The draft proposes reducing non-tariff barriers to facilitate increase in trade, but exporters said this alone would not be sufficient and have pushed for reduction of duty. [break]
“This is important because Nepal´s key exports like readymade garment and pashmina do not enjoy duty benefits pledged under generalized system of preferences (GSP),” said Uday Raj Pandey, vice president of Garment Association of Nepal (GAN). He argued that TIFA will fail to boost trade without addressing tariff concerns and, hence, will be meaningless.
At a consultation meeting on TIFA, which the Ministry of Commerce and Supplies (MoCS) organized jointly with the private sector and civil society institutions, experts too voiced out a strong demand for categorical inclusion of a clause on tariff reduction in TIFA itself.
“This is important mainly because TIFA will stand as the basis for the two countries to enter into bilateral free trade agreement,” said Ratnakar Adhikari of South Asia Watch on Trade, Economics and Environment (SAWTEE).
The ministry had organized the consultation as a preparation for the visit of a high-level trade delegation, which is holding the first round of discussions on TIFA in the US in the first week of April. Commerce Secretary Purushottam Ojha would lead the team that will hold meetings with the senior USTR officials, among others.
Draft of TIFA, which the USTR forwarded to the government a few months ago, among others envisages establishment of Nepal-US Council on Trade and Investment -- a permanent body that will monitor bilateral trade and investment relations.
“The council will also identify opportunities for expanding trade and investment and identify relevant issues such as those related to the protection of intellectual property rights, worker rights and environment,” says the draft agreement.
However, experts have suggested the government to remove sentences like ´removal of trade distorting investment measures and protectionist trade barriers´, saying that it could prevent Nepal from using industrial policy for the country´s economic and development needs. They also asked the officials not to accept conditions that narrow down policy space for industrial development, dilute public health and consumer interests or hurt facilities provided by World Trade Organization (WTO).
Referring to a case of Jordan, where TIFA has managed to secure soft rules of origin (RoO) condition, trade specialists urged the government to seek for similar facility and not to accept undue labor and environmental standards.
Apart from discussions on TIFA, the Nepali team is also scheduled to interact with officials of State Department and request them to support for infrastructure development, and hold talks with US Chamber officials to attract investment and foster private-private tie between the two countries.
Amid political turmoil and instability, country´s trade and economic relations with the largest economy of the world has faded in recent years. Bilateral trade between Nepal and the US stands very nominal with Nepal enjoying trade surplus of Rs 180 million.
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