WTO Ministerial Meeting, host of challenges for Nepal

KATHMANDU, Nov 29, 2013

The upcoming 9th WTO Ministerial Conference, scheduled to start on December 3 in Bali, Indonesia, has twin significance for Nepal.

As the coordinator of the Consultative Group of the Least Developed Countries (LDCs) at the World Trade Organization (WTO), Nepal has the opportunity to raise its voice to demand a larger space in international trade for LDCs.

Also, with the country itself facing barriers aplenty in international trade and a skyrocketing trade deficit, Nepal can take the opportunity to take the stage to draw global attention toward its specific concerns on existing multi-lateral and bilateral trade issues.

Though Nepal is suffering from ‘discriminatory attitudes’ shown by developed countries, mainly the United States (US), regarding granting of Duty-Free-Quota-Free (DFQF) facility in comparison to LDCs in Africa, Nepal will face challenges in trying to find a common ground that will be beneficial to and accepted by all LDCs.

“Some LDCs are enjoying DFQF to market access while others, including Nepal, are deprived of this facility. Given the fact, as a chair of LDCs in WTO, Nepal has to explore the landing zone for convergences of crucial issues,” said Shankar Bairagi, the Permanent Representative for Nepal´s mission at the WTO Secretariat in Geneva, Switzerland.

However, growing competition among LDCs to benefit from global trade at individual levels will hamper the process of finding a common agenda that can be raised collectively at the international forum.

Though developed countries have pledged DFQF market access to 97 percent of the goods originating from LDCs as per Hong Kong Ministerial Conference in 2005, only around 80- 91 percent of the goods are enjoying such facility. Nepal has been getting 81 percent and some other African LDCs have been enjoying a preferential market for 91 percent of their total exports to developed countries under the DFQF.

“As a group coordinator, Nepal is insisting on implementing market access in developed countries to 97 percent of the goods originating from LDCs so as to boost exports for LDCs,” said Toya Narayan Gyawali, joint-secretary at the Ministry of Commerce and Supplies (MoCS).

Another crucial issue being raised by LDCs in different forums of WTO negotiations is Rule of Origin (RoO). Different developed countries, which have been importing goods from poor countries, have been setting their own standards and criteria to apply RoO to facilitate DFQF access to their markets.

“In the absence of uniformity and harmonization in application for RoO for products being imported from LDCs by developed countries, we have to suggest the need for ‘best practices’ which can be most beneficial for our LDCs,” Bairagi said, speaking at an interaction on ´Nepal´s Participation at the 9th WTO Ministerial Conference´, held on Thursday.

Gyawali also said country-specific RoO based on disparate formulae and requirements have discouraged LDCs from trying to enjoy the preferential market access that they might qualify for.

“So, the LDC group has drafted a new RoO with a view to harmonizing and simplifying existing major RoOs that have been applied by different developed countries or regions,” Gyawali said.

Another crucial issue that Nepal has been raising at WTO forums and is planning to raise in Bali is the implementation of Service Waiver that provides preferential treatment to LDCs on trade of services to developed nations.

Commerce ministers at the 8th WTO Ministerial Conference held in Geneva on December 2011 had adopted a waiver to provide preferential treatment to services and services suppliers of LDC members.

Given the fact that the services sector contributes over 50 percent of the total Rs 1,700-billion Gross Domestic Product (GDP) of Nepal, Nepali officials are also pushing for greater access to developed countries´ market for Nepal’s services sector.

Keeping in view the significance of the services sector, Nepal Trade and Integration Strategy (NTIS) 2010 -- the government´s strategic roadmap to promote exports, has given priority to development of seven services sectors --tourism, labor, IT and business process outsourcing, health, education, engineering, and hydropower. However, export of the services listed under NTIS is still negligible.

“Nepal can benefit from services trade if the decision of Service Waiver is sincerely implemented. For this, Nepal needs to explore measures to enhance its capacity to boost services exports,” said Gyawali.

Nepal has been suffering a trade deficit of at least Rs 1.43 billion per day due to constraints in supplies of goods and services in the international market.
Trade facilitation for LDCs, including Nepal, is also a long-pending issue which has not been properly implemented to enhance their [LDCs] international trade capacity.

Negotiations on Trade Facilitation, initiated in 2004, have been aimed at enhancing technical assistance and capacity building, and simplification of customs procedures for LDCs.

Though Nepal is entitled to a substantial amount in WTO’s Aid for Trade scheme to enhance its capacity for promotion of international trade, the support has not been properly channelized to effectively serve its purpose.

Pushpa Sharma, research director of South Asia Watch on Trade, Economics and Environment (SAWTEE), also said LDCs are entitled to get preferential treatment for services with respect to the number of services allowed for supplier, value of transaction or assets, and quantity of services, among others.
Nepal needs to secure more support under Aid for Trade to improve its supply capacity.

Even though Nepal has a huge potential when it comes to export of the services identified by NTIS, actual export of such services remains negligible.
Given the huge contribution of services to GDP, nominal share of services in total export highlights Nepal’s poor capacity to take advantage of services exports.

As a leader of LDCs in WTO, Nepal can use the stage of the ministerial conference to seek new preferential treatment to boost services trade.

(Source: Republica)