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Sarad Bikram Rana
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Presentation Layout2
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South Asia
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Nepal's Intra SAARC Trade
In Millions $Sl. No Import % Export % Total Trade%
Total 5,039 100 818 100.00 5,857 100.00Other than
SAARC2,148 42.63 214 26.15 2,362 40.33
SAARC 2,891 57.37 604 73.85 3,495 59.67India 2,874 57.04 535 65.47 3,410 58.22Bangladesh 10 0.20 45 5.54 56 0.95Bhutan 2 0.04 21 2.55 23 0.39Pakistan 4 0.07 1 0.13 5 0.08Sri Lanka 1 0.01 1 0.16 2 0.04
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Trade and Transit Treaties
• Trade Treaties–17 Countries
– SAARC: India, Bangladesh, Sri Lanka, Pakistan
• Transit Treaty– India
–Bangladesh
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• Article XII • Treaty of Trade mainly provides for;
– Reciprocal
arrangements
on
primary
and
agricultural commodities,
– Preferences
to
Nepalese
Manufactured
Articles
in
export to India.
– Rules of Origin Criteria.– Additional
Preferences
to
SSI
(Small
Scale
Industry)
Products
– 26 LCS + 1 Airport identified as trade corridors– Provision of Duty Refund Procedure (DRP) –
abolishment.
Treaty of Trade with India
Transit Treaty with India
• 12 Articles• Protocal to Article v
– lease conditions for dock berth, land and infrastructure to be provided for Nepal,
arrangement of customs clearance licence to be provided for Nepal, and condition for Warehouse
management etc.
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Transit treaty with India
• Protocal to Article VI– the mutually agreed road route (i.e. 15 routes)
connecting Kolkatta/Haldia with Nepal’s Border Stations, and to connect Indian rail head (Raxaul),
– Provision of force majeure situation, and
– Condition applicable for transportion of various types of cargo.
• Memorandum to Protocol– the import and export procedure applicable for
traffic‐in‐transit.
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Rail Service Agreement with India• Rail Service Agreement Signed in 2004
• Kolkatta/Haldia Ports and Birgunj, Nepal for transit traffic, and Birgunj via Raxaul for bilateral traffic
• 33 clauses specifying rule, regulation and operating modalities of railway movement, recruitment of ICD operator, Permission of rolling stock to be
interchanged etc.
• Anexure specifies the import and export procedure
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Transit Corridor: Kolkata Port• Road:
– Birgunj‐Kolkata Distance: 924 KM– Time required to cover the distance: 2 ‐
3 days (for cargo
vehicle).
– Road Status: Moderate
• Rail Movement– Birgunj ‐
Kolkata: 704 KM
– Time: 3 to 4 days, one way.
– Frequency: 22 rake per month
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Transit corridor: Phulbari (India)
• Road:– Kakarvita (Nepal) via Phulbari (India) to Banglaband
(Bangladesh) 55 KM
– Banglaband to Khulna: 713– Road Status: very congested.– Time to travel: 2 days (from Banglaband to Khulna)
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Transit Agreement with Bangladesh• 9 Articles• Protocol with reference to Article I specifies the
designated entry and exit points of the Bangladesh side for traffic‐in‐transit.
• Protocol with reference to Article IV specifies the administrative arrangement to make available for Nepal from the Bangladesh side.
• Protocol with reference to Article V specifies the import and export procedure for traffic‐in‐transit.
• Protocol to the transit Agreement will also apply to the movement of bilateral trade between Bangladesh and
Nepal. 13
Trade and Payments Agreement with Bangladesh• 11 Articles• Article II specifies the agreement of
extending MFN treatment in respect of – issues of licenses – customs formalities,
– customs duties and other taxes etc
• Article IV mentions the list of goods to be exchanged between two countries.
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Trade Agreement with Pakistan
• Article 13• The Contracting Parties shall grant each
other the MFN Treatment with respect to– customs duties and formalities, taxes, fees
and charges of any kind levied on export and import of goods and commodities between
two countries.
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Trade Agreement with Sri Lanka
• Article 12• The Contracting Parties agree to accord to each
other in their trade relation treatment no less favorable than that which is accorded to any
other country in respect of issuance of licenses, custom formalities, customs duties and taxes
and other charges for the import and export of goods and commodities.
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South Asia Free Trade Area
• Elimination of barriers to trade, facilitation of cross, border movement of goods, promotions of fair
competition in trade, and creation of mechanism for the implementation of the agreement and for the
resolution of disputes.
• Trade liberalization, programme, rules of origin, institutional arrangements, and consultations and,
dispute settlement procedures
• Time schedule for tariff elimination within a certain time period, there is also a clear provision for removing
all quantitative restrictions17
Documentary Requirement: Bilateral TradeMandatory Additional Total
Bangladesh 11 3 14
Bhutan 5 3 8
India 6 10 16
Pakistan 6 11 17
Nepal 7 5 12
Srilanka 8 13 21
Source: Annex to the Report of the 6th
meeting of the Sub‐group on Customs Cooperation, SAARC, 14‐15 January 2009
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Transit issues: Kolkata Corridors
• Transshipment of Cargo takes place at Singapore or Colombo.
• Limitation on vessels due to draft available at Kolkatta Port.
• No transshipment provisions from Kolkata Port to Nepalese Border point
• Clearance process is cumbersome and time consuming
• Inefficiency of the CONCOR for container movement.
• Poor rail network.• Limited working hour at Land Customs Stations (LCS)
• High detention charges likely to every consignment.
• Charges
for
Nepal
Handling
Container
to
costly
(next
slide)19
High transaction cost: Import
1 Delivery Order charges 4,963.502 Terminal Handling Charges (THC) 3,860.503 Washing/Maintenance Charges of Containers 1,500.004 Documentation charges 827.505 Lift on/Lift off charges 330.96 Survey Charges 551.507 Wharfages (Port Landing) 4,274.128 Shipping liner congestion charges 6,862.509 Final Delivery charge of vessel owner 2,206.00
10 Insurance charge (Customs) 275.0011 Shipping lIner Insurance Charges 493.0012 Container damage charges 5,000.0013 CHA's service charge 6,000.00
14Demurrage/Detention charges 223.45 daily ( for 14 days) US$ 700 Approx.
3,126.90
15Transportation charges ex Kolkata to Birgunj Nepal (THC and other charges
33,463.25
Total 73,734.67
S.N. Activities Charges involved for handling a TUE (IRs)
•1 US$ = 48 (approx.)•20 ft. containers with 20 MT. import shipment.•Cost is based from the vessel arrival to return of empty container to shipping lines yard.20
Transit issues ‐
Bangladesh
• Nepal and Bangladesh does not have boarder with each other
–Has to rely with Indian Corridors for transit traffic
• No railway connectivity from adjoining boarder of Nepal‐
India to India‐
Bangladesh–Has to rely with India when she laid down the
railway track. 21
• Procedure at Kakarvitta (Nepal) via Fulbari (India) to Banglaband (Bangladesh) is cumbersome;
– Process of escorting and convoying• Requires 25 truck/tailor• Charges of the escort
– Back to Back loading• Nepalese and Indian truck not allowed to cross the border at
Bangladeshi side and vice versa (Lifted recently)
– Labor Problem for Loading/unloading• Bangladeshi does not allow Indian labor to cross the border and vice
versa. In this case back to back loading has been initiated. In the case of bulk cargo, back to back loading is mostly unpractical.
Transit issues ‐
Bangladesh
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– No administrative provision at Bangladeshi side• Offices like immigration and other related authorities are lacking
– No infrastructural provision at Bangladeshi side:• No CFS to:
– store perishable, vegetable– store dairy product– and other break‐bulk cargo.
– No railway connectivity from border points to Port
– Highways• No dedicated freight corridor• Very congested
• Out of four agreed entry point only one entry point is in operation
Transit issues ‐
Bangladesh
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Way Forward• Treaty of Transit and RSA Revision,• Document & Procedure Simplification,
• Additional transit route and sea port.• Common Transit Declaration
• EDI use • Better Border Management
• Capacity Development of Port, Customs,
• Multimodal transport.
Thank You Thank You 24
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