NATIONAL 3 -(Spotlight Weekly)

Going Nowhere

With the trade treaty coming up for renewal in weeks, Nepalese and Indian officials remain divided on a number of issues

By SANJAYA DHAKAL

Nepalese trade officials are hinting at the need for political intervention to smooth the tangled talks with their Indian counterparts, which ended without conclusion in New Delhi last week.

The issue of "export surge" remained the stumbling block yet again. Indian and Nepalese officials failed to reach an agreement addressing India's concerns on the matter it before the renewal of Nepal-India Trade Treaty 1996, set for December.

Indo-Nepal bordar : Flourishing trade

The officials from the two countries failed to unzip the contention after the Indian side stuck to the demand it put forth during the August 1-5 bilateral meeting in Kathmandu. India had notified that it wants to review certain provisions of the treaty, while Nepal has been maintaining that, though it is open for negotiations, it is unwilling to kill the spirit of the accord.

Although the two sides had agreed to follow the issue of "export surge" in the August meeting, Indian officials could not come up with a concrete proposal last week, raising doubts over the future of the treaty.

Purushottam Ojha, joint secretary at the Ministry of Industry, Commerce and Supplies (MoICS), who led the Nepalese delegation, said the Indian side would be delivering its written proposal on the issue of "export surge" as well as "rules of origin".

"The Indian delegation has told us that it would submit the proposal soon and has agreed to hold commerce secretary-level talks within a month," Ojha was quoted as saying in a daily newspaper. "We listened to them. We will make our comments after we receive the written proposal and know what provisions they want to add on rules of origin and export surge."

The Indian side has promised to make available the proposal before the secretary-level meeting, but it still unclear how the future talks would unfold. There is special urgency to the matter, since the treaty has to be renewed within the next two months.

India has been expressing its reservations on the "surge" of some five items, including polyester yarn, vegetable ghee, copper wire rod, zinc oxide and G.I. pipe that are exported from Nepal. These five items are among the largest Nepalese exports to India.

During the first 11 months of fiscal year 2000/01, polyester yarn exports increased by 38 percent (worth NRs 1460 million), vegetable ghee by 27 percent (NRs 3070 million), copper wire rod by 382 percent (NRs 1930 million), zinc oxide by 17 percent (NRs 245 million) and G.I. pipe by 400 percent (NRs 280 million) compared to the same period the previous year.

Immediately after the August meeting, the Indian side unilaterally imposed anti-dumping duty on the exports of zinc oxide from Nepal, choking off its exports. The Nepalese government has formally requested the Indian government to withdraw the decision, saying it was against the treaty that allows duty-free access to Nepalese-manufactured products into the Indian market.

Nepal maintains that its exports are meager (only 2 to 2.5 percent of the total Indian imports of the items are said to have fallen on the surge net) in the huge Indian market. Nepalese officials argue that curtailing the exports of these items would widen the trade deficit Nepal is currently facing with its single-largest trading partner, India.

Imports from India amounted to a whopping Rs 40.92 billion, while exports stood at Rs 22.62 billion in the year 1999/2000, with a net trade deficit of a staggering Rs 18 billion. "It is not appropriate to check the growth of Nepalese exports to Indian in the name of export surge. In the wake of the huge trade deficit, we need to increase our exports to India further," Ravi Bhakta Shrestha, President of Federation of Nepalese Chamber of Commerce and Industry, told SPOTLIGHT.

Because of the 1996 trade treaty, Nepalese exports to India have been able to grow gradually and the trade deficit declined at an annual rate of 5 percent. At present, more than 40 percent of Nepal's exports is headed towards India and 35 percent of its imports come from its southern neighbor. Almost 40 percent of Nepal's total exports to India come from Indian joint-venture companies like Dabur Nepal, Nepal Lever and Colgate-Palmolive Nepal.

With so much at stake, any needless delay in the renewal of the trade treaty would be counterproductive to both sides. As the date of renewal nears, it would be wise for politicians to take up and expedite the matter for theeconomic well-being of both countries.