KATHMANDU, May 31: Nepal´s endeavors to expand its trade with Bangladesh, the second largest trading partner in the region, by having Bangladesh provide duty concessions on primary goods, faced a setback after Bangladesh sought to shorten the list of commodities for such a facility.
The Nepali government had forwarded a list of 140 groups of commodities to Bangladesh, mainly seeking a zero-tariff facility on major agricultural items, and duty concessions on others.
Bangladesh sought a shorter list, mainly after Nepal, referring to a restrictive provision of its bilateral trade treaty with India, said that it would not provide duty concessions on manufacturing goods, as Bangladesh had sought.
Nepal´s going with the trade treaty that it has with India means that Nepal cannot pledge a facility to other trading partner that it has not given to India. And Nepal has not given a concessional entry facility to Indian manufactured goods.
During the bilateral trade talks held at the joint secretary level on Friday in Dhaka, the Nepali team instead sought Bangladesh´s consensus that Nepal could pledge duty concessions on agricultural produces, on a reciprocal basis. “We have asked Bangladesh to start that preferential trade arrangement, at least for some primary goods,” said a member of Nepali team for the talks.
Bangladesh currently imposes customs duty of up to 40 per cent on Nepali agricultural products. Nepal had pushed for the duty concessions because the high duty structure has largely deterred it from increasing exports to Bangladesh.
Despite the geographical proximity between the two countries, the annual bilateral trade volume between Nepal and Bangladesh remains very low. In 2007/08, Nepal-Bangladesh trade was valued at Rs 5.15 billion, and that volume represented barely 10 percent of the total trade that Nepal conducts in the South Asian region. Agricultural produces like yellow lentils, wheat products, rice, fruits and vegetables make the largest portion of Nepali exports to Bangladesh, while it imports commodities like fertilizers, homeopathic medicines, raw materials for garments and jute industries, and cutlery, among others, from Bangladesh.
During the talks, Bangladesh also refused Nepal´s call to allow Nepali cargo-ferrying vehicles to ferry their goods to major industrial cities and markets in Bangladesh. Instead, Bangladesh suggested that Nepal move the cargoes to and from the dry port it has built in Banglabandh, along the Indo-Bangladeshi border.
Presently, Nepali vehicles are allowed to move up to a dry port in Banglabandh, but because of the poor coordination at the Indo-Bangladeshi customs, Nepal has seriously lagged behind in making use of this facility.
Nonetheless, to smooth the vehicular movements along the erratic Kakarbhitta-Fulbari-Banglabandh transit corridor, Bangladesh proposed that the two sides hold tripartite talks with India. The two sides have finalized various modalities for operating cargo vehicles between the countries, the source told myrepublica.com.
The two sides have also agreed to hold further talks on unsettled issues during the Secretary-level talks later this year. “The talks could be held in the first week of October 2009,” stated the source.