The recent state visit of Chinese President Xi Jinping was supposed to be one more indication of Nepal’s attempt at breaking free of the constraints of geography and to look beyond the south to the neighbour to the north. One crucial agreement with China could help Nepal go a step closer to that goal, but two-and-a-half-years since its signing, the Agreement on Transit and Transportation with China has yet to come into effect.

This is largely due to the fact that the Protocol to the Agreement on Transit and Transportation—signed between the two countries in April—has not been duly satisfied by both parties. Before the agreement comes into effect, both countries are required to inform each other that their domestic laws are in place in accordance with the agreement. In July, Nepal informed China but officials say that three months later, the Chinese side has yet to respond.

Article 15 of the Protocol to the Agreement on Transit and Transportation states that the protocol will come into effect only a month after both sides officially notify each other.

After the agreement comes into effect, Nepal will have access to four Chinese seaports—Tianjin, Shenzhen, Lianyungang and Zhanjiang—and three land ports—in Lanzhou, Lhasa and Shigatse—for third-country imports and exports.

Nepali diplomats in Beijing and officials at the Ministry of Industry and Commerce confirmed that China had yet to notify Nepal that it is ready to facilitate the use of Chinese sea and land ports by Nepali importers and businessmen for third-country trading.

“Diplomatic correspondence is often delayed,” said Nawaraj Dhakal, joint-secretary at the Ministry of Trade and Commerce. “Having said that, it [communication from the Chinese side] has not been delayed. It is a work in progress.”

In a brief telephone conversation, Sushil Lamsal, deputy chief of mission at the Nepali Embassy in Beijing, said that he had not received any message from the Chinese side but was hoping to receive it soon.

Officials involved in negotiations with Beijing told the Post that the implementation of the Transit and Transportation Agreement and its Protocol is already behind schedule.

“It is already getting delayed and we do not know what kind of difficulties our importers will face while doing third-country trade,” said Rabi Sainju, a former joint-secretary who has been involved in negotiating the transit agreement with China. “We have to be proactive. The Chinese weren’t too interested since the very beginning as we have a lot to do back home and on the border.”

A team of Nepali officials, technical experts, importers and freight forwarders had even visited the Chinese sea and land ports after Nepal had notified China of its readiness. But much remains to be seen regarding the ease or difficulty of conducting third-country trade via China.

“We do not have any experience of doing third-country trade using Chinese sea and land ports. So first of all, the government should bring in some third-country cargo as a test so that we know what the problems and hiccups are in terms of quarantine, locking, transhipment modality and cargo tampering,” said Sainju.

Nepal and China signed the landmark Transit and Transportation Agreement in 2016, during the state visit of the northern neighbour by Prime Minister KP Sharma Oli. The signing was described as a “watershed moment” in Nepal’s diplomatic history, one that would end Nepal’s long-standing dependence on India for third-country trade.

After the agreement’s protocol was signed during President Bidya Devi Bhandari’s visit to China in April, both countries had said that the protocol would come into effect immediately once each side informed the other that their internal laws and regulations are in place to allow transit and transportation.

One major hurdle to implementing the deal, according to Nepali officials, is the condition of Nepali roads connecting China. Nepal faces challenges from poor infrastructure, including its highways and dry ports.

Imported goods will be transported up to Xigaste via Chinese rail and Nepali containers will transport them from Xigaste to the Nepali border. As of now, Nepali containers are only allowed to travel up to Kerung.

Before the transportation of import or export goods, the Nepali side will provide the lists of items and the electronic bills of each transported cargo to the Chinese side. Almost all Chinese containers are electronically monitored.

Nepal and China had agreed in 2012 to open six dedicated land routes: Humla, Korola, Rasuwagadhi, Tatopani, Olangchunggola and Kimathanka. The Rasuwagadhi-Kerung route has been operational since 2014.

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