A lot on the plate for both sides when Nepal and US hold trade talks this weekWhile Nepal will seek to take advantage of duty-free access to 77 different goods, the US will seek clarity on customs valuation, intellectual property rights, repatriation from investment, officials say.
During the fifth virtual meeting of the Trade and Investment Framework Agreement (TIFA) Council between Nepal and the United States, scheduled for December 15, Nepal will focus on investment promotion and technical assistance from the US.
The delegation from Nepal and the US will be discussing issues regarding customs and trade facilitation, preference programme and technical assistance and intellectual property rights, Prakash Dahal, joint secretary of Ministry of Industry, Commerce and Supplies told the Post.
TIFA is a bilateral pact aimed to expand trade, increase investment and technical cooperation and strengthen the economic ties between two countries which Nepal and the US signed in April 2011.
In 2015, the US granted duty-free access to 66 products by enforcing the Trade Preferences Act and later it extended that to 77 products. Nepal will be receiving the facility through 2025.
Commerce Secretary Baikuntha Aryal will lead the Nepali delegation.
According to Dahal, as for the US, its concern is the issue of Customs Valuation Agreement of the World Trade Organization (WTO). The US had in 2016 raised eight points regarding the compliance process and Nepal responded to five of them in 2017.
Although the trade of 77 Nepali products, like carpets, pashmina products and travel goods have been given preference by the US, Nepal has not been able to take advantage of the facility and find a market for them since it has not been able to mass-produce them, enhance the quality and ensure assurance of standard of the listed goods.
Therefore, Nepal is seeking technical support and trade capacity support so that the country can utilise this facility, according to Dahal.
“We have linked technical assistance to enhance trade competitiveness and seek support from the US,” he said. “We have already sent a draft of a concept note for support on technical assistance to promote small and medium entrepreneurship.”
The US has said that they will respond to it after assessing it, he said.
Besides customs valuation, the US has raised concern regarding intellectual property rights in Nepal which includes copyright, patent right and trademark right.
These are under the jurisdiction of the IT Bill which is under consideration in Parliament.
“The US delegation has been saying that it will be easy for the investors if intellectual property rights are investment-friendly,” Dahal said.
The US has also said that they are willing to give suggestions on protecting intellectual property rights, according to him.
The US delegation has always been raising the issue regarding labour. In particular, they are concerned about an article on the SEZ Act that states there is the provision for trade union rights but they cannot protest or strike.
According to Dahal, the US also wants to know the jurisdiction of the federal and provincial governments regarding labour regulation.
It has also raised the issue of child labour and forced labour.
“The US wants that the goods it imports, especially carpet, should not use child labour and forced labour and they have raised questions about it,” he said.
Nepal has said that by 2021 it will abolish all forms of child labour and forced labour. The government has focused on its implementation through inspection and improvement has been achieved, Dahal said.
The US is also concerned about financial transactions done digitally and the e-commerce bill which is being drafted which will have provisions on digital transactions, according to Dahal.
“The US delegation is willing to give input on the e-commerce Bill,” he said.
Meanwhile, a national payment gateway has been established as it will come into operation soon which will allow international investors to repatriate money easily, he added.
“The US delegation is looking for more clarity regarding it,” he said.
The process and provision for investment promotion will also be discussed for assurance of potential investment in Nepal, Dahal said.
The US is looking for harmonisation of technical measures like lab tests and lab certificate accreditation in the export and import of pork and poultry and discussions on capacity enhancement to meet the required standards during the December 15 meeting, according to Dahal.
As Nepal banned the import of energy drinks, the US is looking for more clarity although Nepal has notified the WTO of this. Nepal has also banned the import of peas, black pepper, betel nuts, dates, from the US and it is expressing its concern as it is against WTO provisions, said Dahal.
According to the Trade and Export Promotion Center, Nepal exported goods worth Rs4.7 billion in the first four months of the current fiscal year to the US, a rise of 21.9 percent compared to the same time period in the last fiscal year as export stood at Rs3.9 billion.
Similarly, imports from the US declined by 41.5 percent during the review period as imports plunged to Rs3.7 billion from Rs6.3 billion.
Exports to the US declined by 12.9 percent in the fiscal year 2019-20 as it stood at Rs9.44 billion from Rs10.85 billion in 2018-19. Similarly, imports from the US sharply increased by 75 percent as the import bill accounted for Rs23.5 billion in 2019-20 from Rs13.43 billion in the previous fiscal year.