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Downloads/Documents/Wg Med.Pdf Nepal Trade Integrati on Strategy 2010 Background Report Government of Nepal Ministry of Commerce and Supplies Kathmandu, June 2010 MoCS/GoN. 2010. Nepal Trade Integrati on Strategy 2010: Background Report. Kathmandu: Ministry of Commerce and Supplies, Government of Nepal. © 2010 Publishers Published by: Government of Nepal Ministry of Commerce and Supplies Singha Durbar Kathmandu Phone: 4211450 / 4211292 / 4411623 Fax: 977-1-4211167 Email: [email protected] Website: www.mocs.gov.np With the support of Department for Internati onal Development (DFID), Internati onal Finance Corporati on (IFC), Government of Finland, and Enhancing Nepal’s Trade Related Capacity Programme (ENTReC)/UNDP Edited by: Anil Shrestha Design and layout by: Mahesh Khadka, PagePerfect, Kathmandu Printed by: PagePerfect at Format Printi ng Press Government of Nepal Ministry of Commerce And Supplies SINGHA DURBAR KATHMANDU, NEPAL Foreword Poverty alleviati on and improvement in the living standard of people have remained prime agendas in the nati onal development plans of Nepal since they were fi rst launched in 1956. The development focus in the changing politi cal and social setti ngs relies on sustained and inclusive growth with wider parti cipati on of people from all segments of society. Export orientati on of various sectors is very important to drive the economy to export-led growth and reach out to the rural populati on for sharing the benefi ts of trade. Recognizing the role of trade in economic growth, the Government of Nepal (GoN) brought out a new trade policy in 2009, which aims at making export trade competi ti ve, pursuing, among others, the measures of product development, export promoti on, and trade facilitati on. Nepal’s exports growth remained below sati sfactory level last decade despite conti nued eff orts to harness benefi ts from the regional and multi lateral trading systems. Major exportable items have witnessed sharp decline, thereby steadily raising the trade defi cit. Politi cal instability and conti nued confl ict further eroded Nepal’s export performance during the period. A silver lining in the deteriorated export performances can be traced in the ongoing peace and consti tuti on-building process, which has unlocked prospects for building of New Nepal. However, to make it happen, the trade sector should get high priority on the country’s development agenda. Hence, addressing the ‘supply-side constraints’ is imperati ve for achieving the desired economic growth through export orientati on. It is perti nent to note that the study undertaken for developing Nepal Trade Integrati on Strategy (NTIS) will create a base for the removal of the constraints and seize the opportuniti es of trade liberalizati on and integrati on of the Nepalese economy at regional and multi lateral level. The NTIS 2010 is a follow-up to the earlier Nepal Trade and Competi ti veness Study 2004, as substanti al changes are taking place in the internati onal trading regimes and the country has faced new challenges to streamline its trading practi ces. The accession of Nepal to the multi lateral and regional trading systems during the mid 2000s has necessitated profound transformati on of the trade sector in order to benefi t from integrati on of the Nepalese trade and economy. The study charts out a course of acti on for the development of the country’s export sector over the next three to fi ve years, conti nued with capacity development acti ons and selected short- to medium-term prioriti es that are supporti ve of ‘inclusive growth’. I would like to thank the various insti tuti ons that put their sincere eff orts to bring out this strategic document. The United Nati ons Development Programme, the Government of Finland, the UK’s Department for Internati onal Development, the Internati onal Finance Corporati on, and the Internati onal Trade Centre deserve special appreciati on for their fi nancial and substanti ve support in the preparati on of the NTIS 2010. The private sector organizati ons and academia also deserve special appreciati on for their support and feedback during the preparati on of this strategy. I am also thankful to all NTIS contributors and all the offi cials of the GoN who were involved in its preparati on. Finally, I appreciate the hard work of my colleagues in this initi ati ve, parti cularly Mr. Chandra Kumar Ghimire, Joint Secretary, Mr. Jib Raj Koirala, Under Secretary, Mr. Hemlal Devkota, Secti on Offi cer, MoCS, and Mr. Shiv Raj Bhatt , Nati onal Programme Manager of the Enhancing Nepal’s Trade Related Capacity (ENTReC) Programme. The GoN expects acti ve parti cipati on of development partners, private sector organizati ons, and other stakeholders in the implementati on of this strategy. June 2010 (Purushott am Ojha) Secretary iii Table of Contents Foreword iii Abbreviati ons and Acronyms ix EIF Nati onal Steering Committ ee xi Agencies and Individuals Consulted xi Contributors xii Chapter 1 Trading Environment, Export Potenti als, and Att racti ve Markets 1 Chapter 2 Nineteen Export Potenti als: Detailed Sector Analyses 21 Chapter 3 Access to the Indian Market 127 Chapter 4 Access to the Chinese Market 137 Chapter 5 Investment Environment 147 Chapter 6 Trade Facilitati on 161 Chapter 7 Technical Standards 169 Chapter 8 Sanitary and Phytosanitary Standards 187 Chapter 9 Intellectual Property Protecti on 207 Chapter 10 Barriers to Service Trade 215 Chapter 11 Trade Support Insti tuti ons: Business Development Services for Trade Supply Capacity 227 Chapter 12 Managing Aid for Trade and TRTA to Implement NTIS 2010 239 Bibliography 253 Acti on Matrix Part I 257 Acti on Matrix Part II 267 Appendix 1 Methodology for Export Potenti al Assessment and Selecti on of 19 Sectors 293 Appendix 2 Market Att racti veness Index 297 Appendix 3 Updated Legislati ve Acti on Plan for SPS, January 2010 301 Appendix 4 Good Agricultural Practi ces, Food Safety and Quality Management Systems in the Context of Third Party Certi fi cati on of Nepalese Food Exports 302 Appendix 5 Malaysia GAP (Skim Amalam Ladang Baik Malaysia): A Possible Opti on for Nepal? 307 Appendix 6 GAP Requirements for Smallholder Farmers Organized in Producer Groups 308 Appendix 7 Good Agricultural Practi ces As Promoters of Yield and Sustainability 311 Appendix 8 NTIS Technical Committ ees 312 iv List of Tables Table 1.1 Balance of Payments, Current Accounts, 2002/03-2008/09, in US$ millions 5 Table 1.2 Main Nepalese Goods Exports, 2004-08, in US$1,000 by HS-2, HS-4 and HS-6 Codes 6 Table 1.3 Nepalese Goods Exports by Desti nati on, 2004 and 2008, in US$1,000 7 Table 1.4 Percentage of Nepali Households Receiving Remitt ances by Regions and Castes 8 Table 1.5 Number of HS-6 Products Exported and Average Number of Markets per Exported Products. Nepal Compared to Selected Countries, 2006 9 Table 1.6 19 Priority Export Potenti als 10 Table 1.7 Export Potenti al and Socio-Eeconomic Impact of 19 Products and Services 11 Table 1.8 Export Potenti al compared to Socio-Eeconomic Impact 19 Export Potenti al Goods and Services 12 Table 1.9 Impact of 19 Export Potenti als on Water and Electricity Resources 13 Table 1.10 Geographical Distributi on of Top 10 Att racti ve Markets and Tariff Advantage or Disadvantage in Att racti ve Markets for 12 Goods and 3 Service Export Potenti als 15 Table 1.11 10 Most Att racti ve Markets for 12 Goods and 4 Service Export Potenti als 16 Table 2.1 Export Value of Cardamom, 2005-2009 (US$1,000) 21 Table 2.2 Large Cardamom: Acreage, Producti on and Yield 24 Table 2.3 Att racti ve Markets for Cardamom 27 Table 2.4 Export Value of Ginger, 2005-2009 (US$1,000) 28 Table 2.5 Total World Export Value of Ginger, 2005-2009 (US$1,000) 29 Table 2.6 Ginger: Acreage, Producti on, and Yield 30 Table 2.7 Att racti ve Markets for Ginger 33 Table 2.8 Export Value of Honey, 2005-2009 (US$1,000) 34 Table 2.9 Total World Export Value of Honey 2005-2009 (US$1,000) 35 Table 2.10 Honey Producti on in Nepal 36 Table 2.11 Att racti ve Markets for Honey 39 Table 2.12 Export Value of Lenti ls, 2004-2008 (US$1,000) 40 Table 2.13 Total World Export Value of Lenti ls, 2005-2009 (US$1,000) 41 Table 2.14 Att racti ve Markets for Lenti ls 44 Table 2.15 Export Value of Tea, 2004-2008 (US$1,000) 45 ` Table 2.16 Total World Export Value of Tea, 2004-2008 (US$1,000) 47 v Table 2.17 Acreage and Producti on of Tea 48 Table 2.18 Att racti ve Markets for Tea 50 Table 2.19 Export Value of Instant Noodles, 2004-2008 (US$1,000) 51 Table 2.20 Total World Consumpti on of Instant Noodles, 2004-2008 (in million packs) 52 Table 2.21 Nepal’s Preferenti al Tariff s for Instant Noodles 53 Table 2.22 Att racti ve Markets for Instant Noodles 55 Table 2.23 Export Value of Medicinal Herbs and Essenti al Oils, 2005-2009 (US$1,000) 56 Table 2.24 Total World Export Value of Medicinal Herbs and Essenti al Oils, 2005-09 (US$1,000) 57 Table 2.25 Att racti ve Markets for Medicinal Herbs 60 Table 2.26 Att racti ve Markets for Essenti al Oils 61 Table 2.27 List of Commercially Available Medicinal and Aromati c Plants (MAPs) and Essenti al Oils in Nepal 61 Table 2.28 Export Value of Handmade Paper, 2005-2009 (US$1,000) 64 Table 2.29 Total World Export Value of Handmade Paper, 2005-2009 (US$1,000) 65 Table 2.30 Att racti ve Markets for Handmade Paper 68 Table 2.31 Export Value of Silver Jewelry, 2005-09 (US$1,000) 69 Table 2.32 Total World Export Value of Silver Jewelry 2005-09 (US$1,000) 70 Table 2.33 Att racti ve Markets for Silver Jewelry 72 Table 2.34 Export Value of Iron and Steel Products, 2004-2008 (US$1,000) 73 Table 2.35 Total World
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