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

« View All Articles

Trade agenda for NDF
Published: The Kathmandu Post, 9 April 2004
By: Ratnakar Adhikari

The preparatory meetings being currently organised by the government for the Nepal Development Forum (NDF) to be held from 5 to 6 May 2004 are to be considered laudable effort inasmuch as they provide opportunity for those stakeholders, who are fortunate enough to participate at the meetings. It is hoped that the government will actually incorporate the suggestions provided during the meetings, failing which they would be a futile exercise at best. At worst, they would be labeled merely as an effort of the government to provide legitimacy to its actions.

I too had an opportunity to participate at the session on trade and commerce during which the government made tall claims about what it is going to do in the coming two years to help alleviate poverty through active promotion of trade and commerce. However, looking at the process of the meeting as well as content of the presentation, it appears that such claims are not based on solid foundation.

The first point relates to exclusive nature of the session on trade and commerce (I cannot mention anything about other sessions in which I have not participated). This is because out of the total seven discussants – there were three representing business community, but none from the consumer groups, farmers’ groups, trade unions or non-governmental organisations (NGOs). This shows the attitude of the government, which narrowly focuses on the private sector alone and views the same as the sole beneficiary of any trade policy initiatives. This tendency has also exposed a serious lack of understanding within the Nepalese bureaucracy about the role that could be played by other stakeholders in making trade and commerce beneficial for the country as a whole.

Ever since countries realised that trade policy can transcend the business domain, they have started engaging all the stakeholders in every decision relating to trade policy issues. For example, it is, by law, not possible for the United States Trade Representative (USTR) to negotiate agricultural tariff without adequate consultations with the farmer groups. Similarly, developing countries like Thailand and Peru have also enacted legislation, which oblige the respective governments to discuss the contours of any policy initiatives with all the stakeholders that are going to be affected by them.

In a democracy (or pseudo-democracy like ours in the present context), formation of interest groups and lobbying around certain issues are quite common. It is also true that the groups, which are more organised, are able to throw their weight on the government, at the victimisation of other groups or communities.

However, it is equally important for the government to seek opinions from the relatively unorganised segments of the society, so that proper check and balance can be ensured. What the government did was to provide ample opportunity to the representatives of only one stakeholder to make their presentations. In the process of accommodating them, the government could not provide any space to other stakeholders. This is a telling pointer to apathetic attitude of the government towards reflecting the concern of different stakeholders in planning and policy making processes.

So much about the process, now let us focus on the content of the paper presented on behalf of Ministry of Industry, Commerce and Supplies (MoICS). It is striking to note that, despite repeated mention of 'poverty alleviation' as the major focus of government’s trade policy agenda, the paper is silent on how the poor, marginalised and vulnerable segments of the society are going to be compensated for the loss, let alone being the beneficiary of such policy initiatives. This is probably because the government sees virtue in projecting 'poverty alleviation' as a major objective, not least because it is appealing to the donor community.

There is no denying the fact that trade liberalisation policy, managed properly, could provide stimulus to poverty alleviation. However, the catch is that poverty alleviation objective would not be achieved if the institutions were not created and they were not geared up to make trade work for the poor. One of the most important institutions the government needs to create is the institution for the redistribution of income.

Trade liberalisation creates both winners and losers. While in the long run, it creates more winners than losers, in the short run, it does just the opposite. The problem is further compounded by the fact that the burden of adjustment falls disproportionately heavily on the weaker segments of the society.

It is the responsibility of the government (provided it is a responsible one) to ensure that losers are at least partially compensated for the losses.

Despite high sounding rhetoric by the Finance Minister, the present government has miserably failed in terms of meeting the target for tax collection. The situation is bound to worsen because of the increase in non-budgeted expenditure at an alarming pace, even outside the control of the supposedly legitimate government. In such a situation, it is probably a fallacy to assume that the government will help create and build the institution for the redistribution of income.

However, the start has to be made from somewhere. Let the forthcoming NDF be a starting point. For this to happen, the government needs to fundamentally revise its paper on trade and commerce by taking the following factors into consideration.

First, trade policy making should be made an inclusive process, proper consultation with the stakeholders before preparing any policy or negotiating positions (in the case of trade agreement with outsiders) being its hallmark. Secondly, the government should set aside some income from trade expansion for the rehabilitation of certain sectors of the economy, which could be devastated by trade liberalisation, garment sector being a case in point. It should spend part of the resources for retraining and retooling of workers, who are bound to lose their jobs, so that they could be absorbed in other sectors.

Third, it should make active efforts to create new jobs to accommodate the workers or farmers, who have lost their livelihood options because of trade liberalisation. Finally, it should help establish credible institutions, which will provide exposure and skill trainings to the workers going abroad for earning their living so that they could not only earn better salaries, but also send higher remittances to their families.

The paper does mention that the government wants to move from A to Z, but it is silent on how to reach there (modalities), who will ensure that government reaches there (responsible agency to implement the programmes), what is time period to reach there (deadlines), what are the major milestones (targets) and who will check whether the government has reached there or not (monitoring mechanism). The government, therefore, needs to incorporate these issues in the paper, so as to be able to sell it to the donor.

Let us hope that the government is serious about using trade and commerce for the benefit of the poor. It should try to ensure that the forthcoming NDF does not become yet another public relations exercise solely aimed at receiving donations just for the sake of receiving them.

« View All Articles