South Asia Watch on Trade, Economics & Environment (SAWTEE)

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A tale of three economic sins
Published: The Kathmandu Post, 5 March 2004
By: Ratnakar Adhikari

Representative democracy has been officially relegated to the backburner thanks to the present political quagmire. The present government is signing international, regional and bilateral treaties left, right and centre without fulfilling the bare minimum political process that would have provided legitimacy to the signing of various agreements. As we move towards the latter days of the government, things are getting murkier. When the negotiations for obtaining the membership of the World Trade Organisation (WTO) began during the earlier part of the government's tenure, the government did consult the stakeholders, which resulted in Nepal getting the 'best possible deal' in the words of United Nations Conference on Trade and Development (UNCTAD). Now the government does not bother to consult even a fraction of stakeholders while signing agreements with other countries' leading the people of the country towards uncharted territory without providing an opportunity for them to weigh their pros and cons.

While the government has signed and is likely to sign many more treaties in days to come, taking advantage of the fluid political situation, the focus of this column is only on three treaties, which are nothing less than economic sins.

The first economic sin is the signing of South Asian Free Trade Agreement (SAFTA) not only without any homework at the national level, but also without any consultation whatsoever with the stakeholders. Though the business community praised SAFTA as a 'landmark achievement', an in-depth analysis of the Treaty reveals that Nepal has been duped, misled, and worse still cheated by developing member states of SAARC as well as by the leader of the LDC camp.

When the question about the non-application of special and differential treatment (S&DT) provisions is raised, government officials are quick to point out that the negotiations are diplomatically driven and are conducted in good faith. Hence, as the argument goes, it is not always possible to include binding language in the Framework Agreement. They further justify their poor performance by stating that one has to look at the spirit of the provisions, not the letter. Sirs, my humble submission is that it is not the spirit that is going to be looked at when we need to enforce a provision of any Treaty, it is the letter and its legal interpretation that matter.

Haven't we seen how the developed member countries of the WTO have fooled the developing countries by including non-binding best endeavour languages in the WTO Agreements and washed their hands off when the latter asked for implementation of those provisions? What are we trying to prove by repeating the same mistake during Free Trade Agreement (FTA) negotiations? When will our bureaucrats learn that, at the end of the day, economic negotiations are about fooling others diplomatically to protect and promote own national interest? While countries like India and Bangladesh have learned this trick, our bureaucrats are taking pride merely in the fact that they have been able to sign an FTA.

As if the deceitful act mentioned above was not enough, the government is trying to cover it up by saying that SAFTA Treaty is just a Framework Agreement, and that consultation would take place at the time of deciding the modalities of negotiations. However, this too has proven a blatant lie after the government quietly went and participated in the meeting of Committee of Experts (CoE), which concluded on 27 February, without any consultation with the stakeholders.

The second sin committed by the government is to have signed the Bangladesh, India, Myanmar, Sri Lanka and Thailand (BIMSTEC) FTA in an even more aggressive manner. The Ministry of Foreign Affairs (MoFA) has shown the acme of its efficiency by making a quick decision on signing the FTA, though it is still unclear whether or not it had the required mandate to sign the same.

The recent row between the Ministry of Industry, Commerce and Supplies (MoICS) and MoFA regarding the encroachment by the latter of the formers turf at the time of signing the BIMSTEC FTA is a telling pointer to the serious lack of inter-ministerial coordination.

When bulk of the work on trade policy issue takes place at the MoICS and the same has the history as well as 'expertise' to deal with FTAs why should MoFA poke its nose on these matters is anybody's guess. Moreover, looking at the signed text of BIMSTEC FTA, except for Nepal and Bhutan, all the countries were represented by the Commerce Ministers' who are not only elected representatives of their people, but have also been sworn in as Ministers.

Probably as a reward for continuing the tradition of non-consultation and making unilateral decision, which have become a routine practice of the present government, Dr Thapa has been given a ministerial berth now.

It also exposes the then Ambassador-at-Large Dr Bhesh Bahadur Thapa's yearn for participating in a 'photo session' immediately after singing the FTA. Dr Thapa must have looked down upon Bangladeshi Commerce Minister Amir Khoshru Chaudhary, who did get the opportunity to participate at the 'photo session'. Readers would recall that Bangladesh did not sign on to BIMSTEC FTA rightfully citing lack of provision for the revenue compensation mechanism for LDCs.

The last sin in the series is the transportation agreement with India. It is understood that this agreement could boost the flow of passenger traffic from either side of the border and will provide competition to relatively inefficient Nepalese transport operators, who have survived through the creation of a close-knitted cartel. Moreover, this might have come as a sigh of relief to our dwindling tourism industry. However, the government should not have signed the agreement with India without taking the stakeholders into confidence.

When the transport entrepreneurs organised a programme in Kathmandu last month, the Indian Embassy officials invited their leaders to persuade them not to oppose the agreement, but the officials at the Ministry of Works and Transport did not even bother to consult them before signing a treaty with far reaching implications.

Interestingly, as published in the editorial of The Kathmandu Post on 27 February 2004, the present government is making decisions without doing much needed homework and kneeling down only when its decision faces stiff resistance from the interest groups. The recent decision of the Nepal Oil Corporation to separate the distribution point for petrol and kerosene as well as the decision of Civil Aviation Authority of Nepal to introduce monopoly ramp bus services and subsequent withdrawal of the decisions, following intense pressures are glaring examples. No one knows how long such irresponsible behaviour will continue. However, one thing is certain that unless and until representative democracy is put back on track, the decisions will continue to be made based on the whim and fancy of the government, with absolute impunity.

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