Ministry of Commerce And Supplies - Enhanced Integrated ...

N T I S2010 Export subsidies such as export financing on preferential terms and agricultural export subsidies thatdisplace exports in third country markets; Weak intellectual property protection such as inadequate patent, copyright, and trademark regimes; Barriers to trade in services such as limits on the range of financial services offered by foreign financialinstitutions, regulation of international data flows, restrictions on the use of data processing, quotas onimports of foreign films, and barriers to the provision of services by professionals; Investment barriers such as limitations on foreign equity participation and on access to foreigngovernment-funded research and development consortia; local content, technology transfer, andexport performance requirements; and restrictions on repatriation of earnings, capital, fees, androyalties; Government-tolerated anti-competitive conduct of state-owned or private firms that restricts the saleor purchase goods or services in the foreign country’s markets such as cartels, abuse of dominantpositions, monopolies of state intervention agencies; Trade restrictions affecting electronic commerce, including tariff and non-tariff measures, burdensomeand discriminatory regulations and standards, and discriminatory taxation;The findings discussed here are divided into ‘Generic Issues’ and ‘Sector-specific Issues’ focusing on the issuesaffecting some of the Export Potential Sectors identified in Chapter 2.Generic IssuesImport Policies Nepalese manufacturing products that are accompanied by certificates of origin get customs-freeprivileges (facilitated customs clearance). The current treaty is not clear about the export procedure forNepalese products other than manufacturing products and primary products. For example, it appearsthat Nepalese handicraft products (which are neither primary products nor manufactured ones) haveto pay customs duties to enter India; Weak formal border infrastructure is an impediment to formal trade. Out of 22 official border crossings(27 in the new agreement), only three have quarantine check facilities and only two have food testingfacilities on the Indian side. They also appear not to be sufficiently equipped; Not all 27 recognized border crossings are authorized to clear all kinds of cargo. Indian customs appearto allow clearance of specific products only through designated border crossings. This practice limitstrade performance and adds cost to Nepalese exports; Currently, only the Kolkota Port is allowed for transit of Nepalese products to sea. Transit to Bangladeshand Bhutan via India is provided through land routes. Nepal’s long-standing request for additional portfacilities on India’s western coast for west-bound cargo is still under consideration. Port facility toNepal from Vishakhapatnam (also in the east and 400 km far from Kolkata) was agreed in August 2009,but it has yet to be formalized; Only one of the 27 crossings is connected by Indian Railways. The procedures agreed for the movementof Nepalese cargo by rail are complicated. Not all types of bilateral cargo (i.e. open cargo and liquidcargo) are allowed by rail; Collection of a variety of allegedly arbitrary additional duties by Indian customs can cause damageto Nepalese exports and add to the unpredictability, unreliability, and intrinsic instability of traderelations; The lack of clarity and transparency by Indian authorities in the notification or interpretation ofapplicable rules, procedures, and customs duties often hampers Nepalese exports. It takes on averagethree to six months for Nepal to get clarification when confusing new rules are notified in India.130NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT