Kathmandu School of Law Review

P-ISSN : 2091-2110, E-ISSN : 2773-8159, DOI : 10.46985, Publisher : Kathmandu School of Law, Nepal
Annual flagship journal of Kathmandu School of Law, Nepal

Volume 2, Issue 1, April 2013
Articles

Trade and Investment Rules for Inclusive and Sustainable Development: Nepalese Legal Perspectives

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  • Kumar Ingnam
Kumar Ingnam
Associate Professor, Kathmandu School of Law, Purvanchal University
Bio

Published 2013-04-30

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How to Cite

Ingnam, K. . (2013). Trade and Investment Rules for Inclusive and Sustainable Development: Nepalese Legal Perspectives. Kathmandu School of Law Review, 2(1), 114–131. Retrieved from https://kslreview.org/index.php/kslr/article/view/1028

Abstract

Sustainability of development and making investment sustainable are reinforcing and correlated. The investor does not invest unless their investment is permitted and protected by the laws and policies of the host state. There exist a number of principles for investment policymaking for sustainable development within which relationship between investors, host states and local communities is a key requirement. Environmental sustainability, social equity and inclusiveness and economic growth are reinforcing and complementing each other which are the three pillars of sustainable development. Nepal had, at the time of WTO accession, confirmed to amend trade related investments measures regime i.e. Foreign Investment and One Window Policy 1992, Industrial Policy 1992 and others, to ensure the compliance with the WTO Agreement on Trade Related Investment Measure (TRIMS). By now, the laws of Nepal, except few, are in compliance with the WTO standards. Nepal has some prospective areas of investment, mostly based on agriculture and service business. Trade and investment with sustainable development, is a pragmatic approach which encourages upgrading policies and laws. However, investment policy alone cannot provide a ‘one-size-fits-all’ solution for all economies that depends on the eco-socio-political conditions of individual countries.

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References

  1. Including fight against worldwide severe threats to the sustainable development i.e. chronic hunger, malnutrition, foreign occupation, armed conflict, illicit drug problems, organized crime, corruption, natural disasters, illicit arms trafficking, trafficking in persons, terrorism, intolerance and incitement to racial, ethnic, religious and other hatreds; xenophobia; and endemic, communicable and chronic diseases, in particular HIV/AIDS, malaria and tuberculosis
  2. Building on an international consensus that recognized the importance of a supportive international climate of economic cooperation, negotiators made clear in Chapter 2 of Agenda 21 that an open, equitable, secure, non- discriminatory and predictable multilateral trading system must be ensured to deliver on the promises of sustainable development. Signatories also agreed at the time that trade policy should not operate at cross-purposes with international efforts to curtail environmental degradation or promote development.
  3. The summit has focused on the indivisibility of human dignity through decisions speedily increase access to basic requirements such as clean water, sanitation, adequate shelter, energy, health care, food security and the protection of biodiversity. At the same time, collective work to gain access to financial resources, benefit from the opening of markets, ensure capacity-building, use modern technology to bring about development and make sure that there is technology transfer, human resource development, education and training to banish underdevelopment forever. See UN, Report of the World Summit on Sustainable Development (26 August-4 September 2002) A/CONF.199/20, para. 18.
  4. Ibid resolution 2.
  5. International Conference on Financing for Development, Monterrey Consensus of the International Conference on Financing for Development (Report, 18-22 March 2002) 7 Ibid para 1.1, 1.3; The MDG emphasis the role of developing countries to ensure their own development, and compliance of the commitment of developed countries to support through aid, debt relief. The developed countries again agreed Doha Development Agenda (DDA) in 2001 for better trade opportunities providing numbers of flexibilities, facilities directly supportive to the economic development of developing and LDCs however the achievement of the MDGs and DDA remains stalled.
  6. Most aspects of trade, from intellectual property rights to agricultural products, are addressed by different international processes.
  7. Ibid para 1.4.
  8. NGIPs are characterized by: i) a recognition of the role of investment as a primary driver of economic growth and development and the consequent realization that investment policies are a central part of development strategies; ii) a desire to pursue sustainable development through responsible investment, placing social and environmental goals on the same footing as economic growth and development objectives, and iii) a shared recognition of the need to promote responsible investment as a cornerstone of economic growth and job creation is giving renewed impetus to efforts to resolve, in a comprehensive manner, long-standing issues and shortcomings of investment policy that may hamper policy effectiveness and risk causing uncertainty for investors. These three broad aspects of ‘new generation’ investment policies translate into specific investment policy challenges at the national and international levels. UNCTAD, Investment Policy Framework for Sustainable Development (UN 2012) 6.
  9. Ibid 5.
  10. UNCTAD, World Investment Report 2012: Towards a New Generation of Investment Policies (UN2012) xxiv-xxv.
  11. They comprise the Universal Declaration of Human Rights and the UN Guiding Principles on Business and Human Rights, the Convention on the Establishment of the Multilateral Investment Guarantee Agency, the World Bank Guidelines on the Treatment of Foreign Direct Investment, the UN Global Compact, the OECD Guidelines for Multinational Enterprises and the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, and several WTO-related agreements, including the GATS, the TRIMs Agreement and the Agreement on Government Procurement.
  12. UNCTAD (n 11) xxvi
  13. UNCTAD (n 13) xxvi.
  14. ‘Empowering People for Inclusive Growth’ (European Union) 1 <http://eudevdays.eu/sites/default/files/EDD12_EPIG_25092012pdf> accessed 28 April 2013.
  15. UNIDO, Industry: Inclusive and Sustainable Development (Vienna International Centre 2012 7.
  16. World Bank, Inclusive Green Growth: The Pathway to Sustainable Development (2012) 2.
  17. European Union (n 15 ) 2.
  18. Nepal has committed to standardizing 39 legislations, including Act, Rules, policy and ratification of convention.
  19. WTO, Report of the Working Party on the Accession of the Kingdom of Nepal to the World Trade Organization (28 August 2003) WT/ACC/NPL/16 para 108-109.
  20. Ibid para 111.
  21. Nepal did not attract much foreign direct investment (FDI) in spite of policy reforms initiated in the early 1990s. This is partly because a small, least developed, landlocked, mountainous country has little to offer to investors. Nevertheless, other similarly situated countries are receiving more investment than Nepal. Numbers' of advantages Nepal have namely privileged access to a well-disposed neighbouring country with a large market; a low wage, trainable workforce; a flourishing local entrepreneurial culture in both small and large business; and established international recognition thanks to tourist landmarks. Nepal’s temperate climate is also ideal for cultivating medicinal herbs, whose market has seen phenomenal expansion in recent years. These advantages can make attractive investment packages.
  22. Foreign Investment and One Window Policy 1992 para 4.
  23. Ibid para 6.
  24. That includes cottage Industries, personal Service business, i.e. hair cutting, beauty parlour, tailoring, driving training etc., arms and ammunition industries, explosives, gunpowder, industries related to radioactive materials, real estate business (excluding construction industries), motion pictures business, security printing and currencies and coinage business.
  25. That includes retail business except the retail business instantly conducted more than two countries as international transaction, bidi, internal Courier service, atomic energy, poultry farming, fisheries, beekeeping beauty paler, domestic food processing methods in rent, local catering service and rural tourism.
  26. The policy had also emphasized on the development of export-oriented industries and industries using local resources, and its important element was to reduce unemployment. The Industrial Enterprises Act 1992 was implemented under this policy. Section 15 of this Act has provided for certain priorities areas forsubsidy such as tax reduction and excise duty rebate of up to 35 percent for the industries established in remote, undeveloped and underdeveloped areas for export oriented products. But the policy did not meet its objectives hence, Nepal Government has bundled up the policies within the tenth five year plan of 2002.
  27. Industrial Policy, para 7.1-7.5, 8.1-8.19.
  28. Industrial Policy (n 28) para 9, 10.32.
  29. Ibid para 9.
  30. Ibid para 10.1-10.9.
  31. Ibid para 11.4.
  32. Ibid para 10.10-10.16.
  33. Nepal is divided into 75 administrative districts
  34. For permission on establishment, registration, expansion and exit of an industry and to ensure the availability of services in simple and transparent manner within the specified period (para 10.20) 36 See Ibid para8.18-8.19, 9.8, 10.38-10.40, 11.5.
  35. Ibid para 11.20-11.25.
  36. Ibid para 11.6-11.10, 11.16.
  37. Ibid para 10. 23.
  38. Ibid para 12.2.1-12.2.9.
  39. Ibid para 12.3.1-12.3.5.
  40. Ibid para 13, 14.
  41. FITTA 1992, s.3(2), 3(3).
  42. Ibid s 5.
  43. Ibid s 6 (2)
  44. Investment Board Act 2010, s 3.
  45. Ibid s 9. That includes Investment to be made in fast track road, tunnel, railway, rope way, trolley bus as specified by the Government of Nepal, construction of international, regional level airport and modernization and management of the running airport, management and refinement plant of dump, chemical fertilizer production factory, plant of petroleum refinery, construction of big bridge, Bank and financial institution having more than fifty one percent or in the establishment or operation of insurance or reinsurance company, medical college, hospital or nursing home having more than three hundred beds, hydro power project of Five hundred or more megawatt, establishment of special economic zone, export promotion or refinement zone, special industrial zone or information technology park.
  46. Ibid s16.
  47. Ibid s 7.
  48. Ibid s 18(1).
  49. Industrial Enterprises Act 1992, s 3.
  50. Ibid s 4-7.
  51. That includes explosives, including arms, ammunition and gun powder, security printing, bank notes and coin industries; cigarette, bidi, cigar, chewing tobacco, khaini industries and industries producing goods of a similar nature utilizing tobacco as the basic raw material and alcohol or beer producing industries. Sectors reserved for nationals mainly in order to promote small entrepreneurs are generally of indigenous skills, resources and technology; cottage industry; personal service business (business such as hair cutting, beauty parlour, tailoring, driving training, etc.); Industries related to radioactive materials; Real estate (excluding construction industries); Motion picture industries (produced in national languages and the language of the nation); Retail business; Travel agency; Trekking agency; Water rafting; Pony trekking; Horse riding; Internal courier services; Atomic energy; Tourist lodging; Poultry farming; Fisheries; Bee keeping; Consultancy services such as management, accounting, engineering and legal services etc.
  52. Ibid s 9.
  53. Ibid s13.
  54. Ibid s 18.
  55. Ibid s 21- 22.

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