Under the system, the two sides agreed at pledging concessional market access for key products of mutual export interest and adopting simple rules of origin (RoO) so as to establish trade creating environment. [break]
“The meeting successfully did away long-running confusion over modality of trade and agreed at lowering tariff for items of mutual interest to give impetus to almost negligible bilateral trade,” said Surya Silwal, joint secretary at Ministry of Commerce and Supplies (MoCS), who led the Nepali trade delegation in the meeting.
He informed myrepublica.com that the two sides also decided to exchange lists of items in which they want the other to open market within three months, paving way for serious negotiations for formalizing trade treaty between the two countries.
Bhutan is one of the few countries with which Nepal enjoys trade surplus. But the two sides have no formal trade ties and have been trading mere on the basis of mutual understanding. As a result, the volume of trade between the two countries in very low and business ties between the private sectors of the two South Asian neighbors is weak.
During the day-long meeting, Nepal mainly pushed Bhutan to lower tariffs on key items to 5 percent. It also sought Bhutan to exempt sales tax on all Nepali exports, just as it has been providing to the Bangladeshi products.
“Bhutan responded to these calls positively, but on reciprocal basis,” said a source. He also said the two sides also decided to exchange draft of treaty protocol and hold meeting on exchanged drafts of preferential commodities list, RoO and protocol in Thimpu in the three months.
The source also disclosed that the meeting had decided to drop duty-free trading arrangement after Nepal briefed the Bhutanese side about Article 3 of Nepal-India Trade Treaty, which 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.
Apart from the modality of trade treaty, the Nepali side also discussed on attracting Bhutanese investment in the country. 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.
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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