Trade Facilitation Initiatives in Nepal

1. Trade Facilitation Initiativesin Nepal Prachanda Man Shrestha Joint Secretary Ministry of Industry, Commerce, and Supplies Nepal

2. Trade Facilitation • Tariff and Non Tariff Elements involved in the Process of Import and Export have been the Concern since long for all those who are committed to enhance International Trade • In course of regulating and disciplining International Trade, there has been substantial achievement in Reducing Tariff barriers which is realized not enough to expand trade unless other Elements are effectively taken care of. • Therefore, in broader context all the Elements related to the Enhancement of International Trade comes under the scope of Trade Facilitation • However, in specific understanding Procedures relating to Import and Export are taken up under Trade Facilitation • Moreover, under WTO Negotiation, Trade Facilitation is precisely scoped to Freedom of Transit, Border Fees/ Formalities, and Publication /Administration of Trade Regulations • All three issues considered under WTO seeks to maximize Transparency, Predictability, Stability, Non-discrimination, and Competitiveness

3. Trade Facilitation and Nepal • Trade is vital to Nepal as its share to GDP is substantial and increasing • But, limited product range and trading partners, high transaction cost due to landlocked feature and poor trade infrastructure have made Trade Facilitation even more important to Nepal • The Nepal Trade Competitiveness Study of 2003 highlighted issue of Trade Facilitation as the major Obstacle to Trade Development • The Trade Facilitation Negotiation under WTO, therefore, offer Nepal an opportunity to seek binding international assistance to address constraints to improve competitiveness and also to deal with transit issue in an objective multilateral forum

4. National Trade Development Objectives • Increase Trade Contribution to National Income • Facilitate Private sector Participation • Establish Backward linkage of Industrial Development to Export Trade • Develop Mechanism for Trade benefits at grass-root level to Reduce Poverty

5. Direction of Trade Policy Efforts • Consistent Reform to Create Liberal and Competitive Market-oriented Trade Regime • Integrate National Economy to Global Trade Regime through Multilateral and Regional Arrangements • Adopt Measures to Mitigate Adverse Impacts from Externalization • Promote and Diversify Export: Destination and Product wise • Improve Quality in Exportable Products to meet accepted Standards • Develop / Improve Trade Infrastructure, Institutional Capacity and Business Services • Establish Trade linkage to Industrial Development • Encourage Local material based and Smaller Industries to benefit from Opportunities of External Trade

6. Measures undertaken to Facilitate Trade Sector • Customs Related: • Adoption of Harmonized Customs Codes • Tariff Structure Rationalized (Lowered & Slabs reduced) • Implementation of Automation (ASYCUDA) in major Customs • Container Sealing Facility at Kathmandu Airport Custom • Gradual Phasing out of Other Duties and Charges • Import/Export Related: • Abolition of Quantitative Restrictions and NTB on imports • Elimination of Export Import Licensing • Bonded Warehouse & Duty Drawback Scheme • One Spot Export Clearing House in Kathmandu • Current Account Convertibility • Market determined Exchange Rate • Trade Related Agreements: • Bilateral Trade Agreements with 17 Trade Partners • Transit Facilitation Agreement with India and Bangladesh • Accession to WTO, SAFTA, BIMSTEC • SAARC agreement on Mutual Administrative Assistance in Customs Matters • South Asian Sub-regional Economic Cooperation on Trade Corriders • Trade Related Physical Infrastructures • Operationalization of Rail Connected Inland Container Depot at Birgunj and Road Connected at Biratnagar and Bhairahawa

7. On-going Efforts towards Trade Facilitation • Customs Administration: • Provisions of Revised Kyoto Convention in the amendment of Customs Act • Custom Valuation as per WTO Provisions, Selectivity Module, Risk Management, Time bound Clearance, Simplification of Procedures, Single Administrative Document through electronic media, Monitoring of Custom office performances, publications of Manuals, Training are ongoing activities under three years Customs Reform and Modernization Action Plan (2003-2006) • Trade Instruments and Infrastructure: • Provision of Export Promotion and Special Economic Zones • Provision of Single Negotiable Multimodal Transport Document • Integrated Physical Facility at four land Custom adjoining India (Biratnagar, Birgunj, Bhairahawa, Nepalgunj) • Container Freight Station • Activating National Trade Facilitation Committee • Transit Facility: • Exploring alternate Transit of Mumbai, Phulbari, Mongla • Developing Nepal as Transit Point to facilitate trade between India and China • Bilateral, Regional, and Multilateral Initiatives: • Negotiation under SAFTA and BIMSTEC for Trade Facilitation Measures of Harmonization Recognition Accreditation Certification of Standards, Simplification of Customs , Banking Procedures, Business Visa, Transit Facilities • Regional Cooperation for Transport Infrastructure Development • Participation on Trade Facilitation meetings of WTO July Package as per Annex D • Bilateral Agreements with India and China for mutual recognition and certification of standards in selected Products

8. Challenges to Improve Trade Facilitation • Landlocked and situated between Lowly Developed and Remote Parts of India and China (Bihar and Tibet) • Custom Administration more Revenue oriented than Facilitation with over 90% of assistant level clerical staffs • Seven SAARC countries adopting 4 different Fiscal Year, 5 different Weekly Holidays, 6 different Working Hours • Investment in Physical Infrastructure along Border Points and Trade/Transit Corridors facing Resource Constraint • Intensity of Interest on Trade Facilitation Measures among the countries in the Region is Extreme • Intra-regional Multimodal Transport Arrangement along the Trade Transit Corridors • Absence of Separate Clearance Tracks as Express, Sensitive, and Regular at Border Custom points

9. Nepal’s Position on WTO Trade Facilitation • Article V Freedom of Transit: • Transit facility on National Treatment • Non-discrimination on means of Transport in Transit including Fixed installation as pipelines and electricity Transmission • Freedom of Transit via Routes chosen by Operators • Preferential Treatment to Perishable Goods • Article VIII Fees and Formalities: • Pre-arrival Clearance and Risk Management Application and Border Clearance Audit be Voluntary for LDCs • Simplification and Rationalization of Charges establishing list of permissible fees • Periodic Review of Fee and Charges on Voluntary basis • Prohibit Consular transaction and Consular related Fees • Article X Publication: • All applicable Fees and Charges be published and accessible • Advance Ruling system to LDCs should not be binding though it could be encouraged by sufficient Assistance • Nepal is positive to create Trade Advisory Board to have consultations for traders • Developing Code of Conduct to Custom Staffs

10. S/D Treatment and Assistance to LDCs and Landlocked Members • S/D Provisions must focus to address • Trade related Infrastructures, Supply Capacity, Competitiveness, Value Addition • Development Flexibility and Policy Flexibility to Recently Acceded LDCs • Special treatment on SPS/TBT requirements • Assistance not to be limited on Technical support but also be extended Financial support. Areas of Assistance for Nepal can be: • Harmonizing Simplifying Standardizing Documents and Procedures • Network of Transport Infrastructure Development • Enhancing Enforcement and Facilitating Capability of Customs • Negotiating Bilateral / Regional Trade, Transport, Transit Agreements • Capability for Post-clearance Verification, Audit, Risk Management, Automation of Customs Procedures, Selectivity Modules • Developing Port Facilities, Transport and Cargo Handling Equipments • Adopting Information Technology for data base, information dissemination, for pre-arrival processing, post release controls

11. THANK YOU