AID FOR TRADE The New Mantra

Nepal government and development partners have joined hands to stimulate trade, eradicate extreme poverty and promote sustainable development

March 9, 2017, 5:45 p.m. Published in Magazine Issue: Vol.10,No. 14. March 10,2017, (Falgun 27, 2073)

As there is growing criticism over the foreign aid coming as a grant and its utilization, the new mantra is aid for trade and it is gradually catching up. In the last few years, trade has been shown to be the best way to make the country richer.

The recently concluded 16th Donor Group meeting on Aid for Trade (AfT) reviewed the implementation of the Action Matrix of Nepal Trade Integration Strategy (NTIS) 2016; the Capacity Development Strategy (CDS) of Ministry of Commerce; and the formal handing over the role of Enhanced Integrated Framework (EIF) Nepal Donor Facilitator from the Embassy of Germany to the European Union Delegation to Nepal.

During the meeting, various development partners working in the trade sector in Nepal expressed their firm commitments in supporting the implementation of the NTIS 2016 and for the overall trade sector development of Nepal.

Speaking at the program, Commerce Secretary Naindra Prasad Upadhayay informed Nepal’s development partners that the Government of Nepal has prioritized trade as an important component to achieve inclusive and sustainable economic growth, gender empowerment and poverty reduction through various periodic plans, policies and strategies.

He also thanked the Federal Republic of Germany for its vital role as Donor Facilitator for the last five years and welcomed the EU Delegation to Nepal as the EIF Donor Facilitator.

The out-going EIF Nepal Donor Facilitator and Deputy Chief of Mission of German Embassy in Kathmandu Jacqueline Groth appreciated the efforts being taken by the Government on the policy front by bringing out the Trade Policy, NTIS 2016 and CDS. Groth also highlighted the need for support from Nepal’s development partners to the government for the implementation of trade policies and strategies. She underscored the importance of coordination among various line ministries and the private sectors for mainstreaming trade in sectoral polices, plans and leveraging resources.

In the program, the new EIF Nepal Donor Facilitator and Head of Cooperation of the European Union Delegation to Nepal, Andreas Roettger, expressed the pleasure of the Delegation in assuming this new role. He remarked that the EU is one of the largest trading partners in the world and the it saw trade and investment as very important vehicles for inclusive development as outlined in its "Trade for All" strategy.

Least Developed Countries (LDC), such as Nepal, benefit from the most preferential trade regime globally available and Nepal has the potential to embrace this opportunity in a stronger manner. In 2016 Nepal exported goods worth €90 million to the EU, making it Nepal's second largest export market after India. The "Everything but Arms" initiative, allows duty and quota free access for all kinds of products with the exception of weapons and ammunition. The EU looks forward to contribute in the role of EIF Donor Facilitator to enhance the trade potential, especially through donor coordination and AfT mobilization. 

The Ministry of Commerce, Government of Nepal, organized the 16th Donor Group meeting on AfT in the presence of representatives from various development organizations. The ministry has been organizing these meetings at regular intervals within the Enhanced Integrated Framework (EIF) at the WTO.

The Government of Nepal’s Trade Policy 2015 has prioritized supply-side capacity building, increase in production and productivity, trade in services, protection and promotion of intellectual property rights, and trade mainstreaming, aid for trade, corporate social responsibility as mechanisms to boost trade in the country. In close complementation with the policy, the Government of Nepal has launched Nepal Trade Integration Strategy 2016, which seeks to address the outstanding trade and competitiveness challenges confronted by the country’s export sector. NTIS 2016 focuses on actions to address constraints on the seven broadly grouped cross-cutting sectors and 12 priority export potential sectors by 2020, which include nine products, i.e. Cardamom, Ginger, Tea, Medicinal and Aromatic Plants, Fabrics and Textiles, Leather, Footwear, Chyangara Pashmina and Knotted Carpets as well as three services, i.e., IT and Business Process Outsourcing, Tourism and Skilled and Semi-Skilled Professional Services.

The NTIS 2016 has identified 190 actions to be implemented by 2020 with clear roles and responsibilities along with quantitative indicators to measure the success. It has clearly outlined its focus on supply capacity through increased production and productivity; product and value chain development; development of trade-related infrastructure to address the bottlenecks of supply-side constraints and enhanced market access in terms of both technical and institutional capacity building.

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