Previously, the government had decided to seek zero-tariff facility for items of Nepal´s export interest at the bilateral level, instead of in the package of LDCs. Officials, who preferred to secure the facility at the bilateral level, had argued that the Chinese offer was inadequate because 235 of the total items it included for the facility are items that Nepal never exports. [break]
“But our latest position is to take the offer nonetheless, because it will at least open zero-tariff export trade for some 400 tariff lines (of six-digit harmonized code),” said Surya Silwal, joint secretary at Ministry of Commerce and Supplies (MoCS).
The government is mulling over exchanging a letter to this connection soon.
Silwal attributed the latest change in government´s position to the information shared by the Chinese side that if Nepal is to get the facility at the bilateral level, it might have to wait for another three years.
At the bilateral level, Nepal has been seeking duty-free market access facility for 497 items. Because China always responded to it positively, the government had decided to take the facility at the bilateral level only in the past.
“But we recently got information that China might take some three years to decide on Nepal´s request,” said Silwal, adding, “So, we have chosen to take the offer and also continue to negotiate for expanding the facility for additional 100 items of our key export interest at the bilateral level.”
Concerned officials noted that the facility, once it comes, will at least keep exports going and open space for entrepreneurs to plan areas wherein they wish to invest their money.
The government´s latest decision is also guided by its wariness over growing trade deficit of the country with China. Currently, Nepal-China trade totals Rs 36 billion, with Nepal suffering a trade gap of Rs 32 billion.
Statistics further shows that Nepal´s imports from China have fast jumped to 12 percent of country´s total imports. Exports to China, on the other hand, have dropped to less than 3 percent of the total exports.
However, sources still held that Chinese duty-free offer would little help Nepal. “That is because traders would need to meet 40 percent value addition to enjoy the zero-tariff entry facility - something which will eat away their competitiveness,” said a source.
Since Nepal largely depends on expensive imported raw materials and suffers from higher transit-transportation cost, Nepal in its bilateral negotiations has been requesting China to lower the value addition criteria to 30 percent.
Nepal has been requesting China to extend zero tariff facility to address its growing trade gap concerns since 2003.
Nepal exports food items, handicrafts items, incense sticks, vegetable ghee, biscuits, noodles, cosmetics, cement, iron rod, paint, refined wheat flour, rice, vegetables, fruits, processed meat, spices and jewelry, among others.
It imports wool, electrical and electronic goods, clothes and textiles, shoes and wide range of consumable goods from Tibet and mainland China.
milan@myrepublica.com
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