Finally, Agreement
THAT the Nepal-India Trade Treaty has been
renewed by another five years has come as a relief to both the countries despite some
reservations remaining related to the quota system and the value addition. The agreement
between the delegations of both the countries broke the ice in the four-day long seventh
round of talks at the secretarial level in a span of about eight months. Herein it may be
worthwhile remembering that the trade treaty had expired three months back on December 5,
2002 but had been extended by another three months. The treaty will be effective from
March 6, 2002. In fact, the secretaries of both the countries have to be appreciated for
their patience in finally coming to an agreement with some new provisions included. The
trade treaty between Nepal and India, for the first time, includes provisions under which
four items that include vegetable ghee, acrylic yarn, copper wire and zinc oxide are
allowed duty free entry into India but a quantitative ceiling has been imposed on each. In
the meantime, a value addition on other articles is 25 per cent for the first year and 30
per cent in the years following. Besides this, an extra four per cent has been imposed as
additional duty on the items for which quotas have been fixed, according to the new trade
treaty.
Looking at the way and the duration for which the trade
treaty talks had proceeded, it had not been an easy task. So many things had to be sorted
out including India’s complaints that some of the items exported from Nepal had had a
negative effect on businessmen in India. Maybe this is the reason why some items have been
slapped with a fixed quota on export to be made to Nepal. On the overall, Nepal, at the
time, is suffering from a huge imbalance in trade with India. There may be a cause of
concern among the businesspeople here that the new regime is bound to affect Nepal’s
export trade with India. Whatever that may be, there is reason to be complacent on the
score that success has been achieved in the renewal of the Nepal-India Trade Treaty
despite the fact that compromises had to be made.
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