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Nepal Govt to negotiate with India on BIPA

Kathmandu Post, Nepal

27 August 2003

Govt to negotiate with India on BIPA

Post Report

KATHMANDU, Aug 26 ; The government has finally announced to commence negotiations on long-unheeded Bilateral Investment Protection Agreement (BIPA) with India, which the southern neighbour had been pressing for the last five years.

"For the first round of negotiations two sides have decided to meet in the Indian capital, New Delhi on September 2 and 3," Dinesh Chandra Pyakuryal, Secretary at Ministry of Industry, Commerce and Supplies (MoICS) told The Kathmandu Post.

Lila Mani Paudel, Joint Secretary of the ministry would lead the Nepali negotiation team that would leave for India on September 1.

India, the largest foreign investor to Nepal, has been asking the government to enter investment protection agreement since mid 90s to create more predictable investment environment in the country. Moreover, the issue gained height when Maoists attacked Colgate Palmolive and Nepal Lever Limited the two large Indian joint venture industries.

It had formally forwarded a proposal on the matter in 1998, to which the Nepali government agreed in principle to ink the agreement and commence negotiations in 2001. "But two countries had been basically focusing on other trade related matters since then to pick up the issue immediately," said senior government officials.

The issue was left unheeded due also to the arising of an issue on SAARC (South Asian Association for Regional Cooperation) Investment Protection Agreement then. The government had decided to first thrash out regional agreement framework on the matter and only pursue it at bilateral level.

But, India had been raising the issue in every negotiations and bilateral talks, to which Nepal had been adopting a policy to deal on it separately through independent negotiations.

"The two countries have already exchanged a preliminary draft of the agreement and the negotiations would be picked up from it," said Paudel.

He elaborated that the agreement would not go beyond the World Trade Organisation (WTO) principle. The agreement would basically incorporate provisions whereby the government would guarantee to prevent any encroachment on investment coming from India.

Also it would devise legal treatment to any possible damages on Indian investment projects and ensure redressing mechanisms. However, officials preferred not to disclose the Indian demands on the matter and Nepal’s promises mentioned in the exchanged drafts.

Nonetheless, Pyakuryal said that the Nepali team would urge for minimal state liability on the matter, while the Indian side’s effort, of course, would be to maximise it. "An outline to the redressing mechanism will be realised only when two side sits on the table," he added.

Officials further hinted that the Nepali team might urge for reciprocity on the matter from India as well. This reveals that the government is thinking in line to allow Nepali investors venture in India. So far, Nepali investors are barred from undertaking any investment projects outside the country.

The BIPA, however, is not a new concept in the country. Nepal has already signed such investment agreement with four countries including France, Mauritius, Germany and the United Kingdom. "Its impact had been no very positive on raising the investment from these countries though," added officials.