Nepal and WTO

The accession process of Nepal to WTO started in early 1997. During 1997-2004, Nepal participated in various working party meetings and also made various commitments for opening its market to outside world. The accession of Nepal in the multilateral trading system in 2004 has created opportunities and challenges to Nepalese trade. The opportunity is available for better market access, as the member countries are bound to remove the tariff and non-tariff barriers to trade. Nepal, as the least developed country (LDC), can enjoy the benefit of special and differential treatment under various agreements of the multilateral trading system. Similarly there are opportunities of sounding the concern of Nepal as the land-locked LDC (LLDCs) by rallying with the other similar members on common areas of interest to the least developed countries and raise the collective voice in the international forum that will be an effective mechanism to address the issues of LDCs and LLDCs.

Managing the challenges at post WTO era require a set of reform within the national boundary. The decreased MEN tariff of major export commodities of Nepal has resulted to a great loss of these products. The case in point are products like garment and pashmina, the export losses of these is associated with, the consequent losses of employment to the poor people, women and revenue to the government. Garment was hard hit due to phase-out of multi-fiber agreement under the Agreement on Textile and Clothing (ATC). Similarly, the European markets for Nepalese carpet is being lost in the wake of tariff reduction and the new entrants are finding easier to downswing the Nepalese woolen carpets in competition.

Two ministerial of WTO seems to be of significance ‘from the perspective of developing and least developed countries. The first one is Doha ministerial 2001 that is termed as the development round and focuses on strategy and means to bring the developing world in the mainstream of trade by providing package of relief and assistance to these countries mainly: support for capacity building, special and differential treatment, allowing to take commitment and concessions consistent with the development, financial and trade needs, additional time periods for implementation of the commitments and so on. The second is the Hong Kong ministerial 2005 that has amounted duty free quota ‘free access to all LDCs products in ‘developed countries market, covering 97 percent products in all tariff lines. The declarations are quite encouraging but, the implementation of the commitments is still in limbo due to procrastinated negotiation of Doha Development Agenda (DDA).

Market access is the universal principle of the multilateral trading system. However, developed member countries are finding excuses in implementation of this principle under the veil of protecting the legitimate interest of the countries, thereby raising the trade barriers on account of the product quality, standards, environment and labor issues. This is also largely being used to discourage the exports from the developing world as those countries are unable to meet the mandatory standards and parameters of the developed countries. The case in point for Nepal is honey, coffee and other high value agricultural products, which were prevented from entering into the European markets on account of pesticides residue.

The commitments made during the accession are still to be completed, which mainly comprises or: bringing changes to the legal regime by enacting new pieces of legislations and modifying the existing ones to make them compliant with the international trading regimes. Several such legislations are now in the various stages of formation from preliminary drafting to completion of enactment and implementation. Commitment on opening of services sector, phase-out of other duties and taxes, bound of agriculture and non-agricultural tariff to a maximum of 42 percent and 24 percent are some of the commitments made during the accession process. Completing the process of legislation and implementation of the provisions is becoming an extra burden to the government to carry on.

However, there are benefits to joining the international trading regime which, among others, include; ensured transit right under Articie-5 of GATT, opportunity to voice the concern of country’s interest in the international forum, benefits of special and differential treatment, increased market access to all countries around the world and the opportunity to harness trade related assistance and development assistance for capacity enhancement of the country. The effective participation in international trade forum and negotiations would also help to uplift the country’s profile among ‘the international community’.

Posted on : 2009-09-16 05:58:13

Comments (0)