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Public-Private Dialogue on Nepal-China Trade

SAWTEE, in association with Ministry of Commerce and Supplies (MoCS), Government of Nepal, and Nepal Economy, Agriculture and Trade (NEAT) Activity/USAID, organized a half-day Public-Private Dialogue (PPD) on 26 April 2012 in Kathmandu. The objective of the event was to disseminate the overall findings of the “Nepal-China Trade Study” report, which sheds light on Nepal’s overall trade indicators with China, Nepal’s top potential products to China, critical trade barriers and supply-side bottlenecks, reviews Nepal-China trade treaties, and provides recommendations for the government of Nepal and the private sector with regard to improving Nepal-China trade.

Speaking at the programme, the Chair Dr. Posh Raj Pandey, Executive Chairman of South Asia Watch on Trade Economic and Environment (SAWTEE), stated that Nepal has not been able to capitalize on China’s growing influence in the global economy by strengthening Nepal’s trade with China. Factors such as custom hassles, and quarantine, “within border” constraints such as supply capacity and unfavorable macroeconomic situations have led to Nepal’s inability to capitalize on such an opportunity.

Making a presentation on the topic, Mr. Tula Raj Basyal, Former Senior Economic Advisor, Ministry of Finance, Government of Nepal argued that government of Nepal’s (GON) development plans and targets to increase exports and reduce deficits have fallen miserably short of their expectation. He added that Nepal’s exports to China have deteriorated at an alarming rate during the past decade and the GON needs to take urgent steps to reverse this trend.  He cited that transportation problems (including road infrastructures), customs capacity, administrative processes and hassles, lack of credit facility, China’s strict quarantine, among others, as the biggest factors inhibiting Nepal’s exports to China. He also pointed out several steps that GON could take in order to increase Nepal’s exports to China and reduce the spiraling trade deficit.    

In his special remarks, Mr. Tanka Karki, Former Nepalese Ambassador to People’s Republic of China, stated that “behind-the- border” factors such as massive labor and capital outflows are most relevant with regard to the bleak present situation of Nepal’s exports to China. He further added that Buddhism-related goods such as statuettes (“murti”) and wooden handicraft products have an extremely high potential in China besides other products such as flowers and fruits. He further added that the potential railway which could be extended to Nepal border from Shigatse holds immense potential for improving Nepal’s future export performance with China.

Commenting on the presentation, Mr. Naindra Prasad Upadhyaya, Joint-Secretary of the Ministry of Commerce and Supplies (MoCS), Government of Nepal argued that besides products exhibiting a positive trend in Nepal’s exports to China, special attention should be given to agriculture and primary products like poultry and meat products that are losing market in China due to its strict quarantine requirement. Accreditation and upgrading of Nepal’s present lab facilities is of upmost importance in order to solve this problem.  He also voiced the importance of diversification of Nepal’s export basket and a need for the exporters to carefully study China’s import demand.   

Mr. Pancha Ratna Shakya, Vice President of the Nepal China Chamber of Commerce & Industry (NCCCI) further added that Nepal’s trade deficit with China is exacerbated by Nepal’s import of high-value goods and exports of low-value goods. Furthermore, lack of market diversification and lack of product and market research orientation is a major sticking point with regards to Nepal’s exports to China.  Air-connectivity, besides road connectivity, is equally important, especially with regards to exporting high value-added goods to China.

Dr. Posh Raj Pandey, in his closing remarks, thanked all the participants for their time and valuable inputs, which had further enhanced the participant’s understanding of the dynamics of Nepal-China trade. Altogether 73 participants representing a cross-section of stakeholders--including academia, government officials, the private sector, civil society and the media--attended the programme.

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