Featured post
Global Environment
- Get link
- X
- Other Apps
Unit 7 Asian and Global Environment
Globalization
Concept:
•
The process of becoming a part of global village is globalization.
•
Globalization is the process of integrating nations
and peoples—politically, economically, and culturally—into a larger community.
•
Globalization most often refers to the increasing
degree of connection between various countries and their economies.
•
Globalization refers to the increasing unification of
the world's economic order through reduction of such barriers
to international trade
as tariffs, export fees, and import quotas. The goal
is to increase material wealth, goods, and services through an international division of labor
by efficiencies catalyzed by international relations, specialization and competition. (Wikipedia)
Forms of Globalization:
a.
Economic
Globalization: Economic globalization can be defined as the process
of increasing economic integration between two countries,
leading to the emergence of a global
marketplace or a
single world market.
•
Increasing deregulation, privatization, ease in
transportation, and improved communication lead to economic globalization.
•
Economic globalization is promoted by WTO, SAFTA,
BIMSTEC, ASEAN etc. in Nepal.
b.
Cultural Globalization: Cultural globalization refers
to the transmission of ideas, meanings and values around the world in such a way as to extend and intensify social relations.
•
This process is marked by the common consumption of
cultures that have been diffused by the Internet, popular culture media, and
international travel.
•
Western Hip-hop, pop music, foods, movies are being a
part of Nepalese Youth.
c.
Political Globalization: It refers to the integration of the world in
terms of political ideology.
• Political globalization is when governmental action takes place on a global level, where responsibilities, such as the welfare of citizens and economic growth, are acted upon by an international political body.
•
Uniting politically for addressing the common needs of nations.
d.
Environmental /Ecological Globalization: It refers
to the integration of the world
in terms of environmental issues
such as; global
pollution, ozone layer depletion, loss of bio —diversity,
acid rain etc.
•
It further deals with global
environmental law and policies.
Drivers of Globalization:
•
Political
•
Technological
•
Market
•
Cost
•
Competition
Regional Economic grouping of Nations
Regional integration can be defined as the association of nations in a
specific area or region of
the world.
The major objectives of regional integrations are:
•
To promote economic activities within the region for mutual betterment.
•
To promote free flow of goods between
nations.
•
To remove the trade and other barriers gradually among nations.
•
To build trust and cooperation between
nations
Regional Trade Agreement in South Asia
South Asian
Association for Regional
Cooperation (SAARC) was established in 8th
December 1985 with 7 member states, Nepal, Indian, Bhutan, Bangladesh,
Maldives, Pakistan, and Sri Lanka. In 2007 Afghanistan became an 8th member state in SAARC.
SAARC Preferential Trading Agreement (SAPTA):
SAPTA was an attempt of the SAARC
countries to promote
economic cooperation in them.
In December 1991, the Sixth Summit held in Colombo approved the establishment of an Inter-Governmental Group
(IGG) to formulate an agreement to establish a SAARC Preferential Trading
Arrangement (SAPTA) by 1997. Given
the consensus within SAARC, the Agreement on SAPTA was signed on 11 April 1993 and entered into force on 7 December 1995 well in advance of the date
stipulated by the Colombo Summit. The Agreement reflected the desire of the
Member States to promote and sustain mutual trade and economic cooperation
within the SAARC region through the exchange of concessions.
The basic principles underlying SAPTA are:
•
overall reciprocity and mutuality of advantages so as to
benefit equitably all Contracting States, taking into account their respective level of economic and
industrial development, the pattern of their external trade, and trade and
tariff policies and systems;
•
negotiation of tariff reform step by step, improved
and extended in successive stages through periodic reviews;
•
recognition of the special needs of the Least Developed Contracting States and
agreement on concrete preferential measures in
their favor; and
•
Inclusion of all products, manufactures and commodities in their raw, semi-processed and processed forms.
Four rounds of trade negotiations have been concluded under SAPTA
covering over 5000 commodities. Each Round contributed to an incremental trend
in the product coverage and the deepening of tariff concessions over previous
Rounds.
South Asian Free Trade Area (SAFTA)
The Agreement on the South Asian Free Trade Area
is an agreement reached at the
12th SAARC summit at Islamabad, capital of Pakistan on 6 January 2004. It
creates a framework for the creation of a free
trade area covering
1.4 billion people in India, Pakistan, Nepal, Sri
Lanka, Bangladesh, Bhutan and the Maldives. The seven foreign ministers of the region signed a framework agreement on
SAFTA with zero customs duty on the trade of practically all products
in the region by end 2016. The new agreement i.e. SAFTA,
came into being on 1 Januaw 2006
and will be operational following
the ratification of the agreement by the seven governments.
SAFTA requires the developing countries in South Asia that is, India, Pakistan
and Sri Lanka, to bring their duties down to 20 percent in the first phase of the two vear
period ending
in 2007. In the final
five vear phase ending 2012,
the 20 percent dutv
•
The objective of the agreement is to promote good
competition in the free trade area and to provide equitable benefits to all the
countries involved in the contracts.
•
It aimed to benefit the people of the country by
bringing transparency and integrity among the
nations.
•
SAFTA was also formed in order to increase the level
of trade and economic cooperation among the SAARC nations by reducing the
tariff and barriers and also to provide special preference to the Least
Developed Countries (LDCs) among the SAARC nations.
The impacts of SAFTA on Nepal’s Economy:
Positive Effects
a. The tariff and non-tariff concessions negotiated and
exchanged amongst member states shall be incorporated in the national schedules of concessions.
b. Member
countries can focus on development, production and trading of products that
provide them sustainable comparative advantages.
For example, Nepal and Bhutan can focus in tourism and hydropower, Bangladesh
can focus on natural gas and fisheries.
C. SAFTA will help SARRC members to present strong
voice regarding their common problems in multilateral agreements.
d. Free trade will increase
people’s movement between countries.
e. Being a LDC, Nepal further
receive following privilege;
•
Duty —free access, exclusive tariff preference or
deeper tariff preference for export product.
•
Special consideration of export from LDC member states
in the application of safe guard measures.
Negative Effect or limitation
a.
The region is not cohesive in the same sense that it
has diversity in socio-political and economic
conditions. Similarly, there is also vast
difference among countries in their size,
location and infrastructure.
b.
SAARC countries import products from non-member
countries though the product is sufficiently produced in the region. This
indicates weaker trade links among SAARC countries.
C. There are political consideration and geographical
disadvantages for some countries
,which are responsible for affecting intra-regional trading.(The case of India
and Pakistan)
d.
Informal trade in the boarders of the countries has
been increasing. This has adversely affected the formal flow of trade between
the countries. There is a greater
flow of primary
commodities within the region. The capital and technology that are required
to process these commodities are
lacking in the region
.Hence, the intra-regional flow of capital and technology is very limited.
e.
Transit is another issue for increasing trade with
SAARC. There are several transit
problems for Nepal and Bhutan.
Free trade within the
region cannot flourish unless these transit problems are removed. Nepal suffers
from high transport costs as it is at a disadvantaged geographical position.
f.
Intra-regional movement of people is also equally
important for promoting trade and investment. There are many formalities and
entry problems at the borders, which make the free intra-regional movement of
people difficult.
Bay of Bengal Initiative for Multi- Sectoral and Technical Economic Cooperation (BIMSTEC)
•
On 6 June 1997, a new sub-regional grouping was formed in Bangkok and given the name BIST-EC
(Bangladesh, India, Sri Lanka, and Thailand Economic Cooperation).
• After membership granted to Myanmar in 22 December 1997 the name was changed to BIMST-EC.
•
In the first Summit on 31
July 2004, leaders of the group agreed that the name of the grouping should
be known as BIMSTEC or the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation.
BIMSTEC Prioritv sectors:
BIMSTEC has thirteen priority
sectors cover all areas of cooperation.
•
Trade and Investment, led by Bangladesh
•
Transport and Communication, led by India
•
Energy, led by Myanmar
•
Tourism, led by India
•
Technology, led by Sri Lanka
•
Fisheries, led by Thailand
( upto 19’h
November 1998)
•
Agriculture, led by Myanmar
•
Public Health, led by Thailand
•
Poverty Alleviation, led by Nepal
•
Counter-Terrorism and Transnational Crime, led by India
•
Environment and Natural Disaster Management, led by India
•
Culture, led by Bhutan
•
People to People contact, led by Thailand
(from 19’h December 2005)
Major Objectives of BIMSTEC:
• To create an enabling environment for rapid economic development, accelerate social progress in the sub-region.
•
To promote active
collaboration and mutual assistance on matters of common interest.
•
To provide assistance to each other in the form of
training and research facilities.
•
To cooperate more effectively in joint efforts that
are supportive of and complementary to national development plans of member states.
•
To maintain close and beneficial cooperation with
existing international and regional organizations.
•
To cooperate in projects that can be dealt with most
productively on a sub regional basis and which make best use of available synergies.
Difference between SAFTA and BIMSTEC
1. SAFTA includes only trade in 1. BIMSTEC covers both trade in goods goods and services.
2.
SAFTA’s
aim is to bring down the 2. BIMSTEC aims for total tariff
to a 0-5 percent level. elimination
of tariffs.
*Pakistan
and Maldives are not the members of BIMSTEC and Thailand and Myanmar are not
the part of SAFTA. This composition of memberships would create conflicting obligation.
World Trade Organization (WTO)
The WTO's predecessor, the General Agreement on Tariffs and Trade (GATT), was established
after World War II in the wake of other new
multilateral institutions dedicated to international economic
cooperation - notably the Bretton Woods institutions known as the World Bank
and the International Monetary Fund.
Well before GATT's 40th anniversary, its members concluded
that the GATT system was straining to adapt to a new globalizing world economy.
In response to the problems identified in the 1982 Ministerial Declaration the
eighth GATT round
— known as the Uruguay Round — was launched in September 1986, in Punta del Este, Uruguay. It was the biggest negotiating mandate on trade ever agreed: the talks were going to extend the trading system into several new areas, notably trade in services and intellectual property, and to reform trade in the sensitive sectors of agriculture and textiles; all the original GATT articles were up for review.
The Final Act concluding the Uruguay Round and officially
establishing the WTO regime was signed
during the April
1994 ministerial meeting at Marrakesh, Morocco, and hence
is known as the Marrakesh Agreement. From 1st
January 1995 GATT officially succeeded
to WTO.
Structure of WTO
•
Ministerial Conference: It is a apex body of WTO. It
meets at least once in every two years.
• General Council: It consists of ambassador level
members. It oversees the day-to-day operation and management of WTO.
•
Trade policy review body: It periodically reviews the
trade policies and practices of all member states.
•
Dispute settlement body: It looks after the
implementation and effectiveness of the dispute resolution process for all WTO agreements.
•
Other councils: Goods and Service
councils, Trade development and environment
committees, Intellectual property right council.
Functions of WTO
•
It oversees the implementation, administration and
operation of the covered agreements.
• It provides a forum for
negotiations and for settling disputes.
•
It is the WTO's duty to review and propagate the
national trade policies, and to ensure the coherence and transparency of trade
policies through surveillance in global economic policy-making.
•
The assistance of developing, least-developed and
low-income countries in transition to adjust to WTO rules and disciplines
through technical cooperation and training.
•
Regular assessments of the global trade picture in its
annual publications and research reports on specific topics are produced by the organization.
•
Finally,
the WTO cooperates closely with the two other components of the Bretton Woods system, the IMF and the World Bank.
Nepal’s
Membership: Opportunities and Threats for the Nepalese Business
Opportunities:
a. Market access: Market access opportunities
provided by the WTO system can lead to further investment addressing the
constraint of limited domestic market for economic scale of productive
operation, which will also help to raise investment, economic production of
goods and services and industrialization process.
b. Special and differential treatments: The WTO
offers special and differential treatments for LDCs like Nepal. These include
longer transition periods for the implementation of the agreements, technical
support, due restraint on disputes involving LDCs, and special treatment while liberalizing the services sector.
c. Transit right: One of the reasons why Nepal had sought membership of the General Agreement on Tariffs and Trade (GATT) was the transit problem it had encountered during the Indo-Nepal transit stalemate in 1989. It was expected that under the GATT/WTO, Nepal would be granted access to the sea as a right as per Article V of the GATT. In theory, as a WTO Member, Nepal should benefit from access to international markets without discrimination.
d. Policy stability: The WTO regime provides
opportunity for policy
stability internally which is of utmost urgency
in the context of the existing political instability in order to
provide an environment of predictability for investment and industrialization.
e. Attract foreign direct investment: Policy stability
due to WTO membership provides credibility to the nation
in terms of economic activities with predictable environment.
Such environment is essential to attract foreign direct investment (FDI) and technology to expedite industrialization process in Nepal.
Additionally, the mandatory provision of WTO in protecting intellectual property rights creates
a better situation
for attracting investment
f. Gearing up domestic institutional capability: Joining WTO
reflects national commitment in gearing up domestic institutional capability in
delivering services related
to trade and economic transactions. Similarly, the
challenge to business community in enhancing
their competitive capability certainly builds pressure to
look at their
own existing lapses
and inefficiency, paving the
way for the effective actions to correct them.
g. Benefit from liberalization: Nepal has and
could benefit from
liberalization through better allocation of natural resources towards
industries with the strongest advantages, enhanced learning and newer
technology from interacting with the rest of the world.
h. Access to dispute settlement body: WTO”s best
achievement is dispute settlement body. A WTO membership would accord Nepal the
right to challenge in any measures taken by trading partners, which are against
Nepal’s economic and trade interest.
Mobilization of trade related
technical assistance: WTO provides and has initiated the programs of aid for trade and Enhanced
Integrated Framework (EIF) to enhance the supply side capacity of the developing countries.
Challenges:
a.
Employment: Employment opportunities may dry up by using sophisticated technology to boost the
local organization to meet WTO standard competition.
b.
Negotiation
for more benefits: The task of negotiation for accession with the
objective of gaining more and loosing less is challenging for Nepal primarily
due to lack of knowledgeable and skillful human resources with the government
as well as private sector.
C. Strengthening Institution: Given the financial constraint of the government and the lack of proper policy
intervention to cope with the responsibility and obligations posed by the WTO
membership, the task of strengthening institutions seems difficult to achieve.
d.
Specialization in some products and services: This is a challenging task of Nepal, when there is
lack of proper physical and institutional infrastructure, capital and resources
for industrialization.
e.
Making
industries cost effective: The old industries of Nepal need urgent restructuring and modernization in order to make them
capable of producing quality goods at a competitive price .It is not possible
to make industries cost effective without investment.
f.
Income
distribution and Poverty: Because of the powerful impacts of MNCs and INGOs,
which influence the both rule of laws ( in
creating monopoly market, less employment and conflict on local bodies) and
government the country may force to remain in low equilibrium poverty trap.
- Get link
- X
- Other Apps
Comments
Post a Comment