Economy News The Rising Nepal (Daily)

Chambers' role in trade facilitation Trade

By K. P. Kaphley

The economic liberalization and integration into the multilateral trading system require, inter alia, facilitation of trade that calls upon simplification, standardization and harmonization of procedures and documentation. With the opening of new opportunities and challenges in the wake of rapid globalization of the world market, the need for trade facilitation that makes trading with foreign partners simpler, cheaper and faster is increasingly felt by many governments as well as by commercial interests all over the world. In the process, the national Chambers representing the private sector interests are becoming key players in trade facilitation activities.

The private sector led growth policy adopted by His Majesty's Government of Nepal during the 1990s has triggered not only trade facilitation measures in licensing, foreign exchange control and Customs procedures but also manifold rise in the sectoral, product and professional trade associations. The trade facilitation activities got momentum in 1998 with the launching of the Nepal Multimodal Transit and Trade Facilitation Project with the financing from the World Bank for the creation of three dry ports or Inland Clearance Depots (ICDs) in Biratnagar, Birgunj and Bhairahwa. The Project also includes technical assistance from the United Nations Conference on Trade and Development (UNCTAD) for multimodal transport and trade facilitation, Customs Reform and Modernization ASYCUDA (Automated System of Customs Data) and ACIS (Advance Cargo Information System).

There are several reasons for Chambers to get actively involved in trade facilitation. Trade facilitation is an effective, non-capital intensive and simpler means of promoting international trade, which is the prime concern of the Chambers. The facilitation activities can be achieved only with a close cooperation of bankers, transporters, freight forwarders, exporters, importers, and insurers. Such cooperation is the second nature to the Chambers.

Most of the public and private sector institutions including trade promotion organizations are confined to export promotion activities, and pay limited attention to imports. Chambers can represent both the export and import interests for trade facilitation. This is particularly important to Nepal where most exports depend on imports since overseas purchases supply bulk of basic and auxiliary raw materials for the production of principal export products like carpets, garments, pashmina shawls and vegetable oils.

Trade facilitation is not possible without a constructive partnership between private sector and government. With the delicensing of exports and imports except for a few quantitatively restricted products and for exports of garments under the GSP scheme (Generalized System of Preferences) to the European Union, the customs and exchange control requirements now represent the main part of trade procedures and documentation. The Chambers are in a position to meaningfully represent a wide range of business interests to the concerned government agencies for putting forth a case for simplification, integration or removal of a particularly difficult or unnecessary procedure or document.

Not all civil servants may become familiar with the modern practices, commercial requirements and operational difficulties relating to production, transport, documentary credit, procedures and documentation. On the otherhand, traders also may be unable to fully understand the administrative reasons behind a designated control procedure. Therefore, the success of trade facilitation activities depends upon a close cooperation and understanding of all the partners involved in foreign trade. A change from the conventional belief and practice to a new and simple one can be achieved only through better wider cooperation and understanding between traders, service providers and government agencies.

Moreover, the traders and government officials alone may not able to cover all facets of trade facilitation without the cooperation of other key partners like bankers, transporters, freight forwarders and insurers. All these agencies often see their individual procedural and documentation requirements in isolation. This is the reason behind the creation in 1998 of the National Trade and Transport Facilitation Committee (NTTFC) under the chairmanship of the secretary to the Ministry of Industry, Commerce and Supplies. NTTFC includes members from the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Nepal Chamber of Commerce, Insurers Association, Bankers Association, Nepal Freight Forwarders Association, Nepal Goods Carriers Association, Central Carpet Industries Association, Garment Association-Nepal and Handicrafts Association of Nepal.

The Chambers are represented in all-important institutions, boards and committees including national facilitation organizations that provide platforms for putting facilitation measures into implementation. In addition, their representations in other important events like seminars, workshops and training can also be potentially used to advance such activities. This enables Chambers to establish a highly effective and practical link with the government sector at policy and operational levels as well as from top decision-makers down to the implementing grounds.

At the apex of the private sector associations is FNCCI which consists of (as of July 2000) 556 members that included 83 district/municipality level chambers covering 69 districts, 416 leading public and private sector enterprises, 48 commodity/sectoral association and 9 bi-national Chambers. Measured in terms of its size and geographical coverage combined with its domestic network, institutional set-up and external linkages, the FNCCI has successfully established itself within a span of three and half decades to become the national focal point of business and industrial representations in Nepal. The FNCCI is represented, among others, in the boards of the Trade Promotion Centre, Nepal Intermodal Transport Development Board and NTTFC.

Today's need for trade facilitation calls for the institutionalization and decentralization of activities from central to district, and from general to product and professional levels. For instance, the FNCCI may create its own trade facilitation body at the centre to be supported by similar committees at district levels as well as in commodity and professional sectors. This may also be ultimately modernized with computerized system facilitating Electronic Data Interchange (EDI) with private sector institutions as well as with government agencies. It is not that the FNCCI is not carrying out trade facilitation activities at present, but the need is for taking this as a regular, effective and specialized functional area. It may require consolidation and strengthening of existing activities in order to response to the modern commercial needs of just-in-time delivery, multimodal transports, containerization and E-commerce.

Going through the mission statement and objectives of the FNCCI, the trade facilitation stands to be the most potential area to cater to the development needs of the business and industrial sector. This function may also generate some additional income as some fees can be levied on specific and specialized services. The scope of trade facilitation may cover a wide range of activities. This may include simplification of trade procedures, elimination/integration and standardization of documents, one run system for reproduction of documents, popularizing the use of EDI, international conventions and legal instruments, and human resource development through training, seminar and workshops in collaboration with professional institutes like International Chambers of Commerce, UNCTAD and ESCAP (Economic and Social Commission for Asia and the Pacific). In a nutshell, FNCCI can play a role of national catalyst for institutionalizing trade facilitation activities in Nepal.

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