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Public-Private Dialogue on Nepal-India Trade, SAFTA-SATIS

SAWTEE, in association with the Ministry of Commerce and Supplies (MoCS), Government of Nepal, and Nepal Economic, Agriculture and Trade (NEAT) Activity of USAID, organized a Public-Private Dialogue on 23rd March 2012 in Kathmandu. The objective of the event was to share the key findings of two researches—Study on Nepal-India Trade and Diagnostic Study on SAFTA and SATIS—conducted by SAWTEE and to gather comments and suggestions from experts and stakeholders to further enrich the studies.

Making a presentation on the “Study on Nepal-India Trade”, Dr Ratnakar Adhikari, Chief Executive Director, SAWTEE, highlighted Nepal’s poor export performance, pointing to the dominance of low-value products in the export basket and a weak production base as structural constraints to sustainable income and employment generation from exports. He noted that although most Nepali products enjoy basic customs duty-free entry into the Indian market, they face a number of para-tariff barriers and non-tariff barriers. He said that besides these market access barriers, domestic supply-side constraints—such as infrastructural deficiency, weak human capital and poor access to finance—are equally responsible for Nepal’s export woes. In addition, Dr Adhikari presented a critical assessment of various trade-related treaties between Nepal and India, and recommendations regarding domestic policy reform, strengthening supply-side capacity, and issues to be discussed in Nepal-India Intergovernmental Committee meetings.

Making a presentation on the “Diagnostic Study on SAFTA and SATIS”, Mr Puspa Sharma, Research Director, SAWTEE, noted that Nepal’s export to South Asian countries other than India is negligible. Nepal’s export trade with South Asian countries other than India is basically concentrated with two countries—Bangladesh and Bhutan—and mainly in two products—lentil and iron and steel products, respectively. Assessing Nepal’s comparative advantage using various tools, Mr Sharma identified a range of products—such as tea, cardamom, vegetables, ginger, medicinal plants, and some manufactured items such as iron steels, plastic products and footwear—with high potential for export to South Asian Free Trade Area (SAFTA) countries. He identified major barriers of Nepal’s export to SAFTA countries: sensitive lists, stringent rules of origin, para-tariff and non-tariff barriers in partner countries, and poor transit facility.

As the chief guest of the dialogue, Hon’ble Vice Chairman of National Planning Commission, Government of Nepal, Mr Deependra Bahadur Kshetry said that it would be difficult to attain development goals without robust export growth, and a country can achieve sustainable export growth only if it can make its tradable items competitive in the global market. He expressed confidence that the research findings would be helpful to the Government of Nepal while formulating policies and strategies, and setting agendas for trade negotiations.

Dr Posh Raj Pandey, Executive Chairman, SAWTEE, said that the world trading regime has been shifting from multilateral to bilateral and regional trading orders, particularly in the last decade. Against the backdrop of such a shift in the global trading regime and the poor export performance of Nepal in recent years, Dr Pandey noted, the studies have tried to prepare a set of workable policy recommendations to increase Nepal’s export to South Asian countries. He said that Nepal could tap its comparative and competitive advantages only if joint efforts are made by all associated stakeholders to enter into and increase the national share in global value chains, formulate domestic support policies, expand and strengthen trade-related infrastructure, improve investment climate, and enhance trade negotiation capacity. 

Mr Lal Mani Joshi, Secretary, MoCS, said that the recommendations of the studies would be useful to negotiators, policy makers as well as the private sector. He expressed commitment to implement the recommendations of the studies. Other experts—including Deputy Chief of Mission of NEAT Activity Mr Prithvi Raj Ligal, Joint Secretary at MoCS Mr Naindra Prasad Upadhyay, Professor Dr Pushkar Bajracharya, Senior Economist Dr Binod Karmacharya, and Former Secretary at MoCS Mr Bharat Bahadur Thapa—also provided their comments and opinions. In line with the research findings, they suggested that the government negotiate with trading partners in South Asia for relaxing the rules of origin criteria and quarantine-related obligations, and improving transit facility. Representatives from the private sector, including Mr Pradeep Kumar Shrestha, Vice President of SAARC Chamber of Commerce and Industries, and Mr Anand Bagariya, Executive Member of Nepal-India Chamber of Commerce and Industries, called for a shift in focus from procedural issues to exploration of major export potential areas and possibilities of mass production.


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