During the question hour session of the National Assembly, MP Choida Gyamtsho of Nganglam constituency questioned MoEA Minister Norbu Wangchuk on lifting the ban on alcohol and furniture due to bilateral trade agreement, and also raised concerns over how such agreements will impact Bhutan, especially with Bhutan planning to join the World Trade Organization (WTO).
MoEA Minister Norbu Wangchuk said the previous government had banned the import of furniture, alcohol and vehicle in March 2012. The objective of the ban was to solve the rupee shortage, and balance of trade (balance import and export volumes). A review on the ban found that its objectives were not fulfilled even after two years.
Therefore, Lyonpo Norbu Wangchuk said the ban alcohol and furniture was ineffective and does not have to do with the existing bilateral trade agreement with India.
“We had to review through relevant agencies, like representatives from MoEA, MoF, RMA, and private sectors. After reviewing it, we had submitted to the Lhengye Zhungtshog. The immediate action to be implemented was alcohol ban to be lifted and vehicle import can be also lifted after reviewing fiscal policy. In case of furniture ban, when there is ban also there are increase in import of furniture,” Lyonpo said.
He also added that even though there was a ban on furniture, but furniture import was allowed in government offices, hotels and projects. Lyonpo said, “The ban affects only innocent people, ban had some benefits but there is no equality.”
The MoEA Minister added, “In case of alcohol, we should know that ban was not due to the health effects, but it was due to the rupee shortage, as manufacture of alcohol within the country had increased and availability of alcohol was as usual, for example, duty free shops, where people in high position can have access to alcohol so it only affects innocent people, but we are concerned about the health effects of alcohol.”
Lyonpo said the government has not yet initiated any formal talks on joining the WTO. He also said the free trade agreement with India, which places no custom duties and sales tax on imports like, rice, fruits, vegetables, etc., will not affect the farmers.
He said WTO has provisions which enable a member country to restrict imports, if it affects its security and balance of payment.
Lyonpo addressed the House that the ban lift was not due to the bilateral agreement but looking at the benefit of the economy and community.
The 23rd Lhengye Zhungtshog decided to lift the ban on import of furniture and alcohol on January 27. Upon the recommendations of the multi-sectoral task force, the Lhengye Zhungtshog agreed to lift the ban on furniture and alcohol in the spirit of renewing the bilateral trade agreement with India. The task force found that restrictions did not serve their intended purpose in the economy or the bilateral and regional trading arrangements. It recommended the government to frame fiscal measures to supplement monetary measures in order to ensure smooth functioning of the economy.
The task force also recommended the government to review duty & tax structure to promote local industry and if deemed necessary, reduce alcohol consumption through fiscal, education and other measures.
It also identified vehicle import as major contributor to trade imbalances and rupee shortfall and recommended for appropriate fiscal measures prior to lifting the existing restriction on vehicle import.