Nepal trade policy dilemma: Experts stress benefits of bilateralism
The Rising Nepal | 2008-1-26
Trade policy dilemma: Experts stress benefits of bilateralism
By Raj Kumar K.C.
Kathmandu, Jan. 25: Who should be blamed for this? The government still seems to be unclear about its priority on trade. Owing to lack of clear policy and ’inherent lacunas’ in structure, policy makers and senior government officials appear to be bugged down in the morass of confusion as to whether would it be appropriate to go for bilateralism or regionalism or multilateralism.
However, experts say that inadequate bilateral trade agreement (BTA) is one of the reasons for poor trade diversification. Since bilateral trade agreements are easier and simpler, priority should be given to this type of structure, they believe.
Even though Nepal has embraced multilateralism and regionalism (MTA/RTA) by endorsing the framework of the World Trade Organisation (WTO), South Asian Free Trade Area (SAFTA) and Bay of Bengal Initiatives for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) in the recent years, inadequate bilateral trade agreements with various countries across, Asia and Europe has impeded diversification of trade, according to experts.
Uma Shankar Prasad, a research scholar at Jawaharal Nehru University, New Delhi says that the bilateral trade agreements with different countries are more effective in order to promote trade for a country like Nepal. �Because, it is easier to strike a deal between two countries and the process is much simpler and quicker as well," says Prasad.
Countries in Asia, Europe and Latin America are gradually embracing bilateralism again. But it does not mean that, they are shying away from multi-lateralism or regionalism, believes Sunil Manandhar, a trade analyst and political activist.
Manandhar thinks that the governments after the restoration of democracy in 1990 should have given priority to bilateral, multilateral and regional trade agreements in equal footing. But it has not happened so far. The government has not entered into the bilateral agreements with any countries after 1992.
However, official statistics show that no effect has been witnessed in this regard. Even officials at the Ministry of Industry Commerce and Supplies (MoICS) and Trade and Export Promotion Center (TEPC) bluntly say that bilateral trade agreements have had no significant impact on Nepal’s trade volume. Instead, the volume of export and import volume has rather increased after 1990. But researchers in this connection have calculated various permutations and combinations and subsequently drawn hypotheses that equal emphasis on bilateral trade agreements would have been more productive.
A senior officer at MOICS however admits that bilateral trade is obviously more result-oriented. Besides, going by the regional trade framework even USA has established bilateral trade agreements with its neighbours like Mexico or Canada. On top of that India and Sri Lanka, India Bhutan, India Bangladesh have developed bilateral trade relations to expedite bilateral trade relations.
Regarding Nepal’s bilateral trade agreements with 17 countries, the MOICS official said that the government has not yet reviewed any BTA with any countries though some of the countries such as Yugoslavia is no more in existence. Officials at Ministry of Finance express ignorance about this. In fact, there should be a provision of review of the trade treaties, they say.
