7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 1/34

 

Int’l Tradein the evolving multilateral regime

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 2/34

Beyond Boundaries

Tap to Ocean 

• Multilateral - WTO

• Regional - SAFTA / BIMSTEC / BangkokAgreement / Growth Quadrangle

• Bilateral - NepalIndia/China/Bangladesh/Pakistan & Bhutan

• Saarc & EU

• Asian Highway-UN ESCAP

2

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 3/34

WTO

• Part of global family of trade and legislation

• Global market access

• Diversification of products and markets possible

• Technical Assistance -Integrated Framework /Capacity Building

• Rights to Inherent & Indigenous Products

• Dispute settlement mechanism

• Priority to LDCs /Aid for Trade

3

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 4/34

WTO Policy

• Rule based International trading System

• Member driven Organization

• Trade with global market access at competitive price of bestquality product

• Harmonization of tariff - fusion with InfoTech

• Protection only through Tariff 

• Trade Liberalization – ‘MFN’ to all members 

• Quantity and Quota system restricted

• General agreement on trade & services (GATS)

4

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 5/34

Genesis

• Virtual Collapse of the world economy in the 1930

due to global economic recession followed by World

War II in 1940s

• International Meeting to hammer out strategy forthe restructuring of the global economy - Bretton

Woods Conference 1944

• Three legs proposed to handle global economic

restructuring World Bank, IMF, ITO

5

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 6/34

Genesis

• IMF for facilitating world liquidity, World Bank

for sectoral lending for restructuring and ITO

for managing international trade

• Two legs of Bretton Woods (IMF and the

World Bank) did come up but ITO could not

because the US Senate refused to ratify the

treaty

6

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 7/34

GATT

• Multilateral Trade Treaty – General Agreement onTariff and Trade (GATT) singed by 23 countries on30th October 1947 at UN building in Geneva.

•

It was a multilaterally agreed treaty related to tariffsimposed on goods

• Decision making body with a set of rules for theconduct of international trade in goods, and

formulated mechanisms for trade liberalisation

7

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 8/34

GATT

• This provided a forum for the “contractingparties” to discuss and solve trade problemsand negotiate tariff reductions to increase

trade volume• From 1947 to 1994 GATT provided the rules

for world trade

•

Additions made through “trade rounds”

8

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 9/34

GATT

• From the seventh round (Tokyo Round) attentionmoved to other areas as well (such as non-tariff barriers)

•

During the eighth round (Uruguay Round) new issueswere added (e.g., agriculture, textile and clothing,services, IPR, standards etc.) and a concept of ‘singleundertaking’ was introduced

•

This round gave birth to an institution to oversee theimplementation of GATT and other agreements – which is known as WTO

9

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 10/34

WTO

• Successor of GATT, Operational from 1 January1995

• Permanent inter-governmental body

governing and regulating international tradein goods, services and IPR

• It’s an organisation for liberalising trade – help

trade flow as freely as possible• It’s a place for settling trade disputes 

10

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 11/34

WTO

• WTO is based on four pillars

 – Promoting rules based multilateral trading system

 – Non-discrimination (Most-Favored Nations and NationalTreatment)

 – Transparency

 – Special treatment for less developed countries

• It has 153 members

•

Decisions are made through consensus• It provides for an effective dispute settlement

system

11

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 12/34

WTO

• At the heart of the system are WTO

Agreements, negotiated and signed by

members

• These Agreements are contracts that bind

governments to keep their trade policies

within agreed limits

12

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 13/34

Major WTO Agreements

• GATT 1994

• Trade Related Aspects of Intellectual Property Rights(TRIPS)

•

Agreement on Agriculture (AOA)• General Agreement on Trade in Services (GATS)

• Agreement on Sanitary and Phytosanitary (SPS)Measures

• Technical Barriers to Trade (TBT)

• Agreement on Textile and Clothing (ATC)

13

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 14/34

WTO Agreements

• The WTO Agreements cover goods, services andintellectual property

• They spell out principles of liberalisation and

permitted exceptions• They include individual countries commitment to

lower custom tariffs and other trade barriers andopen key services sectors : 22,500 pages listing

individual countries commitments• They set procedures for settling disputes

14

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 15/34

Cross-Cutting and New Issues

• WTO work is not confined to agreements

• Members also discuss a range of other issues,usually in special Committees and working

groups• Trade and the environment, trade and

investment, competition policy, trade

facilitation, trade and labour rights

15

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 16/34

How does the WTO Function ?

• WTO is “member-driven”,with decisions taken by

consensus

• All major decisions are made by membership as a

whole, either by ministers or by ambassadors ordelegates in Geneva

• Different from World Bank or IFM in that power is

not delegated to a board of directors or the

organisation’s head

16

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 17/34

How does the WTO Function

Highest Level

• Ministerial Conference, composed of representatives of all the members,heads the WTO and is the highest policy making body

• Meets at least once every two years – Seattle, Doha, Cancun,

Hong KongSecond level

• General Council, composed of representatives of all the members

and oversees the operation of the agreements and ministerial

decisions on regular basis

17

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 18/34

How does the WTO Function ?

Third Level

• Council for Trade in Goods

• Council for Trade in Services

• Council for Trade-Related Aspects of IntellectualProperty Rights (TRIPS)

Fourth Level

• Committees – Cover specific issues and carry out the

functions assigned to them by the GC – Trade andDevelopment, Plurilateral Agreements

18

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 19/34

How does the WTO Function ?

• The Director General appointed for a period of 

four years by the Ministerial Conference heads

the secretariat of WTO

19

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 20/34

Why is WTO Powerful

• Single undertaking and binding

• Dispute Settlement Mechanism

•

Cross retaliation

20

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 21/34

Special Provisions for Developing

Countries

• Extra time and reduced level of commitments fordeveloping and least developed countries to fulfilltheir commitments under most of the agreements

• Market Access

• Technical Assistance

• Aid for Trade

21

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 22/34

22

Some myths and reality

• WTO will not eliminate custom duties

• WTO does not set trade rules, it functions as

per the mandate given by its members

•

Members have flexibility to protect theirdomestic sectors through tariff and trade

remedy measures

• WTO rules do not conflict with

environmental conservation goals

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 23/34

Reasons for Membership

• Stable and predictable market

• Participatory (consensus based) decision making

• Rules based system and effective dispute resolution

mechanism

• Reduced dependence on a single market

• Special and differential treatment for LDCs

• Transit right

• Policy lock-in• Technical assistance

23

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 24/34

Post accession agenda

• Focus: maximising opportunities andminimising costs

• At the domestic level

 – Policy reforms

 – Legislative Action Plan

 – Actions and implementation

• Government, business sector, academia, Civil Society

• At the international level

 – Proactive negotiating agenda

 – Alliance building

24

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 25/34

SAFTA (South Asian Free Trade

Area): The landmark achievement

• Objectives of Safta:

1. eliminating barriers to trade, and facilitating the cross-

border movement of goods;

2. promoting conditions for fair competition & ensuring

equitable benefits;

3. creating effective mechanism for the implementation as

well as resolution of disputes;

4. establishing a framework for further regional cooperation

25

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 26/34

 

SAFTA – The landmark achievement  (

Contd. )

• Takes care of the regional imbalance in development.

• Para 3(1) a reads – 

eliminating barriers to trade in, and facilitating the cross-border movementof goods between the territories of the Contracting States;

• Para 3(2) d reads – 

SAFTA shall involve the free movement of goods, between countriesthrough, inter alia, the elimination of tariffs, para tariffs and non-tariff restrictions on the movement of goods, and any other equivalent measures; 

26

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 27/34

SAFTA – The landmark Achievement

• Para 3(2) f reads – 

The special needs of the Least Developed Contracting States shall be

clearly recognized by adopting concrete preferential measures in

their favor on a non-reciprocal basis.

• Para 8(g) reads – 

transit facilities for efficient intra-SAARC trade, especially for the

land-locked Contracting States;

27

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 28/34

SAARC – ASEAN

Cooperation. 

• Established on 8 August 1967 with 5 member states, ASEAN currently has 10member states.

• ASEAN region has a population of about 500 million, a total area of 4.5million square kilometers, a combined gross domestic product of US$737billion, and a total trade of US$ 720 billion.

• When established the share of intra-ASEAN trade was just between 12 and15 percent. It has now increased to almost 25 percent.

• Per capita income is $ 309 in South Asia compared to over $ 10,000 in EastAsia (excluding China)

• Before formation of ASEAN in 1960s, the gap in per capita income betweenSouth Asia and East Asia (Excluding China) was $ 200, which has increased toover $ 9700 in a matter of few decades

• Intra-regional trade volume of SAARC countries stand at 4.46 percent of totaltrade of member states compared to 55 % of EU; 61% of NAFTA and 25% of ASEAN

28

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 29/34

BIMSTEC (Bay of Bengal Initiative for MultiSectoral Technical

and Economic Cooperation) - Trade & Services Measures

• Para 2 of Article 6 of the Final Draft Framework Agreement On the BIMST-

EC Free Trade Area says:  “The parties further agree to

enhance trade facilitation in areas, including but not 

limited to, the following:”  (a) Mutual Recognition Arrangements (MRAs), conformity assessment,

accreditation procedures and standards & technical regulations.

(b) Customs cooperation;

(c) Trade finance;

(d) E-commerce; and

(e) Business Visa and travel facilitation

29

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 30/34

Bangkok Agreement

• China & India are the world’s fastest growing economy whoare members.

• Sino India is also the world’s largest market in terms of head-count.

• It can provide both techno-financial and market support.• SAARC, ASEAN & China can join hands to ensure the

prosperous future for one-half of the world population.

• The geographical proximity between SAARC-China-Asean

must be exploited for mutual benefit

30

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 31/34

Growth Quadrangle

• Nepal, East India, Bangladesh & Bhutan

Cooperation

• Sub Regional Within SAARC

• Sectorial Development Like Trade, Transport,

IT & Tourism etc.

• ADB’s Sub Regional baby 

• East India’s Focal Role 

31

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 32/34

Nepal India

• Ocean Market / Sky Limit

• Preference Market Assess

• Value Addition

• Trade Balance

• Bilateral Within SAFTA/WTO

• Complementary & Supplementary

• 3rd Country Arrangement Like Pakistan &Bhutan

32

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 33/34

Saarc & EU

• Two of World’s Largest Regional Cooperation 

• Demand & Supply

• Asia’s Market size and resource 

• EU’s techno finance capacity 

• Cooperation in WTO

• Win Win for both Economies

33

7/29/2019 International Trade in Nepal in the Evolving Multilateral Regime

http://slidepdf.com/reader/full/international-trade-in-nepal-in-the-evolving-multilateral-regime 34/34

Others

• NAFTA (North Atlantic Free Trade Agreement)

• ASEAN (Association of Southeast Asian

Nations)