March 5, 2002	Tuesday	Zilhaj 20, 1422

KATHMANDU, March 4: Disregarding worldwide trends towards free and unrestricted trade, India has introduced restrictions on Nepali goods through a renewed treaty which takes effect on Wednesday (March 6). It is sure to result in a marked decline in Nepal’s exports.

The 1996 Treaty of Trade, renewed on Saturday in New Delhi by the officials of the two countries, has subjected four Nepali products to both quota restrictions and requirement to value addition of 25 per cent.

The products to be affected, which are described by India as “sensitive items”, are vegetable oil, acrylic yarn, copper products and zinc oxide. The new safeguard clause, for instance, has fixed export quota of vegetable oil (vanaspati) at 100,000 tons a year. Annual quota for acrylic yarn stands at 10 thousand , copper products at 7,500 and zinc oxide at 2,500 metric tons.

In addition to treaty-related restrictions, India’s budget announcement last Thursday levied a four-per cent additional customs duty on those four commodities.

These exports previously enjoyed unlimited duty-free access to the Indian market. But, despite six rounds of talks in as many months, Nepali trade delegation failed to secure India’s agreement to maintain initially-agreed status.

“Renewal of the treaty in this form has confined the possibility of Nepal’s industrial growth,” wrote The Rising Nepal newspaper on Sunday. Inclusion of quota system is against the norms of the World Trade Organization, the newspaper quoted an economist as saying.

India’s contention that recent surge in the exports of these four Nepali products has affected that country’s industries is highly unrealistic in view of Nepal’s small industrial base, business analysts said. Saturday’s agreement, they viewed, would further widen Nepal’s trade imbalance with India.

India is frequently criticized for its policy to make Nepal a captive market for its low-quality merchandise.

An Indian embassy press note, however, claimed that introduction of quota and value addition systems was meant to provide a “strong impetus to industrial growth and economic development in Nepal.” An embassy official explained that restrictive measures were meant to check unscrupulous elements, who harm those making genuine efforts towards Nepal’s industrialization process.