Discussion notes on
Trade Facilitation
Nepal’s perspective
Compiled by
-Bishnu Pandey
• Not a very new phenomena
• TF very much part of the agenda of many
international and regional organizations
World Bank
APEC and so on
Defining TF
• Des not have a commonly accepted standard
• WTO defines as ‘The simplification and harmonization of international
trade procedures where trade procedures are the
activities, practices and formalities involved in
collecting, presenting, communicating and processing
data required for the movement of goods in
international trade’ .
Defining …
• United Nations Centre for Trade Facilitation and
Electronic Business (UN/CEFACT), defines trade
facilitation as ‘the simplification, standardization and
harmonization of procedures and associated information
flows required to move goods from seller to buyer and
to make payment’.
• OECD defines trade facilitation as “simplification and
standardisation of procedures and associated
information flows required to move goods
internationally from seller to buyer and to pass
payments in the other direction”
Defining ….
• Occasionally, the term ‘trade facilitation’ is also used
more literally, and is extended to mean the
improvement of transport infrastructure (that is,
transport facilitation), removal of government
corruption, reduction of customs tariffs, removal of
inverted tariffs, resolution of non-tariff trade
barriers, export marketing and export promotion.
• Three main components –
– Simplification of procedures,
– Harmonization of laws & regulations,
– Standardization of means
Defining ..
• Simplification - the process of eliminating all
unnecessary elements and duplications in
formalities, process and procedures
• Harmonization - alignment of national formalities,
procedures, operations and documents with
international conventions, standards and practices
• standardization - process of developing
internationally agreed formats for practices and
procedures, documents, information and other
TF Objectives
• To improve the trade environment and reduce or
eliminate any transaction cost between business and
• To make the transactions easier, quicker and more
economical than before
• To enable trading activities to be carried out with
minimum efforts and costs
• Initiated by Singapore Ministerial 1996 - one of four
focused areas (trade facilitation, trade and competition,
trade and investment, and transparency in government
• Doha Ministerial recognized the case for further
expediting the movement, release and clearance of goods,
including the goods in transit and the need of TACB
• General Council decision on 1 August (July Package) –
Modalities of Negotiation (Annex D) (only TF was taken
• Hong Kong Ministerial – reaffirmed the mandate and
modalities adopted by July Package
WTO negotiation
Negotiations based on three GATT Articles
• Article V – Freedom of Transit
• Article VIII – Fees and formalities connected
with importation and exportation
• Article X – Publication and Administration of
Trade Regulations
Nepal’s context: Measures undertaken
to FacilitateTrade Sector
• Customs Related:
Adoption of Harmonized Customs Codes
Tariff Structure Rationalized (Lowered & Slabs reduced)
Implementation of Automation (ASYCUDA) in 9 major Customs
Container Sealing Facility introduced
Gradual Phasing out of ODCs
• Import/Export Related:
Abolition of Quantitative Restrictions and NTB on imports
Elimination of Export Import Licensing
Bonded Warehouse & Duty Drawback Scheme
One Spot Export Clearing House in Kathmandu
Current Account Convertibility
Market determined Exchange Rate
Measures undertaken to …
• Trade Related Agreements:
Bilateral Trade Agreements with 17 Trade Partners
Transit Facilitation Agreement with India and Bangladesh
Accession to WTO, SAFTA, BIMSTEC
SAARC agreement on Mutual Administrative Assistance in
Customs Matters
South Asian Sub-regional Economic Cooperation on Trade
• Trade Related Physical Infrastructures
Operationalization of Rail Connected Inland Container Depot
at Birgunj and Road Connected at Biratnagar and Bhairahawa
ICD in Kakarbhitta in the final stage
Nepal’s Needs Assessment
Nepal undertook needs assessment in 2009. The following three categories were used to
assess our needs1. Those measures that they have already undertaken or they can be undertaken
relatively easily and that they can therefore agree to implement straight away, as
soon as the agreement is finalized
2. A second category that the national needs assessment exercise has shown they
would require time to carry out, and
3. A third category for which they require not only time but also technical assistance
and capacity building support in order to complete satisfactorily.
The result was as follows:
Already Compliant with 3 (5%)
Partially compliant with 40 (68%)
Not compliant with
13 (22%)
Not applicable with 3 (5%)– E.g. F.3- Import/Rapid Alerts and I.1- Elimination
of Consular Transaction
Needs assessment …
Priority areas identified for Technical Assistance
Periodic Review of Formalities
Coordination of Activities of Border Agencies
Use of International Standards
Test Procedures
Specific Parameters for Fees and Charges connected with
Importation and Exportation
Single Window
Advance Rulings
Risk Management
Post-Clearance Audit
Strengthened non-discrimination of transit operators
Reduction/Simplification of Transit Fees
Promotion of regional Transit Agreements
On-going Efforts Towards Trade
Transit Facility
Exploring alternate Transit of Mumbai, Phulbari, Mongla
Developing Nepal as Transit Point to facilitate trade between
India and China
Bilateral, Regional, and Multilateral Initiatives
Negotiation under SAFTA and BIMSTEC for Trade Facilitation
Measures of Harmonization Recognition Accreditation
Certification of Standards, Simplification of Customs , Banking
Procedures, Business Visa, Transit Facilities
Regional Cooperation for Transport Infrastructure
Participation on Negotiating Group on Trade Facilitation in the
On-going Efforts towards
Trade Facilitation
Customs Administration
• Provisions of Revised Kyoto Convention in the amendment of
Customs Act
• Custom Valuation based on transaction value
• Broker module applied in 6 Customs (1 more planned for June)
• Single Administrative Document through electronic media
• Selectivity Module applied in 4 customs (1 more planned for June)
• PCA office established,
• Risk Management initiated
• Time bound Clearance, Simplification of Procedures
• Performance based incentive mechanisms applied
• Monitoring of Custom office performances
• Automation, publications of Manuals, Training are ongoing activities
under three years Customs Reform and Modernization Action Plan
On-going Efforts….
Trade Instruments and Infrastructure
• Provision of Export Promotion and Special Economic
• Provision of Single Negotiable Multimodal Transport
• Integrated Physical Facility at four land Custom adjoining
India (Biratnagar, Birgunj, Bhairahawa, Nepalgunj)
• Exploring the possibilities of establishing ICD at various
places including Tatopani, Rasuwa, Krishnanagar….
• Activating National Trade Facilitation Committee (?)
Service providers in TF
Trade facilitation depends on the activities of many service providers.
• shipping lines, airlines, banks or finance companies,
• express curriers intermediaries including postal services,
• trucking and haulage companies'
• railway companies' freight forwarders, customs brokers
• insurance companies, seaport and airport operators,
• International rail-terminal operators,
• inland container port operators,
• cargo handlers and handling agents,
• warehouse operators, transit-shed operators,
• transit transport operators,
• independent testing and inspection companies,
• sanitary and Phyto-sanitary measures
• port community system providers
• specialist IT service providers and so on
Separate files on • Documents used in importation and
• Port clearance flow chart
• Comparative tables
Major issues
• Poor infrastructure customs and ports
• Lengthy and cumbersome procedure in transit port
• Resource constraints in investment in physical
infrastructure along border points and trade/transit
• High transaction costs
• Lack of coordination
• Complex procedures, laws and regulations
• Customs administration more revenue oriented than
facilitation, with almost 90 percent clerical staff
• Absence of separate clearance tracks as express,
sensitive and regular at border custom points
Way forward
• Harmonizing simplifying and standardizing documents
and procedures
• Network of national and intra-regional transport
infrastructure development
• Negotiating bilateral/regional trade, transport, transit
• Enhancing capability for PCA and risk management
• Optimizing the use of ICT and managing web for online
• Enhancing enforcement and facilitating capability of
• Human resource development plan for customs
Doing the same thing and expecting different results is
a sign of madness.
- Albert Einstein
Thanks for your patience

Trade Facilitation Initiatives