Kathmandu, August 14

The government has forwarded the draft protocol of Transit and Transport Agreement to neighbouring China seeking inputs and comments from the Ministry of Transport, China. Based on the comments from the Chinese government, the Ministry of Commerce (MoC) will make changes to the draft protocol accordingly for further negotiation.

The Transit and Transport Agreement with the northern neighbour was signed during former prime minister KP Sharma Oli’s visit to China on March 21. Following the agreement, the MoC developed the draft protocol to pave the way for negotiations with the Chinese government for the execution of the agreement. When the agreement was signed it did not have any protocol, which is required to define the provisions of the pact.

The draft protocol has not identified any seaport and route, however, it has proposed for the use of multimodal transport for trade. “The port and route have not been identified yet,” said Naindra Prasad Upadhyay, secretary of MoC. The seaport, route and transport modality will be finalised during the negotiation.

The MoC has proposed joint secretary level mechanism for the negotiation. “The draft protocol has just outlined the areas of negotiation,” Upadhyay explained, “The detail draft will be prepared after receiving comments and inputs from the government of China.”

Along with port and route for export, and import trade via China, the protocol will also define the transit operation modality, import procedure, export procedure, mode of transport and customs clearance, among others.

The government has been preparing to conclude the protocol exchange (signing the protocol for the execution of Transit and Transport Agreement) by this year. Till date, Nepal has been utilising transit facility provided by India for third-country trade. The country will be able to utilise transit facility of China after the protocol is signed.

Meanwhile, the government of China has sent the draft of free trade agreement (FTA) to the MoC. Nepal and China agreed to commission a study to enter into the FTA during former PM Oli’s visit. MoC has sent back the draft with its inputs.

Reportedly, MoC has sought the guarantee of Chinese investment to increase the production base and supply capacity of the country before entering into the free trade agreement. “Without any assurance of investment in Nepal, the FTA with China will ruin our production base along with the entry of cheaper goods,” said Purushottam Ojha, former commerce secretary.

FTA is an agreement where concerned parties need to reduce the tariff and non-tariff barriers of trade to increase volume of trade in each other’s country.