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Trade: Although the World Trade Organization (WTO) confers special and differential treatment to least developed countries (LDC), joining the organization while still a LDC or not, will not translate into a huge loss or benefit for Bhutan.

WTO accession easier as LDC, say experts

Even though Bhutan will not lose much if it joins WTO or not

Trade: Although the World Trade Organization (WTO) confers special and differential treatment to least developed countries (LDC), joining the organization while still a LDC or not, will not translate into a huge loss or benefit for Bhutan.

This was the outcome of a discussion on Bhutan’s accession to WTO that surfaced during a workshop on country’s graduation from LDC and implication last week.

The decision whether to join or not, UNCTAD’s chief for landlocked developing countries, Mussie Delelegn said is a political decision in most countries. “No country made the decision to join WTO based on economic rationalization,” he said.

He also highlighted that it was important to weigh the systemic benefits of bilateral trade over multilateral. “Regional and bilateral trade agreements are seen more important than multilateral agreements,” he said. “But this should be based on a detailed cost benefit analysis.”

According to the most favored nation clause of the WTO framework, Bhutan could enjoy the benefits of multilateral trade without having to negotiate individual trade agreements with each and every member country.

Experts also pointed out that the benefits of joining WTO, as a LDC is higher in terms of availing technical assistance.

Participants however stressed that since majority of Bhutan’s trade is with India and the given the free trade agreement, loss of preferential market access may not have a huge implication.

Joining the WTO would also mandate Bhutan to ensure that its laws, regulations and policies are non-discriminatory, transparent and WTO consistent. As a member of WTO, the country will have to pursue economic reforms and establish appropriate institutions to meet WTO obligations.

There are over 150 provisions covering a wide range of concerns for developing country on market access in agriculture and manufacturing, flexibility in meeting WTO commitments, safeguard measures to protect small economies and access to technical assistance.

On the flipside, one of the participants said that with less financial capacity and human resource, there are many theoretical and practical differences. For instance, market access is insignificant because it is dependent on competitiveness, which does not favour Bhutan.

Bhutan cannot fully benefit from market access due to supply constraints, high transportation costs and lack of export diversification.

Export enhancement and diversification is one of the recommendations to improve the country’s economic vulnerability index, one of the three criteria for LDC graduation. However, it was viewed that joining WTO would lead to increased imports since Bhutan must provide market access to other countries with tariff reduction.

Bhutan has already surpassed the thresholds on GNI per capita and human asset index-two of the three criteria, which made the country eligible for graduation.

Meanwhile, a local economist said given the bitter reality of the country’s economy, the advantages are not substantial.

He said there would be cost implications because Bhutan will have to make new laws and institutions. Besides, the country’s economy being closely integrated with India’s and constraints on financial and human resources, he said would prove to be a major impediment in linking with other external markets.

By Tshering Dorji

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