Trade Policy

2.1 To create a conducive environment for the promotion of trade in such goods will be promotion of trade and business in order to make supported. it competitive at international level.

2.2 To minimize trade deficit by increasing exports 3.2 Reducing trade deficit through export promotion. of value added products through linkages (a) Procedures of import will be simplified and between imports and exports trade. incentives will be provided for the import of raw

2.3 To increase income and employment materials and industrial machinery required by opportunities by increasing competitive ness of the export oriented industries. trade in goods and services and using it as a (b) Market access opportunities will be expanded for means of poverty alleviation . Nepalese products through utilization of windows

2.4 To clearly establish interrelationship between available under the bilateral, regional and internal and foreign trade, and develop them as multilateral trade agreements. complimentary and supplementary to each other. (c) Special economic zones will be established and expanded for export promotion with a view to 3. Main Strategies: attracting domestic and foreign investments.

3.1 Creating a conduciv e atmosphere for making trade 3.3 Increas ing income and employment opportunities. competitive at international level. (a) The trade development will be made inclusive, (a) The private sector will be facilitated to actively and employment opportunities to marginalized engage in the conduct of trade and the groups and deprived communities will be government will play the role of a guide, enhanced by developing the employment oriented guardian, regulator and motivator. skills and entrepreneurship in the commerce (b) Transaction costs will be reduced by facilitating sector. exports and imports through procedural (b) Emphasis will be given on the development and simplification, facilitation and in stitutional promotion of special thrust areas and industrial strengthening. clusters with a view to expanding market access -3- -4- to exportable products based on traditional skills , enhancing the supply of goods in the quantity and art and craftsmanship. quality in line with the demand of international (c) Emphasis will be given to increase income and markets. employment opportunities through promotion of 5. Laws relating to Anti-Dumping, Countervailing trade in services. and Safeguard will be formulated in order to protect domestic industries , in consistent with

3.4 Establishing interrelationship between domestic and the multilateral trading arrangement. foreign trade. 6. Foreign investors and non-resident Nepalese (a) Conducive environment will be created for nationals will be encouraged to establish allowing partial consumption within the country international production network through the of goods or services produced by export oriented means of out-sourcing and contract of services industries. and production with a view to harnessing (b) The goods or services produced for domestic benefits from the cost effective and qualitative consumption within the country will be production opportunities which are available in encouraged for exports. the country and to be developed in future. 4. Policy and Working Policies: 7. Exporters will be encouraged to open liaison office or sales counter abroad. Similarly foreign

4.1 Enhancing the role and professional capacity of importer companies will be encouraged to government and private sector entities. establish liaison office for promotion of Nepalese

4.1.1 Policy: service and goods. 1. The government will play the role of a guardian, 8. The implementation of the Competition Act will regulator and facilitator to make export trade be made effective, and timely amendments will competitive through commodity and regional be made in the Consumers Protection Act in diversification by bringing the private sector in order to protect rights and interests of consumers, the forefront. and to develop a fair competitive regime in 2. The fiscal and monetary policies , foreign national and international markets. Moreover, investment, industrial estate , tourism, agriculture, laws relating to domestic trade will be framed forest, and physical infrastructures policies will and enforced. be reviewed with a view to harmonizing them 9. Capacity of private, non-governmental and with the trade policy. research oriented organizations will be enhanced 3. The export base will be widened by maintaining for the export promotion of goods and services. forward, backward and parallel linkages among 4.1.2 Working Polic ies: the above mentioned sectoral policies. 1. Main exporters of Nepalese products abroad will 4. Efforts will be made for concluding bilateral and be rewarded by honor and award for the ir role on regional agreements for the recognition of expansion and promotion of export trade . Nepalese quality standards with a view to -5- -6- 2. The existing network of the government and of commodity associations, bilateral Chambers private sectors organizations as well as industrial and industrial entrepreneurs. and trade associations related directly or 10. P rivates sector, non-governmental organizations, indirectly with exports will be further experts and research oriented institutions will be strengthened to make export trade more involved in the process of trade policy competitive and effective. formulation. 3. Procedures will be framed and made transparent

4.2 Reducing transaction costs through proce dural and systematic regarding the body issuing of simplification and institutional strengthening certificate of origin , body making recommendation the related service charge and 4.2.1 Policy: its utilization, and monitoring body . 1. The duty draw back system will be made simple, 4. Policy, legal and procedural arrangements easy and speedy for the refund of tax and duty relating to trade cooperation will be reviewed and paid on the raw materials used in the production further strengthened for making them compatible of exportable goods. with the international trading system. 2. Collection, processing and dissemination of 5. Ministry of Foreign Affairs and Nepalese information required for trade promotion will be Missions abroad will be mobilized effectively in made effective through the introduction of various aspects of economic diplomacy, modern information system. investment potentiality and export promotion. 3. Uniformity shall be brought in the procedures, 6. Arrangements will be made to depute standards, policies, and regulations relating to Commercial Counsel ors to the Nepalese customs, transit transportation and standards Missions in the countries that are major importers certification to harmonize with the SAARC of Nepalese goods , and bear potentialities of member States and Nepal's trade partner enhancing trade with Nepal. countries. 7. Separate units for food, quality standard, 4. Services provided by the dry ports will be made agriculture, forest, archeology and other related effective to enhance the competitive capacity of infrastructures will be established at Customs for trade. providing services from those major Customs 5. Treaties/agreements will be concluded for using posts. appropriate transit routes after undertaking 8. Integrated services shall be provided on studies on physical infrastructures, multimodal administrative and technical matters to the transport system, transport facility and costs of private sector agencies under the coordination of alternative transit routes and seaports in transit Trade Promotion Institute for the facilitation of through neighboring countries for minimizing the exports. costs in Nepal's international trade. 9. Programmes will be launched for the capacity 6. Programmes will be implemented to adopt cost enhancement of the representative organizations effective measures at the production level, and to address the supply side constraints. -7- -8-

4.2.2 Working Policy: 7. Additional financial, human and other resources 1. Integrated customs system will be expanded in will be made available to the Trade Promotion coordination with the customs of neighboring Institute in order for facilitating the collection, countries for making customs clearance processing and distribution of market information procedures simplified and efficient. for export promotion. 2. Customs procedures will be simplified and made 8. All other goods except the goods of effective by following the custom s valuation archaeological and religious importance, system based on the international trading system. explosives, goods relating to environment and 3. System will be introduced for determining wildlife conservation, and goods prohibited by quality standards in accordance with the treaties and conventions to which Nepal is a prevailing internal and international practices for party, will be opened for expor t. maintaining quality standards of exportable 4.3 Developing policy, institutional and physical goods. Necessary ground works will be done for infrastructures relating to foreign trade the development of quality inspection,

4.3.1 Policy: certifications and monitoring, flow of information and human resources development in 1. A new law will be enacted to replace the existing order to make them at par with international Export Import Control Act in order to develop standards. exports as a foundation of economic growth. 2. Capacity of governmental agencies directly 4. Warehous ing facilities, flow of customs related information, and transportation and clearing and involved in the international trade will be enhanced. forwarding services will be expanded at border customs areas for making transit services 3. Up-grading of the existing infrastructures as well effective. as the construction of new infrastructures like dry ports, cold storage, container freight station and 5. Weighing machines, x-ray machines, laboratory, roads will be done to make them compatible with cold storage and computerized system of data the international standards. management will be provided at major land 4. Initiatives will be taken for the development and customs in border and international airport improvement of physical infrastructures for custom offices. realizing benefits from the overland trade with 6. Renewal of exporting firms, procedures relating the neighboring countries. to refund of customs duty on raw materials 5. Initiatives will be taken to include international imported by the export oriented industries, trade, regional trade treaties and agreements and customs duty draw back on the goods exported, their main provisions, export promotion and value added tax, provisions relating to extracting related subjects in the curriculum of commerce of sample s for export order will be made simple, and economics faculties in U niversities. export friendly, prompt, efficient and cost effective . -9- -10- 6. Assistance will be given for the organization and participation of the private sector with a view to participation in national and international trade promoting industries and foreign trade . fairs by ensuring the contribution of the private

4.4 Developing policy and institutional networks for the sector. protection of intellectual property rights and

4.3.2 Working Policy: promotion of export of services. 1. Capacity building of human resources both in the 4.4.1 Policy: government and private sectors will be ta ken up 1. Action plan will be prepared and implemented on WTO matters and the international trading for the protection of intellectual property rights regimes, particularly in the areas of Trade and expansion of trade in services. Related Aspects of Intellectual Property Rights 2. Legal provisions will be made for the protection (TRIPs), Sanitary and Phytosanitary (SPS) and of Nepali products in the international markets in international standards of goods and certification consonance with bilateral, regional and of quality st andards, and customs proce dures. multilateral trading agreements. 2. Studies will be carried out to link customs points

4.4.2 Working Polic y: of the North and South by railways and highways, and the existing north–south roads w ill 1. Diplomatic missions abroad will be activated to be improved and upgraded. serve as trade intelligence in order to increase the 3. Initiatives will be taken to advance the concept of access of goods and services in international growth quadrangle for creating transport network markets. of international standards linking India, Nepal, 2. Assistance w ill be given to the protection of Bangladesh and Bhutan in consultation with the intellectual property rights of major exportable stakeholders. goods in international markets. Initiatives will be 4. Physical infrastructures w ill be constructed at taken to establish rights relating to geographical major Custom border posts w ith the objective of indication of exportable goods such as developing Nepal as a transit point in the conduct handicrafts, tea, coffee, carpets, pashmina and of overland bilateral trade between India and honey under TRIPs. China. 3. Detailed working policies on various aspect of 5. Initiatives will be taken to improve management TRIPs will be formulated by a committee created of cargo complex at the Kathmandu International under the Ministry of Commerce and Supplies Airport, and increase frequency of flights of and with participation of the Ministry of Industr y, cargo planes. Ministry of Agriculture and Cooperatives, 6. Dry ports will be constructed at Nepalgunj, Ministry of Forests and Soil Conservation, Rasuwa, Tatopani and other feasible areas. Ministry of Science and Technology and 7. An exhibition centre of international standards Federation of Nepalese C hambers of Commerce will be constructed in Kathmandu with and Industries and their commodity associations. -11- -12- 4. Priority w ill be accorded to develop competent 7. The export credit guarantee scheme w ill be human resources in order to expand export of implemented in order to increase the flow of services and particularly trade in services under financial resources in exports. Mode 4 in accordance with provisions of the 8. Special measures will be adopte d in consultation World Trade Organization and Regional Trading with stakeholders , for stopping the activities like Agreements. lockouts and strikes in view of the sensitivity of 5. An autonomous body named as Trade Promotion export-oriented industries. Institute will be established along w ith its 9. Lands will be made available on leasehold basis requisite organizational structure in order to play for commercial farming of forest products, which an effective role in the development of exportable take longer gestation period of production. The goods and market promotion. The existing Trade products, among others, include; tea, coffee, and Export Promotion Centre w ill be merged fruits, herbs, eucalyptus (spice-tree), soap-nut within the Institute. (Sapindus Mukorossi) , and pricklyash 6. Intellectual property rights of Nepalese (Zanthoxylum armatum). traditional skills, craftsmanship, goods 4.5.2 Working Polic y: production processes and goods produced thereof 1. Product Development Fund will be established will be protected. with the participation of the private sector and

4.5 Providing additional incentives to export oriented cooperatives in order to provide support for industries. transportation and storage of handicrafts, herbs,

4.5.1 Policies: honey, tea, milk, fish, meat, vegetables and other semi-processed products. 1. Simple procedures will be adopted in the imports 2. Integrated Technical Centers will be established of raw materials, industrial machineries and in collaboration with the private sector for others required by the export oriented industries. improving quality standards, product 2. Programmes w ill be launched for enhancing the development and diversification of major production of raw materials within the country. exportable products. 3. Initiatives will be taken to harmonize the policies 3. Bonded warehouse facility will be made on agriculture, forest and other sectors for the available against a bank guarantee on the import effectiv e implementation of trade policy. of raw materials, auxiliary raw materials, 4. The primary goods being exported without packaging materials and intermediary goods used processing will be encouraged for exports with in the production of export products. value addition. 4. Taxes and duty levied on raw materials or 5. The customs duty, excise duty and value added auxiliary raw materials imported or purchased tax, except the export service fees, will not be locally by the export orie nted industries will be levied in expor ts. refunded to the exporters on the basis of the 6. Private and cooperative sectors will be quantity of export. encouraged to establish export promotion houses. -13- -14- 5. Establishment and operation of export trading 2. Joint collaboration will be made with other houses in the form of a cooperative association or countries having the similar trade interest for private company will be encouraged. While utilizing opportunities offered by bilateral, establishing such export trading houses special regional and multilateral trade treaties / consideration will be given to maintain regional agreements. balance. 3. Initiatives w ill be taken for the optimum 6. The value added tax and excise duty will be utilization of the facilities provided by the refunded to the company producing goods , which bilateral, regional and multilateral trade treaties/ are purchased under a contract by export oriented agreements to the least developed specially land industries from local industries, on the basis of locked country. exported quantity after exporting the goods. 4.6.2 Working Polic ies: 7. Product Development P rogrammes w ill be 1. A permanent 'Trade Policy Analytical Wing' will launched to increase exports of major export be established with the involvement of private commodities like readymade garments, carpets and government sector representatives and and handicrafts. Similarly, programs will be experts with the objective to refine policy launched to increase exports of tea, coffee, measures to be adopted by Nepal in the context vegetable seeds, herbs, agriculture and dairy and of direction of international trade, current non-timber forest products. In addition, special situation and future direction. programmes will be launched to identify and promote additional new exportable products. 2. Trade Promotion Institute w ill be developed as a 8. No fees of any type will be levied on the resource centre of international trade to generate flow of information relating to challenge s and transportation within the country of exportable goods and raw materials used in their production. opportunit ies created by bilateral, regional and multilateral trade treaties/agreements and to the ir

4.6 Market expansion through utilization of provisions. opportunities available under bilateral, regional and

4.7 Establishing Special Economic Zones for export multilateral trade promotions promotion

4.6.1 Policy:

4.7.1 Policies: 1. Initiatives w ill be taken to enter into agreement 1. Export process ing and special economic zones, on Free Trade Area with countries including along with requisite physical infrastructures, will United States of America and European Union be established to promote exports. that possess comparatively more trade prospects , and other regional trade organizations for 2. Laws along with flexible labor policy will be expanding access to international markets for formulated for providing additional facilities and Nepal’s exports. privilege s to the industries established in special economic zones. -15- -16-

4.7.2 Working Policies: creation of income and employment opportunities 1. Special Economic Zones will be established close in trade sector. to the existing dry ports to increase productivity 2. Programmes will be launched to increase export and competitive capacity of exportable goods. and employment opportunities through enhanced 2. Private sector w ill be encouraged to establish competitive capacity of major exportable ancillary industries capable of making available products. raw and semi-processed goods to the export 4.8.2 Working Policies: oriented industries located in the vicinit y of the 1. Export Promotion Fund will be utilized in export process ing zone at Bhairahawa and the adopting new technologies and improving proposed special economic zone at Birgunj. production processes in industries producing 3. Initiatives will be taken to use the under-utilized exportable goods based on domestic raw industrial zones of Rajbiraj, Butwal and materials. Nepalgunj in the form of product-specific special 2. Assistance w ill be provided to the packaging, economic zones. storing and certification of agricultural products 4. Studies will be undertaken for establishing for ma king their production and processing special economic zone s in the potential places of compatible to international demand by utilizing Northern and Southern parts of the country in the opportunities for diversification in agricultural context of developing Nepal as a transit point. production. 5. An integrated directive will be implemented in 3. Contract farming and cooperative farming system special economic zones with regard to the will be encouraged by attracting investments in provisions and requirement of import, processing, exportable agricultural product to promote large value addition, export, domestic sales , tax and scale production and market through commercial duties. farming. 6. Assistance will be extended to enhance trading 4. Entrepreneurship and skill development training capacity of the agencies which are incorporated programmes will be conducted with participation as Board and Committee for the commodity of private sector f or promotion of exports. development programmes. 5. Joint collaboration will be made with academic

4.8 Developing employment oriented skills and institutions for prepar ing skilled and competent entrepreneurship in trade sector human resources in foreign trade sector.

4.8.1 Policies: 4.9 Increasing income and employment opportunities 1. Emphasis will be given on entrepreneurship through promotion of trade in services development, employment oriented skills and 4.9.1 Policies: managerial capacity enhancement for improving 1. Promotional programmes will be launched after the living standards of the people through identifying thrust areas of trade in services. -17- -18- 2. Procedural simplification will be made through Support w ill be provided for improving the creation of institutional mechanism for making quality of such handicrafts. trade in services easy, simple and effective . 2. Formation of cooperative organizations or export 3. Private sector will be encouraged to play a lead trading houses in collaboration with the Local role in trade in services. Bodies will be encouraged.

4.9.2 Working Policies: 4.10.2 Working Polices: 1. Service sectors such as tourism, education and 1. Assistance will be provided for capacity health and information technology will be enhancement , product development, quality developed and promoted as the special thrust improvement and marketing of established area. industrial clusters. 2. Coordination will be maintained with the sectoral 2. Emphasis will be given on the promotion of agencies for promoting special service thrust agricultura l and non-timber forest based special areas. thrust areas for creating employment and income 3. Special thrust areas will be reviewed in order to opportunities in rural areas. No local tax and fees capacitate for providing services according to the will be levied on the transportation of the goods market demand. produced in such areas. 4. A separate 'Service Trade Promotion Council' 3. Export trading houses will be encouraged to will be constituted with the participation of increase the sales of handicrafts to tourists, and private sector and under Ministry of Commerce permanent exhibition cum sales counters will be and Supplies for promoting trade in services. The established through Tourism Development Board Council will play the role of a facilitator and in major cities of tourists’ destination. motivator for promotion of trade in services. 4. Local bodies, cooperative organizations and 5. The existing laws w ill be reviewed and new laws export trading houses will be involved in the will be made, as required through the concerned management and operation of industrial clusters. Ministries for promotion of trade in services. 5. Cooperative organizations will be encouraged in 6. Domestic and external resources will be the exports of agricultural and forest based mobilized as may be necessary to encourage the products, cottage industry products , industrial private sector in the promotion of trade in goods and herbal products. service s sector.

4.11 Promoting identification, selection, production and

4.10 Developing special thrust areas trading of new exportable goods of comparative

4.10.1 Policies: advantage 1. Special thrust areas will be identified and 4.11.1 Policies: developed, particularly in the handicraft sector 1. Integrated program will be implemented for that will be based on local skills, craftsmanship identification, selection, and production as well and with the involvement of Local Bodies. -19- -20- as for access to international markets of the 2. Industries established in the export processing goods of comparative advantage. zone will be allow ed to sell specified quantity of 2. Expansion in the production capacity and quality their products in the domestic market. improvement of the export oriented goods will be 3. Government agencies will be encouraged to encouraged. increase utilization of the domestic goods.

4.11.2 Working Policies: 4.13 Encouraging exports of goods or services produced 1. Assistance will be extended to make available for domestic consumption by expanding their skills, capital and technology necessary for production increas ing production capacity and improving 4.13.1 Policies and working Policies: quality of exportable goods. 1. Improve ment in production, productivity and 2. Export Promotion Fund will be used w ith the quality of the goods or services produced in the participation of private sector in assisting the country will be encouraged. transportation of exportable agricultural products , 2. Potential markets will be identified for forest based products, handicrafts and goods encouraging exports of good or services. based on domestic raw materials to international 3. Emphasis will be given on the development of market from the place of production. transportation and related infrastructures for 3. Emphasis will be given on the commercial facilitating the making market access. farming, livestock and promotion of non-timber forest products through the supplies of irrigation, 5. Institutional Arrangement machinery, fertilizer, seeds and highbred animals and poultry birds. 5.1 Board of Trade 4. Value chain, cost effectiveness and quality 5.1.1 A Board of Trade will be constituted at the central level control of exportable products will be improved. with participation of the private sector to provide 5. The capacity of the existing institutions will be necessary assistance in the policy formulation for trade enhanced for identifying and promoting new promotion, trade facilitation, policy monitoring and exportable products to meet the demands of inter-agency coordination as follows: international markets.

4.12 Linking export oriented industries with domestic Minister/Minister of State for Commerce Chairperson markets Assistant Minister for Commerce Member

4.12.1 Policie s and working Policies: Member, National Planning Commission Member 1. Export oriented industries will be developed on (Trade) sustainable basis through creation of an environment in which parts of their products and Governor, Nepal Rastra Bank Member services produced for exports are consumed Secretary, Ministry of Commerce and Member domestically. Supplies -21- -22- Secretary, Ministry of Industr y Member 5.1. 2 The Board may invite any person or an expert to attend its meeting. The Government of Nepal may alter the Secretary, Ministry of Finance Member composition of members of the Board by a notification Secretary, Ministry of Tourism and Civil Member in the Nepal Gazette. The Board will meet at least once Aviation bi-monthly, and other procedures relating to its meetings will be as determined by the Board itself. Secretary, Ministry of Education Member 5.1. 3 Main functions of the Board will be to coordinate Secretary, Ministry of Health and Population Member implementation of the Trade Policy, and recommend to Chairperson, Federation of Nepalese Member the government on policy reforms and removal of Chambers of Commerce and Industries problems and difficulties with the implementation of the open and liberal trade policy. Chairperson, Nepal Chamber of Commerce Member 5.1.4 The Board will take decision to solve problems and Chairperson, Confederation of Nepalese Member difficulties in the conduct of export import trade. Industries 5.1.5 The Board will carry out other functions as may be Chairperson, National Industries Trade Member necessary for trade facilitation. Association 5.2 Trade Promotion Institute Chairperson of bilateral chamber of Member 5.2.1 The existing Trade and Export Promotion Centre will be commerce of the concerned country having converted into Trade Promotion Institute to function as highest volume of imports from Nepal an autonomous organization capa ble of providing services as per demands of the market. Executive Director, Trade Promotion Member Institute 5.2. 2 The Institute w ill carry out functions relating to study and research, export promotion, product development Two experts nominated from amongst the Member and human resource development in trade. professors or reader s having expertise in 5.2. 3 The Institute will work as a focal point in the collection, trade or balance of payment and engaged at processing, analysis and dissemination of trade data, and the level of Central Department of a internal and external information for trade promotion. University 5.2. 4 Business and professional associations of the private Four experts or personalities nominated by Member sector will be involved in the management and operation the Minster for Commerce from amongst the of the Institute. Resources will be mobilized from the persons involved in industrial and trade government and private sector for sustainable operation sectors of the Institute. Director General, Department of Commerce Member - 5.2.5 The Institute will also organize , and coordinate Secretary participation in trade fairs and exhibitions. -23- -24-

5.3 Special Economic Zo ne and Export Pro cessing Zone: 6.1.5 An Inter-modal Transport Authority will be established

5.3.1 Special economic zones and export processing zones, for regulating the operation and management of dry along with their requisite infrastructures, will be ports, container freight stations and integrated custom established for the promotion of export trade. points (ICP ) which have been, and will be established in Nepal.

5.3.2 A separate law will be formulated and enacted for the establishment and operation of the Zones. 6.2 Export processing and special economic zone

5.3.3 Private sector will be encouraged in the development, promotion programmes establishment and operation of special economic zone Feasibility study will be carried out with the involvement of and export processing zone. private sector for establishing export processing zones close to the currently constructed dry ports in order to make the export 6. Foreign Trade Promotion Programmes trade competitive. The following provisions w ill be made for the

6.1 Transit and logistics programmes: establishment of such zones : The following programmes will be launched in order to make 6.2.1 Industries desiring to export the specified proportion of export trade more competitive through minimization of their products will be permitted to establish at the export transaction costs: processing zone.

6.1.1 Laws relating to multimodal transport system will be 6.2.2 Priority will be accorded to establish carpet village, brought into immediate implementation for effective handicrafts village and garment processing zone (GPZ) operation of the established dry ports. at the export processing zone/ special economic zone.

6.1.2 The existing Nepal-India Rail Service A greement will be 6.2.3 Labor Act will be made flexible to promote industries reviewed and revised, and brought into effective established in the export processing zone s. implementation. Moreover, initiatives will be taken to 6.2.4 An integrated directive will be formulated and expand the rail service to other feasible places. implemented relating to import, processing, value

6.1.3 Additional module s will be brought into use after addition and exports at the export processing zone. expanding the information and communication

6.3 Publicity and promotion programmes technology adopted for strengthening the custom operation, and necessary trainings will be imparted to the 6.3.1 The existing National Inquiry Points relating to customs staff for its effective implementation. information dissemination and inquiry on SPS, Technical Barriers to Trade (TBT) and Trade in Services according

6.1.4 Access of exportable goods in international markets w ill to the provision of the World Trade Organization will be be increased by developing physical infrastructures and strengthened. The Ministry of Com merce and Supplies competent human resources necessary for the quality will coordinate such inquiry points. standards , inspection and certification and conformity assessment in accordance with provisions of bilateral, 6.3.2 Initiatives will be taken to acquire membership of ATA- regional and multilateral trading arrangements. CARNET with an objective to support the hassle free -25- -26- transportation of goods while participating in foreign 7.2.4 The import customs duty will be refunded if the goods trade fairs for export promotion. produced from the imported raw materials and auxiliary raw materials are exported. If the import is against a

6.4 Human resource development programme bank guarantee , the concerned customs office will be

6.4.1 Emphasis will be given to human resources development authorized to release the guarantee. for negotiating on product and market development, quality improvement and trade treaty/agreement in view 7. 3 Provisions relating to Generalize d System of of the need of effective participation in the bilateral, Preference (GSP) regional and multilateral trade treaties/ agreements. 7.3.1 Trade Promotion Institute will provide information to

6.4.2 Trainings will be imparted to persons of the government entrepreneur s about GSP facilities in a regular manner. sector and private sector agencies on international trade 7.3.2 Ministry of Commerce and Supplies will nominate the specially relating to TRIPS, SPS, TBT, customs agency for certifying GSP, procedures and service fees valuation and procedures. relating to export under GSP .

7.3.3 The amount received as GSP certification service fees 7. Simplification of Procedures. will be utilized for the development of export products,

7.1 Procedure s relating to licens ing quality improvement and export promotion.

7.1.1 No license w ill be required for importing through 7.3.4 Trade Promotion Institute will maintain records and banking channels except the goods that are prohibited for implement GSP schemes. import and are under quantitative restrictions. 7. 4 Provisions relating to certificat e of origin

7.1.2 Export of all goods other than those prohibited will be open. 7.4.1 Ministry of Commerce and Supplies will de signate the agenc y to issue the certificate of origin and the service

7.1.3 The Department of Commerce will issue licenses in case fees to be collected by the agency. of need of an export or import license.

7.4.2 The procedures for obtaining the certificates of origin 7. 2 Provisions relating to tax, customs duty and charges will be published by the Ministry of Commerce and

7.2.1 No local tax w ill be levied on transportation within the Supplies. country of export products , and raw materials and 7.4.3 The agency issuing the certificate of origin will utilize auxiliary raw materials used for their production. the amount collected for development and promotion of

7.2.2 No customs duty w ill be levied on the samples sent by expor table products. foreign buyers to Nepalese exporters for export order. 7.4.4 The agency as designated by the Ministry of Commerce

7.2.3 Provisions will be made not to levy customs duty and and Supplies will carry out monitor ing relating to VAT on export goods returned back due to non certificate of origin. accepta nce by a foreign buyer on the basis of 7.4.5 The agency issuing the certificate of origin will have to documentary evidences establishing that the goods were keep all relevant records, at least up to three years. The exported. nominated agency shall require submitting the trimester -27- -28- statement of such records to an agency designated by will be laid on the product development through Ministry of Commerce and Supplies. coordination with cottage and large domestic fabric industries that are in current operation. 8. Commodity development programme • Additional steps as may be necessary will be taken Commodity development programmes will be implemented into to establish Garment Processing Zone (GPZ) after two separate groups. In the first priority group, labor-intensive conducting feasibility study in order to increase goods, which are already established in export markets, will be competitive capacity of readymade garment developed as special focus area. Especially the readymade industries. garments, woolen carpets and handicrafts w ill come under this priority group. In the second group, priority will be accorded to • Promotional activities will be carried out in highly potential export items like agricultural, forest based and partnership with the private sector to harness handicraft products as the thrust area development. In this maximum benefits from trade opportunities created group,emphasis will be given on the export promotion of tea, by the open policy in international markets through vegetable seeds , herbs, ginger large cardamom etc. market diversification of readymade garments. • Steps being taken to obtain duty free access to such

8.1 Special Focus Area: major international markets where Nepalese exports

8.1.1 Readymade garments: have declined due to open trade regime after the • Programmes will be implemented in a phase-wise removal of quota system in 2005 will be further manner for the sustainable development of Nepali enhanced. fabric s, readymade garments and cotton towels in • The private sector w ill be encouraged to establish view of the situation emerged after the termination Fashion Technology Institute for creating competent of quota system under Multi Fiber Arrange ment, and human resources base necessary for the production promoting the competitiveness of Nepalese of value added readymade garments. products.

8.1.2 Carpets and woollen goods • National guidelines will be formulated and • Activities on branding and labeling of Nepalese implemented on the basis of recommendations made carpets will be carried forward for checking from a study for adopting a long-term strategy for downfall of export and maintaining the identification increasing exports of readymade garments and of Nepalese carpets in inte rnational market. cotton towels. • Bureau of Standard and Metrology will arrange the • Such policies and infrastructures as may be examination and certification scheme for labeling of necessary will be made available for establishing Nepalese carpets. Moreover, initiatives w ill be taken spinning and textile industries in the form of to ensure continuity to the duty free market access backward linkage s for sustainable development of currently available in major markets. readymade garments and cotton towels by taking into account also the GSP rules of origin. Emphasis • Study on the cost-benefit analysis will be carried out taking into consideration the price and demand -29- -30- competitiveness of carpets in international markets 8.1.3 Pashmina and silk products in order to adopt a concrete policy on the use of • The production of raw materials will be encouraged machine made yarns. to ensure permanent and long term supply of • The mandatory requirement of the documentary primary raw materials required to produce pashmina evidence of quality test of imported wools to be and silk goods. produced by the importer at the Customs will be • Local entrepreneurs will be encouraged through the continued for maintaining the quality of Nepalese support in capital and technology as may be carpets. necessary for the rearing of Himalayan goats • Pre-inspection of production and exports will be (Chyangra) for producing raw materials. made effective in order to make the quality of • Activities ranging from mulberry farming (Kimbu), Nepalese carpets reliable. the raw material of silk, to the production of fabrics • Any type of transshipment will be completely will be encouraged with special emphasis on silk discouraged by controlling imports of woollen produc tion through support to capital and carpets in order to maintain the images of Nepalese technology as may be necessary. carpets in the international markets which is being • Priority will be given to the quality testing and affected currently due to exports of foreign carpets registration of trade marks in major exporting in the name of Nepal origin. countries to maintain quality standards of the goods • Feasibility study will be carried out to implement an produced from pashmin a and silk. integrated programme for producing wools within • Pilot projects based on cooperatives and improved the country for the production of carpets and other technology will be implemented in potential rural woolen products with emphasis on production of areas under the supervision and surveillance of Tibetan type wools. technicians for the development of farming of • The quality labeling of carpets, child labor free Himalayan goats (Chyangra). certification and eco-labeling will be made effective • Exports will be encouraged by facilitating market for giving continuity to the export of qualitative access through conduct of promotional programmes carpets and its access to foreign markets. and development of competitive capacity. • Promotional programmes will be carried out in • Assistance will be given to develop human resources European, American and other potential markets for as may be necessary for production and exports of diversifying exports. silk and pashmina. • Assistance w ill be accorded to the development of • Backward and forward linkages of pashmina and competent human resources through establishment silk based products will be developed. of a carpet school with participation of the private sector for strengthening the institutional • The design center will be optimally utilized for the arrangements on carpet production process. diversification of pashmina and silk based production. -31- -32-

8.1.4 Handicraft goods • Archeological examination of handicraft products • Assistance will be given to develop, pashmina, will be made hassle free and simple in coordination woollen products, silver products, metal products with the concerned agencies. and handmade papers that are being exported in • Comprehensive programmes will be launched in large quantities. coordination with the Ministry of Forest and Soil • Program mes will be conducted under the aegis of Conservation and the Forest Product Development Federation of Handicraft Association of Nepal and Committee in consideration of the economic with the support of Government of Nepal for activities stemming from the production and research activities and trainings on product collection of Lokta used in the production of Nepali diversification, designing, quality development and paper products in ruralareas. market access of handicrafts. Moreover, Handicrafts 8.2 Thrust Area Development: Design and Development Centre will be developed Coordination will be established among the concerned agencies as an institute in providing services on designing. of the government and private sectors for improving the • The payment system in handicrafts export will be competitive capacity by increasing the production of highly made simple by reviewing exports against the export potential agricultural products as emphasized under the advance payment and letter of credit (L/C). Special thrust area development. As stated in the specific objective of provisions will be made to allow imports of samples, the Trade Policy, the target will be the development of and purchases under buy back L/C and exports agricultural products under the thrust area through improvement under buy-back arrangement. in the value addition with the utilization of local resources for • Exports of handicrafts other than those exported transmitting the benefits of exports to the reach of farmers. As under the letter of credit will be allowed on the basis the Agricultural Perspective Plan and Periodic Plan of the documents against payment. implemented by the government have accepted agriculture as a • Provisions will be made to refund duty based on a priority sector of the economy and given its role in poverty flat rate specified in proportion to the export value alleviation, the trade policy accordingly aims at promoting for making the duty draw back practical and exports of agricultural products in an integrated fashion. In effective. particular, programs will be implemented for the commercialization of the farming of tea, vegetable seeds , large • All agencies issuing certification and cardamom, ginger and herbs that possess comparative recommendations required for exporting handicrafts advantage. Efforts will also be made to widen market access will be brought at one place to simplify the facilities for the other products the export of which has procedures. continuously increased. • All government agencies like customs house,

8.2.1 Tea Department of Archeology, security police and others will be pooled at one place to facilitate one- • Nepalese tea will be established as a major time customs inspection and sealing. exportable product in the prospective of the -33- -34- geographical diversity, climatic suitability and • Transportation costs will be reduced by constructing comparative advantage . feeder/rural roads between tea gardens and • Intergraded programme will be formulated in production centers. coordination with Ministry of Agriculture and 8.2.2 Vegetable s seeds Cooperatives , Tea Development Board and other • Opportunit ies of produc ing and exporting vegetable agencies concerned for developing Eastern region of seeds arising out of the geographical and Nepal as tea area in order to increase the production environmental diversity will be utilized with capacity and quality of tea. participation of the private sector. • Contract farming and establishment of tea estates will be encouraged for the enhancement of • Seeds production will be expanded to neighboring districts after the marketing and commercialization economies of scale and bringing continuity and of the foundation seeds producing areas like Rukum, reliability in the production in consideration of the Salyan, Jumla, Kalikot and Nuwakot. international demand. • The private sector will be given assistance to • Incentives will be given to the production and regularly participate in agricultural fair s organized in promotion of Orthodox tea and C.T.C. tea Bangladesh which has emerged as a major market considering their different market demands . for Nepali vegetable seeds, and in other potential • Promotional programs will be launched, particularly markets of the M iddle East Asia, Japan and India. in Japan, France and Germany for orthodox tea and, • Initiatives will be taken in cooperation with the on the other, steps will be taken for expanding concerned agencies for maintaining coordination markets for C.T.C . tea in Pakistan, India and between production and exports with due regard to markets in the Middle East countries. the seeds quality, improved variety and varietals • The existing tea development fund will be made purity of Radish (Minorli Mula), or Cress leaves more effective for promoting investments that will (Lepidium sativum), broad leaf mustard, and beans benefit from the economie s of scale in raising tea that are being exported from Nepal. production. Ste ps will be taken to divert the fund in • Incentives will be provided in the agricultural inputs the international marketing of tea. including packaging materials required for seeds • Steps will be taken to implement promotional production and exports. Moreover , imports of programs suitable to international markets in qualitative seeds will be encouraged. partnership with private and donor agencies by motivating small tea farmers and producers. 8.2.3 Large Cardamom • Quality control test ing and certification of tea will • Assistance will be given in availing capital and be streamlined by taking consideration of the technolo gy for extending cardamom production on demand of international consumers and prevailing the basis of feasibility study. laws. -35- -36- • Exports will be promoted through product-wise and • P roduction will be encouraged for the development country-wise diversification by maintaining the floriculture business through identification of quality standards through improvements in the appropriate variety of flower s. production and processing on the basis of national • Assistance will be provided for the market study, standards of quality and grading. promotion, packaging and transportation for • Assistance will be given in cooperation with facilitating access to international markets. Nepalese diplomatic missions abroad to publicize • Certification system of quality standards will be about the Nepalese cardamom in the potential adopted in accordance with the international practice markets. for the purpose of enhancing reliability on the • Value addition opportunities will be identified and quality of flowers. encouraged. • Facilities of air conditioned transportation system

8.2.4 Pulses: and cold storage at the airport will be made available to facilitate the exports. • Special programmes for the development of pulses crops will be launched through Ministry of 8.2.6 Precious/semi-precious gems and stones, and gold Agriculture and Cooperatives to increase production and sliver ornaments and productivity by providing support for improved • Imports of raw materials required for producing seeds and developed production technology. ornaments will be made simple and duty free by • Technical services, trainings, seeds and other inputs adopting a separate special policy for the production, as may be necessary will be made available in development and export promotion of precious and cooperation with the concerned service oriented semi-precious gems and stones, and gold and sliver organizations for the development of pulses crops to ornaments. meet the production and export targets. • The production, import -export and re-export of • Efforts w ill be made to strengthen the SPS ornaments made of precious metal, gems and stones laboratories and get international recognition and will be facilitated by encouraging mining extractions accreditation. of precious and semi-precious gems and stones. • SPS certification will be made effective in order to • Tax and customs duty will be waived on the import develop competitive capacity of the products. of machinery and tools necessary for industries produc ing and exporting precious and semi precious

8.2.5 Floriculture stones and ornaments. • Floriculture business will be developed through • Production of ornaments will be encouraged by provisions of seedlings, capital, technology and targeting particular markets. trainings as may be necessary to produce exportable flowers and also by maintain ing coordination • Additional promotional activities will be carried out between production and market demand. for availing export opportunities through provisions -37- -38- of capital necessary for producing and maintaining • Trainings will be provided in various aspects sufficient stock of various types of gems and stones, ranging from production to sales promotion for the and gold and sliver ornaments. commercial and improved farming. • Trainings will be given to craftsmen of gold and • Assistance will be given to the processing and sliver ornaments to enhance their skill. transportation of the ginger based exportable

8.2.7 Processed leather products. • Capital and technical assistance will be made 8.2.9 Herbs and essential oils available for the commercial farming of livestocks to • Testing and certification services will be made ensure supply of qualitative raw hides and skins . available by developing fully equipped testing • Export of processed leather and leather goods will laboratories in herbs production and processing, and be encouraged. efforts will be made to acquire international recognition in testing technology. • Assistance will be given on the import of machinery and technology for manufacturing the fully • Capital, technology and trainings will be made processed leather. available for production, grading, storage and collection of high value herbs and essential oils • Effective market promotion programmes will be required for the development of their commercial conducted for access to international markets. farmin g. • Foreign investment s will be encouraged in leather • Value addition in the production of herbs based processing. processed and semi-processed exportable products • Loans on concessional interest rates will be made will be encouraged. available to import machinery and equipment. • Market research and promotional programs will be • Common Facility Centre will be established for the conducted to encourage exports of herbs and herbal full processing of semi-processed leather. products.

8.2.8 Gingers/dried gingers • P roduction will be encouraged through the • Capital, technology and seeds will be made available cooperatives by according priority to the identified in cooperation with the concerned agency by pocket areas for herbs production. identifying pocket area for the production of 8.2.10 Handmade paper and paper products appropriate species of ginger for enhancing the • Supply of raw materials will be expanded through quality of dry ginger. conservation and organized production of Lokta, a • Markets shall be ensured for gingers. wood pulp, for developing quality standards and • Certification system and promotional programs will increasing supply capacity of handmade paper and be launched for access to international markets by paper products. diversif ying production. -39- -40- • Capital, technology and trainings necessary to 8.2.12 Coffee produce Lokta and Nepalese papers will be made • Exports will be promoted through the adoption of available. new technologies in the production, processing, • Assistance will be given for the improvement of grading and quality standards of highland and production technology of Lokta paper. organic coffee , and additional areas will be • Promotional programs will be carried out to identified for increasing coffee production. diversify products based on handmade paper , and • P roduction will be encouraged in the community maximize utilization of the design centre and market through cooperatives. opportunities. • Supply of high quality seedlings and other necessary

8.2.11 Wooden craft products inputs w ill be ensured to attract farmers in the production of qualitative coffee. • Assistance will be given to facilitate wood seasoning and ensure regular supply of wood for the 8.2.13 Honey production of qualitative wooden craft produc ts as • Quality standards will be ensured by developing per the international demand. laboratories of international recognition to maintain • Promotional programs will be conducted through reliability of honey. research, training, product development and export • Effective inspection and monitoring of bee farming capacity expansion for produc ing wooden craft and honey production w ill be carried out to maintain products. the quality. • Tax and customs duty will be exempted on the • Honey production will be diversified by encouraging import of machinery and equipment necessary to production of Nepalese special honey particularly produce exportable wooden craft products, and based on mustard and rapeseed flowers. regular supply of electricity will be ensured and • Packaging system will be improved, and imports of necessary infrastructures will be developed for facilitation of production. machinery and equipment required for processing exportable honey will be exempted from tax and • Incentives and concessions will be provided in the custom s duty. export of the wooden craft products. • Honey producers will be assisted through support of • Programs will be conducted to improve the quality capital and technology and appropriate of wooden craft products through trainings to the infrastructures to promote production of exportable entrepreneurs. organic honey. • Handicraft Design Centre will be encouraged in • Promotional measures will be pursued at the developing new products based on wooden crafts. identified honey importing nations. • Fumigation treatment facility will be established to facilitate exports of wooden crafts. -41- -42-

8.2.14 Oranges (Junar) • Foreign importers will be encouraged to produce • Trainings will be impa rted to farmers for skill vegetables in Nepal for exports through the means of development, and provisions will be made for supply chain. developing infrastructures on quality standards, 9. Repeal packaging and storage for exportable orange The Trade Policy 1992 is hereby repealed. products. • Technology will be improved in packaging of exportable oranges, and subsidy will be given on lll transportation costs. • National standardization and grading system will be introduced for giving commercial identity to Nepalese oranges. • Efforts will be made for ensuring market access through identif ication of niche markets. • Infrastructures will be developed in oranges growing area, and information will be disseminated to farmers on marketing and sales promotion. • Seeds , inputs and technology required for the production of improved variety of oranges will be made available.

8.2.15 Vegetable s • Production of organic, fresh and dried vegetables will be encouraged. • Cold storage w ill be constructed at major customs stations for the export promotion of vegetables. • Arrangement s will be made for the movement of reefer containers at the B irgunj dry port to maintain cold chain. • A mechanism will be developed to issue inspection certificates for the vegetable s, and the areas for production of organic vegetables will be identified and promoted. -43- -44-