After BIPPA: What Matters Is Business Environment


Nov. 13, 2011, 5:45 p.m. Published in Magazine Issue: Vol.: 05 No.-09 Nov. 11-2011 (Kartik 25,2068)<br>

The Bilateral Investment Promotion and Protection Agreement (BIPPA) signed between Nepal and India has generated debates in various circles. We have been hearing strong voices of opposition to BIPPA from different institutions. Nevertheless, the agreement is in the interest of the Nepalese and their national economy. My concern  here will be to discuss the government policy about implementing this agreement. Various kinds of treaties and accords are needed in conducting the state to state relations. The treaty regimes guide the patterns of relations between any two countries.

One of the objectives of entering into the BIPPA with India or any other country was to promote industrialization, create employment in the manufacturing and services sector, increase government revenues and export trade and reduce trade imbalances that will finally help promote the welfare of Nepal and the Nepali people.

As Nepal and India have already signed the agreement, the important duty of all would be to explore ways and means on how the agreement could be utilized in the best manner for the promotion of  Nepal’s interests. If Nepal wants to have foreign investment, it must sign this kind of treaty with other countries as well.

In today’s globalised economy no country can survive without getting involved in trade deals with other countries. No sane industrialist can invest money in another country without receiving an adequate assurance on the protection of their investment.  Wisdom lies in harnessing the potential benefits from the globalizing pace of Nepali economy by generating complementarities and forging mutually reinforcing economic ties with neighboring countries and others.  In this context, the present BIPPA agreement signed between Nepal and India is beneficial to both the countries. There is no reason to make a hue and cry without understanding the clauses and implications of the treaty.

Every treaty can be defined in various ways and there are always pros and cons in the bilateral treaties. BIPPA is not an exception. There is no reason to make such a hue and cry except for gaining political mileage. International treaties and relations have their own courses and actions. They must not be interpreted politically and under narrow slogans of so-called nationalism. Clauses included in BIPPA have protected Nepal’s interests too.

Keeping voices of opposition aside for the moment, policy makers still have no clues as to what form of protection they want strengthened in order to promote economic development. Does an investor come to Nepal just because of the BIPPA agreement?

As a developing country, Nepal lags far behind in protection and enforcement of IPRs due to its low level of economic and social development. In the absence of proper domestic laws and negotiating skills on the part of the developing countries, they are not able to benefit from favorable provisions inside the IP system.

Policymakers must keep in mind that whenever a firm comes to establish industries or research and developments plants, it wants strong intellectual property protection to ensure the non-disclosure of technologies, brought in by the firms. So the firms need trade secrets and contractual protections, firms seeking to establish markets for finished products need strong copyright, patent and trademark protection.

Being a close neighbor, India remains the single-largest trading partner of Nepal.  After the revision of treaty of trade in 1996, it has given a big push for increasing the export trade of Nepal in the Indian market. Duet to this, Nepal’s export to India increased by seven folds after that. But, the momentum was lost after the revision of the treaty in 2002. The pace of export growth between 2002 and 2007 was around 10 percent and it was more or less stunted after 2007.  Due to unstable trade regime and unstable political scenario, many Indian investors left Nepal creating a huge trade gap.

In Nepal, we have the IP laws but they are below the standards.  If we analyze the IP laws of different countries with those of Nepal, similarities are there as most of the countries are signatories to the International Convention and the TRIPS Agreement, which establish minimum standards of IP protection.  But the national laws differ according to the need and demand of their respective nation. In categories of work, eligibility for protection are the same. Major differences between Indian and Nepalese copyright acts are in terms of protection of the copyright. Indian copyright law is comprehensive, with detailed and clearer provisions for assignment, mode of assignment, disputes with respect to assignment. The Nepalese copyright law lacks the details relating to assignment, there is no specific provision for mode of assignment and disputes relating to that.

It is very important to create awareness about Intellectual Property, as IP plays an important role in the economy of the country. At present there is a need of provision IP laws regarding alternative dispute resolution, so that disputes can be settled through negotiations. Separate courts for Intellectual Property in China, Taiwan, and Malaysia have helped them in terms of effective protection of the copyright. Nepal can also come with separate IP court, not immediately, but in future. This can be introduced as a separate bench for IP matters. The open border between Nepal and India has become a medium of piracy and entry of counterfeit goods, which have made authors and investors frustrated. So government of Nepal has to come with a new policy to cope up with this issue.

Because of lack of awareness and difficulties to access the work, and lack of IP laws like Geographical Indication, Biodiversity Acts, Protection of Plant Varieties and Farmer Rights, it seems that Nepal has still a long way to go to have a strong and proper IP regime.

In the proper policy context, IPRs are an important component of the general regulatory system including taxes, investment regulations, production incentives, trade policies and competition rules. At the end of the day, irrespective of how many treaty/agreement the governments signs, what matters is pro-competitive business environment, which can be had through IPRs as they are an important component of the general regulatory system including taxes investment regulations, production incentives, trade policies, and competition rules.  The IPRs may encourage competition and lawyers of strong IPRs maintain that they create competition with long run consumer benefits. Thus with strong IP Policy we need more IP experts lawyers for our industrial revolution which starts with agreements like BIPPA.

I suggest the government should come out with strong IP Policy before signing a similar Bilateral Investment Promotion and Protection agreement with China.
(Upreti is  a BSC LLB student)

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