By Ratnakar Adhikari
Ratnakar Adhikari
23 April 2005 marks the first anniversary of Nepal’s accession to the World Trade Organisation (WTO) – the rules-based multilateral trading system. The motives of WTO accession, such as predictability of market access and policy lock-in, remain sacrosanct, hence there is no need to indulge in a lengthy discussion on these issues. Suffice to mention that Nepal made a landmark achievement by acceding to the WTO. However, it is time to reflect upon and review the progress made till date and chalk out the future course of action.
Logically, there are two ways of expressing one’s thoughts. First, to be diplomatic and maintain good rapport with all the actors involved, thereby giving false impression to the readers that all is well. Second, to be critical of the action of all the stakeholders and knowing our ‘criticism-averse’ culture, thereby creating more enemies than friends at one stroke. However, I would choose the middle path and be diplomatically critical.
That we have already missed the deadline for enacting some legislation despite repeated official commitments is not new. Similarly, it is not an earth shattering revelation that we are extremely slow in making decisions. We also claim that a carefully considered decision-making process through an extended period of consultation with the stakeholders will produce better outcomes. However, there is no evidence to suggest that the time taken for making a decision is directly proportional to the quality of decision. We, at times, also use the façade of wide consultation to achieve the elusive goal of consensus in order to mask our ineptitude.
The absence of a functioning parliament is also attributed as a major reason for our inability to meet our various commitments. However, there are two major fallacies associated with this argument. First, if our WTO Accession Treaty itself was ratified by amending our Treaty Act through an ordinance, then why should the commitments made as a part of our Protocol of Accession to the WTO be treated differently? Second, looking at the legislation being brought in the country after the dissolution of the House of Representatives in 2002, there is hardly a sense of ‘conservatism’ (i.e., passing only those legislation through ordinance that are essential for the smooth functioning of the state). When external pressure is present, the government has readily prepared legislation without any consultation with stakeholders.
Be that as it may, the objective is not to lay the blame on anyone but to clarify that all of us, as Nepalese, have failed to achieve major milestones during the one-year period following our accession to the WTO. This has given rise to suspicion in minds of some about the credibility of our commitment.
The reasons may vary but let us accept a harsh reality that the government was not able to undertake major policy, legal and institutional reforms required to reap benefits from WTO membership (such as amendment to Export Import Act, Labour Act, Industrial Enterprises Act, etc.) and to mitigate the negative impacts of the membership (such as enactment of Anti-dumping and Countervailing Act, Access to Genetic Resources and Benefit Sharing Act, etc.). Furthermore, there are some other legislation, the enactment of which would have not only provided benefits to Nepal but also helped us mitigate some threats. For example, a competition legislation could have helped us achieve the following: enhancing the competitiveness of the private sector, and protecting our consumers from the rent seeking behaviour and local business enterprises from the anti-competitive practices of foreign enterprises. It is equally disappointing to note that the government has so far been unable to make well-informed contributions during the WTO negotiations.
The second bitter truth is that our private sector has not been able to pool resources for investment in research and development (R&D), become innovative, reduce inefficiency, and enhance competitiveness so as to take advantage of the market access opportunities offered by the WTO. Neither have they been able to conduct research to identify the major market access barriers and supply side constraints in the post-accession era, nor have they been able to provide informed advice to the government on the positions to be taken by the country in the on-going WTO negotiations.
The third harsh fact is that non-governmental organisations (NGOs) have been unable to conduct capacity building efforts targeting the consumers, farmers, workers and small and medium enterprises – the vulnerable sections of the Nepalese economy- they claim to represent. Their activities have focused mostly on the Kathmandu Valley and the urban centres, which is in no way sufficient to lead to desired outcomes. They are also seriously lagging behind in putting forth well-researched and cogent arguments to influence the policy making process.
Fortunately, to borrow the popular expression “every cloud has a silver lining”, some encouraging symptoms are also visible. For example, encouraged by the outcomes of an extensive consultation process during the process of Nepal’s accession to the WTO, other Divisions in the Ministry of Industry, Commerce and Supplies (MoICS), too, have emulated this approach. Since February this year, the Regional Trade Division of the Ministry has started consultations with the stakeholders to prepare government’s position on some of the contentious issues in the regional trade agreements (RTAs) being signed by Nepal. The government is now preparing its negotiating positions on sensitive list, rules of origin, mechanism for revenue compensation, and technical assistance to the least developed countries (LDCs) for the negotiations on South Asian Free Trade Agreement (SAFTA), in consultation with a wide range of stakeholders including the private sector, NGOs and academia. Similar processes have been followed in the case of the Bay of Bengal Multi-Sectoral Initiative for Technical and Economic Cooperation (BIMSTEC) Free Trade Agreement (FTA).
The government is also contemplating the creation of a multi-stakeholder expert body, which will provide advice to the government on various trade related issues. However, as noted above, this too has been considerably delayed, apparently due to apathy of officials at the higher echelons of the Ministry.
What is required is an honest commitment from all the stakeholders to convert WTO membership into meaningful opportunities and mitigate the threats. One year may not be a sufficiently long period in a country’s history, which has lost several decades of opportunities. The creation of a multi-stakeholders group, which will not only provide inputs to the government in implementing our commitments but also in helping the government prepare well-informed national positions, is the need of the hour.