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Private Sector & Conflict Management 
By Madhukar Shumshere J.B.Rana
For socialists it is commonplace to view the private sector as a major source of societal conflict with their dogma of exploitation of labour and consumers, and the marginalisation of the peasantry. One conjures images of macho men seeking, primarily, to be aggressive, authoritarian, scheming and controlling. For an ideology whose mission is social welfare the private sector, whose business mission is narrower—profit maximisation—is perceived as entities that tend to reduce social welfare with their unique focus on private profits garnered by such day-to-day behaviour as described above.
To correct such socially irresponsible behaviour, new concepts have emerged to guide business conduct. Most notably there is the concept of “corporate socials responsibility” with a “business code of ethics” to ensure good corporate governance at the daily practical level. Now it is deemed vital that all stakeholders’ interests be considered before decision-taking with emphasis on fairness together with return on investment, return on equity, corporate market share, total factor productivity etc. Self-regulation necessary as it may be is not, however, sufficient. It has to be reinforced by a general Competition Act that is regulated by the State. Such an Act seeks to guarantee maximum social welfare benefits for all while preserving consumer sovereignty through maximisation of consumer choices at least cost.
On passing, it may be appropriate here to underscore that Nepal badly needs an Industrial Relations Act that governs labour-management, collective bargaining and union formation and conduct at the place of work. It is generally accepted that the present labour laws have helped in creating privileged “labour aristocracies”, where the union-political party nexus has led to business being unable to engage in strategic hiring of different kinds of labour for different production needs depending on the seasonal, cyclical and trend related demands. Such an Act would manage conflicts in the work place which, in turn, will help to mitigate the dysfunctional conflicts that has destabilised our society.
How Nepal has dealt with the insurgency and terrorism has drawn flak in the international media mostly since 2001. We have not been able to counter the poor image being created about us abroad largely because of the negative role of the Nepali media themselves. In an age of the ICT revolution, media should be sensitive to matters of national security, investment climate and economic stability while using their right to freedom of expression.
It is submitted here that had we large number of expatriates living in Nepal as retirees or as business people, as in Thailand, Sri Lanka, Singapore, Hong Kong and Indonesia (Bali), much of the poor image would have been effectively negated by the ground realities provided to the world by the expatriate community living their daily lives as retirees, being drawn away from the political conundrums, and doing business in Nepal as foreign direct investors. I estimate that the implementation-pending policy on “resident tourists” can create around 10,000 jobs in two years. Not to mention the immense prospects for jobs if the other implementation-pending Deemed University Act comes into effect which could make Nepal SAARC’s regional centre for higher education. This has immense prospects for making Pokhara the western regional growth hub in its own right.
The Nepali business community have to understand that they have a vital role to play in conflict resolution. It is they who create productive jobs; and youth unemployment is a root cause of the insurgency in Nepal. They have done an admirable job in keeping their businesses alive in these trying times.
They must now move forward towards fully utilising their productive assets through development of a national industrial security strategy in partnership with the government and local communities. This is a major task that has been completely ignored by the National Security Council. A prime need now is how best to rehabilitate the 4,000-5,000 Maoist militia that may wish to lay down their arms and seek alternative employment. It is submitted here that creating productive jobs by the business community in partnership with HMG for the jobless youth is as much an act helping conflict management as it is helping conflict resolution—being done simultaneously.
We need primary schools, hospitals, village electrification, urban water supply schemes and rural roads etc which can be done with people-public-private partnerships in a manner that is manageable by each community given their local resources, technology, savings and investment capacities. Such a flowering of community self-help projects should be promoted by the Government through direct grants to these communities.
The extent of the grant from government should vary from 1:1 for relatively developed areas up to 1:3 for the backward areas. It is submitted that the MDG targets can be met more rapidly through this additional development modality rather than relying on the current one going through the local development ministry, social welfare council, or, indeed, direct donor grants to their chosen NGOs, bodies that are entirely unaccountable to the local communities or HMG’s foreign aid coordination authorities and public audit agencies. It is envisaged that the local business community in the form of social entrepreneurs will be managing and funding such local MDG projects subject to the provision of differential matching grants from HMG.
Finding new modalities for farmer-business cooperation and collaboration should be the foremost task for the FNCCI, CNI, Chambers of Commerce and product associations—so is the continuity of essential supplies to the consumers. Innovation and re-engineering are a must for effective conflict management. Solely depending on monetary and fiscal incentives and disincentives will not be sufficient as it takes time to yield results. Direct, proactive measures by the business world are eminently desirable to help the small farmers and poor households in these difficult times.
It is fashionable for the developed countries to speak of “state failures” and thus eagerly seek intervention in the conflict ridden developing countries hoping to arrest the states “failure” and at the same time promote and protect human rights and democracy. It is doubtful if humanitarian assistance could help achieve any of these goals—let alone all of them. What is needed is endogenous development intervention based on the partnership of all stakeholders at the community level maximising the social capital already present in each community with a nation.
Yes, macro-economic stabilisation is vital. So the private sector must and should pressure government for economic and financial reforms as planned; but implemented in a very halting manner. Wilful defaulters must, should and can be brought to book. Privatisation must be carried out. Graft and corruption must be attacked with even greater vigour and ingenuity. All these reforms will help create jobs and eradicate poverty through greater investments and higher economic growth rates thus helping to attack the very structural reason for conflict—poverty, inequality and exclusion.
Last, but not least, it is the patriotic duty of the private sector to assist HMG to combat tax evasion, smuggling, under-invoicing which are both the cause and the effect of conflict which feed upon each other in a vicious cycle for conflict multiplication and deepening. Just as business leaders must practice good corporate governance so they must insist, as sovereign citizens, that governments, at all levels, be accountable, transparent, participative and foster, at all times, the spirit of fair play based on market competition.
(Rana is former Minister of Finance)
TRIPS Agreement of WTO: Implications for Public Health 
by Shiv Raj Bhatt
Nepal’s membership to the WTO has opened many economic opportunities as well as challenges for Nepal. Turning opportunities into reality is in itself challenging for Nepal being a least developed country with very a poor infrastructure, huge supply side constraints, and lack of competitiveness. Its implications for various segments of society and sectors of the economy are much debatable. Similarly, there is a wide spectrum of concern of researchers and health policy experts on its public health implications. While many international health policy commentators are arguing that the WTO is one of the most influential international agencies with respect to health; in Nepal yet the likely impact on health of the organisation and the policies it is promoting has not been given much attention.
WTO, as an instrument of trade liberalisation, can affect public health in multiple ways—both positively and negatively and also directly and indirectly. It can affect the public health situation directly when a disease crosses a border together with traded goods. It can also affect the public health indirectly, i.e., reducing tariffs may lead to lower prices for medical equipment and health related products, or changing international rules concerning patent protection may affect the prices of medicines and vaccines. Moreover, there is a positive link between free trade and economic growth, which can lead to reduced poverty and higher standards of living, including better health care. However, health implications of WTO in general and its various agreements in particular can be case specific, which among others, depends on the existing level of development, availability and access to health facilities, the country’s pharmaceutical production capacity, availability of human resources and research and development (R&D) capacity.
Many WTO agreements including Trade Related Intellectual Property Rights (TRIPS), Technical Barriers to Trade (TBT), Sanitary and Phytosanitary Measures (SPS), Trade in Services (GATS) and Agriculture (AoA) have significant importance for public health issues, especially for developing and least developed countries like Nepal. However, TRIPS is the most debated and important agreement regarding public health; therefore is the focus of this article.
TRIPS-Public health interlink
The agreement intended to increase social and economic welfare through protection of intellectual property, and transfer and dissemination of technology towards benefiting producers as well as consumers. However, critics oppose these arguments and argue that the agreement has many adverse implications for poor nations’ poor people. Its implications for public health, farmers’ rights, food security and bio-diversity are hotly debated upon.
Various articles of the agreement deal with patents and are particularly relevant for public health. The agreement contains several provisions that enable governments to implement their intellectual property regime in a manner, which takes into account immediate and longer-term public health considerations. It also provides for some flexibility in the implementation of the agreement by allowing countries, under certain conditions, to limit patent owners’ exclusive right, for instance by granting compulsory licenses and allowing parallel importation of patented products. Article 7 (objectives of the agreement), Article 8 (that allow member countries to formulate and adopt measures necessary to protect public health and nutrition) and the Doha Declaration pave the more public health-friendly interpretation of TRIPS by explicitly recognising that intellectual property rights are subservient to public health concern.
Proponents of TRIPS argue that the protection of pharmaceuticals by patents should lead to an increase in the flow of technology transfer and direct foreign investment in developing countries like Nepal. It helps to end the “brain drain” from developing to industrialised countries caused by the absence of protection for their inventions in their home countries. It is argued that patents protection will encourage inventors to divulge and to market their inventions that ultimately results in the development of new drugs that benefit the patients, therefore improving the public health outcomes. Moreover, availability of a wider range of better quality products, including medicines will improve the welfare of the general populace.
On the other hand many other who are less optimistic oppose the Agreement. They argue that the prices of patented drugs and the amount of patent royalties will increase with the strengthening and prolongation of the patent holders’ monopoly and multinational firms will be free to export finished or semi-finished products rather than transferring technology or foreign investment directly to developing countries. Therefore, the introduction and strengthening of patents regime for pharmaceutical products will certainly not lead to an increase in R&D investment by enterprises in developing countries, which have to contend with a lack of technical infrastructure, and financial and human resources. Likewise, the non-patentability of pharmaceutical products existing prior to the TRIPS gave developing countries the opportunity to acquire basic technology through reverse engineering before being able to invest in R&D.
Therefore, the debate on public health implications of TRIPS is also inconclusive and necessarily depends on many factors as indicated above. Besides global concerns and development matters, however, our efforts at national level are more important.
The way forward
Being a member state of WTO, Nepal has an obligation to integrate into her patent legislation the minimum standards (patents for 20 years, no differential treatment between nationals and foreigners and reversal of the burden of proof) established by the TRIPS agreement. By the year 2016 (or prior) Nepal will have to grant legal protection by patents to pharmaceutical products. However, implications of Nepal’s WTO membership in general and intellectual property protection in particular for public health are inconclusive. Loss or gain will depend on many factors such as consumer habits, market structure, public health situation, strength of the local pharmaceutical industry, human resource availability to initiate R&D, the legal environment, and the economic, trade and pharmaceutical policies.
Basically, the protection of intellectual property benefits the persons and countries that have an innovative capacity that mostly depend on availability of human resources and the level of infrastructure. Therefore, to reap the benefits of WTO membership and patent protection, Nepal must improve in human resource and infrastructure. In addition, Nepal’s strategy for the production and distribution of drugs will be incorporated into its national pharmaceutical policy, a component of the national health policy. Similarly, greater interaction between trade and health policy makers and practitioners and greater mutual awareness of trade and health policies is needed.
Being a least developed member country of WTO, Nepal needs appropriate policy measures and efforts to maximise its positive effects while mitigating the negative ones. Ensuring health and trade policy coherence, encouraging research and development activities, improving the capacity of pharmaceutical production, and improvement in the availability of health services are crucial to seize the opportunities opened by WTO membership in the area of public health.
(This article is based on Nepal: Public Health Under WTO, authors’ paper published in South Asian Journal Vol. 11, P. 29-40, January-March 2006. Bhatt specialises on foreign trade and development)
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