HEADLINE NEWS THE RISING NEPAL (DAILY)

NEPAL -INDIA TRADE TREATY
Renewal of treaty still at cross roads

BY A STAFF REPORTER

Kathmandu, Oct 16; As the time for expiry of Nepal-India Trade Treaty is nearing, officials as well as business leaders from the both countries are trying to forge a mutually agreed solution for the renewal of the treaty. The Trade Treaty 1996 has a provision of automatic renewal, but India has been demanding the review of the treaty, whereas Nepal is pressing for automatic renewal as mentioned in the treaty.

Though the future of the treaty is yet to be decided, experts from Nepal and India today extensively discussed various issues related to the Trade Treaty. Most of the speakers at the programme said that the treaty should be renewed to promote the interests of both the countries.

Addressing the seminar on 'Renewal of Nepal India Trade Treaty' jointly organized by Nepal -India Chamber of Commerce & Industry (NICCI) and Embassy of India, Dr. Bhek Bahadur Thapa, Royal Nepalese Ambassador to India said that the issue of trade needs constant monitoring so as to keep the spirit of the treaty intact.

Instead of giving importance to other areas, the spirit of friendship between two countries has to be given priority for long-term sustainability, Dr. Thapa said. "Certain problem has been cropped up regarding trade issues, but it has to be solved through dialogue."

Dr. Thapa further said that the trade treaty should not be confined within trade alone, it should be a catalyst to strengthen mutual and economic ties between two nations.

Deb Mukharji, Ambassador of India stressed the need to solve the issue in a mutually acceptable manner. "We have to be clear about the trade treaty. Along with trade, we should make joint efforts for strengthening economy of both the nations," he said.

Rukma Shumshere Rana President of NICCI in his welcome address stressed the need for developing an atmosphere for mutual understanding to tackle the issues.

While many of the clauses in the treaty have been unofficially settled, there are some certain issues that are yet to meet a common ground, he said. "The 1996 Trade treaty was the culmination of new thinking."

There are many new changes, but for a small industrial power like Nepal, there were two huge changes that were to radically alter of the whole scene. First, was the removal of all material content requirements and second was the self - certification of the products that would get entry into the India market.

These two clauses, according to Rana, have led to a quantum leap of Nepal's export to India. At the same time, there has also been a jump in the import of Indian products into Nepal. Hence, he said the 1996, Treaty has really been a win win situation on both side, he noted.

Arun Kumar Chaudhary, Vice President of NICCI, said that a few issues of concern to both Nepal and India have arisen that need to be addressed and amicably settled so that the essence and spirit of the treaty is preserved and further strengthened.

Jagadish Prasad Agrawal, Managing Director of Nimbus Marketing, said that the investment depends upon the certainty and predictability of investment climate, which the 1996 treaty had tried to usher in.

The issue is 'How can the renewal of the trade treaty provide assured in built certainty and predictability to future investors domestic as well as from India, he added. He further said that the focus has to be on streamlining the procedural strengthening of the treaty and instituting an efficient mechanism that can address the issues as they come.

Tirtha Raj Upadhyay, a chartered accountant noted that India being a stronger partner should help Nepal in reducing its unfavourable balance of trade, but Nepal has also respect right of India, as the terms of bilateral trade could only be negotiated mutually.

Himalaya Shumsher Rana, former governor of Nepal Rastra Bank noted that the issues related to the renewal of Nepal -India Trade Treaty should have been resolved much earlier in the interest of buoyant continuation of flow of trade and investment between two countries.

Dr. Vijay Katti, Professor and Chairperson of Indian Institute of Foreign Trade said that the existing text of treaty is not in the interest of Indian industry so the situation needs to be rectified so that Indian industry would not go in loss.

Shashi Kant Agrawal of NICCI also stressed the need for developing mutual understanding.

Shashi Raj Pandey extended vote of thanks at the end.

According to NICCI, the treaty of the Trade was modified in 1991. The new treaty was a milestone in fostering and enhancing economic cooperation between Nepal and India. The 1991 Treaty of Trade was renewed in December 1996. The renewal of the treaty was an achievement that further opened avenues for expanding trade and investment.

The treaty's objectives of accelerating industrialization in Nepal have shown fruitful results so far. After the renewal of the treaty of trade in 1996 both countries have witnessed a growth in trade. While exports from Nepal to India grew from five billion rupees in 1996, to over Rs 25 billion in 2001. Similarly, exports from India to Nepal also increased from Rs 24 billion to Rs 46 billion in the same period.

According to an RSS report the Nepal-India trade treaty expires on December 5.

Even though the Nepal-India trade treaty signed in 1996 has provision for automatic renewal after its expiry, a provision has also been made in the treaty for review of the treaty if any side wishes to do so. In accordance with this provision, India has asked for the review of the Nepal-India Trade Treaty.

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