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Kathmandu Monday November 05, 2001 Kartik 20, 2058.
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Trade talks end on positive note Value
addition breaks stalemate
By Bhaskar Sharma
KATHMANDU, Nov 4 – Despite the fact that the latest
round of trade negotiations between Nepal and India over the renewal of the 1996 Trade
Treaty concluded without any concrete outcome, some cloud of uncertainty has finally
cleared.
According to officials who participated in the discussions,
the two sides have agreed to adopt a certain value addition slab on material and labour
content on Nepali exports to India as a means to weed out the contentious issues that have
soured the trading relations between the two countries lately.
The delegation of the Indian commerce officials who were here
to negotiate with Nepali counterparts for the first time proposed to allow duty free
market access to Nepali products in India if the two sides could agree on value addition
slab on material and labour, Nepali officials said.
And though Nepali side agreed to stick to the Indian
proposal, no discussions were carried out to determine the extent of value addition on
Nepali exportable goods. Furthermore, no consensus could be reached on the modality
implementing the value addition norm.
The Indian officials are learnt to have presented a modality
on value addition based upon various international conventions and different regional and
bilateral trading arrangements. However, the Nepali side put forward a different modality
that sought to protect and safeguard the domestic Nepali industries from injury and
uncertainty. Both Nepal and India are likely to study each other’s proposals before
taking a final decision.
Despite the new differences, this is the first time that the
two sides came to some kind of understanding ever since India proposed to review and
revise certain provisions contained in the Treaty. The earlier two rounds of trade talks
over the Treaty renewal had completely failed.
Leader of the Nepali negotiating team Purushottam Ojha, Joint
Secretary at the Ministry of Industry, Commerce and Supplies, said that an exchange of a
few more missions would be required before a final understanding is reached through an
exchange of Protocols. No dates for the next round of talks were fixed.
Another official who took part at the talks today preferring
to remain unnamed informed The Kathmandu Post that Commerce ministers and secretaries from
the two countries are likely to hold informal discussions over the Treaty renewal even at
Doha during the fourth ministerial meet of the WTO.
While Nepal has for long been asking to impose a 30-per cent
value addition slab on material and labour content of the exported goods as jointly
proposed by the Federation of Nepalese Chambers of Commerce and Industries and
Confederation of Indian Industries, Indian officials had remained tight lipped over the
issue until the latest talks. Indian entrepreneurs who claim their industries are being
elbowed out by Nepali exports, however, had been demanding value addition on Nepali goods
to the tune of 85 per cent.
The two sides since August have been wrangling over the
export of five products from Nepal that includes vanaspati ghee, acrylic yarn, zinc oxide,
steel pipes and copper winding wires. India claims that these items fall under the surge
net. India’s call for changes in the Treaty’s provisions was with an intention
to curtail the export of these items from Nepal. It also has been arguing that Nepali
products have forced the closure of many of its domestic industries.
It may be recalled that the 1996 Treaty expires this December
unless both the Indian and the Nepali governments ratify it before December 5. "The
concerns of both Nepal and India have narrowed down and the talks has moved ahead. Some
amicable solution would surely be reached before the deadline for ratification
expires," Ojha said.
Despite the optimistic note, Ojha said that flexibility is
required in talks and that the Nepali side is worried. Asked on if a political solution
would be sought if the two sides fail to come to reconciliatory terms even after the
latest achievement, he said, "That is an alternative which can be pursued."
With the latest string of flexibility in the Indian stand, it
appears that provisions relating to rules of origin would not make into the amended
Treaty, neither the five items into the negative list as earlier demanded. However, the
two sides agreed to recognise surge as per international practice and to develop a
modality to establish if any domestic industries in any of the countries are injured by
imports from the other.
Nepal-India bilateral trade since the signing of the Treaty
in 1996 has increased tremendously. While exports to India from Nepal has leaped from Rs
5.23 billion in 1996/97 to Rs 27.3 billion in 2000/01, imports have surged from Rs 24.85
billion to Rs 46.66 billion in the same period. Almost 20 per cent of the total exports
from Nepal consist of the five items that India wants to check.
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