TREATY OF TRADE BETWEEN
THE GOVERNMENT OF NEPAL AND THE GOVERNMENT OF INDIA
The Government of Nepal and the Government of India (hereinafter referred to as the Contracting Parties),
Being conscious of the need to fortify the traditional connection between the markets of the two countries,
Being animated by the desire to strengthen economic cooperation between them,
Impelled by the urge to develop their economies for their several and mutual benefit, and
Convinced of the benefits of mutual sharing of scientific and technical knowledge and experience to promote mutual trade,
Have resolved to conclude a Treaty of Trade in order to expand trade between their respective territories and encourage collaboration in economic development, and
Have for this purpose appointed as their Plenipotentiaries the following persons, namely,
( Rajendra Mahto ) Minister of Commerce and Supplies For the Government of Nepal
( Anand Sharma ) Minister of Commerce and Industry For the Government of India
Who, having exchanged their full powers and found them good and in due form, have agreed as follows:
The Contracting Parties shall explore and undertake all measures, including technical cooperation, to promote, facilitate, expand and divers ify trade between their two countries.
The Contracting Parties shall endeavour to grant maximum facilities and to undertake all necessary measures for the free and unhampered flow of goods, needed by one country from the other, to and from their respective territories.
Both the Contracting Parties shall accord unconditionally to each other treatment no less favourable than that accorded to any third country with respect to (a) customs duties and charges of any kind imposed on or in connection with importation and exportation, and (b) import regulations including quantitative restrictions.
The Contracting Parties agree, on a reciprocal basis, to exempt from basic customs duty as well as from quantitative restrictions the import of such primary products as may be mutually agreed upon, from each other.
Notwithstanding the provisions of Article III and subject to such exceptions as may be made after consultation with the Government of Nepal, the Government of India agree to promote the industrial development of Nepal through the grant on the basis of non-reciprocity of specially favorable treatment to imports into India of industrial products manufactured in Nepal in respect of customs duty and quantitative restrictions normally applicable to them.
With a view to facilitating greater interchange of goods between the two countries, the Government of Nepal shall endeavour to exempt, wholly or partially, imports from India from customs duty and quantitative restrictions to the maximum extent compatible with their development needs and protection of their industries.
Payment for transactions between the two countries will continue to be made in accordance with their respective foreign exchange laws, rules and regulations. The Contracting Parties agree to consult each other in the event of either of them experiencing difficulties in their mutual transactions with a view to resolving such difficulties.
The Contracting Parties agree to co-operate effectively with each other to prevent infringement and circumvention of the laws, rules and regulations of either country in regard to matters relating to foreign exchange and foreign trade.
Notwithstanding the foregoing provisions, either Contracting Party may maintain or introduce such restrictions as are necessary for the purpose of:
|(a)||Protecting public morals,|
|(b)||Protecting human, animal and plant life,|
|(c)||Safeguarding national treasures,|
|(d)||Safeguarding the implementation of laws relating to the import and export of gold and silver|
|(e)||Safeguarding such other interests as may be mutually agreed upon.|
Nothing in this treaty shall prevent either Contracting Party from taking any measures which may be necessary for the protection of its essential security interests or in pursuance of general international conventions, whether already in existence or concluded hereafter, to which it is a party relating to transit, export or import of particular kinds of articles such as narcotics and psychotropic substances or in pursuance of general conventions intended to prevent infringement of industrial, literary or artistic property or relating to false marks, false indications of origin or other methods of unfair competition.
In order to facilitate effective and harmonious implementation of this Treaty, the Contracting Parties shall consult each other regularly.
|(a)||This Treaty shall come into force on the date of its signature. It shall supersede the Treaty of Trade concluded between the Government of Nepal and the Government of India on 6th December 1991, as amended or modified from time to time.|
|(b)||This Treaty shall remain in force for a period of seven years and shall be automatically extended for further periods of seven years at a time, unless either of the parties gives to the other a written notice, three months in advance, of its intention to terminate the Treaty.|
|(c)||This Treaty may be amended or modified by mutual consent of the Contracting Parties.|
|(d)||The Protocol annexed to this Treaty shall constitute its integral part.|
Done in duplicate in Hindi, Nepali and English languages, all the texts being equally authentic, at Kathmandu on 27th October 2009. In case of doubt, the English text will prevail.
( Rajendra Mahto ) Minister of Commerce and Supplies For the Government of Nepal
( Anand Sharma ) Minister of Commerce and Industry For the Government of India
( including primary, semi processed and processed) , and shall allow entry of these products into their markets on the basis of these certificates subject to meeting the mandatory requirement of the importing country.
1. The Government of India will allow the Government of Nepal payment of the excise and other duties collected by the Government of India on goods produced in India and exported to Nepal provided that:
1. The Government of India will provide preferential access to the Indian market free of customs duties normally applicable and quantitative restrictions except as mentioned elsewhere, for all articles manufactured in Nepal, provided they fulfill the qualifying criteria given below:
(a) The articles are manufactured in Nepal wholly from Nepalese materials or Indian materials or Nepalese and Indian materials. In addition, the following products, but not limited to, shall be considered as wholly produced or manufactured.
(i) Raw materials or mineral products extracted from soil, water, riverbed or beneath the riverbed.
|(ii)||Products taken from the seabed, ocean floor or sub-soil thereof beyond the limits|
|of national jurisdiction, provided it has the exclusive rights to exploit that seabed,|
|ocean floor or sub-soil thereof, in accordance with the provisions of the United|
|Nations Convention on the Law of the Sea (UNCLOS).|
|(iii)||Used articles collected there, fit only for the recovery of raw materials.|
|(iv)||Waste and scrap resulting from manufacturing operations conducted there.|
|(b)||(i)||The articles involve a manufacturing process in Nepal that brings about a change|
|in classification, at four digit level, of the Harmonized Commodities Description|
|and Coding System, diffe rent from those, in which all the third country origin|
|materials used in its manufacture are classified; and the manufacturing process is|
|not limited to insufficient working or processing as indicated in Annexure "B",|
|(ii)||The total value of materials, parts or produce originating from non-Contracting|
|Parties or of undetermined origin used does not exceed 70% (seventy percent) of|
|the FOB price of the articles produced, and the final process of manufacturing is|
|performed within the territory of Nepal.|
Note: The value of materials, parts or produce originating from non-Contracting Parties shall be the CIF value at the time of importation of materials, parts or produce, at the point of entry in Nepal, where this can be proven, or the earliest ascertainable price paid for the materials, parts or produce of undetermined origin in the territory of the Contracting Party where the working or processing takes place.
Explanation: Additional Duty shall mean a duty levied under Section 3(5) of the Customs Tariff Act, 1975 of India.
VI. With reference to Article VI
The Government of Nepal, with a view to continuing preferences given to Indian exports, will waive additional customs duty on all Indian expor ts during the validity of the Treaty.
VII. With reference to Article VII
Both Contracting Parties shall make provisions so that no discrimination will be made in respect of tax, including central excise, rebate and other benefits to exports merely on the basis of payment modality and currency of payment of trade. This would be made effective from the date to be mutually agreed to, after which the Protocol to Article III would become redundant.
Both Contracting P arties agreed to develop modalities for transition from the existing to the new system.
VIII. With Reference to Article IX
In the event of imports under the Treaty, in such a manner or in such quantities as to cause or threaten to cause serious injury to the domestic industry relating to the article, an investigation for application of safeguard measures may be initiated. The following conditions and limitations shall apply to an investigation for application of safeguards measures.
|a.||a Party shall immediately deliver written notice to the other Party upon:|
|(i)||initiating an investigatory process relating to serious injury or threat thereof and the|
|reasons for it;|
|(ii)||making a finding of serious injury or threat thereof caused by increased imports; and|
|(iii)||taking a decision to apply a safeguard measure;|
|b.||in making the notification referred to in paragraph (a), the Party proposing to apply a|
|safeguard measure shall provide the other Party with all pertinent information, which shall|
|include evidence of serious injury or threat thereof caused by the increased imports, precise|
|description of the goods involved and the proposed measure, proposed date of introduction|
|and expected duration; the Party proposing to apply a measure is also obliged to provide any|
|additional information which the Party considers pertinent;|
|c.||a Party proposing to apply a measure shall provide adequate opportunity for prior|
|consultations with the other Party as far in advance of taking any such measure as|
|practicable, with a view to reviewing the information arising from the investigation,|
|exchanging views on the measure and reaching an agreement. Such consultation shall take|
|place at the Joint Committee meeting set up by the two governments. If the consultations in|
|the Joint Committee fail to resolve the issue within a period of sixty days from the date of|
|request for consultation, then the requesting government shall be free to take appropriate|
|remedial measures. The Nepal-India Inter Governmental Committee (IGC) will review such|
Explanation: The terms "Domestic Industry" and "Serious Injury" shall be interpreted as defined in the WTO Agreement on Safeguards.
The determination of 'Serious injury' shall be as per the WTO Safeguard Agreement.
" Threat of injury" means a situation in which a substantial increase of imports under the Treaty is of a nature so as to cause injury to the domestic producers, and that such injury, although not yet existing is clearly imminent. A determination of threat of injury shall be based on facts and not on mere allegation, conjecture, or remote or hypothetical possibility.
IX. With reference to Article XI
1. In case of problems arising in clearance of goods at the land customs stations, provided that the quality of goods in questions would deteriorate or perishes due to delays, such problem shall be dealt at the joint meeting of the local authorities comprising of the followings:
AGREED ROUTES FOR MUTUAL TRADE
ILLUSTRATIVE LIST OF
INSUFFICIENT WORKING OR PROCESSING
The following shall be considered as insufficient working or processing to confer the status of originating or manufactured or produced or made in Nepal, to an article, whether or not there is a change in heading classification at four digit level, of the Harmonized Commodities Description and Coding system, different from those in which all the third country origin materials used in its manufacture are classified:
|a)||Operations to ensure the preservation of articles in good condition during transport and storage|
|(e.g., ventilation, spreading out, draw ing, chilling, placing in salt, sulphur-dioxide or other|
|aqueous solutions, removal of damaged parts and like operations);|
|b)||Operations consisting of removal of dust, shifting or screening, sorting, classifying, matching|
|(including the making up of sets), washing, painting, cutting up;|
|c)||Changes of packing and breaking up and assembly of consignments;|
|d)||Slicing, cutting, slitting, re -packing, placing in bottles or flasks or bags or boxes or other|
|containers, fixing on cards or boards, etc., and all other packing or re-packing operations;|
|e)||The affixing of marks, labels or other like distinguishing signs on articles or their packaging;|
|f)||Mixing of articles, whether or not of different kinds, where one or more components of the|
|mixture do not meet the conditions laid down in para 1 (b) of Protocol to Article V of the Treaty|
|to enable them to be considered as manufactured or produced or made in Nepal;|
|g)||Assembly of parts of an article to constitute a complete article;|
|h)||A combination of two or more operations specified in a) to g) above.|
Nepalese manufactured articles allowed entry into India
free of customs duties on a fixed quota basis.
|S.no.||Nepalese Article||Quantity in MT per year|
|1.||Vegetable fats (Vanaspati)||100, 000 (One hundred thousand)|
|2.||Acrylic Yarn||10, 000 (Ten thousand)|
|3.||Copper products under Chapters 74.00||10,000 (Ten thousand)|
|& Heading 85.44 of the H.S. Code|
|4.||Zinc Oxide||2,500 (two thousand five hundred)|
|a)||Imports into India of the above four commodities for quantities in excess of the fixed quota|
|mentioned above will be permitted under normal MFN rates of duty, notwithstanding any|
|concession in any other preferential arrangement.|
|b)||Imports into India of the above commodities will be permitted through the Land Customs|
|Stations (LCS) at Kakarbhitta/Naxalbari, Biratnagar/Jogbani, Birganj/Raxaul,|
|Bhairahawa/Nautanwa, Nepalgunj/Nepalgunj Road and Mahendranagar/Banbasa.|
|c)||Modalities of operationalization of the fixed quota on vegetable fat (Vanaspati) shall be as|
|agreed from time to time.|
|d)||The existing administrative arrangements for operationalization of the fixed quota of Sl. no 2, 3|
|and 4 shall be reviewed for further simplification, as required.|
CERTIFICATE OF ORIGIN FOR EXPORTS FREE OF CUSTOMS DUTIES UNDER THE TREATY OF TRADE BETWEEN THE GOVERNMENT OF NEPAL AND THE GOVERNMENT OF INDIA
Reference No. ______________________
The undersigned hereby declares that the details furnished above are correct, that the articles are produced in Nepal and that they comply with the Rules of Origin specified in the Treaty of Trade between the Government of Nepal and the Government of India.
(Place & Date, Signature of authorized signatory).
It is certified that the articles herein referred to are eligible for preferential treatment as per provisions of the Treaty of Trade between the Government of Nepal and the Government of India. It is further certified that:
For the Government of Nepal (Place and Date, Signature & Stamp of certifying authority)
14. For Official use of Indian Customs
The consignme nt has been examined and allowed to be imported into India as it complies with the provisions as stipulated under Article V of the Treaty of Trade between the Government of Nepal and the Government of India.
Signature & Seal of the Certifying authority Dated:
* For the purpose of the above item No.3, the articles which have undergone a manufacturing process in Nepal as defined in the Protocol to Article V of the Treaty will not be treated as product of third country origin.
Certificate of Origin for export to India under MFN arrangement.
The undersigned hereby declares that the details furnished above are true and correct and complies with the provisions of Nepal-India Trade Treaty.
Place and Date, Signature of authorized signatory.
12. Certification by the competent authority:
The above declarations are correct to my knowledge and hence recommend for export to India under MFN arrangement.
Signature and seal of certifying authority Annexure " E "
MFN LIST OF ARTICLES WHICH WILL NOT BE ALLOWED PREFERENTIAL ENTRY FROM NEPAL TO INDIA ON THE BASIS OF CERTIFICATE OF ORIGIN TO BE GIVEN BY AGENCY DESIGNATED BY THE GOVERNMENT OF NEPAL
Note: Government of India may, in consultation with the Government of Nepal modify the above list.
(*) Nepalese beers can be imported into India on payment of the applicable liquor excise duty equal to the effective excise duty as levied in India on Indian beers under the relevant rules and regulations of India. (Nepalese beer has been exempted from the whole of the additional duty vide customs notification No. 178/2003-customs date 17.12.2003)