"If we want, we can enjoy the facility now. But we will push for the facility at the bilateral level because the offer excludes many items of our export interest," said a highly placed official at the Ministry of Commerce and Supplies (MoCS).
The offer forwarded ahead of Prime Minister Madhav Kumar Nepal´s visit to Beijing extends zero tariff facility for only 148 items among 497 items for which Nepal has sought the facility.
"Of the 438 items, 235 are ones which Nepal never exports," the source told myrepublica.com.
Given the fresh development, Nepal is going to request Beijing to extend the facility to all 497 items at the bilateral level.
Prime Minister Madhav Kumar Nepal left for his maiden China visit on Saturday. During the visit, he would also request Beijing to lower the value addition criteria for Nepal.
To enjoy the facility, China has said LDCs must meet the value addition criteria of 40 percent. However, Nepal has consistently told Beijing that Nepal´s exporters will simply fail to operate under this condition.
Referring to the country´s dependency on expensive imported raw materials and higher transit transportation costs, Nepal has been requesting China to lower the value addition criteria to 30 percent.
During the bilateral talks, PM Nepal would also share his concerns about the country´s ballooning trade gap with China and seek special support to fight the current cracks seen in the economy due to record high balance of payment deficit.
Currently, Nepal-China trade totals Rs 36 billion, with Nepal suffering a deficit of Rs 32 billion. In the last fiscal year, Nepal´s imports from China had valued at Rs 34 billion, while its exports to Tibet and mainland China is worth a meager Rs 2 billion.
Statistics further show that Nepal´s imports from China have fast jumped to 12 percent of country´s total imports. Exports to China, on the other hand, have dropped to less than 3 percent of the total exports.
Traders attribute Nepal´s dismal exports performance to higher customs duty levied on Nepali commodities in China and also due to sudden changes in customs and imports policies.
Nepal has been requesting China to extend zero tariff facility to address the growing trade gap since 2003.
Nepal exports food items, handicraft, incense sticks, vegetable ghee, biscuits, noodles, cosmetics, cement, iron rod, paints, refined wheat flour, rice, vegetables, fruits, processed meat, spices and jewelries, among others. It imports wool, electrical and electronic goods, clothes and textiles, shoes and a wide range of consumable goods from Tibet and mainland China.
Studies have shown that it is easier for China to acquire construction materials, food items and consumer goods from Nepal than through mainland. They even suggest that zero duty to Nepal will cost little to China, because it will make imports cheaper and reduce the subsidy burden the Chinese government shoulders.
milan@myrepublica.com
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