The talk, being held in the capital on Wednesday, will discuss on the draft agreement that that the two sides exchanged a few years ago, said a source. [break]
The two countries have no formal trade ties so far and the traders were conducting trade on the basis of mutual understanding. Nepali traders, meanwhile, have been blaming this lacking for low volume of trade and had urged the government to enter into a formal trade agreement to foster trade and support private sector enter business ties between the two South Asian neighbors.
Based on their demand, the cabinet had agreed to sign a bilateral trade agreement with Bhutan and forwarded a draft of preferential trading agreement a few years ago. Under its proposal, Nepal had sought Bhutan to substantially lower duty on agricultural produces and manufacturing goods and promised to pledge similar facility to it as well.
Bhutan had instantly responded to Nepal´s call positively and exchanged a draft, proposing that the two countries signed free-trade agreement.
However, Bhutanese proposal had forced the government to stall further talks on the issue, especially as Article 3 of Nepal-India Trade Treaty bars Nepal from pledging facility that it has not given to India to any third country. Going by this article, if Nepal provides duty-free entry to Bhutanese products, it is also required to pledge the same to India.
Concerned officials refused to disclose how the Ministry of Commerce and Supplies is planning to deal with this impediment. But sources indicated that Nepal would push for working out a midway between the two drafts.
“We will discuss on all possible option, ranging from zero-tariff facility for key exports to lowering tariff to 5 percent for potential exportable items,” said the source, adding that Commerce joint secretaries from the two countries would also discuss on fostering economic cooperation, investment and technology transfer.
Presently, Nepal has only one foreign direct investment project from Bhutan and the volume of trade between the two countries in 2007/08 was less than Rs 300 million with Nepal enjoying surplus of some Rs 6 million.
Compared to Nepal´s total exports to SAARC countries, its exports to Bhutan was at 0.3 percent, while imports from Bhutan was mere 0.1 percent of total import it made from SAARC during the year.
Nepal imports commodities like gypsum, fruits and fruit products, potatoes and handicrafts from Bhutan. It exports noodles, food items, fast moving consumer goods and alcoholic beverages, among others to the dragon kingdom.
milan@myrepublica.com
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