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Bilateral FTAs emerge as Safta talks in limbo


Bilateral FTAs emerge as Safta talks in limbo


With the implementation of the South Asian Free Trade Agreement (Safta) remaining in limbo, Nepal has been negotiating with a number of South Asian countries to sign bilateral Free Trade Agreements (FTA).

According to officials at the Ministry of Commerce and Supplies (MoCS), Nepal has initiated inter-ministerial discussions with Pakistan about signing an FTA, after the latter presented a draft FTA at a meeting of the Nepal-Pakistan Joint Economic Commission held in August in Islamabad.

Similarly, there have been enhanced talks with Bangladesh regarding duty-free access for a number of products on a reciprocal basis. After Bangladesh agreed to provide duty-free access to 108 Nepali products, the MoCS also drew up a list of 62 Bangladeshi products for which Nepal can grant duty-free access.

“We are also holding informal talks with Bhutan to sign an FTA,” said Jibaraj Koirala, joint secretary at the MoCS.

Meanwhile, Safta has been collecting dust prompting South Asian countries to sign bilateral agreements to increase trade. Regional trade is disappointing, which is reflected in the fact that India accounts for 99.3 percent of Nepal’s imports and 93.1 percent of exports in South Asia.

Purusottam Ojha, former secretary at the MoCS, said that the lack of progress in Safta had led to countries in the region going for bilateral trade agreements. Although Safta is also a form of free trade agreement, Ojha said the implementation of Safta had been affected due to the large number of items on the negative list (on which duty is not reduced).

“While going for bilateral FTAs, countries could reduce the number of products on the negative list on a reciprocal basis,” he added.

An FTA with Pakistan is being considered against a backdrop of the minuscule trade between the two countries. According to the Trade and Export Promotion Centre (TEPC), Nepal’s exports and imports with Pakistan is just 0.3 percent and 0.1 percent compared to its entire trade with South Asian countries.

The MoCS has forwarded Pakistan’s FTA proposal to the Finance, Foreign, Industry and Agriculture ministries for their comments and approval.

Officials said that after the ministry receives feedback from the line ministries, it would begin discussions with the private sector and give the formal decision to the Pakistani government.

Rameshwor Pokharel, under-secretary at MoCS, said the Pakistani government had shown interest in extending investments in a number of areas including, tourism, health, energy, infrastructure and health. Ministry officials said that the Pakistani government had also asked Nepal to present a list of items to be enlisted under the duty-free agreement.

Meanwhile, former secretary Ojha said that poor transportation links between Nepal and Pakistan were the main hurdle in boosting bilateral trade.

Similarly, Nepal’s export and import trade with Bhutan stand at 0.6 percent and 0.1 percent of the entire trade in South Asia, according to the TEPC. Nepal’s export and import trade with Bangladesh stand at 4.9 percent and 0.5 percent of the regional trade volume.

 source: Kantipur