Debating International Trade And Aid

Lok Nath Bhusal

Despite alarming methodological limitations, evidence uncovers that benefits of economic openness and incursion of globalisation have been skewed. Precisely, economic openness has been costly for economies with weak domestic markets, negligible support for domestic producers and in which a significant proportion of the population is engaged in subsistence production. Additionally, despite more than a quarter of a century of extensive research and evaluation on trade liberalisation experiments affecting billions of people across the developed and developing world, there remains little consensus about the effects of neo-liberal policies on most macroeconomic and social indicators. For instance, trade has always accounted for a relatively small percentage of GDP, and the relative underdevelopment of Nepal's agricultural and industrial base has so far badly impeded the potential profitability of trade liberalisation. Obviously, there cannot be a fight between a tiger and a cat; globalisation is clearly unfair.

Global village

UNDP states that, although enthusiasts who have been trying to quantitatively emphasise the positive aspects of globalisation and increasingly use the language of global village to describe the new order, the global village appears deeply divided between the streets of the haves and those of the have nots, when viewed through the lens of human development. However, policies that encourage investments in human and physical capital, and support technological change, are more likely to promote export-growth and, thus, the wealth of a nation.

Henceforth, FDI (foreign direct investment) and aid for trade is likely to offset the inequalities emerging from globalisation. The common development strategy should recognise the sheer importance of foreign aid in our development efforts. The development partners who have funded development in Nepal have had their own agenda and interests other than solving the overdue structural problems of the country.

Up until the present time, Nepal received funds only when it has been in accordance to the plans of the donors. The agenda and interests of the latter have obtained easy entry into the national development discourse, as the country's own political parties and bureaucratic structures have blindly supported them and have themselves failed to come up with a commonly-shared agenda of a pro-people's development process led by the poor themselves. Indeed, the concept of "aid for trade" should be materialised to sustainably benefit from foreign aid as aid for trade enhances trade-related capacity, expands exports and creates new jobs.

At the international level, the eighth Millennium Development Goal ? develop a global partnership for development ? aims at altering aid, trade, business and debt-related policies in the developed countries that now obstruct poverty reduction efforts in developing countries like Nepal. More specifically, the targets under Goal Eight aim at increasing developed countries' commitments to relax trade restrictions to enable market access, especially for developing countries' agricultural commodities and labour-intensive manufactures, along with expanded provisions of debt relief and transfers of technology.

Despite the commitment to the eighth goal - the critical area of financing and sustaining development in poor countries - it is neither time-bound nor measurable by the kinds of indicators specified for the other goals. The World Bank states that aid has rarely been a simple transfer of resources from the affluent to the deprived economies. Rather it comes along with a number of conditional ties. These conditions explicitly or implicitly fulfil the interests of the donors; donors use aid to advance their values, their commercial interests, their cultural aspirations and their diplomatic and political objectives rather than the developmental needs and priorities of developing countries.

Furthermore, in 1970, the world's rich countries agreed to provide 0.7 per cent of their gross national income for development assistance, but only five have met or surpassed the target ?Denmark, Luxembourg, the Netherlands, Norway and Sweden. Consequently, coupled with this, Nepal is unlikely to meet several MDGs targets, in part because of the poor economic growth rate limited to the urban areas, poor implementation of public services and support mechanisms, and low agricultural productivity.

Not only the economies of the low-income bracket, even the middle-income countries have been arguing for increased support, mainly for enhancing their trade-related capacity from the developed countries. The G-11 has identified four areas where international support can help consolidate the gains and move forward. The first is promotion of investment, which supports higher productivity and trade-based growth. Second is trade development, including market access and technical assistance. Third is debt-burden alleviation, to reduce pressures on financial and budgetary space. Fourth is targeted grant assistance, to address global crises such as poverty and health, but just as urgently, to support education, infrastructure and other initiatives that enable developing countries to maximise the impact of knowledge, technology, innovation and economic liberalisation.

Aid for trade

Since expansion of trade leads to sustainable growth, the World Bank and the IMF have jointly proposed an aid for trade package for the provision of financial and technical assistance to developing countries to address supply side constraints and to assist them in copying the adjustment costs raised from the liberalisation of economies. Therefore, there is a growing need to assess the benefits of global trade more holistically through rigorous intellectual exercise, particularly for serving national interests. Nepal and other developing economies should focus on aid for trade for development rather than relying on conventional aid.

Source: The Rising Nepal, June 4, 2007

Nepal-France Relations : Possibilities Of Co-operation

Madhavji Shrestha

The status of Nepal-French relations at the moment is said to be normal. No new dimension in the bilateral ties is likely to emerge soon. A new government headed by Nicolas Sarkozy is on the saddle of the government after his spectacular victory in the presidential elections. The latest opinion polls predict his party will also make decisive gains in the assembly elections slated for next month. Observers of the French political scene, however, say that no new initiative will emerge in its foreign policy towards Asia, in general, and South Asia, in particular, because our region does not figure prominently in the scheme of French foreign policy since long.Nepal's dramatic political transformation last year has not been able to add any perceptible new element to the bilateral connectivity between the two countries. Nepal still remains plunged in the political impasse. One very lamentable concern is that Nepal has not been able to make a good choice for an efficient and effective ambassador to France for the last five years. Hence, the level of relationship has stayed at a low key as if no interactions are working between the two.

Global roleBut France has maintained its presence with an ambassador in Nepal without a break since the establishment of its embassy in Kathmandu. Evidently, France does not have any strategic partnership with Nepal nor are there any good linkages of political and economic concerns. Requisite components of connectivity between the two are conspicuously absent to have a good friendship. However, consistent efforts to identify appropriate areas of co-operation will help to improve the relationship and widen its scope.Experts of recent French history and politics say France aspires to be a universal country, and to achieve that, it has charted a map for a major global role. Naturally, aspiring for a greater role means having a great vision and implementing the policies in true form. Undoubtedly, France is very proud of its culture, literature and, above all, its language. It is for these reasons that France had taken the initiative a few years ago to establish in Vietnam an international organisation of 42 Francophone countries, with the appointment of former UN Secretary General Boutros Boutros Ghali as its founding Secretary General. This shows how France wishes to play its role in the global arena. Undeniably, the sizeable quantum of resources and capabilities at its disposal are the pre-requisites for materialising its global role.

France as an influential nation exhibited its diplomatic prowess in maintaining stability and peace in Europe in post World War II period. Along with a democratised Germany, it has also made great contributions with its diplomatic ingenuity to establish the European Common Market, which has now grown into a politically homogenous European Union. At present, this Union is the single largest trading bloc of the world with a total GDP of about US$ 13 trillion. France stands tall in the European Union and plays a crucial role in its foreign and defense policies and, more visibly, in trade and developmental co-operation.France is endowed with enchanting landscapes in the whole of its territory bordered by the Atlantic Ocean in the west and the Mediterranean Sea in the south. It is also rich in ancient and medieval heritage, arts and music. The geographical attraction coupled with its aesthetic inheritance have made France a truly global centre of tourism. Each year, tourist arrivals from around the globe exceed its total population. Today, France enjoys a position of envy, which remains unbeatable despite severe competition from various countries of Europe and other continents. It has remained so because tourists wishing to make a trip abroad can find every object and comfort of their choice in the sprawling lands of France.

The ties between Nepal and France are one of an underdeveloped country with a highly advanced nation. The situation in the two is indeed different from every socio-economic aspect. On the political front, too, there is a high degree of difference. If Nepal is toddling with a multi-party system, France has already reached the pinnacle of democratic maturity. Under such circumstances, Nepal as a country trailing far behind in socio-economic progress needs to search for possibilities of co-operation.France is a core member of the European Union with great influence on the co-operation that the Union extends to underdeveloped countries like Nepal. An appropriate approach with the concerned authorities of France dealing with EU affairs would certainly enhance broader understanding, besides paving the way for strengthening democratic linkages with many member states of the European Union. Such efforts would, no doubt, escort the Nepali mission accredited to the European Union in Brussels to move ahead with reinforced synergy. As a result, co-operation can be expected to grow to the advantage of Nepal.

France is also a country that takes great pride in its educational and cultural attainments that are of excellent standard. The one important step Nepal needs to initiate is to move ahead with an avowed purpose of establishing good contacts with the educational institutes of France. France is the only country in the world that allocates the largest share of its annual budget for cultural activities abroad. Nepal can, if approached with convincing and well charted programmes, make good progress in pushing our educational level upward.Nepal has yet to make its bureaucracy self-sustaining and functioning for the country's cause. For bureaucratic management and efficiency, France is at a highly advanced stage compared to other democratic countries of the European Union. Its effective bureaucracy showed the world how the momentum of technical and economic progress could be achieved even during the years of political instability after World War II until the advent of the fifth republic in 1958. The efficacy of the French bureaucracy is considered very high. Nepal can improve its bureaucracy by learning from France and sharing their experiences.

Co-operation in Tourism

Nepal possesses large potentials for expanding tourism and related activities, which can contribute to economic growth and create jobs. Regrettably, this sector has not made worthy achievement. France is undoubtedly an appropriate country to turn to for technical assistance as it has valued experience and technical capability. France is among the top five countries from where large numbers of tourists come to Nepal. This is one of the good points to enhance our co-operation in tourism promotion. Noticeably, a very important point, among others, is that Nepal should be receptive to attaching importance to the mutually advantageous introduction of the French language and their educational technicalities in Nepal. This will certainly contribute to the growth of the cordial relations between Nepal and France. Are we prepared to do something positive for the sake of giving a good touch to Nepal-France relations instantly?

Nepal-China Trade

IN ancient times there was significant volume of trade between Nepal and China, particularly Tibet the autonomous region of China. Now, however this trade is not up to an appreciable extent, and there is much more scope for boosting the trade between the two countries for their mutual benefit. In this connection a discussion was held between a Chinese delegation that is currently visiting Nepal with the representatives of Nepal Trans Himalayan Border Trade Association.

The purpose of the parleys is to manage the trade between the two countries as well as to clear up the problems that might arise while carrying out such trade, apart from creating a congenial environment that would be ideal for the enhancement of trade between the two countries. The Chinese government for its part has made it known that the government level discussions desires to further expanding and improving trade between the two neighbouring countries.

However, the governments alone are not able to further boosting the trade, and, as such, the private sector should also be actively involved so that a vibrant trade thrives that would bring in rich dividends for the people of both the countries and contribute substantially to raise the income of their peoples. For this it is found that a mechanism including the representatives of local bodies and trade representatives of the two countries should be made in an attempt to seek resolutions to problems that the traders face in Khasa. Incidentally, Khasa is a commercial hub for Nepal-China trade. Furthermore, the full potential of trade between Nepal and China could be realized if the Chinese investors were to invest in the banking and tourism sector.

China has now emerged as an economic superpower. Nepal stands to benefit were it to attract the investors from China for also such sectors as hydroelectricity that holds immense potential and with which Nepal is endowed aplenty. For the time being, trade between the two countries would be further facilitated if the visa processing for Nepalese businessmen were to be eased. Other measures that could be undertaken are to initiate trade by developing infrastructures for transits adjacent to Nepal and China. Nepal also would appreciate it were the customs duty for Nepalese agricultural products, handicrafts and food grains in the Chinese market were done away with. These are some of the measures that would revive and also contribute to the further enhancing the trade between the two friendly countries.

Source: The Rising Nepal, May 20, 2007