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

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Dangerously complacent
Published: The Kathmandu Post, 29 October 2004
By: Ratnakar Adhikari

We, the Nepalese, have developed a fatal habit of being complacent even when a job is partially done. This is evident from the attitude of the government of hurrying to sign pacts aimed at freeing trade, without making any efforts towards creating an atmosphere to take advantage from them. Not that Nepal’s membership to the WTO is any different.After Nepal was provided membership to the WTO on 23 April 2004, the government has been missing the deadlines for fulfilling the commitments made at the WTO. The missed deadlines of 31 July 2004 to enact two laws on competition and anti-dumping are still fresh in our mind. It appears that now that we have obtained membership to the WTO, we are becoming complacent.

Moreover, we are not doing any homework at all in terms of making an informed contribution during the WTO negotiation processes. Since the discussions on various Committees have already begun at the WTO following the 31 July decision of the General Council of the WTO – which saved the Doha Round – it is high time that we got our acts together. The reason we are avoiding such homework could be many, but some of them immediately come to my mind.

First, we feel that our interests will be protected by following the positions of other groups such as Group of 90 (G 90) which includes the Africa Union, Africa, Caribbean and Pacific (ACP) countries, and least-developed countries (LDCs). We tend to forget the fact that G 90 is a diverse group often with conflicting interests and its future is at best uncertain, let alone the sustainability of its positions.

Second, preparing negotiating positions on key issues means that we have to conduct a lot of research and consultation with stakeholders – a culture seriously lacking in Nepal. While these aspects had received some priority during the process of accession negotiations, the government does not seem to be serious on institutionalising this process.

Third, it could be our sheer complacence that we have been able to obtain membership to the WTO. Our belief that benefits would automatically flow and harms will automatically disappear may not have been founded on any logical reasoning, but we enjoy the luxury of waiting for things to happen without having to make any effort.

Since this column does not purport to be a guideline for the government (because it is only the government which can make interventions at the WTO) aimed at making positions on 31 July Package, it would only touch upon the current state of play in Geneva. This is being done with the exception that our government machinery realises what they have missed so far and how they could catch up.

As pointed out in this very column dated 6 August 2004, only five issues have been taken up for negotiations as a part of Doha Development Round, with a commitment to continue work on other issues.

Out of the five issues, agriculture is the most contentious one. The Chair of the Special Session on Agriculture, New Zealand Ambassador Tim Groser has already started the agriculture negotiations with a bang, taking a very active role from the first and calling on members to start technical work immediately. Besides the conventional issues related to three pillars of agriculture (market access, domestic support and export competition), new issues like Special Safeguard Mechanism (SSM), Special Products (SPs) and conversion of specific duty (e.g., Rs. 5,000 per tonne) to ad valorem tariff (e.g., 12 percent) are going to be discussed shortly.

Different groups have taken up the responsibility to prepare technical papers, which will form the basis for negotiations. While Group of 33 (G 33) will prepare draft papers on SSM and SP, Group of 20 (G 20) will work on market access pillar, in particular the formula for tariff reduction. Cairns Group of agricultural exporting countries has been preparing papers on several conventional issues, as well as ad valorem tariff equivalents.

On the issue of non-agricultural market access (NAMA) no formal negotiations have taken place but informal meetings were held earlier this month. During July meetings, the major point of divergence between the developing and developed countries had been the issue of further clarification on four critical issues. These relate to the tariff reduction formula, treatment of unbound tariffs, the flexibilities for developing-country participants, and participation in the sectoral tariff component and the preferences. Developing countries had accepted the NAMA text only with the conditions that "further negotiations" would take place on these four issues before moving on to technical issues.

However, Chair of the Negotiations Group on NAMA, Iceland’s Ambassador Johanesson was keen to get members to commence technical work on the formula for tariff reduction, the sectoral approach and flexibilities. Some developing member countries spoke out against moving so quickly on technical issues without re-opening the debates on the above mentioned four issues.

On the issue of services negotiations due to the delay in request and offer mode, some countries have been moving into bilateral mode, thus diluting the positive list approach of services negotiations. Developing countries have repeatedly pointed out that in the area of most interest to them – Mode 4 (the temporary movement of persons) – offers tabled by developed countries so far have fallen far short of their expectations. This is one area where developing countries should make concerted efforts in order to ensure that they too share the benefits of services liberalisation.

On the issue of special and differential treatment (S&DT), the major contention has been whether to create a separate category of WTO membership, besides the three categories – developed, developing and least developed that exists now. While July Decision has made it clear that no new category will be created, some G90 countries seem keen to create a differentiation that would separate them from the more advanced developing countries. This is a tricky issue because developed countries do not want powerful developing countries such as Argentina, Brazil, China, Egypt, India, Malaysia and Indonesia to receive same S&DTs as being provided to smaller developing countries like Fiji, Sri Lanka and Ghana. At the same time, developing countries fear that this is a ploy to divide the developing countries.

On the issue of trade facilitation – which is the only Singapore Issue to be negotiated under the Doha Round of trade negotiations, no negotiation has taken place so far. The only development on this front has been the appointment of Ambassador Noor from Malaysia as the chair of the Committee on Trade Facilitation.

Nepal, which is now a full-fledged member of the WTO, has neither made any contribution to the discussion on above mentioned issues, nor has formally aligned itself with any group. If we are unable to prepare our negotiating positions and make an informed contribution in the negotiation process, our interest may be compromised. We might have to finally accept the positions of other members towards the end of the negotiating cycle – just to fulfill the formality of joining the consensus required for making decisions.

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