Businessmen are less than excited over latest trade pact with China that officials are counting on to reduce huge deficit<br>SANJAYA DHAKAL

May 16, 2011, 5:45 p.m. Published in Magazine Issue: Vol.: 04 No.-22 May 13-2011 (Baisakh 30,2068)

Hours after Nepali and Chinese officials signed an MoU on May 10 aimed at easing trade between the two countries, Rajesh Kaji Shrestha was a disappointed man.

President of Nepal-China Chamber of Commerce and Industry, Shrestha had pinned high hopes from the trade talks.

“Such a senior delegation came from China and Nepalese officials were also optimistic. But the pact is full of only promises. There is no timeline or clarity in process of implementation,” said Shrestha.

In fact, the meeting of Nepal-China’s Tibet Trade Facilitation Committee (NTTFC) agreed to ease the non-tariff barriers hurting Nepal’s exports as well as ensuring implementation of zero custom facility accorded to 33 LDCs including Nepal by China.

In principle, the agreement seemed to address most concerns of Nepal.

“The agreement eases obstructions in bilateral trade. Therefore, it will definitely reduce the trade deficit. First benefit will be the reduction in complications felt in the implementation of zero custom facility,” said Toya Narayan Gyawali, joint secretary at the Ministry of Commerce, who led the trade dialogue from Nepali side.

If his statement is to come true, say Nepali traders, the first thing that should improve is the quarantine complications.

Since foodstuffs like ghee, rice are in high demand in Tibet, Nepali traders have called for easy quarantine system. But presently they are subjected to stringent quarantine by Chinese customs. Their goods are stored for days in the customs, which leads to rapid fall in their quality.

“We wanted to see concrete agreement to ease quarantine complications but it looks like once again we will only be served commitments,” said Shrestha.

Around one year ago, China had provided zero custom facility on 4721 products to 33 LDCs – of which 361 products were of interest to Nepal. These products included food grains and agro products.

But due to non tariff barriers such as strict quarantine system, certification standards and rules of origin, Nepali traders could not take advantage.

At present, Nepal suffers from whopping Rs 40 billion worth of trade deficit with its northern neighbour.

It has become a big headache to Nepal, which is already suffering from astounding Rs 174 billion worth of trade deficit with its southern neighbour, India.

In total, Nepal has trade deficit running over Rs 300 billion in its foreign trade.


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