Instead, the two sides decided to leave the matter for the top political leadership to resolve. “This has pushed into limbo the signing of the Treaty to Control Unauthorized Trade during the prime minister´s visit to India,” stated a government source.
Nepal, however, has decided to unbundle this treaty from the Nepal-India Trade Treaty and move ahead with the signing of the latter.
The two sides are amending the treaties in bid to address a widening trade deficit and the growing incidence of unofficial trade. As part of controlling illicit trade, the two sides had previously agreed to open re-export of third country goods through multi-nation agents based in each other´s territory on a reciprocal basis.
However, the problem surfaced after New Delhi refused to recognize re-exports from Nepal, pointing out the possibility of trans-shipment of goods to its territory even if there are no official international agents in Nepal.
“The provision was incorporated in the proposed treaty after both sides agreed to it on reciprocal basis. If that does not happen, the treaty will not be signed,” stated the source.
Rajan Bhattarai, Foreign Affairs Advisor at the PM´s office, also told myrepublica.com that the Treaty to Control Unauthorized Trade will be signed only if India addressed Nepal´s concern, accepting it on reciprocal basis.
Despite the problem, India has agreed to Nepal´s request to allow temporary re-export of machinery tools to India for repair and maintenance. This facility was absent in the previous bilateral treaty.
“As for the trade treaty, there is no problem at all,” stated Bhattarai, adding that Nepal will sign the treaty during the PM´s visit if India agrees.
In the revised trade treaty, India has agreed not to impose state duty and non-tariff barriers on Nepali goods. This provision is widely expected to boost Nepal´s export to India, as imposition of non-tariff and extra-customs duties, which debilitated Nepal´s competitiveness, has been badly affecting Nepal on the export front.
Sharp rise in consumption, on the other hand, has caused its trade deficit to widen to more than Rs 108 billion. Once signed, the treaty will remain valid for the next seven years.
milan@myrepublica.com
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