EU, Nepal trade
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As the largest integrated market in the world, the European Union (EU) is fully aware of the importance of trade facilitation for economic prosperity and fully supports international initiatives aimed at enhancing trade among nations. In December 2013, the 9th Ministerial Conference of the World Trade Organization (WTO) in Bali, Indonesia, adopted the 'Agreement on Trade Facilitation'. This has been a major step forward to expand international trade rules and to ease the flow of goods globally and was firmed up in November 2014 after an agreement with India was achieved on public stockpiling of food. Now, it is time to put these new rules in action.
What will they concretely mean for countries like Nepal? They can expand opportunities. This can contribute to Nepal's vision and aspiration of accelerating its development and to raise standards of living. The Organization of Economic Cooperation (OECD) estimates a potential trade cost reduction for low income countries between 11 percent and 14 percent, which can be used otherwise be it productively or for consumption. In short, enterprises and consumers and the economy as a whole can reap the benefits.
The EU stands ready to help Nepal in this process and to provide technical assistance and capacity building. Currently, it takes up to 22 days and more for merchandise such as coffee from the Himalayas and carpets and pashmina shawls to reach Kolkata port from Kathmandu Valley via Birgunj. This is far too long also due to the lack of proper trade facilitation. We should work together to address this.
Let's be clear. Sustainable and inclusive economic development is not only a matter of trade facilitation. Infrastructure, connectivity, energy, decent jobs and also good governance need to complement this undertaking to really expand opportunities. Nepal knows this and is shaping its Vision 2030 which aspires to effectively address such matters and to bring the country to a new level.
Yet, trade facilitation can be part of the solution. The new agreement aims at putting into motion goods across borders in a dynamic way, thus improving the transparency, reliability, and predictability of trade (such as in agricultural and perishable goods), which are to be released in the shortest possible time, even outside the regular business hours of customs and other relevant authorities, if necessary. It will lead to a win-win situation for developed and developing countries alike as the importance of trade facilitation for trade creation and expansion is paramount for growth and development for both industrialized and developing countries. Its disciplines on import, export, and transit formalities will especially benefit landlocked countries. Transport costs account for 21 percent of total trade costs in industrialized countries and are considerably higher in remote or landlocked areas.
The Agreement on Trade Facilitation provides an ambitious but realistic roadmap not only for customs authorities but also other agencies involved in trade-related border transactions. Although it will be binding in its entirety from its entry into force (after acceptance of the protocol of the Agreement by two thirds of the WTO Members), some developing and least developed countries will require technical assistance before they can fully implement their obligations. The EU will support this process. Furthermore, it is up to each developing and least developed country to determine the timing and entry into force of its specific commitments. For the implementation of the various provisions, the concerned countries need to look for the required technical assistance and/or capacity building from donor agencies.
The EU has already worked together with Nepal from 2008 to 2011 on trade facilitation and institutional strengthening of trade-related institutions. It has worked notably in the areas of compliance with food and technical standards, legislative review and public awareness.
We recently joined hands with the Ministry of Commerce and Supplies (MoCS) to strengthen the trade and private sector development in Nepal (TPSD) with a specific focus on coffee production, quality and trade. This €6 million program aligns with the Nepal Trade Integration Strategy 2010. It will support efforts to facilitate and enhance trade with other countries, thereby stimulating economic growth and reducing poverty by fostering exports, and adding value to agricultural products with a high socio-economic potential in specific rural areas.
The focus is on strengthening the capacity to formulate and implement policies which will enhance the competitiveness of Nepali products at home and abroad. It aims to strengthen the national quality infrastructure to ensure the compliance of Nepali products with import requirements in other countries and to protect health and safety of consumers at home. Besides, it also provides support to the development of the coffee value chain. The TPSD-Project entered its operational phase in January 2015 and will end in January 2018.
The EU believes in the transformative inspiration of regional integration and is happy to share this experience of peace and prosperity. We closely cooperate with the Association of South East Asian Nations (ASEAN) and stand ready to explore avenues for closer cooperation also with the South Asian Association for Regional Cooperation (SAARC). Enhanced trade and economic cooperation among SAARC Member States and beyond can be a powerful tool to propel sustainable development in the region to a new level.
Nepal stands at a critical juncture of its history and has an immense untapped potential. The poet Robert Frost once said "Two roads diverged in the wood. I took the less travelled by and that made all the difference." As a long-standing partner and friend the EU wishes Nepal well in making the right choices. We are not only Nepal's second largest trading partner but also the largest development partner collectively with the EU Member States. We sincerely hope and aim at making this cooperation and partnership a meaningful contribution for a brighter future of Nepal.
The author is the EU Ambassador to Nepal
