LDCs to jointly seek preferential treatment in services trade
KATHMANDU:
As all the Least Developed Countries (LDCs) have decided to deal collectively with advanced countries of the World Trade Organisation (WTO) for preferential treatment to service and service suppliers of LDCs, Nepal has conducted a study regarding the required facilities from advanced countries to enhance services sector.
Though the Bali ministerial conference of WTO decided to implement the service waiver, none of the advanced countries have granted any preferential facility till date. This is why LDCs are preparing to jointly negotiate mainly on services like Information Technology (IT) and IT enabled services, tourism, professional services, health and music services.
The study conducted by the World Trade Institute, the International Centre for Trade and Sustainable Development and the International Lawyers and Economists Against Poverty for the Ministry of Commerce and Supplies has stressed on simplifying the visa process for IT engineers, facilitating international payments, data protection and intellectual property laws.
“Challenges to exports of relevance for purposes of this assessment as underscored by stakeholders include difficulties in obtaining visas and work permits, cumbersome incorporation requirements and procedures, localisation requirements and challenges in tendering on government procurement tenders,” as per report.
As IT and Business Process Outsourcing (BPO) have emerged as vibrant businesses, the country itself has to adopt flexibility regarding Foreign Exchange (Regulation) Act, 1962 and Act Restricting Investment Abroad, 1964.
“These restrictions limit the development and growth of Nepali services that can be easily traded cross-border such as those in the vibrant IT-BPO sector because it permits to receive money from abroad and to open foreign bank accounts for the purposes of inter alia receiving payment from their foreign clients,” said the report.
Nepal’s promising IT companies are off shore operations for companies of the US, India and Hong Kong and also Nepali owned companies in various countries. Out of Nepal’s 100 active IT companies, around 20 have more than 50 employees and at least 10 firms have between 150 and 300 employees. Intellectual property protection and visa related hassles are problems faced by music and music recording services also, as per the report.
Regarding tourism, many Nepali tourism entrepreneurs are heavily dependent on foreign tour operators and face difficulties to market tourism offers. In addition, the travel warnings (travel advisories), and restrictions imposed by advanced countries have been affecting tourism sector development. The report emphasised on seeking direct support for LDCs and their tourism operators in terms of marketing and information from the advanced countries and regular reviews of travel warnings as well.
Likewise, it has urged government to focus on Nepal’s traditional ayurvedic treatment along with other health services. Nepal can be developed as a hub of ayurvedic health tourism focusing on patients of neighbouring India and China as well as from abroad. As per report, Nepal can reap benefits if advanced countries extend coverage of state-sponsored health insurance to treatments of their citizens in LDCs. Due to government financed insurance schemes in developed countries, LDCs barely get a chance to bring patients in their respective countries.
Moreover, to develop professional services like accounting and legal, the report has suggested the government to seek recognition of qualifications obtained in LDCs, extension of privileges under double taxation agreements to LDC service providers and waiver of residency requirement for legal service providers of LDCs.
The idea of LDC services waiver was floated in the eighth ministerial meeting of WTO held in Geneva in December 2011,which gathered pace in Bali ministerial conference in December 2013. Following the Bali ministerial conference, LDCs had collectively requested for implementation of Bali Promise on 21 July, 2014 and it is reported that the advanced countries are under pressure to implement the promise of extending preferential treatment for trade in services.
In the recently held meeting of WTO Services Council, members discussed on measures that would support growth of services trade in LDCs by providing their services exports with preferential treatment.
Source: THT
