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Impact of WTO in Nepal – Positive and Negative Impacts | Nepal’s Membership in the World Trade Organization (WTO)

Impact of WTO in Nepal

As the 147th member of the WTO, Nepal joined the organization in 2004. Nepal’s membership in the WTO is aimed at integrating its economy with the international market. In addition to the opportunities that come with joining the WTO, Nepal may also face many threats.

Some of the positive and Negative Impact of WTO in Nepal are described below:

Positive Impact of WTO in Nepal

Positive Impact of WTO in Nepal

A)  Diversification and expansion of trade:

Nepal’s membership in the WTO aids Nepalese trade to grow. It provides Nepalese businesses with an easy way to enter the global market and helps Nepalese trade be more diverse. As a result, the Nepalese economy is integrated into the global economy and its competitiveness is enhanced.

B) Obtain foreign direct investment:

In order to attract foreign direct investment (FDI) and technology, the WTO emphasizes stability and predictability in business environments. A better investment climate is also created by the WTO’s mandatory protection of intellectual property rights.

C) Right to transit:

A landlocked country such as Nepal needs transit rights if it wants to develop. The WTO provides members with transit rights mandatorily, which is critical for economic growth.

D) Development of the private sector:

It is expected that technology transfer and management expertise will be rapid following Nepal’s membership in the WTO.

E) Handling disputes constructively:

The WTO facilitates the peaceful and constructive resolution of trade disputes. The WTO’s systems and procedures concentrate on the rules. More trade means more chances of disputes. Ultimately, it contributes to maintaining cooperation among countries. Nepal can also benefit from it since it promotes international confidence and cooperation and discourages trade wars.

F) Rules-based system:

Members of the WTO ratify agreements through their parliaments. The agreements apply to all countries. In the WTO’s dispute settlement procedure, both rich and poor countries have equal rights to challenge each other. Smaller countries have greater bargaining power. It is not possible for the more powerful countries to impose their will on countries like Nepal that are less powerful.

G) Reduces the cost of living:

By lowering trade barriers, the WTO’s global system lowers prices for inputs used in production. This results in a reduction in production costs, lowering prices for final goods and services. Eventually, this reduces living costs.

H) A wider selection of products and qualities:

There are more options available to consumers with free trade. More imports means more products are available. In addition to increasing the choice of brands available to consumers, it may also increase the range of goods and services produced locally by encouraging local producers to compete.

I) Economic growth and employment generation:

Increased trade between countries leads to economic growth. This eventually leads to more jobs being created.

J) Good governance is encouraged:

When a commitment to liberalizing trade is made under the WTO rules, it is hard to reverse it. In addition to dissuading a range of unwise policies, these rules give businesses greater certainty and clarity about trading conditions. The government benefits from good governance, which is crucial for the development of the country as a whole.

Negative Impact of WTO in Nepal

Negative Impact of WTO in Nepal

 A) Domestic businesses are under threat:

Because Nepal is a member of the WTO, it faces severe competition in the domestic business sector. Nepalese domestic businesses may not be able to build competitiveness because of a lack of capital, technology, economies, and management skills. Nepalese businesses, especially small and cottage ones, may face serious challenges due to a lack of competitiveness.

B) Loss of revenue to the government:

In a least developed country like Nepal, tariffs are a major source of revenue. As a result of the WTO provisions, member countries are required to reduce tariffs to a certain level. This may adversely affect the country’s revenue collection position. Infrastructural and social development may be adversely affected.

C) Incompetence in negotiating:

Nepal may not benefit from the WTO as anticipated due to a lack of knowledgeable and skilled human resources in the government and private sectors.

D) Natural resource exploitation:

Nepal’s membership in the WTO is likely to result in more foreign companies scrambling to Nepal in search of business opportunities, which may result in unwise exploitation of natural resources.

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