Crucial trade talks overdue amid widening trade deficit

PRABHAKAR GHIMIRE

KATHMANDU, Feb 10: Nepal faced 27 percent rise in trade deficit to Rs 251 billion over the first six months of 2012/13 and lack of timely trade negotiations with key trading partners might worsen the country´s trade figures further.

Traders say delay in crucial trade talks with India, Bangladesh and the US would affect Nepal´s capability to strengthen international trade. Nepal-India trade talk, which is supposed to be held at least every six month at either secretary or joint secretary level, has been pending for over a year.


Senior trade officials of the two countries have not held formal talks since the secretary-level talk held in December, 2011 in New Delhi. In the absence of talks, long standing as well as emerging trade issues between the two countries have been affecting Nepal´s trade with the South Asian powerhouse.

Senior trade officials of the two countries have not held formal talks since the secretary-level talk held in December, 2011 in New Delhi. In the absence of talks, long standing as well as emerging trade issues between the two countries have been affecting Nepal´s trade with the South Asian powerhouse.

Worse still, Nepal-India Transit Treaty, which is crucial to strengthen the trade with India and overseas countries by enhancing trade infrastructure, also couldn´t be renewed with additional provisions. The treaty couldn´t be renewed after Ministry of Foreign Affairs (MoFA) expressed strong objection on the draft that among others included proposals to open additional trade routes, increase transit facilities and open Visakhapatnam Port for Nepal´s third country trade.

As a result, the treaty was renewed in its existing form.

Despite the fact that most of the business people and trade experts supported the proposal of introducing additional lock system on Nepal-bound third country containers by Indian officials, the MoFA didn´t approve the proposal prepared by the Ministry of Commerce and Supplies (MoCS)

MoFA officials claimed that the additional lock system would create hassles in transporting third country imports to Nepal.

“The delay in starting trade talks with key trade partners is set to weaken Nepal´s position in international trade,” a former commerce secretary told Republica.
Though Nepal´s garment export to US is decreasing, no initiative has been taken to hold Nepal-US meeting on Trade and Investment Framework Agreement (TIFA). The meeting is now two years overdue.

Nepal had US had signed TIFA in Washington on April 16, 2010, establishing a forum for dialogue between two countries. The agreement which also set up the Nepal-US Council on Trade and Investment (NSCTI) -- the commerce secretary level permanent mechanism that is supposed to meet at least once a year to work out ways for expand bilateral trade and investment.

“Nepali officials failed to convince US officials for timely talks to activate NSCTI even during the Nepal Investment Year,” said Uday Raj Pandey, president of Garment Association of Nepal.

Trade talks with Bangladesh, another important trade partner in the South Asia, has also not moved ahead as per the schedule. The secretary level meeting between the two countries held in Kathmandu on June 30 last year had entrusted the responsibility to finalizing modalities for implementation of agreed points to joint secretaries at commerce ministries of both the countries. The joint-secretary level meeting was originally scheduled to be held in September 2012.

The delay in joint secretary level trade talks has pushed back implementation of crucial trade issues, including zero tariff facility provided by Bangladesh to 100 Nepali goods, operating transit cargo through Chittagong and Mangla Port, initiating Kathmandu-Dhaka bus service, and simplifying quarantine process.

Lal Mani Joshi, secretary at the MoCS, told Republica on Sunday that joint secretary level meeting between Nepal and Bangladesh would be held on February 17.

“We are sitting for joint secretary level talks with Bangladesh in Dhaka followed by another round of talks in Kathmandu,” Joshi said, adding: “The joint secretary level meeting will finalize the agendas to be signed at the next secretary level meeting which will be held in Dhaka.