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Kathmandu Tuesday November 06, 2001 Kartik 21, 2058.
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Political guidance needed
The lop-sided trade balancem between Nepal and
India will continue to be heavily in India’s favour given the manner in which the
inconclusive third round of Nepal-India trade talks ended on Sunday. The only thing the
two sides seemed to be able to agree on was that they have been able to "narrow the
differences". India’s allegations of a so called surge in the export of certain
Nepalese items needs proper definition. What constitutes a "surge"? Surely it is
time Nepalese officials began asking this question. Surge does not and should not mean
merely a steep rise in exports, as everyone knows. The very fact that India raised the
surge issue at the behest of some Indian industrialists goes to show how things are being
done, including matters relating to international trade, in an ad hoc manner not only in
Nepal but in India as well. India has singled out five items for alleged infringement of
the ill-defined surge net as if the Indians could not have foreseen the phenomenon when
the treaty was signed. The offending list could surely increase in future as the export to
India of other Nepalese items picks up. India’s gripe about the so called surge is,
therefore, a forerunner of many more such Indian objections to come. The ever widening
unfavourable trade balance vis-a-vis India, that has plagued Nepal for more than four
decades, will continue to haunt and despoil our economy.
Nepal raked up a trade deficit of over 19.4
billion rupees with India in the last financial year. This growing gap must be narrowed if
Nepal is ever to attain economic independence. Nepal’s total trade last financial
year was to the tune of 170.63 billion rupees, of which exports to India and third
countries accounted for just 57.24 billion. As far as trade directions are concerned,
India continues to be Nepal’s largest single trading partner. The bilateral trade
with India in the previous financial year was 73.96 billion rupees, with Nepalese exports
accounting for 27.30 billion rupees while imports from India totalled 46.66 billion. Nepal’s
trade with India accounts for almost half its total foreign trade. However, Nepal’s
exports to India form a very small percentage of India’s total import. It is
therefore unthinkable that India should have invoked the so-called "surge"
clause in order to discourage exports to that country of some items from Nepal. Acceding
to the Indian demand cannot but spell disaster for Nepal’s manufacturing sector and
industrial growth. Trade talks are not a confrontation between two countries, they are a
means to settle problems. The principles inherent in the 1996 treaty must not be
compromised, for doing so would mean denting the very spirit in which the treaty was drawn
up and signed. India, as a far bigger and more developed market, must be able to absorb
some rises in exports from Nepal, whether they be in vegetable ghee or Himalayan herbs.
Nepalese exports are too minuscule to make any difference to India’s overall import.
Taken in this spirit without falling prey to the vested interests of traders and
industrialists, and keeping in mind the nature and content of Nepal-India relations, there
is no reason why the 1996 trade treaty cannot continue in its present form. It may help
expedite matters if the needed guidelines for the bureaucrats are forthcoming from the
political leadership of both countries.
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