alternate means of livelihood; and are illiterate. Therefore, the government must be alert in protecting their rights and interests. That apart, I also urge the international community and the WTO to open up labor market if they want totally free trade. Since they talk about equality, they must also open up labor market so that our laborers can freely travel to their countries to work. That would be appropriate from the perspective of social justice as well. Otherwise, the WTO will remain a tool to legitimize the monopoly of around 500 multinational companies – already around ten top companies control 45 percent of seed generation and distribution market. Therefore, I also want to add that LDCs and developing countries should form a unified front to protect the interests of the poor.

“Trade Policy In The US And To Some Extent Worldwide Is Tilted Against Asian LDC”

— Edward Gresser

Edward Gresser is a director of Washington-based Progressive Policy Institute (PPI). Mr. Gresser’s major focuses have included investigation of the American tariff system, Trade Promotion Authority and the future U.S. trade negotiating agenda, hemispheric integration, economic relations with China in the wake of WTO membership and Asian affairs, as well as international finance and labor issues. Mr. Gresser joined PPI in 2001 after ten years of service in the Clinton Administration and as a senior Congressional staffer. As Policy Advisor to U.S. Trade Representative Charlene Barshefsky from April 1998 through the close of the Clinton Administration, he was the USTR’s principal policy advisor and research aide. An international trade researcher, he gave written replies to queries by SANJAYA DHAKAL regarding Nepal’s entry into WTO and how it could benefit from the rule-based free trade regime. Excerpts:

How do you think Nepal will fare in the days ahead?

Ultimately, the most important factor for Nepal is the restoration of peace and political stability. If that succeeds, Nepal has its destiny in its own hands and can do quite well. In that case I see three basic issues to address: (1) a global trade regime that is tilted in important ways against least-developed Asian countries; (2) the challenges emerging from the end of the textile quota policy; and (3) the potential opportunities created by the rapid growth and development of China and India. The good news is that as a WTO member, Nepal has a great deal more power and influence than before, and can use them to address these problems and take greater advantage of the opportunities.

What do you think Nepal should do?

As a WTO member, Nepal is on a legally equal basis with the U.S., India, China and the European Union and other large economies. By setting some clear priorities in the “Doha Development Agenda” talks, the Nepali government can reshape the country’s trading environment in a more fair and favorable way. In policy terms, Nepal’s government might set two goals. First, it could seek early elimination of US garment tariffs, so as to give Nepali exporters and workers parity with those of other least-developed countries in Africa and Latin America, and help balance the size of China and India. Second, it could seek reform of trade policies in India and China that disadvantage small and least-developed Asian countries. A good example is the Indian ‘specific-duty’ policy – that is, the practice of charging flat fees of hundreds of rupees on low-cost cotton and synthetic garments – which makes it very hard to reach the Indian consumer market. Politically, Nepal has some likely allies in these issues. Other Asian LDCs in the WTO, in particular Cambodia, Mongolia and Bangladesh, face similar challenges and all can gain strength by working together.

How do you find US trade policies vis-à-vis Nepal?

It really seems to me that trade policy in the US and to some extent worldwide is tilted against Asian LDC. Over the past two years I have been looking at the operation of American trade policy vis-a-vis different countries. It is especially tough on Nepal and a few other Asian LDCs (Cambodia, Bangladesh and Mongolia in particular). This is because: US tariffs and trade barriers generally are much higher in clothing than other products – for clothes the average is about 15 percent and for other manufactured goods about 1.5 percent . In contrast to Africa and Latin America, the US has no special program to offset the effects of this system for Asian countries. In practical terms this means that least-developed Asian countries already get treated a good deal worse than most others. Last year we collected about $21 million in tariffs on $150 million worth of Nepali rugs, shirts and similar goods – and only $20 million on $5 billion worth of Norwegian salmon, oil and airplane parts, or $27 million on $18 billion worth of Irish medicine and computers. LDCs in other parts of the world, notably Africa, do not have such problems, since they have been excused from tariffs through our African Growth and Opportunity Act and two programs for Latin America. This might ironically make life harder for Nepal in coming years, since when the quota system ends next January, exporters in the Asian LDCs will be dealing with duty-free competitors in Africa and Latin America on one hand, as well as very big countries with powerful economies of scale (notably China and India) on the other. Policies in at least some of Nepal’s neighbors also seem tilted against the Asian LDCs. India is a good example, though probably not the only one – it has a two-tier system that in practice probably discriminates against Nepal, Bangladesh and possibly Sri Lanka. One example is that the Indian system puts a 30% tariff, or a 110-rupee flat fee – whichever is higher – on cotton skirts. So in practice an American skirt gets a 30% tariff and the Nepali one probably a 100% or even 200% tariff.