Nepal and Bangladesh have agreed to expedite the process of signing a bilateral preferential trade arrangement (PTA), reviving negotiations that have remained stalled for years due to disagreements over tariffs and para-tariffs.

The eighth commerce secretary-level meeting between the two countries, which concluded in Dhaka on Wednesday, decided to convene a meeting of the Trade Negotiation Committee in Nepal within the next three months. The meeting aims to finalise the draft PTA, rules of origin and the list of goods to be covered under the agreement.

According to officials, the two sides also agreed to work closely on harmonising customs procedures, facilitating cross-border payments and addressing broader non-tariff barriers in order to strengthen trade and investment ties.

The Nepali delegation was led by Ram Prasad Ghimire, secretary at the Ministry of Industry, Commerce and Supplies, while the Bangladeshi side was headed by Mahbubur Rahman, secretary at the Ministry of Commerce.

Former trade secretary and trade expert Rabi Shankar Sainju said Bangladesh’s tariff and para-tariff regime remains the biggest obstacle to meaningful market access for Nepali products. He said Bangladesh imposes around seven types of para-tariffs, which make Nepali goods less competitive in the Bangladeshi market. “Bangladesh should relax both tariffs and para-tariffs before signing the PTA,” Sainju said.

Para-tariffs are additional border charges and fees imposed alongside standard tariffs. These include surcharges, special levies and certain internal taxes designed to protect domestic industries. While they act as hidden taxes that raise import costs, they also undermine competitiveness and complicate international trade.

Sainju said Nepal should focus on identifying a limited number of products for the PTA. “Nepal should identify around 10 to 15 products with large-scale domestic production, strong demand in Bangladesh and high value addition,” he said.

Nepal and Bangladesh had earlier agreed, during a commerce secretary-level meeting in Dhaka in March 2020, to sign a PTA by June that year. The plan was derailed first by the Covid-19 pandemic and later by political developments in Nepal.

Reiterating the outcomes of the latest meeting, the Nepal Embassy in Dhaka said in a statement on Thursday that both sides agreed to work closely on customs harmonisation, cross-border payments and the removal of non-tariff barriers to promote a more robust partnership in trade and investment.

During the two-day meeting, both sides also agreed to promote tourism cooperation through the development of a joint action plan and regular exchanges. Taking stock of existing investment linkages, they stressed the importance of joint venture investments, particularly in hydropower development in Nepal and in value-chain development of goods and services.

A separate statement by the Ministry of Industry, Commerce and Supplies on Friday said the two countries agreed to simplify customs procedures, improve payment systems, enhance cooperation on sanitary and phytosanitary measures and technical barriers to trade, expand market access and activate the technical working committee.

The meeting also agreed to promote cooperation at both government-to-government (G2G) and business-to-business (B2B) levels.

According to The Daily Tribunal, a Bangladeshi daily, both countries agreed to facilitate business visas, visas for professionals and their families, and tourist visas to boost travel, trade, investment and tourism. They also committed to coordinated efforts to further simplify visa procedures.

The two sides further agreed to organise regular trade fairs, exchange market-related information, enhance capacity building and strengthen cooperation at the micro, small and medium enterprises (MSME) level.

Bangladesh had first sought a PTA with Nepal in 2020 amid growing trade in goods and services. Nepal, however, has consistently demanded the removal of what it calls “other duties” imposed by Bangladesh on all imports, arguing that these significantly raise the cost of Nepali exports. Disagreements over tariff and para-tariff issues prevented the negotiations from reaching a conclusion.

Discussions during the latest meeting also covered the reduction of tariff and para-tariff barriers. A preferential trade agreement allows member countries to grant preferential market access to selected products. As an original member of the World Trade Organisation, Bangladesh is allowed to impose such other duties.

Nepali officials say that when these additional charges are added to regular tariffs, total duties on Nepali exports can reach as high as 130 to 132 percent. Bangladesh has been reluctant to remove these duties, citing concerns over potential revenue losses.

Nepal’s total trade with Bangladesh stands at Rs5.84 billion. According to the Department of Customs, Nepal’s exports to Bangladesh rose by 20 percent in the last fiscal year ended mid-July, compared to fiscal year 2023-24, reaching Rs666.15 million.

Nepal’s major exports to Bangladesh include cane molasses extracted or refined from sugar, red lentils, hand-operated floor sweepers, medicinal and aromatic plants, raw khayar, bran, sharps and other cereal residues, and seeds of fruits and vegetables.

Imports from Bangladesh surged by 55.7 percent to Rs5.18 billion during the same period. Nepal’s key imports include raw jute, medicaments, potatoes, toilet paper, lead-acid batteries, rusks, juice, hair oil, yarn, textiles and fibre, and chocolate.