A change in government halted the WTO negotiation, say trade officials 

WTO: Is free trade compatible with the national goal of happiness?

Since joining the World Trade Organization (WTO) has been equated with consumerism, a question that is often raised in Bhutan’s accession is whether WTO market principles are attuned to sustainable development.

“You put a mirror on your face and ask, are you more liberal with bilateral trade agreements and how?” said the chief of trade policy and analysis of the UN Economic and Social Commission for Asia and the Pacific (UNESCAP), (Dr) Mia Mikie.

Although Bhutan’s application process to WTO began in 1999, with a working committee formed and several rounds of negotiations held, Bhutan is still building its capacity for the accession.

A national workshop on capacity building for WTO accession and trade integration was held in the capital yesterday to weigh the benefits and loss from the accession.

“It is not in the spirit of WTO to make trade absolutely free,” (Dr) Mia Mikie said adding there is an acceptable level of restrictions in the form of public policy, for instance protecting the environment and national security.

The ideal meaning of free trade here, she said was in the sense of making trade free from unnecessary distortion like non-tariff barriers and discrimination of products.

For example, imported alcohol is taxed more than local. Once the country becomes a member of WTO, same rules and taxation should be applied on two alike products irrespective of where they are produced.

This was cited as one of the reasons why it is advantageous to join the organization while Bhutan still has the least developed country (LDC) status, since the special and differential treatment of the WTO framework gives some leeway for LDCs. “You can protect the activities where you don’t want foreigners to be,” she said.

WTO members, she said must agree to some degree of reciprocity but this is not strictly imposed on LDCs.

Bhutan imposed a temporary ban on imports owing to the severe rupee shortage. Had Bhutan been a member of WTO that time, the ban would not last more than six months because it cannot discriminate foreign goods.

“There is nothing to fear; it is beneficial to join,” she said adding the accession would mean upping the level of regulations and trade laws to international standards and more technical aid in the area of trade promotion.

LDCs are also given more time on the exemptions even after the graduation.

Officials from the trade department said that although Bhutan lacks the basic factors of productivity-land, labour and capital, opening up the economy would mean attracting more FDI and fetching innovative capacity leading to private sector growth.

Political stability, peace and access to Indian market, among others, officials said are key to attract more FDIs.

“Our trade legislations are already consistent with WTO principles,” an official said. But he said the preferential trade agreement with Bangladesh and free trade agreement with India are much more favorable than other multilateral and regional agreements. Besides, these are the two countries with which Bhutan’s trade is substantial.

Bringing the country’s legislation more in sync with the WTO, the trade Act governing the trade relations and competition policy, the official said is in the final stages of approval.

“We have enough support to join WTO within the ministry but the most important factor is the political will,” he said.

For LDC, (Dr) Mia Mikie said enhancing productive capacity is dependent on efficient small and medium enterprises by using the FDI as a means to it.

Although FDI is sensitive to cost of trading, she said it is up to the government as to how the country wants the FDIs to behave in the domestic regime.

“It is not export-led development but trade-led development that is sustainable,” she said adding developing value chains in trade and providing services would lead to structural shift in the economy and workforce.

To accrue more benefit from WTO, experts said it depends on the how well the country negotiates while accessing. Trade officials said the last negotiation package was a good deal but was suspended due to the change in government.

Albeit the cost, officials agreed that joining the WTO would not have a bigger impact on the national goals.

Tshering Dorji