Internal Environment in Nepalese Perspective

1. Chapter 6
International Environment

2. Globalization
• Process of integrating to the people, companies and
government of different nations.
• For business executives: cross the national
boundaries through globalized production and
marketing network.
• For an economist: interdependence between
countries in term of flow of capital, technology and
labour.

3. Forms of Globalization
• Economic globalization:
- Process of economic interdependence among the
countries in the world by the transfer of economic
resources.
- Economic globalization is the outcome of economic
liberalization, deregulation, privatization, ease of
transport and improved communication.
- Facets of economic globalization are;
a. The globalization of market
b. The globalization of production

4. • Cultural globalization:
- Integration of values, norms and beliefs
- Cultural globalization is influenced by information
revolution, telecom networks and IT.
• Political globalization:
- Integration of the world in terms of political
ideology
- World bank, IMF, G-20, ASEAN, SAARC concern over
democracy and human rights
- Shape future international policy.

5. • Environmental globalization:
- Integration of world in terms of environmental
issues
- It aims at addressing global environmental issues
like global warming, loss of bio-diversity, acid rain
and global pollution.
- It advocates on sustainable development through
rational use of natural resources.

6. Regional Economic Groupings
• Trade agreement among countries to remove
tariff and para-tariff barriers.
• It facilitates the cross-boarder movement of
goods and services.

7. The Association of Southeast Asian
Nations ( ASEAN)
• Formed in 1967
• Initially 5 nations i.e. Malaysia, Indonesia,
Philippines, Singapore and Thailand
• In 1995, Brunei joined
• Now 10 members including Laos, Vietnam,
Cambodia and Myanmar.

8. Objectives of ASEAN
• Accelerate the economic growth, social progress
and cultural devt. in spirit of equality
• Promote regional peace and stability: abiding by
justice and rule of law
• Promote active collaboration: economic, cultural,
social and technical
• Assist in research and training
• Collaborate effectively for greater utilization of
resources
• Promote south east Asian studies
• Maintain close and beneficial relationship with
existing international and regional organizations

9. Works Performed
• Eliminated trade restrictions
• Increased intra-regional trade
• Increased the bargaining power of member
nations with other groups
• Help to industrialization
• Able to increase FDI
• Help to economic development of the region

10. Asia Pacific Economic Cooperation
(APEC)
• East-asian and pacific countries
• In 1989 to promote multi-lateral economic
cooperation in trade and investment
• 21 member nations.

11. Objectives of APEC
• Sustain the growth and development of region
• Contribute to the growth & development of
world economy
• Enhance positive gains through the increment
of interdependence
• Develop and strengthen the multi-lateral trade
system
• Reduce trade barriers

12. Works performed
• Reformation in trade and investment policy
• Application of modern technology in
agriculture and industry
• Developed HR
• Structural change to respond global economic
environment.

13. SAFTA
• Eliminate trade barriers and promote
condition of free trade for mutual benefits
• Intra SAARC cooperation to maximize the
realization of potential with full respect for
the principles of sovereign equality,
interdependence and territorial integrity.

14. Objectives
• Eliminate trade barriers
• Promote condition of fair trade
• Create an effective mechanism for the
implementation of agreement
• Create an effective mechanism for resolution
of disputes
• Establish a network for further regional
cooperation.

15. Instruments
• Trade liberalization program
- 1st phase non-LDCs reduce tariff upto 20%
LDCs reduce tariff upto 30%
- From Jan 1 , 2008 Non LDCs- In 5yrs- upto 0- 5%
LDCs in 8 Yrs – upto 0-5%
• Rule of origin
• Institutional arrangements
- Ministerial council: Administration and
implementation of agreement
- Committee of experts: Nominated by member
states and works for dispute settlement

16. • Safeguard measures
- Suspend concession provisionally with prior
consultation
- Before suspend, impact must be assessed
• Other measures
- Simplification of custom clearance procedures
- Custom cooperation to resolve disputes
- Harmonization of import licensing & registration
- Simplification of banking procedures
- Transit facility - Develop commn. and transportation
- Remove barriers in investment - Simplification of
business visa procedures

17. Bay of Bengal Initiatives for Multi-Sectoral
Technical and Economic Cooperation
(BIMSTEC)
• With countries of south-Asia and South east
Asia ( Bangladesh, India, Myanmar, Sri-Lanka,
Thailand, Bhutan and Nepal)
• In 1997 formed as Bangladesh, India,
Myanmar, Sri-Lanka & Thailand Economic
Cooperation.
• On 2004 , it is renamed as BIMSTEC
• ADB is the development partner of BIMSTEC

18. Institutional Structure
• Annual Ministerial Meeting
• Senior official committee
• Working group: In leadership of Thailand and
the ambassador of member state to Thailand
• Other task forces: as per the necessity

19. Objectives of BIMSTEC
• Create environment for rapid economic devt and
social progress
• Promote active collaboration and mutual assistance
• Provide assistance in the form of training, research
etc.
• Maintain close and beneficial cooperation
• Cooperate in the projects that beneficial to the
region

20. Measures adopted
• Rule of origin
• Dispute settlement mechanism
• Anti-dumping measures: : selling at fair price
in the exporting country not at lower price
than normal price
• Subsidy
• Non-tariff measures: restricting import export
imposing other barriers than tax

21. Impact on Nepalese Business
• Positive
- Expansion of trade
- Increase JV
- Transit facility
- Reduction in transaction
cost
- Benefit to LDCs
- FDI
• Negative
- Increase competition
- Increase in import
- Revenue loss to govt.
- Replacement to local
industries

22. WTO
• International body that deals with rule of
trade between nations
• It is a forum for govt. to negotiate trade
agreements
• Place to settle trade disputes
• The main purpose is to help free flow of trade
removing obstacles
• Nepal acceded in 2004 as 147th member

23. Objectives of WTO
• Raise standard of living and income
• Introducing sustainable development
• Taking positive steps to ensure LDCs secure a
better share of growth trade

24. Structure of WTO
• Ministerial conference: trade ministers (2yrs)
• General Council: Ambassador level to see day to day
operations
• Trade policy review body: periodically
• Dispute settlement body: Appellate body & dispute
settlement panels
• Council on trade in goods and trade in service:
Oversee the details of general and specific
agreements & trade related aspect of intellectual
property

25. • Committee on trade & devt.: Concerned with
developing countries especially LDCs
• Committee on trade & environment:
Identifying and understanding relationship
between trade and environment.

26. Principles
• Fair competition and non-discrimination
• Transparency: publish trade policy, laws , judicial
decisions and valuation of products, rate of duty
and tax
• Treatment for LDCs:
- Provide transition period to adjust the situation
- Extra-flexibility in implementing WTO agreement
- Provides technical assistance
• MFN treatment: No discrimination in goods with
trading partners

27. • Free trade principle: No subsidy & emphasize
on open trade
• Rule base trade system: WTO enforces rule for
trade
• Environmental protection: Sustainable devt.

28. WTO Agreements
• Covers goods, services & intellectual properties
• Liberalization and permitted exceptions
• All agreements must be ratified by the parliament
of member states
• WTO agreement contains 29 individual texts & 25
ministerial declarations
• There are two types of agreements;
- Multilateral
- Plurilateral: more than two but not much as
multilateral

29. Some agreements are;
• General agreement on trade in services (GAT)
• General agreement on trade and tariff
• Trade related intellectual property rights
• Technical barriers to trade: developing
manufacturing standards
• Trade related investment measures
• Dispute settlement
• Policy reviews

30. Nepal’s Membership: opportunities
and Threats
• Opportunities
- Trade expansion & diversification
- Attract FDI
- Transit rights
- Private sector devt.
- Constructive handling of disputes
- Cuts cost of leaving
- Employment generation
- Encourages good governance

31. • Threats
- Threats to domestic business
- Revenue loss to govt.
- Negotiation for more benefits
- Exploitation of natural resources
- Difficult to enter in global market: low quality
- Internal policy reformation

32. Growth potentials of Nepalese
business to South Asia
• Situated in the world’s fastest growing region, Nepal’s
potential to expand trade in goods and services is
promising.
• Addressing its own protectionist policies will help
Nepal significantly increase its exports not only to
South Asia
• There are no flights between Nepal and Sri Lanka, the
Maldives, or Afghanistan. And only one flight per week
between Nepal and Pakistan. Lack of connectivity is a
key contributor to the high cost of trade between
Nepal and South Asia and improving connectivity will
take Nepal a long way.

33. • Foreign investment potential
• Potential to increase market
• Transit facility leverages trade

34. THANK YOU