Transit, trade treaties and RSA to be reviewed

Kathmandu, April 28

Nepal and India have agreed to review Trade Treaty, Transit Treaty and Railway Service Agreement between the two countries.

Commerce secretary-level talks between the two countries, held here on Thursday and yesterday, decided to review the aforesaid treaties and agreements to address issues raised by Nepal during the meeting.

According to Ravi Shanker Sainju, joint secretary at the Ministry of Industry, Commerce and Supplies, review of Nepal-India Trade Treaty is a must to address rules of origin criteria on export of Nepali products to the Indian market and removal of tariff rate quota on selective products. Enforcement of tariff rate quota is against the multilateral trade agreement.

The rules of origin criteria in Nepal-India Trade Treaty require 30 per cent value addition. The treaty was renewed in October 2016 without any changes to the 2009 treaty. The provision is in contrast to India's commitment to World Trade Organisation to allow duty-free, quota-free market access to exports of least developed countries if domestic value-addition is at least 25 per cent. Similarly, to address the issue of non-tariff measures slapped by Indian quarantine, Nepal has been requesting mutual recognition agreement to accept certificates issued by recognised laboratories of each other's country. MRA will be included in revision of trade treaty, said Sainju.

Review of transit agreement will focus on allowing Nepal to use Indian sea ports closer to major customs of western and far-western Nepal - Bhairahawa, Nepalgunj and Dhangadi - for third-country trade. Ferrying Nepal-bound freight via inland waterways will also be included in the transit treaty.

Revision of transit treaty is crucial to implement electronic cargo tracking system and the Indian side has asked Nepal to propose trans-shipment modality soon. After the two countries sign the agreement, Nepal-bound cargo will be directly delivered to the dry ports of Nepal from the port of origin.

Similarly, amendment of RSA will pave the way for operationalisation of private railway to ferry Nepal-bound cargo from Indian ports to respective Nepali inland clearance depots. The Indian government has green-signalled Nepal-bound cargoes to be transported via rail to the nearest railheads from major trade routes. The test phase has already begun from Kolkata to Jogbani.

Nepal and India have also agreed to channelise payments for cargo handling through banking system.

The Indian side had asked for removal of other duties and charges on import of agricultural commodities from India. Nepal has been imposing five per cent ODCs on import of agro products that was supposed to be removed as per its commitment to WTO, according to Indian officials. However, Nepal refused to remove ODCs citing the issue had been dropped during talks in 2013.

The Indian side had also requested extension of Export Import code for Indian nationals trading with businesses in Nepal and expressed concern about protection of intellectual property of Indian products. Discussions on removal of ODCs and extension of ExIm code to Indian traders in Nepal continued till late last night, without agreement.