RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/NPL/16
28 August 2003
(03-4488)
Working Party on the
Accession of Nepal
REPORT OF THE WORKING PARTY
 ON THE ACCESSION OF THE KINGDOM OF NEPAL
TO THE WORLD TRADE ORGANIZATION
Introduction
1. At its meeting on 21-22 June 1989, the Council of Representatives established the Working
Party to examine the application of His Majesty's Government of Nepal (HMG/N) for accession to the
General Agreement on Tariffs and Trade (GATT 1947) under Article XXXIII, and to submit to the
Council recommendations which might include a draft Protocol of Accession.  In a communicationdated 17 February 1997, HMG/N applied for accession to the World Trade Organization (WTO).
Having regard to the decision adopted by the General Council on 31 January 1995 (WT/GC/M/1), the
existing Working Party on the Accession of Nepal to the GATT 1947 continued as a WTO Accession
Working Party with the mandate to examine the application of HMG/N to accede to the World Trade
Organization under Article XII, and to submit to the General Council recommendations which mayinclude a draft Protocol of Accession.  The terms of reference and the membership of the Working
Party are reproduced in do cument WT/ACC/NPL/4/Rev.7.
2. The Working Party met on 22 May 2000, 12 September 2002 and 15 August 2003.  At its
meeting on 15 October 2002, the General Council took note that H.E. Mr. P.-L. Girard (Switzerland)
had been appointed Chairman of the Working Party in replacement of H.E. Mr. R. Farrell
(New Zealand) who had left Geneva and was no longer available.
Documentation provided
3. The Working Party had before it, to serve as a basis for its discussions, a Memorandum on the
Foreign Trade Regime of Nepal (document WT/ACC/NPL/2 and Corr.1 and Addenda), the questions
submitted by Members on the foreign trade regime of Nepal, together with the replies thereto, and
other information provided by the authorities of Nepal (WT/ACC/NPL/3 and Corr.1 and Addenda;
WT/ACC/NPL/5; WT/ACC/NPL/6; WT/ACC/NPL/7; WT/ACC/NPL/9; WT/ACC/NPL/10 andRevision 1; WT/ACC/NPL/11; WT/ACC/NPL/12; WT/ACC/NPL/13; WT/ACC/NPL/14;  and
WT/ACC/NPL/15), including the legislative texts and other documentation listed in Annex I.  The
Legislative Action Plan of Nepal aimed at the implementation of the WTO Agreements circulated in
document WT/ACC/NPL/10/Rev.1 is reproduced in Annex II.
Introductory statements
4. The representative of Nepal said that the Kingdom of Nepal, a least developed land-locked
mountainous country with a small but open economy,  had been facing the problems of poverty,
marginalization, weak institutional capacities and financial and technical constraints.  The population
of the country was estimated to be 23 million people.  Per capita income was US$240, with  38 per
cent of the population living with less than one dollar a day, and 82 per cent living with less than twoWT/ACC/NPL/16
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dollars a day.  Agriculture which was dependent on the vagaries of the monsoon was the main source
of income and employment.  Agriculture accounted for around 41 per cent of GDP and more than 80
per cent of employment.  Rice was the major cereal product followed by maize, wheat and millet.
Woollen carpets and ready made clothing were the leading export items constituting about 85 per cent
of total overseas exports.  Other important i ndustrial products were food, beverage and cement
production.  Tourism contributes about 12 per cent of the total foreign exchange.  High transit costs,
absence of basic infrastructures, dependence on traditional technologies, etc. were some of Nepal's
structural limitations.  Due to the fact that total exports met less than half Nepal's import requirements,
donor support was essential for the country's economic survival.
5. The representative of Nepal said that notwithstanding a difficult economic and political
environment and internal instability and strife, Nepal had sought to achieve a peaceful settlement of
the internal problem and to systematically reform and open its economy.  HMG/N had liberalized theeconomy unilaterally over the years because of the conviction that economic reform and trade
liberalization would attract investme nts, promote development and, contribute to generate productive
employment and alleviate poverty,  in a general framework of equity, participation and market based
efficiency.  Limited physical, material and human resources had constrained Nepal's capacity to reap
the benefits of globalization and liberalization.  In order to pursue the accession process effectively,Nepal had very important technical assistance needs including capacity building.  Accession to WTO
was an essential component of the country's integration into the world economy.  The commitments to
be undertaken by Nepal in the accession negotiations should be consistent with the capacity of a land-
locked LDC and, in accordance with the decision adopted by WTO General Council on 10 December
2002 with respect to the accession of LDCs,  taking into account the important development, financialand trade needs of Nepal.
6. The representative of Nepal noted that trade was not an end itself.  It was a means to develop
the underdeveloped economies, ensure the flows of knowledge, technology and resources with the
aim of improving the global standards of living of all mankind, including in particular the poorer
segments of mankind.  Globalization should pave the way towards a new era of humanity andcivilization with a fair and equitable distribution of welfare.
7. Recalling the decisions adopted at the Fourth WTO Ministerial Conference and at the Third
UN Conference on LDCs, the representative of Nepal noted that as an LDC Nepal would need
transitional arrangements in order to bring its foreign trade regime into full consistency with the WTO
Agreements on Customs Valuation, TBT, SPS and TRIPS.  HMG/N planned to accomplish this task
in accordance with the Legislative Action Plan submitted to the WTO.
8. Members of the WTO welcomed Nepal's application to accede to the World Trade
Organisation.  They expressed the view that WTO membership would be important for Nepal's
development and integration into the world trading system and would also constitute a major step
forward in the WTO evolution to achieving the goal of universality and representation of the interests
of all trading nations.  In expressing appreciation for the significant efforts already undertaken by
Nepal to achieve compliance with WTO rules and principles, they noted that further work was neededin order to implement some important WTO Agreements.  WTO Members pledged to work
constructively with Nepal in accomplishing this objective, and offered to provide technical assistance
to facilitate Nepal's accession.  WTO Members looked forward to Nepal's early accession on
appropriate terms including transitional arrangements to enact and implement the legislative
modifications required.  Recalling Nepal's status as a least-developed country, someMembers acknowledged Nepal's commitment to the principles of the multilateral trading system,
economic reform and market policies.  They noted that Nepal was a key member of the South Asian
Association for Regional Cooperation (SAARC),   w hose population constituted almost one fourth of
humanity and of South Asian Preferential Trading Arrangement (SAPTA).  In their view, economic,
intellectual and moral arguments, including the cred ibility of the WTO, justified according special andWT/ACC/NPL/16
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differential treatment similar to that enjoyed by other LDCs in the existing and forthcoming WTO
Agreements when agreeing on Nepal's terms of accession.
9. The Working Party reviewed the economic policies and foreign trade regime of Nepal and the
possible terms of a draft Protocol of Accession to the WTO.  The views expressed by members of the
Working Party on the various aspects of Nepal's foreign trade regime, and on the terms and conditionsof Nepal's accession to the WTO are summarized below in paragraphs 10 to 155.
ECONOMIC POLICIES
Monetary and fiscal policy
10. The representative of Nepal said that the monetary policy of Nepal was geared towards
managing liquidity so as to achieve the domestic price stability, and to improve the balance of
payments situation of the country.  Accordingly, broad money and narrow money aggregates were
targeted to increase in line with the predetermined benchmarks.  The Central Bank (Nepal RastraBank, NRB) had given up exercising direct instruments of monetary control since the early 1990s and
has resorted to indirect instruments only.  In this context, open market operations had become the
main instrument of monetary control in Nepal.  Tr easury bills are the main instruments used in such
operations.  NRB bonds were also used as open market instruments in the past.  Besides the open
market operations, the bank rate and the cash reserve ratio are the other additional instrumentsdeployed by the Central Bank for monetary control.
11. The representative of Nepal said that since th e start of the 1990s the Government had pursued
an ambitious tax reform programme with the aim of raising public savings, broadening the tax net and
to improve the overall efficiency and fairness of the tax system.  Reforms had been undertaken to
broaden the tax base, lower income tax rates, and to simplify the rate structure across a whole range oftaxes.  The fiscal policy of the Government was to pursue the following major objectives: (i)
reduction of unproductive expenditure in the public sector;  (ii) reform of the income tax structure by
reducing high rates and broadening the tax base; (iii) reduction of net domestic borrowing to 0.5 per
cent of GDP; and (iv) streamlining of bureaucracy.
Foreign exchange and payments
12. The representative of Nepal said that the Central Bank published exchange rates for its
internal purpose and the market rate was determined  by the foreign exchange market.  Import licenses
to obtain foreign currency for specific goods are no longer required.  The present system facilitates
100 per cent of capital transfer in the form of foreign investment and subsequent repatriation of profit
in foreign currencies.  Foreign currency bank accounts can be freely opened.  In case of the emergence
of balance of payments (BOP) problems, the Government may resort to restrictive measures.  He
added that the Nepalese Rupee has been pegged to the Indian Rupee at the rate of NRs. 1.6 per IndianRupee since February 1993.  The current exchange rate is about 76.00 Nepalese Rupees per US Dollar
(June 2003).  Several amendments had been made in the Foreign Exchange (Regularisation) Act, 2019
(1962) in order to reflect the liberalisation policy.  Money changers had been authorized to operate in
the main cities of Nepal.  Moreover, the Govern ment had declared its commitment to make Nepal an
international financial services centre and had formulated an Act in this regard.  Nepal had alsoentered into negotiations with respect to the Poverty Reduction and Growth Facility (PRGF) with the
International Monetary Fund.
13. The representative of Nepal said that the current international payments regime consists of
different provisions for payments made through convertible currency and non-convertible Indian
Rupees.  For countries other than India, payment was made through convertible currency, mainly USDollars.  Selected commodities could be imported from India through US Dollar payments as well.WT/ACC/NPL/16
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Nepal's exchange rate system is presently free of restrictions on the making of payments and transfers
for current international transactions except for restrictions on payments for personal travel.
However, the necessary foreign exchange will be made available (either through commercial banks or
the Central Bank) upon the production of the required documentary evidence for all bonafide
transactions.  All exporters are required to bring the export payment to Nepal within 6 months.However, the exporters could retain up to 100 per cent of the export proceeds for themselves through
the opening of a foreign currency account with the local commercial banks.  There was no time limit
for such retention.  To import goods from India, th e Letter of Credit could be opened in Indian Rupees
in favour of the exporter.  The Nepalese bank could also, if requested by the importer, make direct
payment to the exporter, in Indian Rupees, through an Indian Bank.  The importer could receive
Indian Rupees from the Nepalese bank to make di rect payment to the Indian exporter.  Nepal had
accepted Article V III of the Articles of Agr eement of the IMF.  However, Nepal may restrict the
quantity or value of imports in order to safeguard its external financial position and its balance of
payments.  Nepal was also a member of the Asian Clearing Union (ACU).  Trade transactions among
ACU members were cleared through the Asian Currency Unit.  As far as capital transaction was
concerned, the Ban on Investments in Foreign Countries Act, 1964 prohibits any form of investment
including the purchase of property, bank deposits, investments in shares and bonds by Nepalesecitizens in foreign countries.  The repatriation of capital investments and profits by foreigners was
allowed in accordance with the Foreign Investment and Technology Transfer Act 1992.
Investment regime
14. The representative of Nepal said that a major objective of national economic policy was to
promote and encourage a transparent and fair business environment for both domestic and foreigninvestment, and to increase the role of the private sector in Nepal’s development process.  For this
purpose, a liberal industrial policy was adopted in 1992 consisting of the Industrial Enterprises Act,
1992, the Foreign Investment and Technology Transfer Act, 1992, and the One Window Policy of
1992.  Sections 2, 3 and the annex of the Foreign Investment and Technology Transfer Act, 1992 are
relevant for all foreign investment and cover the major criteria for the permission of foreigninvestment.  Under this policy, a high level committee had been formed with the Director General of
the Department of Industries as its Coordinator in order to coordinate the activities of various agencies
related to industrial enterprises.  The major thrust of these Acts and policies lies in their openness with
emphasis on market-driven strategies, and the dominant role of private initiative and enterprise.  The
Government acts as a facilitator to the private sector and concentrates its efforts on the development
of the infrastructure required, as well as in guaranteeing a stable macroeconomic environment.  The
policies and Acts mentioned above apply to all sectors of economic activities within the country.  TheIndustrial Policy of 1992 identified foreign investment promotion as an important strategy in
achieving the objectives of increasing industrial production, meeting the basic needs of the people,
creating maximum employment opportunities, and paving the way for improvement in the balance of
payments situation.  Foreign investment was expected to supplement domestic private investment
through foreign capital flows, technology transfer, a nd providing access to international markets.  The
first amendment of the Foreign Investment and Technology Transfer Act (FITTA), 1992 in 1996 had
opened further avenues for investors, and had also simplified the administrative procedures.  Some of
the salient features of the Industrial Enterprises Act, 1992 and of the Foreign Investment and
Technology Transfer Act, 1992 (as amended) were as follows:  foreign investment requires an
approval from the Department of Industry.  A person desiring to avail the foreign investment ortechnology transfer shall be required to make an a pplication to the Department.  It grants permission
directly in the case of an industry with fixed assets up to 1 billion Rupees and in accordance with the
decision of the Industrial Promotion Board in the case  of an industry with fixed assets of more than
one billion Rupees within 30 days from the date of application; foreign investors were allowed to hold
100 per cent ownership in industries; foreign investment was open in every sector of economicactivities, except for very few sectors such as cottage industries, arms and ammunitions, security
printing, currencies and coinage, retail business, travel and trekking agencies, consultancy services,WT/ACC/NPL/16
Page 5
etc.  (specified in an Annex of the Foreign Investment and Technology Transfer Act, 1992);
technology transfer was encouraged in all public enterprises of industries; the law prohibits the
nationalization of any private sector industries; the Government does not intervene in fixing the prices
of industrial products in the private sector indust ries.  The statutory provision of FITTA guarantees
full repatriation of the amount received from the sale of equity, profits, or dividends and interest onforeign loans, and the repatriation of the amount received under an agreement for the transfer of
technology.  Foreign investors were granted a business visa as long as the investment was retained.  A
resident visa would be provided for a foreign investor, who at a time makes an investment in excess of
US$100,000 or equivalent and retains it.  Nepal was a member of the Multilateral Investment
Guarantee Agency (MIGA), had signed Reciprocal Encouragement and Protection of Investment
Agreements with France, Germany, the United Kingdom and Mauritius and would conclude such
agreements with a number of other countries.  Agreements avoiding double taxation were effectivewith India, Norway, Thailand, Sri Lanka, Mauritius, Austria, Pakistan, China, and Republic of Korea.
15. In response to questions concerning the need of approval for industrial ventures, the
representative of Nepal said that in accordance with Section 3 of the Foreign Investment and
Technology Transfer Act, 1992, approval from the Department of Industries was required for all
foreign investment.  As provided by the Industrial Enterprises Act, 1992, permission for domestic aswell as foreign investment was required only for industries producing explosives, including arms,
ammunition and gun powder, security printing, bank notes and coin industries; cigarette, bidi, cigar,
chewing tobacco, khaini industries and industries producing goods of a similar nature utilizing
tobacco as the basic raw material and alcohol or beer producing industries.  The specific requirements
to get the permission were not detailed in either of  these Acts.  He said that the sectors listed below
were not open for foreign investment.  Most of these sectors were reserved for nationals, mainly in
order to promote the activities of small entrepreneurs who generally use indigenous skills, resources
and technology.  Some sectors were restricted for national security reasons: cottage i ndustry; personal
service business (business such as hair cutting, beauty parlour, tailoring, driving training, etc.); arms
and ammunitions industries; Explosives, gunpowder; Industries related to radioactive materials; Realestate (excluding construction industries); Motion picture industries (produced in national languages
and the language of the nation); Security printing;  Currency and coinage business;  Retail business;
Travel agency;  Trekking agency;  Water rafting;  Pony trekking; Horse riding;  Cigarette, bidi,
alcohol (excluding those exporting for more than 90 per cent);  Internal courier services;  Atomic
energy;  Tourist lodging;  Poultry farming;  Fisheries;  Bee keeping;  Consultancy services such as
management, accounting, engineering and legal services etc.  Approval from the Government was
required for foreign investment in other areas.  Interested foreign investors should apply in writing, inthe prescribed format, to the Department of Indus try or Department of Small and Cottage Industry or
any other office as prescribed by the Government.  The decision on the application shall be
communicated to the applicant within 30 days from filing of the application.
16. The representative of Nepal also indicated that the recommendations made in the studies
conducted by FIAS had been incorporated in the amendments of Industrial Enterprises Act, 1992 andthe Foreign Investment and Technology Transfer Act, 1992.
State ownership and privatization
17. The representative of Nepal said that Nepal had completed the privatization of a number of
previously government owned enterprises listed below.  The methods of privatization and other
information are given below.  The net (book value) worth of the remaining state-owned enterprisesaccount for about 15 per cent of Nepal's GDP.WT/ACC/NPL/16
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Table 1:  Privatization of Previously Government-Owned Enterprises
Proportionate Share
S.No Name of the CompanyYear of
PrivatizationMethod of
PrivatizationSales
Proceeds
(Rs.  '000)1 Mgt Emp Public
1. Bhrikuti Paper Mills (BPM) Oct. 1992 Asset and
business
sale229,800 70 5 25
2. Harisidhi Brick and Tile
Factory (HBTF)Oct. 1992 Asset and
businesssale226,900 72 5 23
3. Bansbari Leather and Shoe
FactoryMar. 1992 Asset and
businesssale22,400 75 5 25
4. Nepal Film Development
Company (NFDC)Nov. 1993 Share sale 64,662 51 5 44
5. Balaju Textile Industry Ltd.
(BTI)Dec. 1993 Share sale 17,716 70 5 25
6. Raw Hide Collection and
Development CorporationLtd.  (RHCDC)Dec. 1993 Share sale 3,990 -- -- 100
7. Nepal Bitumen and Barrel
Udhyog Ltd.  (NBBU)Jan. (1994) Share sale 11,640 65 5 30
8. Nepal Lube Oil Ltd.  (NLO) Jan. 1994 Share sale 30,424 40 5 332
9. Nepal Jute Trade and
Development Company1993 Liquidation Liquidation -- -- --
10. Tobacco Development
Company1994 Liquidation Liquidation -- -- --
11. Nepal Foundry Industry
(NFI)Mar. 1996 Share sale 14,473 51 5 44
12. Shri Raghupati Jute Mills
(SRJM)Aug. 1996 Share sale 82,204 65 5 30
13. Biratnagar Jute Mills
(BJM)3Dec. 1996 Manageme
nt contractBusiness
contract-- -- --
14. Nepal Bank Ltd.  (NBL)4Mar. 1997 Share sale 125,140 -- 5 545
15. Agriculture Tools Factory
(ATF)May 1997 Share sale 95,100 65 5 30
16. Bhaktapur Bricks Factory
(BBF)Aug. 1997 Lease 20,300
(10 years,
lease)-- -- 100
HM
GN
18. The representative of Nepal said that Section 6 of the Privatization Act, 1992 states that when
the Government intends to privatize any Government Corporation, it shall publish a notice in respect
of the privatization of such a Government Corp oration in the Nepal Gazette.  The Act makes it
mandatory for the Government to initiate the privatization process only after the publication of a
                                                     
1 It includes the price of management share only.
2 Rest of the shares are in the name of other corporations.
3 BJM is a semi-government enterprise in which private sector has majority shares.  The decision to
contracting out was taken by the company's board  and all the procedures were taken accordingly.
4 In this bank the government had majority shares.  The government decided to sell some of its shares
in the market, so that the private sector could become th e majority shareholder.  So it floated 10 per cent of the
shares in the share market.  Now the government is a minority shareholder i.e.  it holds only 39 per cent of the
total shares.
5 HMGN owns 39 per cent shares.WT/ACC/NPL/16
Page 7
notice in the Gazette.  Under Section 7 of the Privatization Act, 1992, the Government may form a
team of experts for the evaluation of the Corporation in this respect.  Section 8 of the same Act has
given alternatives of the privatization process to the Government, i.e., converting shares or selling
intact to private buyers or giving on lease etc.  In accordance with Section 9 of the same Act the
Government must call for public tender for privatization by publishing a notice which has to be inaccordance with international practice.  Section 10 of the same Act describes the basis for the
evaluation of tenders.  The privatization committee evaluates the proposals received from private
parties accordingly.  In accordance with Section 11(4) of the same Act, the terms and conditions
mentioned in the Agreement in respect to privatiza tion must be published to inform the public.  The
parties concerned may ask for attested copies of relevant documents under number 17 of the Chapter
on Document Scrutiny of the Country Code (Muluki Ain).  Likewise, Article 16 of the Constitution of
the Kingdom of Nepal provides the right to seek and get information in respect of matters of publicimportance.  Nepal is also ready to adopt a better mechanism in regard to transparency through proper
legislation.  The Privatization Act, 1992 was silent on the mechanism of review or appeal regarding
any unsuccessful tenders by investors whether national or foreign.  Nevertheless, the unsuccessful
tender participant, in principle, may approach the Court of Appeal under the Administration of Justice
Act, 1991.
Pricing policies
19. The representative of Nepal said that in accordance with the Foreign Investment and One
Window Policy 1992, the Government did not intervene in fixing the prices of industrial products
either by the private sector industries or State-owned enterprises except for necessary products as
defined by the Acts.  The products concerned were petroleum products (HS codes 2710, 2711) andsalt (HS code 2501), however in the interest of consumer protection price controls could be applied to
other products.
20. The representative of Nepal stated that in the application of price controls now or in the
future, Nepal would apply such measures in a WTO-consistent fashion, and take account of the
interests of exporting WTO Members as provided for in Article III:9 of the GATT 1994, and inArticle VIII of the General Agreement on Trade in Services (GATS).  He also confirmed that Nepal
published the list of goods and services subject to State control and any changes in its Official Gazette
and would continue to do so after accession.  The Working Party took note of these commitments.
Competition policy
21. The representative of Nepal said that Nepal did not at present have a competition law, but
Nepal was seeking assistance to draft legislation to ensure fair competition in various business
activities in due course.  The respective legislation would be consistent with the WTO Agreements.The Legislative Action Plan circulated in docum ent WT/ACC/NPL/10/Rev.1 which is reproduced in
Annex II of this Report indicates that the Ministry of Industry, Commerce and Supplies would prepare
a draft Competition Bill by November 2003, the Council of Ministers was expected to endorse the Bill
by February 2004 and the expected approval date was July 2004.
FRAMEWORK FOR MAKING AND ENFORCING POLICIES
22. The representative of Nepal said that in 1990 a democratic constitution had replaced the
Panchayat System.  The Constitution of the Kingdom of Nepal, 1990 had established the King as the
Head of the State and the Prime Minister, responsible to the parliament, as the Head of the
Government, and an independent judiciary.  The parliament was a bicameral legislative body,
consisting of the lower house, the House of Representatives, and the National Assembly, the upperhouse.  The executive, legislative, and judicial powers were well defined and separated.  The
executive power of the Kingdom of Nepal was vested  with His Majesty the King and the Council ofWT/ACC/NPL/16
Page 8
Ministers and the responsibility of issuing general directives, controlling and regulating the
administration of the Kingdom of Nepal lies in the Council of Ministers.  His Majesty the King as the
Head of the State appoints the leader of the Party which commands a majority in the House of
Representatives as Prime Minister and constitutes the Council of Ministers on his recommendation
and under his Chairmanship.  The Prime Minister and the other ministers in the government arecollectively responsible to the Parliament.  The other ministers are also individually responsible for
the business of their respective ministries to the House of Representatives as well as to the Prime
Minister.  Due to the lack of internal security Parliamentary elections were not held in 2002 as
scheduled.  His Majesty the King had appointed the current Prime Minister under the provisions of the
present Constitution.  A cease fire reached in February 2003 had suspended hostilities.  The current
talks with all political entities and groupings were expected to lead to Parliamentary elections being
held in the coming period.  In the meantime, the government exercised legislative authority inconformity with constitutional provisions by means of Ordinances.
23. In accordance with the Constitution, the parliament consists of His Majesty the King and the
two Houses of parliament.  The House of Representatives consists of two hundred and five members
elected from one-man election constituency on th e basis of one-person-one-vote system through a
secret ballot.  Nepal had adopted the simple plurality or "first past the post" election system underwhich a candidate receiving the largest number of popular votes in a given constituency is elected.
The National Assembly consists of sixty members, ten of which are nominated by His Majesty the
King from amongst persons of high reputation, and 35 members, including at least three women
members, are elected by the House of Representatives on the basis of proportional representation by
means of the single transferable vote system.  Fifteen members are elected from five Developmentregions.  The tenure of the members of the House of Representative is five years.  The tenure of the
members of the National Assembly, which is a permanent House, is six years and tenure of one third
of the members expires every two years.
24. Except as otherwise expressly provided in th e constitution, the parliament is empowered to
enact any law.  A bill passed by one house of the parliament is transmitted to the other house as soonas possible and if the receiving house passes it, it is presented to His Majesty the King for his assent.
The bill becomes an Act upon such assent.  The Government is empowered to promulgate rules or
regulations under a delegated legislative power vested under an Act of Parliament.  The constitution
provides certain specific provisions concerning ratification of, accession to, approval of, and
acceptance of a treaty.  Depending on the content, nature, and term of a treaty, a joint sitting of both
houses of the parliament or the House of Representatives is authorized to ratify or accede to.
Normally, multilateral treaties concerning trade which require ratification or accession are ratified oracceded to by the House of Representatives by a simple majority vote.  Once treaties are ratified, they
are executed at the national and international levels.  A treaty may be invoked on a collateral issue,
which the courts may have to determine before adjudi cating on the rights of the parties.  However, the
Supreme Court, in case it decides that the provision of an Act is inconsistent with the provision of a
treaty to which His Majesty's Government is a party, the provision of the treaty in question prevails.Under the Nepal Treaties Act, 2047 (1990) in case of divergence between the provisions of Nepalese
law and provisions of the international treaty to which the Kingdom is a party, the provision of the
treaty shall apply to the extent of the divergence.  Following its ratification by the House of
Representatives, the WTO Agreement would be an international treaty.
25. The judiciary is an independent organ.  The powers relating to justice in the kingdom are
exercised by the courts and other judicial tribunals in accordance with the provisions of the
constitution, the laws of the country, and universally recognized principles of justice.  The judiciary
comprises three tiered courts consisting of 75 District Courts, 16 Appellate Courts, and one Supreme
Court.  The Chief Justice of the Supreme Court of Nepal is appointed by His Majesty the King on the
recommendation of the Constitutional Council, a constitutional body composed of the Prime Minister,the Chief Justice, the Speaker of the House of Representatives, the Chairman of the NationalWT/ACC/NPL/16
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Assembly, and the Leader of the Opposition in the House of Representatives as its members.  The
appointment of other judges of the Supreme Court, Appellate Courts, and District Courts is made by
His Majesty the King on recommendation of the Judicial  Council.  In Nepal, judges are not part of the
civil service and the terms and conditions of their service have been determined by law as required by
the constitution.  The Supreme Court, the apex of th e judicial system, has, inter alia, extraordinary
jurisdiction for the enforcement of fundamental rights  as provided by the constitution in Part 3 and
can issue appropriate orders and writs including the writ of habeas corpus, mandamus, certiorari,
prohibition and quo warranto.  Moreover, it is also empowered to declare any law or any part thereof
either void ab initio or from the date of its decision on the ground of inconsistency with the
constitution, because such law imposes an unreasonable restriction on the enjoyment of the
fundamental rights of the citizen.  Similarly, appellate courts may issue habeas corpus, mandamus
writs and injunction orders.  Nepalese courts are competent to entertain and adjudicate all suitsconcerning real estate located in Nepal and estate matters with respect to assets in Nepal and also any
other suits, if the defendant is domiciled in Nepal or the claim derives from an event that has occurred
in Nepal or from any act made or done in Nepal regarding the defendant's domicile.  If a foreign
company has a branch in Nepal, it is treated as a domiciled party.  A Nepalese court may also
adjudicate suits concerning transactions made abroad if both the plaintiff and defendant are domiciledin Nepal.  Summons are to be served on defendant s domiciled abroad through letters rogatory issued
by the courts.  No. 34 of Adalati Bandobasta (c ourt management) of Muluki Ain (Country Code)
provides that summons to be served on defendants domiciled in Nepal through letter rogatory issued
by the foreign courts are satisfactory only if a reciprocal agreement to that effect has been concluded
by the Government with the foreign state concerned.  Muluki Ain is the general law of the land andany other specific act may replace the provision of th e Muluki Ain if a specific act to that effect is
made.  In addition to the above mentioned courts, there is also a provision in the constitution which
stipulates that law may provide for the establishment of special types of courts and tribunals for the
purpose of hearing of special types of cases.  However, a special court or tribunal may not be
constituted for the purpose of hearing a particular case.  In practice, there are special permanenttribunals to adjudicate and resolve revenue disputes (Revenue Tribunals), labour disputes (Labour
Court) and disputes concerning di smissal of civil service employees (Administrative Court).  Pursuant
to the Arbitration Act, 1998, arbitration had become an effective mechanism for settlement of disputes
arising out of commercial contracts.  Nepal was a party to the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards.
26. Under Articles 35 and 41 of the Constitution of the Kingdom of Nepal, 1990, and the His
Majesty's Government (Allocation of Business) Regulation 2000, the following Ministries areresponsible for making and enforcing the policies affecting foreign trade in goods and services:
(a) The Ministry of Industry, Commerce and Supplies
6 is principally responsible for
making and enforcing policies on trade including foreign trade.  The responsibilities
of this ministry include: Formulating and enforcing trade policy.  Study, research, and
survey on internal and international trade.  Making policy decisions on import andexport trade regime and conducting international trade relations.  Formulating
policies and setting requirements for public trade enterprises.  Preparing and
negotiating treaties and agreements relating to foreign trade (and transit), as well as
participating in bilateral and multi-lateral intergovernmental trade negotiations.
Contact, assistance and coordination with national, regional, internationalorganizations pertaining to trade and transit.  Study and survey of different means of
carriage of goods in the internal and international trade, and of the management
necessary for cheaper carriage, including multi-modal transport schemes.  Training to
develop capable manpower in the appropriate areas.  The Department of Commerce
                                                     
6 The Ministry of Commerce, the Ministry of Industry and the Ministry of Supplies were merged in the
year 2000WT/ACC/NPL/16
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deals with technical issues such as the registration of trade firms, and where
appropriate, permits licenses or authorization for goods to be imported in or exported
from Nepal.  The Trade Promotion Centre operates as a separate government
undertaking to promote foreign trade, particularly overseas trade.
The Ministry is responsible for policies related to foreign investment, promotion
thereof and matters relating thereto; promotion of industrial investment; development
and transfer of technology; industrial promotion and protection; patent design and
trade mark.
The Ministry is responsible for issues related to the policy on supplies of basic needs
goods and its implementation; supervision of the market and regulation of policy
prices for enterprises under it; regular and balanced supply of consumer goods and
necessary consumer goods through these enterprises.
(b) The Ministry of Finance is responsible for activities related to public expenditure,
currency; banking, insurance, revenue policy and planning; revenue administration
and collection of customs duties and taxes levied by the government from time to
time; general price policy for State-owned enterprises; exchange and control of
foreign currencies and control of accounts as well as mobilisation of foreign aid.
(c) The Ministry of Culture, Tourism and Civil Aviation is responsible for issues related
to tourism industry and tourism promotion;  trekking, mountaineering; development of
air transportation and other tourism trade related service and issues.
(d) The Ministry of Labour and Transport Management is responsible for activities
related to policy on development of inland and water transport; regulation oftransportation and carriage by land and sea including multi-modal transport and trade
facilitation.  It is also responsible for activities related to labour policy and its
implementation; study and research of labour force and labour market, and its use;
work permit to foreigners; administration and management of labour.
(e) The Ministry of Agriculture and Cooperatives is responsible for activities related to
policy on agriculture and agriculture production in general; development and
improvement of food, cash and industrial crops; agricultural engineering and
sophisticated agricultural inputs; agricultural nurseries and development of seeds;
development of dairy and dairy products; fishery; marketing and price regulation of
basic agricultural products, agricultural inputs, and development of agricultural
technology; plant quarantines; food research, and import, sale and distribution of
fertilizers and agricultural inputs.
27. The Constitution of Nepal provides a unitary form of government.  There was no division of
authority between central and sub-central or regional governments in Nepal.  However, the laws of the
country provide for the delegation of authority to  the local authorities as and when required.
28. The representative of Nepal said that the implementation of the WTO Agreements would
require the preparation of important pieces of legislation.  He submitted the action plans circulated indocuments WT/ACC/NPL/10/Rev.1, 12, 13, 14 and 15 (repr oduced in Annex II and Tables 3, 5, 7 and
10) which set up a precise calendar plan aimed at enacting the legislation required to implement the
WTO Agreements during the period 2003-2006.  The representative of Nepal said that Nepal
undertook the commitment that any changes in laws, regulations and practices during the transitional
arrangements would not result in a lesser degree of consistency with the provisions of the relevantWT/ACC/NPL/16
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WTO Agreements than existed on the date of accession, and that the scope of application of existing
inconsistencies with WTO provisions in those areas would not be allowed to increase.
29. In response to questions concerning the existence of the right to appeal against decisions
made by the Department of Industry and other administrative entities as required by the WTO
Agreements on Import Licensing, Customs Valuation, TBT, SPS and TRIPS, the representative ofNepal said that under Article 18 of the Industrial Enterprise Act, 1992 there was a provision of appeal
against the decisions taken by Department of Industry to the Industrial Promotion Board.  The
importer had the right to appeal to the Revenue Tribunal over the decision of customs officials in
respect to the determination of customs value under Section 37 of Custom Act, 1962.  Nepal was
currently examining the possibility of establishing an independent administrative tribunal to review
the decision of the customs authority regarding customs valuation.  The decisions of the
administrative tribunal could be appealed to the Revenue Tribunal which should provide promptreview and correction of administrative action relating to customs matters, in accordance with Article
X:3(b) and (c) of GATT 1994.  The Nepalese legislation provides the right to appeal to the affected
party concerning decisions of the authorities on matters related to technical barriers to trade, sanitary
and phytosanitary measures, import licensing, copyrights, trademarks, patent and design.
30. A member of the Working Party expressed readiness to provide technical assistance to Nepal
for the establishment of a system for the review and appeal against administrative decisions in areas
covered by specific transitional arrangements and in other areas.  The representative of Nepal said that
Nepal would review the legislation on administrative appeals to ensure that a system for review of
decisions will be in place by enactment or amendment of appropriate legislation, in some cases new
tribunals may be established.
31. The representative of Nepal said that upon the date of accession, Nepal would establish or
designate tribunals or procedures for the prompt review of all administrative actions relating to the
implementation of laws, regulations, judicial decisions and administrative rulings of a general
application referred to in Article X:1 of the GATT 1994, Article VI of GATS.  The tribunals or
procedures would also include actions relating to the implementation of national treatment,conformity assessment, the regulation, control, supply or promotion of a service, including the grant
or denial of a licence to provide a service and other matters.  The tribunals or procedures responsible
for such reviews would be impartial and independ ent of the agency entrusted with administrative
enforcement and shall not have any substantial inte rest in the outcome of the matter.  The review
procedure would include the opportunity for appeal, without penalty, by individuals or enterprises
affected by any administrative action subject to review.  Notice of the decision on appeal should be
given to the appellant and the reasons for such a decision provided in writing.  The Working Partytook note of these commitments.
POLICIES AFFECTING TRADE IN GOODS
Registration Requirements
32. In response to questions concerning the requirements necessary for obtaining the registration
to engage in business, the representative of Nepal said that all companies, national or foreign, have tobe registered with the competent authority to engage  in business in Nepal.  This includes export and
import activities.  Limited liability companies, in cluding joint venture agencies, sole proprietor and
partnerships, business undertakings for industrial ve ntures, register at the Department of Industry.
Agencies, sole proprietor undertakings and partnership businesses for trading are required to register
at the Department of Commerce.  The Nepalese legislation provided different procedures for theregistration of a private firm and a company.  The Private Firm Registration Act, 1956 governs the
registration of a private firm- defined as any firm, a company or a concern set up by any person – to
engage in the business of export or import.  The running of a private firm without registration wasWT/ACC/NPL/16
Page 12
prohibited.  The Department of Commerce registers firms engaged in commerce whereas the
Department of Industry was concerned with firms engaged in industry.  Any individual desiring to
register a private firm must submit the form prescribed by the Private Firm Registration Regulation
1978 Rule 3, Schedule-1 along with the prescribed application fees to the concerned department.  If
the Department finds the statement of the application to be true and reasonable to register, it willregister the private firm and issue a certificate of registration accordingly.  The registration of a
company was governed by the Company Act, 1997.  An application with a Memorandum of
Association and the Articles of Association of the company along with application fee must be
submitted to the Office of the Company Registrar.  The Registrar, makes any necessary inquiries,
registers the company and issues a certificate of incorporation within 15 days.  The Registrar had the
authority to reject the application if the proposed name of the company is already registered, or the
proposed name is against public morals or the objective of the company is contradictory to existinglaws, or the conditions required to incorporate the company under the Act are not fulfilled.  In this
case, the Registrar gives due notice and explain the reasons for rejection to the applicant.  The
registration of entities with respect to trade in services was governed by other laws, e.g., Nepal
Agency Act, 1958, Partnership Act, 1964.
33. In response to questions concerning the registration fees, the representative of Nepal said that
the application fee and the registration fee of different kinds of legal entities were nominal, non-
discriminatory and not related to the value/ volume of export and import.  He requested the
identification of the specific GATT 1994 and GATS obligations applicable to the registration fees.
The system of corporate registration in Nepal had been primarily introduced for statistical purposes.
The level of such fees varied depending on the nature of legal entity - sole proprietorship, partnershipor company, and only approximated the cost of collecting statistics and verification of documents.
These registration fees were not more onerous for those registering for importation and exportation
than for firms that produce domestic goods.
34. The commitment was sought that there would be no restrictions on the right of individuals
and enterprises to import and export goods into Nepal’s customs territory, except as provided in WTOAgreements, and that individuals and firms would not be restricted in their ability to import or export
based on their registered scope of business.  The commitments should ensure that fees associated with
the right to import and export were applied in confor mity with the WTO, including Articles VIII:1(a),
XI:1 and III:2 and 4 of the GATT 1994.
35. The representative of Nepal confirmed that all registered companies could import and export
goods for business purposes on the basis of the import and export regulations of Nepal.  Individuals
could import for business as long as they were registered as sole proprietor undertakings. Foreignfirms could register to import or export their own produce without establishing a physical presence or
investment in Nepal and without having the intent to distribute imports in the domestic market. A
registered firm or company could change or extend the scope of business, e.g., to include importation
and exportation, by submitting application indicating the desire to do so to the agency where it was
originally registered, with the exception of proh ibited sectors and with the stipulation that the
applicant should get an activity license in advance if he applies for changing or extending the scope of
business to include a sector where such a license is required. Retail businesses were reserved for
Nepalese nationals.  Nepal believed that the agency business (which was not required for importation
or exportation) was covered by GATS.  The relevant market access conditions would be governed by
Nepal's schedule of specific commitments on services.  The registration requirements for companiesthat conduct purely domestic activities and for companies engaged in import and export activities
were the same.  The registration requirements were the same for both national and foreign firms.
36. The representative of Nepal said that Nepal confirmed that from the date of accession, its
laws and regulations relating to exportation and importation of goods and all fees, charges and taxes
levied thereof, including registration requirements  would be applied in full conformity with WTOWT/ACC/NPL/16
Page 13
obligations, including Articles I, VIII:1(a), XI :1 and III of the GATT 1994 and that Nepal would
implement such laws and regulations in full conformity with these obligations.  The Working Party
took note of these commitments.
Import Regulation
Customs tariff
37. The representative of Nepal said that the prevailing basic customs tariff rates were 5, 10, 15,
25, 40, 80 and 130 per cent.  There was a significant number of tariff lines with zero duty.  The
majority of the import items fall in the customs duty range of 10-20 per cent.  The unweighted
average customs duty rate for imports was approximately 11 per cent since1996/97.  The maximum
tariff rate of 130 per cent applied to cars and jeeps will be reduced and specified in the goods
schedule.  A minimum tariff rate up to 5 per cent applied for daily consumption items.  As a general
rule, Nepal applied ad valorem  duties.  A very limited number of products such as motor fuels,
kerosene oils, gas and fuel oils, cement clinkers and some cements, liquor, tobacco and tobacco
products were subject to specific duties.  The Harmonized System of Commodity Classification (HS)
was incorporated in Nepal since the fiscal year 1992/93.  The 2002 version of the HS Nomenclature
had been put into effect.  Nepal's Customs Tariff is available in the Secretariat.
38. Nepal’s commitments on bound tariffs are contained in the Schedule of Concessions and
Commitments on Goods (document WT/ACC/NPL/16/A dd.1) annexed to Nepal’s draft Protocol of
Accession to the WTO.
Tariff rate quotas, tariff exemptions
39. The representative of Nepal said that there were no tariff quotas for imports in effect in Nepal.
The current legislation provides for certain tariff exem ptions and tariff reductions, in order to facilitate
the import of specific goods on a provisional basis.  These measures were taken by the government
and published in the Nepal Gazette.  They were valid for all suppliers of the goods specified in the
Custom Tariff.  Import duty exemptions were in effect for the importation of the following goods:
books; equipment and vehicles for trolley bus services; medical equipment for public health projects;
cold storage equipment for the preservation of agricultural products including fish and fruits;alternative power development equipment; high quali ty printed materials imported for the promotion
and publicity of the tourism in Nepal; threshing m achines and husk-machines (Pankhi); raw jute; and
crates for keeping eggs, falling under chapter 48.  The list of exemptions and tariff reductions was
published in the Customs Tariff.
Other duties and charges  (ODCs)
40. Some members of the Working Party noted that Nepal levied on a number of products the
Local Development Fee, the special fee, the agricu lture development fee, the cigarettes and alcohol
fee and the alcohol control service fee.  They requested that the fees be incorporated into the customs
tariff rates, or as a minimum bound at the currently applied rates, upon accession, in accordance with
the Understanding on Article II paragraph 1(b) of GATT 1994.
41. The representative of Nepal said that for reasons related to local development, health and
education, including the need to generate fiscal revenue earmarked to respond to critical local needs,the Local Development Fee of 1.5 per cent of the value of imports had been set up.  Other duties and
charges in the range of 2.5 per cent - 11.5 per cent were levied on industrial goods, and in the range of
2.5 per cent – 14.5 per cent were levied on agricultural goods. These non-tariff charges were applied
to the c.i.f. value of the imported goods.  In the revised market access offer on goods, Nepal
confirmed the elimination of ODCs for all tariff lin es over a period of time between two and ten yearsWT/ACC/NPL/16
Page 14
as reflected in the Goods Schedule annexed to the Protocol of Accession of Nepal.  After that date all
ODCs would be bound at zero.
42. The representative of Nepal confirmed that fr om the date of accession Nepal would eliminate
ODCs in accordance with the timetable contained in the Goods Schedule annexed to the Protocol of
Accession of Nepal.  Nepal also undertook not to introduce new ODCs.  The Working Party took noteof these commitments.
Charges for Services Rendered
43. The representative of Nepal said that currently there are no duties and charges imposed on
imports for customs processing.  Nevertheless, the Customs Act of 1962 and customs regulations
provide the authority to the Customs Office to charge for the services rendered.  There was a charge
of 1 per cent of the total value of the imported goods as import licence fee.  He acknowledged that
such a fee was based on import value, not the cost of services, and indicated that Nepal intended tochange the import licence fee to the system of determining the fee based on the flat rate or the ad
valorem  rates, whichever is lower.  Nepal reserved the right to introduce customs processing/customs
fee equivalent to the cost of services rendered for the items not requiring import licences.
44. The representative of Nepal said that from the date of accession Nepal would charge an
import licence fee representing the approximate cost of the services rendered.  Nepal would apply thisand any other fees and charges for services rendered in accordance with WTO Agreements, in
particular with Article VIII of the GATT 1994.  The current charge of 1 per cent would be at a flat
rate in NRs to ensure that it did not exceed th e approximate cost of administering application of
import licenses.  The Working Party took note of these commitments.
Quantitative import restriction including prohibitions
45. The representative of Nepal said that all items were free for import.  Nepal at present applied
no import quotas.  The products banned for import, domestic production and sale, in accordance with
the Export Import (Control) Act, 1957, the Narcot ics Drug Control Act, 1976, and the Country Code
(Muluki Ain), are listed hereunder.
(a) Narcotic drugs like opium and morphine;
(b) Liquor containing more than 60 per cent alcohol;
(c) Beef and beef products.
The products restricted for import and domestic production are listed hereunder:
(a) Materials used in the production of arms and ammunition;
(b) Guns and cartridges;
(c) Caps without paper;
(d) Arms and ammunition, and other explosives.
(e) Wireless, walkie talkie and similar other audio communication equipment's(f) Valuable metals and precious stones.  Nepal did not restrict the importation of
jewellery made of valuable metals but there was a restriction on the importation of
gold, silver and other valuable metals and precious stones.
Licensing procedures
46. The representative of Nepal said that auto matic licensing was applied for information
purposes both for the import and export of all goods not restricted.  Licenses were also applied for the
personal baggage exceeding the established allowance.  In addition, the Treaties of Trade and TransitWT/ACC/NPL/16
Page 15
between Nepal and India envisage licensing in order to ensure that the transit of goods does not
violate Articles 8 and 9 of the Transit Treaty, which embody restrictions applied in India in the spirit
of Articles XX and XXI of GATT 1994 (general and security exceptions).  The Department of
Commerce issues the licenses in accordance with the following procedures.  The licensing system is
not intended to restrict either the quantity or the value of imported goods.  It is simply intended to protectpublic health, consumer and environment welfare and national security.  Alternative methods in the form
of the requirement to present to the competent authorities the letters of credit have been introduced in
order to obtain the necessary information and simplify the procedures.  Import licensing was authorized
and maintained under Export Import (Control) Act, 1957, Export - Import Rules, 1978, Customs Act,
1962, Customs Regulation, 1969, Annual Finance Act based on annual Budget Speech of Finance
Minister, and the order made by the Ministry of Commerce pursuant to the Export and Import (Control)
Act, 1957 and Rules, 1978.  Import licensing was statutorily required.  The designation of products to belicensed and the licensing of products to be imported was not left to administrative discretion.  The
government may abolish the system of licensing only by statutory action.  At present, the automatic
licensing system had been relaxed and the submission of application for obtaining a license was not
required.  However, the letters of credit opened for imports and exports must be presented at the customs
office during the time of export and import.
47. For the restricted import products an import licence is required.  The Export Import (Control)
Act, 1957 gives the right to the government to introduce import controls in the case of BOP problems and
in specific cases of governmental assistance to economic development.  The government may specify
whether to apply them by value or quantity.  There is no requirement as to how far in advance an
application for a licence must be made.  A licence can be obtained within a shorter time limit or for goodsarriving at the port without a licence, if all documents are in order.  A licence can be granted immediately
upon request, if all documents are in order.  There are no limitations as to the period of the year during
which applications for licenses and/or importation can be made.  Import licenses are, in most cases,
issued by a single administrative organ which is the Department of Commerce.  Applications for licenses
are submitted to the DOC.  Application may also be reviewed by experts of another agency in certaincases involving goods where assessment of conformity with standards and technical regulations is
required.  In this case, the Department of Commerce coordinates with the agencies concerned.  There are
no circumstances under which an application for a licence may be refused other than for failure to meet
the basic requirements.  When a licence is refused the applicant is advised of the reasons.  He may appeal
to the Ministry of Industry, Commerce and Supplies, within 35 days of the notice issued to him of such
refusal.  The applicant should clearly mention in his complaint his name and address, subject-matter to
complaint, claims and reasons of claims.  He must submit copies of all the relevant documents along withthe complaint for evidence and a copy of the complaint should also be sent to the licensing authority.
48. The representative of Nepal said that the following products are subject to import licensing:
Table 2:  Products Subject to Import Licensing
HS Number Description Justifying Provision of WTO
85.28 All types of radio communication system with the
frequency range of 30 Khz to 300 Khz.Article XXI of GATT 1994
85.28 Radio transmitter and transceiver
85.29 Television transmitter, FM radio transmitter
85.25 Wireless transceiver
85.25 Walkie talkies
85.17 Cordless telephone
85.29 Video sender
85.28 Amateur radio
85.17 Inmarsat terminal (portable satellite hand set)
85.17 Satellite communications equipmentWT/ACC/NPL/16
Page 16
HS Number Description Justifying Provision of WTO
85.17 Radio paging system-paging transmitter, pager
85.17 Communication equipment-cellular
telecommunication base station, cellular hand set.
85.28 Satellite broadcast receiver.
85.28 Satellite receiver (other than broadcast)
85.17 Radio repeater station
85.17 Radio navigation, transmitter/transceiver
85.17 Radio determination transceiver, receivers
93.05 Materials used in the production of arms and
ammunition.
93.01-93.04 Guns and cartridges
93.06 Caps without paper
93.07 Arms and ammunition and other explosives
Chapter 71 Valuable metals and precious stones None, except Article XX (c) of GATT
1994 for gold and silver
49. The representative of Nepal said that Nepa l would enact legal instruments codifying the
substance of the WTO Agreement on Import Licensing Procedures and to bring its licensingprovisions for valuable metals and precious stones into conformity with WTO by applying automatic
licensing.  Provisions relating to gold and silver would be administered in conformity with
Article XX(c) of GATT 1994.  As stated in the Legislative Action Plan reproduced in Annex II of this
Report, amendments to the Export Import (Control) Act, 1957 (Amendment) and to the Export Import
(Control) Regulations, 1978 (Amendments) had already been prepared, or would be prepared by theDepartment of Commerce in August 2003, and wo uld be submitted by the Ministry of Industry,
Commerce and Supplies to the Council of Ministers by September and October 2003, respectively.  It is
expected that endorsement and adoption by the Council of Ministers of the amendments to the Act and
the Regulations would be approved in December 2003.
50. The representative of Nepal confirmed that, from the date of accession, Nepal would eliminate
and would not introduce, re-introduce or apply quantitative restrictions on imports or other non-tariff
measures such as licensing, quotas, bans, permits, prior authorization requirements, licensing
requirements, and other restrictions having equivalent effect, that cannot be justified under the
provisions of the WTO Agreement.  If balance-of -payments measures were necessary, Nepal would
impose them in a manner consistent with the relevant WTO provisions, including Article XII andArticle XVIII of the GATT and the Understanding on Balance-of-Payments Provisions of the GATT
1994.  He further confirmed that the legal authority of the His Majesty's Government of Nepal to
suspend imports and exports or to apply licensing requirements that could be used to suspend, ban, or
otherwise restrict the quantity of trade would be applied from the date of accession in conformity with
the requirements of the WTO.  The Working Party took note of these commitments.
Customs Valuation
51. The representative of Nepal said that in accordance with the Customs Act, as amended in
1997, the customs value of the imported goods was assessed on the basis of the invoice price shown in
the invoice document provided by the importer.  If the customs had reasonable doubt that the invoice
price did not correspond to the price actually paid for the goods, that is the transaction value, the
customs would refer to the value of similar, or  identical goods imported into Nepal.  If this
information was not available, the customs would refer to the international prices, local market price,suggested price lists of manufacturers, recorded prices of previous imports of identical or similar
goods, a list of reference prices and other available information.  The Customs was not applying the
provisions of Articles 5 and 6 of the Agreement on Implementation of Article VII of GATT 1994WT/ACC/NPL/16
Page 17
regarding imputed or computed valuation.  There were  no provisions in the current legislation to the
case when the buyer and seller are related and how the customs should act in those cases.  There were
no minimum prices in effect.  Due to the need to ensure revenue protection and trade facilitation, a
reference price list was still used for comparison purposes with the invoice price with respect to
sensitive products.  Nepal was examining the modifications that would have to be introduced incurrent legislation and practices to fully implement the WTO Custom Valuation Agreement.  To attain
this objective it would be necessary to train personnel, to prepare implementation measures and to
upgrade the institutional capabilities and material infrastructure of the Customs Administration.  The
timetable for complete implementation would depend on the progress that would be achieved on those
issues.  Nepal would require technical assistance in this respect.
52. The representative of Nepal recognized the fact that custom valuation based on the value of
local goods and on reference prices was contrary to the WTO Customs Valuation Agreement.  Heconfirmed that Nepal intended to adopt the valuation methods of Articles 5 and 6 of the Agreement
and to improve Nepalese legal provisions to implement a WTO consistent regime.  Nepal would
incorporate the remaining provisions of the WTO Agreement on Customs Valuation into the Customs
Act, 1962 and the Customs Regulation, 1969.  A timetable for the enactment of legislation that
implements the WTO Agreement on Customs Valuation in Nepal's legal regime was provided in the
Legislative Action Plan circulated in document WT/ACC/NPL/10/Rev.1 and in the action plan
circulated in document WT/ACC/NPL/15.  The Department of Customs had prepared the
amendments to the Customs Act, 1962 (Amendment) and to the Customs Regulations, 1969
(Amendment) which would be submitted by the Ministry of Finance to the Council of Ministers by
August 2003.  These amendments would be endorsed and adopted by the Council of Ministers by31 December 2003.  Having regard to the action plan, Nepal would implement the provisions of Articles
7 and 10 of the Customs Valuation Agreement at the time of accession if the valuation of imported goods
for customs purposes could be ascertained on the basis of the transaction value, the transaction value of
identical goods or the transaction value of similar goods.
53. In response to questions concerning the right to appeal referred to in Article 11 of the Customs
Valuation Agreement, the representative of Nepal said that in accordance with Section 37 of the Customs
Act 1962, the importer had the right to appeal to the Revenue Tribunal against the decisions of
customs officials in respect of the determination of customs value.  Nepal was currently preparing the
establishment of an independent administrative tribunal to review the decisions of the customs
authority regarding customs valuation.  It was fo reseen that the decisions of the administrative
tribunal would be subject to appeal to the Revenue Tribunal, which was a part of judicial system.
Nepal believed that such institutional system  would provide prompt review and correction of
administrative actions relating to customs matters, in accordance with Article X:3(b) and (c) of GATT
1994 and the Agreement on Customs Valuation.  He confirmed that in pursuance of the action plan
contained in Table 3, the right to appeal to an independent administrative tribunal would be in effect
on 31 December 2004.  The Working Party took note of this commitment.
54. Some Members of the Working Party requested that Nepal describe the surety bond system
provided for in section 13.6 of the Customs Act 1962, provide a timetable for enacting the
Interpretative Notes referred to in Article 14 of the Customs Valuation Agreement,  and clarify the
manner of publication of customs issues including valuation referred to in Article 12 of the Customs
Valuation Agreement.  One member also indicated that it did not appear that section 13.6 of the
Customs Act, 1962 meets the requirements of Article 13 of the Agreement.  The representative ofNepal responded that The Financial Ordinance 2003 section 8 (3) has further elaborated the system of
surety bond as provided in section 13.6 of the Customs Act, 1962.  The Ordinance provides that if the
transaction value of the goods could not be ascertained and the importer wishes to clear up the goods
beforehand, the Customs Officer may fix a provisional value for immediate clearance.  The importer
will have the right to clear the goods after paying the duty on such provisional value by making adeposit in an earnest account.  The Ordinance had the force of law.  Concerning publication ofWT/ACC/NPL/16
Page 18
legislation, regulations and administrative decisions on customs issues including valuation,
amendments to the Customs Law and Customs Regulations will provide that they will be published in
the Nepal Gazette or in the notification of the Customs Department or may be available in the web-
site of the Customs Department.  The Interpretative Notes will be incorporated in law and regulation
in accordance with Nepal's action plan for the implementation of the Customs Valuation Agreement.
55. The representative of Nepal requested that the Working Party grant a transitional period from
the date of its accession to allow Nepal to obtain and utilize technical assistance to assist in the full
implementation of the obligations of the Agreement.  Full implementation of the Agreement on
Customs Valuation would be carried out gradually and progressively and would be completed, at the
latest prior to 1 January 2007, in accordance with the timetable contained in Table 3 below.  He
confirmed that during the transition Nepal will not be required to observe the provisions of Article
7:2(a) or (f), thereby allowing for the application of reference values and values based on local prices
to be applied to imports for the purposes of customs valuation.  In addition, the provisions of Articles
5, 6, 10, 11, 12 and 14 of the Agreement would be gradually adopted in accordance with Table 3.  If
such a transitional period were granted, Nepal's deviations from the provisions of the Agreement
would be strictly limited to these Articles, and all other provisions of the Agreement would be
implemented for all imports.
56. During this period, Nepal would ensure that its regulations under current legislation in place
and additional legislation implemented during th e transition concerning customs valuation would be
applied on a non-discriminatory MFN basis to all imports.  Any changes made in its laws, regulations
and practice during the transition period would not result in a lesser degree of consistency with the
provisions of the Agreement on Customs Valuation than existed on the date of accession.  Nepalwould participate in the work of the Committee on Customs Valuation and would seek out all
available technical assistance, including under Article 20:3 of the Agreement, to ensure that its
capacity to fully implement the Agreement upon expiration of the transition period is assured.  The
representative of Nepal presented an Action Plan setting out details of the steps that still remained to
be taken in order to achieve this objective and a timetable for each step (Table 3).
57. The representative of Nepal stated that legislation on the valuation of imports for customs and
taxation purposes conforming to the requirements  of the Agreement on Customs Valuation would be
enacted by 1 July 2004.  Nepal would progressively implement the Agreement on Customs Valuation
in accordance with the action plan in Table 3, and with the understanding that during this period the
scope of implementation of other aspects of the Agreement, as described in paragraphs 55 and 56,
would be applied by Nepal.  Full implementation will start from 1 January 2007.  The Working Party
took note of these commitments.
Table 3:  Action Plan for Implementation  of the Agreement on Customs Valuation
ActionImplementation
Date
Current legal provisions provide the right of appeal of administrative decisions to the
Revenue Tribunal (Article 11)
Sureties for the release of merchandise provided for in current Customs Act 1962 Article
13.6 and the Financial Ordinance 2003   (Article 13)CompletedWT/ACC/NPL/16
Page 19
ActionImplementation
Date
Approval of amendments to the Customs Act and the Customs Regulations, enacting thelegislative framework for the following measures:
Gradual implementation of valuation hierarchy:
--Transaction valuation (Article 1)
--Transaction value of identical goods (Article 2)
–Transaction value of similar goods (Article 3)--Enforcement of Prohibited forms of Valuation when transaction value or transactionvalue of identical or similar merchandise is applicable  (Article 7(b), (c), (d), (e) and (g))
Provision in legislation for the protection of confidential information (Article 10)
Publication of relevant laws and regulations (Article 12)
Importer's right to an explanation in writing from the customs administration concerning
the determination of customs value (Article 16)Prior to
1 January 2004
Amendments to current legislation to establish an independent administrative tribunal forright to appeal from administrative decisions (Article 11)
Training of customs officials in the areas of clearance, verification, audit and the method
to combat valuation fraud
Preparation Customs Valuation ManualPrior to
1 January 2005
Provision in law and regulations of the Interpretative Notes (Article 14) Prior to
1 January 2007
Gradual implementation of valuation hierarchy:  further amendments to legislation to
complete implementation:
--Imputed value (Article 5)--Computed value (Article 6)--Enforcement of Prohibited forms of Valuation (Article 7(a) and 7(f)Prior to
1 January 2007
Full implementation of Agreement on Customs Valuation Prior to
1 January 2007
Application of Internal Taxes
58. The representative of Nepal said that consistent with Article III of GATT 1994 domestically
produced goods and imported goods were both subject to the same taxes, namely value added tax
(VAT) and excise taxes.  The Local Self Governance Act 1998 had abolished the local transit tax
called octroi.
VAT
59.  The representative of Nepal said that in the fiscal year 1997/98, the VAT had replaced the
sales tax and all the existing taxes on services, including entertainment and hotel, and contract taxes.
VAT had been introduced with the rate of 10 per cent for taxpayers registered in the VAT office and
20 per cent for taxpayers who do not report to the VAT office, in order to enhance tax collection and
discourage tax avoidance.  At the time when the Value Added Tax Act was enacted, every person
(defined in the Act as any individual, firm, company, association, institution, partnership firm,
cooperative, joint business, religious endowment, or fund; or any Government body, any religious
organisation, charitable trust or similar other bodies and branches or sub-branches there engaged, withor without profit, in taxable transactions) engaged in any transaction is required to apply for
registration in a prescribed form to the tax office r within 90 days from the commencement of this Act.WT/ACC/NPL/16
Page 20
After the commencement of this Act, every person desirous to be involved in any commercial
transaction is required to register in the tax office before beginning to engage in such transactions.
While evaluating the application, tax officers may ask the applicants for additional information and
documents and it shall be the duty of an individual to submit such information/document within seven
days to the concerned authority.  Upon the verificatio n of the application form, the tax authority shall
issue the Registration Certificate to the concerned individual within 30 days from the date of filing the
application.  The Certificate should be displayed in a conspicuous place at his principal place of
transaction.  If there is more than one place of transaction, he should display a copy of the registration
certificate, attested by a tax officer, conspicuously at each place.  It shall be the duty of every
registered person to use the registration number for all transactions related to value added tax, excise
duty and to other transactions as prescribed.  Exemption from registration was provided to small
vendors whose commercial transaction value was less than NRs 2.0 million (approximatelyUS$26,000 at current exchange rates) during the last twelve months.
60. The representative of Nepal said that the Value Added Tax Act 1996 provided a number of
goods and services exempted from the application of VAT.  In addition, VAT is applied to certain
other goods and services at a zero rate.  Section 5 of the Act provides that these exemptions from
VAT application are applied equally to imports and domestic products.  These exemptions and zerorates are listed in Annex III.
61. In response to questions concerning the tax exemptions in favour of cottage industries, the
representative of Nepal said that cottage industries having transactions less than the annual taxable
transaction threshold level of 2 million NRs turnover established in the VAT regulations were exempt
from VAT.  The Industrial Enterprises Act 1992 defines 'Cottage Industry' as industries utilizingspecific skills or local raw materials and resources, and labour intensive and related with national
tradition, art culture such as handloom; pedal-loom; semi-automatic loom; warping, dyeing and
printing; tailoring (other than ready made garments ); knitting, hand knitted woollen mats and blankets
(radi, pakhi ); woollen carpet; pasmina ; woollen garments; carpentry; wooden artistic product; cane
and bamboo works; natural fibre products; hand made paper and goods made up thereof; gold; filigreeproducts including silver, brass, copper, precious a nd semi precious stones; ornaments; sculpture and
pottery; honey, chauri , cardamom processing; clay or ceramic pottery; leather cutting and tanning;
rural tanning and leather goods producing works; jute, sabai  grass, babio , choya , cotton thread
products; artistic products made up of bones and horns; stone carving; ceramic fine arts; pauwa;
boutique; incense stick ( dhup ); dolls and toys industries with the fixed assets of up to two hundred
thousand rupees.
Excise Tax
62. The representative of Nepal said that the excise  tax was levied to the products specified in the
Finance Act.  This tax did not apply to imported goods.  Imported goods were subject to the
equalising duty levied at the rate of the excise tax applicable to the products listed in the Financial
Act.  The objective of this measure was to provide the same treatment to domestically produced and
imported goods.  The excise tax was applied to domestic goods on the basis of ex-factory price.Imported goods were taxed on the basis of C.I.F price.  Excise taxes as of July 2002 are listed in
Annex IV.
63. Noting that chhyang, beer, cider and other beverages were subject to tax differentials, a
Member asked that Nepal explain whether chhyang was produced in Nepal for commercial sale, if
chhyang was exported, if the excise tax on chhyang was collected at the time of production or at thepoint of sale, and whether chhyang was a fermented beverage like beer or wine, or a distilled beverage
like whisky or vodka.  The representative of Nepal responded that chhyang was a fermented beverage
like beer and its alcohol content depends on the manner the diverse local tribal people ferment it.  AtWT/ACC/NPL/16
Page 21
present, chyyang was neither produced for commercial sale nor was it exported.  In case it was
produced for commercial sale, the excise tax would be collected at the time of production.
64. The representative of Nepal confirmed that, from the date of accession, Nepal would apply its
domestic taxes, including value-added and excise taxes, in a non-discriminatory manner consistent
with Articles I and III of the GATT 1994.  For beverages classified as "chhyang", a fermentedbeverage similar to beer, Nepal would maintain an equal rate of excise duty for chhyang and beer
from the date of accession.  The Working Party took note of these commitments.
Rules of Origin
65. The representative of Nepal said that the appl ication for import requires the importer to state
the country of origin of the goods to be imported.  Nepal was applying the rules of origin under the
SAPTA agreement in order to establish whether preferences should be applied on imported goods.  In
case of exports, document certifying the origin of goods, export declaration form, invoice, letter ofcredit, packing list, visa for ready-made garments for exports were required along with the
application.  Members of the Federation of Nepalese Chambers of Commerce and Industry were the
only agencies authorized to issue a certificate of origin for certifying the export of Nepalese origin
goods.
66. In response to further questions, the representative of Nepal said that proof of origin was
required for products originating in those countries exporting to Nepal under preferential treatment.
The certificate of origin issued by an authority designated by the Government of the exporting country
and notified in accordance with the Certification Procedure constituted the proof of origin.  Products
wholly produced or obtained in the exporting country or products not wholly produced or obtained but
processed in the exporting country were considered to originate in the exporting country.  Raw ormineral products extracted from its soil, its water or sea beds, agricultural products harvested, animals
born and raised and the products obtained from these animals, products obtained by hunting or
fishing, products of sea fishing and other marine products taken from the high seas by its vessels and
processed and/or made on board its factory ships, used articles collected and the recovery of raw
materials, waste and scrap resulting from manufacturing operations and goods produced exclusivelyfrom the above products were considered products wholly produced or obtained in the exporting
country.  Products worked on or processed as a result of which the total value of materials, parts or
produce originating in other countries or of undetermined origin used, did not exceed 50 per cent of
the f.o.b.  value of the products produced or obtained, and the final process of manufacture was
performed within the territory of the exporting country, were eligible for preferential concessions.
Similarly, products covered by sectoral agreements between member countries of regional groupings
were also eligible for preferential treatment.  Nepal only requires proof of origin to determine whethergoods qualify for preferential treatment under the trade agreements to which it is a Party or by
national legislation.  Nepal was ready to implement the WTO Agreement on Rules of Origin.
67. The representative of Nepal confirmed that Nepal would introduce a WTO-consistent regime
with respect to rules of origin upon accession, incorporating the provisions of the WTO Agreement on
Rules of Origin.  Nepal would incorporate the provisions of the WTO Agreement on Rules of Origininto the Customs Act, 1962 and the Customs Regulation, 1969.  A timetable for the enactment of
legislation that implements the WTO Agreement on Rules of Origin in Nepal's legal regime was
provided in the Legislative Action Plan circ ulated in document WT/ACC/NPL/10/Rev.1.  The
Department of Customs had prepared the amendments to the Customs Act, 1962 (Amendment) and to
the Customs Regulations, 1969 (Amendment) which would be submitted by the Ministry of Financeto the Council of Ministers by August 2003.  It is expected that the Council of Ministers would
endorse and adopt these amendments by 31 December 2003 and the provisions of the new law would
come into force in 2004.WT/ACC/NPL/16
Page 22
68. The representative of Nepal confirmed that Nepal, from the date of accession, would adopt
the procedural protection covering the requirements of Article 2(h) and Annex II, paragraph 3(d) of
the WTO Agreement on Rules of Origin in its domestic legislation and that for non-preferential and
preferential rules of origin, respectively, the relevant Nepalese authorities would provide, upon
request of an exporter, importer or any person with a justifiable cause, an assessment of the origin ofthe import and outline the terms under which it will be provided.  The Working Party took note of
these commitments.
Other customs formalities
69. The representative of Nepal confirmed that Nepal did not require any kind of certification of
the customs documentation by consular officials.
Preshipment inspection
70. The representative of Nepal said that there was no system of preshipment inspection in Nepal.
71. The representative of Nepal confirmed that if in the future Nepal engaged the services of a
preshipment inspection enterprise, Nepal would put into place a preshipment inspection system
programme in conformity with the WTO Agreemen t on Preshipment Inspection and would ensure that
preshipment inspection enterprises operating on its behalf complied with the provisions of the WTO
Agreements, including the Agreements on Cust oms Valuation, Import Licensing Procedures, and
Technical Barriers to Trade.  Provision would be ma de that decisions by such firms could be appealed
by importers in the same way as administrative decisions taken by the His Majesty's Government of
the Kingdom of Nepal.  Any preshipment inspecti on regime would be temporary.  Nepal would also
give due consideration to the recommendations of  the Working Party on Pre-shipment Inspection of
2 December 1997 and subsequent recommendations issued by that Working Party.  The WorkingParty took note of these commitments.
Anti-dumping, countervailing duties and safeguard regimes
72. The representative of Nepal said that Nepal did not have an antidumping or countervailing
duty regime at this time, but intended to introduce a WTO-consistent legal regime with respect to anti-
dumping and countervailing measures.  A timetable for the enactment of legislation to introduce an
anti-dumping law that implements the WTO Agreement on Anti-Dumping in Nepal's legal regime
was provided in the Legislative Action Plan circ ulated in document WT/A CC/NPL/10/Rev.1.  Draft
legislation would be prepared in December 2003, the endorsement by the Council of Ministers would
take place in March 2004 and the expected approval date was July 2004.
73. A timetable for the enactment of legislation that implements the WTO Agreement on
Subsidies and Countervailing Measures in Nepal's legal regime was also provided in the Legislative
Action Plan circulated in docume nt WT/ACC/NPL/10/Rev.1.  A draft bill, policies and regulations to
establish a countervailing duty regime would be prepared by the Department of Industry, submitted to
the Ministry of Industry, Commerce and Supplies and were expected to be adopted by the Council of
Ministers in May 2004.
74. With reference to the safeguards regime and protection of the balance-of-payments, the
representative of Nepal said his Government was authorised to restrict imports by issuing an order inaccordance with Section 3 of the Export Import (Control) Act, 1957.  The involved authorities are the
Ministry of Industry, Commerce and Supplies, De partment of Commerce and the Central Bank who
would only use that authority in conformity with WTO provisions.  Currently, there were no
quantitative restrictions on imports other than those banned for import or domestic production listed
in paragraph 45 to 48 above.  The representative of Nepal noted that it was the intent of hisWT/ACC/NPL/16
Page 23
Government to introduce WTO-consistent legislation and amend the Export Import (Control) Act
(1957) and Regulations (1978) in accordance with the Legislative Action Plan contained in
WT/ACC/NPL/10/Rev.1, authorizing trade restrictions for trade remedies and for balance of payment
purposes only in the cases specified in the WTO Agreements and in accordance with WTO
provisions.
75. The representative of Nepal confirmed that fr om the date of accession Nepal would only use
the authority in Section 3 of Export Import (Control) Act of 1957 in conformity with WTO
provisions, including in compliance with GATT 1994 Article XVIII and the Understanding on the
Balance of Payments Provisions on the General Agreement on Tariffs and Trade 1994.  Nepal
planned to introduce WTO-consistent legislation and regulations on safeguard measures and other
trade remedies as indicated in the Legislative Action Plan circulated in document
WT/ACC/NPL/10/Rev.1.  He further confirmed that  Nepal would apply safeguard, anti-dumping, or
countervailing duty measures only after notifying and implementing laws in conformity with the
provisions of WTO Agreements on Safeguards, the Implementation of Article VI of the GATT, and
on Subsidies and Countervailing Measures, and that after accession Nepal would apply any such
measures only in conformity with the relevant WTO provisions.  The Working Party took note of
these commitments.
Export regulation
Registration requirements, customs tariffs, fees and charges for services rendered, application
of internal taxes to exports
76. The representative of Nepal said that the same registration requirements and tariff
nomenclature were used for imports and exports.  The import and export licensing regime had beenintroduced for statistical purposes.  Currently Nepal levied export duties on the items listed in Annex
VI.  The purposes of levying export duties are to discourage environmental degradation, to ensure
food security and to discourage trade diversion to neighbouring countries.  The application for the
export licence was submitted to the Director-General of the Department of Commerce under the
prescribed form indicated in Schedule-2 of the Export Import Regulation 1978.  The necessarydocuments and the information required were mentioned in the application form.  The export licenses
were granted for different purposes, e.g., for commercial purpose, for purposes of private use for
specimen purpose, for purposes of Government office use, for maintenance purpose etc.  The
commercial purpose export licence is granted only to registered entities.  The Authority issues the
certificate of export licence, in accordance with the format prescribed in Schedule-4 of the Export
Import Regulation 1978.
77. The purpose of the export duties on natural resources were aimed at preserving the
environment and the country's afforestation resources.  The legal basis for the export duties was the
Finance Act.  The export duties applied by Nepal are listed in Annex VI.
78. The representative of Nepal said that Nepal levied an export service fee of 0.5 per cent ad
valorem .  The export service charge is applied on the basis of f.o.b. price, to all exports from Nepal.
Nepal has not considered reducing further the service charge.  An important reduction has alreadybeen implemented from 2 per cent to the current 0.5 per cent.  The current level of the service charge
did not represent a tax on export for fiscal purposes.  Nepal was examining the cost of the services
rendered by the administration with respect to exports and imports and would revise the export
charge, along with the import licensing fee, to brin g them into conformity with the requirements of
Article VIII of GATT 1994.
79. The representative of Nepal said that from the date of accession Nepal would charge an
export service fee representing the approximate cost of the services rendered, and would apply thisWT/ACC/NPL/16
Page 24
and other fees and charges for services rendered to exports in accordance with WTO Agreements, in
particular with Article VIII of the GATT 1994.  In this regard, the current charge of 0.5 per cent
would be at a flat rate expressed in NRs to ensure that it did not exceed the approximate cost of the
export services rendered.  The Working Party took note of these commitments.
Quantitative export restrictions, including prohibitions, quotas and licensing systems
80. Some Members of the Working Party noted that Nepal banned from exportation the following
products: Raw hides and skin (including dry salted); Raw wool; All imported raw materials, parts and
capital goods; Mamira; and Logs and timber.  In their view, the ban on the export of raw hides and
skins, raw wool, and logs and timber could not be justified under Articles XI(a) and XX(g) of the
GATT 1994, unless the export restrictions were made effective in conjunction with restrictions on
domestic production or consumption,  or action was taken to prevent or relieve critical shortages of
foodstuffs or other products essential to Nepal.  The ban on the export of imported raw materials,parts and capital goods appeared to be inconsiste nt with Article III and XI of GATT 1994 and should
be eliminated.  The representative of Nepal said that logs, timber and mamira obtained from naturally
grown plants were exhaustible natural resources and it was Nepal's responsibility as a signatory of
various Multilateral Environmental Conventions, to preserve and protect natural resources.  Thus,
there were also restrictions for domestic consumption and for authorized uses.  Nepal would considerlifting the ban or restriction on the export of these products which were planted (not natural resources)
and grown for commercial purposes.  The export restrictions on raw hides and skins and raw wool,
had been temporarily applied and Nepal intended to lift this export restriction at an appropriate time.
Nepal had banned the export of imported raw materials, parts and capital goods due to the possibility
of trade deflection.  These measures would be re viewed in the light of Article III and XI of
GATT 1994.
81. The representative of Nepal said that as a party to the Convention on International Trade in
Endangered Species of Flora and Fauna (CITES), Nepal honoured the obligations stemming from the
said Convention.  The Forest Act, 1992 did not award any export licence for the products prohibited
by the Convention.  The list of protected wild animals and forest based products banned for exports asof July 2001 is as follows:
Table 4:  List of Protected Wild Animals and Forest-based Products
Wild Animal
HS Code Scientific Name English Name
01.06 Macaca assamensis Assamese monkey
01.06 Manis pentadactyla Indian pangolin
01.06 Caprolagus hispidus Hispid hare
01.06 Canis lupus Wolf
01.06 Usrus arctos Himalayan bear
01.06 Ailurus fulgens Red panda
01.06 Prionodon pardicolor Spotted linsang
01.06 Felis bengalensia Leopard cat
01.06 Felis lynx Lynx
01.06 Neofelis nebulosa Clouded leopard
01.06 Panthera tigris Tiger
01.06 Panthere uncia Snow leopard
01.06 Elephas maximus Asiatic elephant
01.06 Rhiniceros unicornis Rhinoceros
01.06 Sus salvanius Pygmi hog
01.06 Moschus moschiferos Musk deer
01.06 Cervus duvauceli Swamp deerWT/ACC/NPL/16
Page 25
Wild Animal
HS Code Scientific Name English Name
01.06 Bos gaurus Gaur
01.06 Bos grunniens Wild yak
01.06 Bubalus bubalis Wild buffalo
01.06 Ovis ammon Great Tibetan sheep
01.06 Pantholops hodgsoni Tibetan antelope
01.06 Antilope cervicapra Black buck
01.06 Tetraceros quadricornis Four horned antelope
01.06 Hyaena hyaena Striped hynae
01.06 Platanista gangetica Gangetic dolphin
HS Code Forest Based Products, Restricted for Exports
12.11 Cordyceps sinensis
12.11 Orchis incanata
12.11 Nardostachys grandiflora
12.11 Rauwolfia serpentine
12.11 Cinnamum glaucescens
12.11 Valeriana jatamansi
12.11 Lichen spp
12.11 Rock exudete (Silazit)
12.11 Abis spectabilis
12.11 Taxus baccata
12.11 Michelia chanpaca
12.11 Acacia ctechu
12.11 Shorea robusta
82. With reference to the export of handicrafts, the representative of Nepal said that there were no
fixed valuation prices for handicrafts, or an expo rt minimum price list.  The exporter submits its
export prices to the Handicrafts Association, who evaluates the proposed prices on the basis of certain
criteria, to recommend the exporter an export price.  Criteria used by the Handicrafts Association
were: Measurement - height and weight; Cost of materials incorporated: domestic and from third
country;  Cost of labour incorporated in the products; and the Quality of the product.  The Handicrafts
Association is a private entity, with no Governmental intervention.  It evaluates export prices as a
service to producers to avoid them under-pricing their products for export.  For the export ofhandicrafts made from the parts of domestic animals, the exporters must present the exporters
declaration form, the invoice and a sample of the goods to be exported to the Handicrafts Association.
The Association issues a No Objection Letter if they are made from parts of domestic animals.  The
service fee charged by the Association for this purpose is:  NRs 50 for FOB value less than NRs
10,000; and NRs 100 for FOB value NRs 10,000 and ab ove.  The Association reviews the price
according to the criteria described above, and if it is approved the certificate is issued.  In the case of
archaeological goods the exporter has to produce the approval certificate from the Department of
Archaeology.  The service fee charged by the Handicrafts Association is 0.5 per cent of f.o.b.  price of
exported goods.
83. The representative of Nepal said that as stat ed in the Legislative Action Plan circulated in
document WT/ACC/NPL/10/Rev.1 the Export Impor t (Control) Act, 1957 (Amendment) and the
Export Import (Control) Regulation 1978 (Amendments ) would be amended.  Amendments to bring
any export licensing requirements or other export control requirements into conformity with WTO
provisions had already been prepared, or would be prepared by the Department of Commerce inWT/ACC/NPL/16
Page 26
August 2003, and would be submitted by the Ministry of Industry, Commerce and Supplies to the
Council of Ministers in September and October 2003, respectively.  Nepal would review and identify
provisions inconsistent with the WTO, and the export/import legislation would be amended to bring it
into conformity with the relevant WTO provisio ns.  Endorsement and adoption by the Council of
Ministers of the amendments to the Act and the Regulations would be approved by31 December 2003.
84. The representative of Nepal confirmed that from the date of accession, Nepal would apply its
export licensing requirements and other export co ntrol requirements in conformity with WTO
provisions, including those contained in Articl es XI, XVII, XX and XXI of the GATT 1994.  The
Working Party took note of these commitments.
Export financing, subsidy and promotion policies
85. The representative of Nepal said that in order to provide a macro-environment conducive for
export promotion, the Government had formulated trade policy, export policy, foreign exchange
policy and domestic trade policy.  A Commercial Council with majority participation of the private
sector had been formed to coordinate activities of all agencies involved in the export activities.
Foreign exchange for the purpose of current account transactions of the balance of payments had been
made convertible.  Income from exports had been exempted for income tax purposes.  The dutydrawback system for the import of raw materials for exportable commodities had been made more
effective.  Other export promotion activities such as participation on international trade fairs, product
development, product diversification and quality improvement of exportable commodities have been
encouraged.  The Government had undertaken or planned to undertake export promotion activities for
the following commodities: Agricultural Commodities such as lentils, Niger seeds, tea and coffee,
ginger, cardamom, vegetable seeds, flower, silk and silk products, medicinal herbs, fruits etc.;
Industrial Goods such as woollen carpets, readymade garments, leather and leather products, cotton
products, woollen sweaters, woollen mufflers etc.; Traditional Handicraft Products etc.; Products of
Cottage and Small Industries and Other Products such as computer software.  The Trade Promotion
Centre, established in 1971, had been working as the Secretariat of the Nepal Trade Promotion Board,constituted under an order of the Development Board Act 2013.  The primary objective of the Centre
was to promote Nepal's export trade in particular and foreign trade in general.  In 1995 amendments
were made to the Nepal Trade Promotion Board (Formation Order) and the scope of the activities of
the Centre was extended to import management.  The Board was chaired by the Secretary of the
Ministry of Industry, Commerce and Supplies a nd included representation of the Ministries of
Industry, Commerce and Supplies, Finance, business associations and communities.
Internal Policy Affecting Foreign Trade in Goods
Industrial policy, including subsidy policies
86. The representative of Nepal said that Nepal did not provide direct payment of incentives to
any industry.  There were certain exemptions in terms of income tax, sales tax, excise duty and
customs duties to the industries qualifying under the conditions stated in Industrial Enterprise Act
1992.  The purpose of the incentives was to ensure balanced industrial development both regionallyand sector-wise.  Nepal had not compiled data on the revenue exempted by such incentives and on the
identification of recipients.  The following provisions governed the incentives provided:
(a) cottage industries are exempted from sales tax, excise duty and income tax;
(b) income tax in excess of twenty per cent is not levied on the income derived from any
industries except industries utilizing tobacco as their basic raw material, and alcoholor beer producing industries;WT/ACC/NPL/16
Page 27
(c) except for industries utilizing tobacco as their basic raw material, alcohol or beer
producing industries and saw-mill and catechu industries, any industry using 80 or
more than 80 per cent of indigenous raw material in its products and supplying all its
manpower from among Nepalese citizens are entitled to obtain a rebate at the rate of
10 per cent of the income tax;
(d) any national priority industry which constructs and operates road, bridge, tunnel, rope
way, flying bridge, and manufactures and operates trolley buses and trams are entitled
to a rebate of 50 per cent of the income tax on their income for ten years from the
date of operation.  Other national priority industries such as agro and forest-based
industries, engineering industry (producing agricultural and industrial machinery),
industry manufacturing fuel saving or pollution control devices, solid waste
processing industry, hospital and nursing home (only outside the Kathmandu valley),industries producing ayurvedic, homeopathic and other traditional medicine,
industries producing crutch, seat belt, wheel chair stretcher and stick and so on to be
used in aid of the disabled and orthopaedic, cold storage installed for the storage of
fruits and vegetables, are entitled to get a rebate of 50 per cent of the income tax on
their income for seven years from the date of operation;
(e) any industries except industries utilizing tobacco as their basic raw material, and
alcohol or beer producing industries established in remote, undeveloped and
underdeveloped areas are entitled to get a rebate of 30, 25, and 20 per cent of the
income tax respectively and 35, 25 and 15 per cent of the excise duty respectively for
a period of ten years from the date of operation;
(f) Fruit-based fruit processing and cider and wine industries with fixed assets up to
NRs2.5 million, established in particular areas, are entitled to an excise duty and sales
tax exemption for a period of ten years, and fruit based alcohol are entitled to excise
duty and sales tax exemption for a period of five years.  Such exemption could be
extended for additional period of three years;
(g) if an industry diversifies itself through reinvestment, in the same or any other
industry, and expands its installed capacity by 25 per cent or more, modernizes its
technology or develops ancillary industries, it is entitled to a deduction of 40 per cent
of new additional fixed assets from its taxable income;
(h) any industry investing in process or equipment, which has the objective of controlling
pollution or which may have a minimum effect on the environment is entitled to
reductions of up to 50 per cent from the taxable income for such investment;
(i) any industry is entitled to deduct 10 per cent of the gross profit from the taxable
income on account of expenses related to technology, product development and
efficiency improvement;
(j) no income tax is imposed on dividends earned out of the investment made in any
industry;
(k) up to 5 per cent of gross income spent for the advertisement of the products or
promotion services, hospitality and any other similar expenses is allowed to be
deducted while assessing the taxable income;
(l) If an industry provides direct employ ment to 6 hundred or more than 6 hundred
Nepalese citizens round the year, an additional income tax rebate at the rate of 10 percent for that year is granted in addition to other facilities;
(m) If any industry utilizes locally available raw materials, chemicals and packing
materials etc.  on which excise duty or sales tax or both are already imposed, the
excise duty, sales tax or both shall be reimbursed to the industry utilizing such raw
materials, chemicals and packing materials;
(n) No income tax is levied on the profits earned through export;
(o) An industry is entitled, for the purpose of the income tax, to deduct the amount of
expenses incurred by it for the long-term benefit provided its workers and employees
including housing, life insurance, health facilities, education and training.WT/ACC/NPL/16
Page 28
(p) Subsidies in seeds, plants, irrigation pipes and pumping were provided by the
respective line agencies.  These subsidies, though small in quantity, were provided
directly to the producer-farmers who use these products as inputs.  Only farmers were
eligible for these subsidies.
87. Some Members of the Working Party said that they considered that the exemption from
incomes taxes for profits earned through export, sales and excise tax exemptions for use of local raw
materials, as well as the rebate of 10 per cent of the income tax for industries using eighty per cent or
more local raw materials in their output were prohibited subsidies under Article 3 of the Subsidies
Agreement.  In their view this subsidy should be eliminated and notified under Article 25.  The
representative of Nepal said that as a least developed country, Nepal should benefit from the special
and differential treatment provided in Article 27 of the Agreement on Subsidies.  The representative
of Nepal said that the Income Tax Act, 2000 had eliminated a number of rebates previously given byrelated legislation.  For example, it had deleted the following provisions on income tax related
facilities and concessions as provided for in the Industrial Enterprises Act, 1992.
(a) Exemption of income tax in excess of 20 per cent on the income derived from any
industries other than the ones producing cigarettes, bidis, cigars, chewing tobacco,
and industries producing other goods of a similar nature utilizing as their basic rawmaterials and alcohol or beer producing industries,
(b) Exemption of a rebate at a rate of 10 per cent of the income tax for any industry using
80 or more than 80 per cent of indigenous raw materials in its products and supplying
all its manpower from among Nepalese citizens, except for cigarette, bidi, cigar,
chewing tobacco, khaini industries and industries producing other goods of a similarnature utilizing tobacco as their basic raw material and industries providing alcohol or
beer, and saw mill and catechu industries.
(c) A rebate of 50 per cent of the income tax of income earned by any national priority
industry, which constructs and operates roads, bridges, tunnels, rope ways, flying
bridges, etc. for a period of ten years from the date of operation.
(d) Entitlement of an industry that diversifies itself through reinvestment in the same or
expending its installed capacity by 25 per cent or more, modernizes its technology or
develops ancillary industries to a deduction of 40 per cent of new additional fixed
assets from its taxable income.
(e) Permission to capitalise pre-operation costs incurred by any industry in connection
with skill development training.
(f) Permission to deduct up to five per cent of gross income spent for the advertisement
of the products or promotion services, hospitality and other similar expenses, while
assessing taxable income.
It had also repealed the provision contained in the Foreign Investment and Technology Transfer Act
(FITA), 1992 under which a foreign investor shall be levied income tax at the rate of 15 per cent only,
on the income earned from a foreign technical as well as management service fee and royalty.
88. The representative of Nepal said that as stated in the Legislative Action Plan reproduced in
Annex II of this Report, the Industrial Enterprise s Act, 1992 (Amendment), the Industrial Enterprises
Regulations and the Industrial Policy 1992 (Amendment) would be amended to bring them into
conformity with the WTO Agreements on Subsidies and Countervailing Measures and on Trade
Related Investment Measures.  Amendments had already been prepared, or would be prepared by theDepartment of Industry in June and August  2003 and March 2004.  These amendments would be
submitted by the Ministry of Industry, Commerce and Supplies to the Council of Ministers in
December 2003 and May 2004, respectively.  Nepal would identify subsidy measures incompatible
with the WTO and these would be eliminated.  E ndorsement and adoption by the Council of MinistersWT/ACC/NPL/16
Page 29
of the amendments to the Acts and the Regulations would be approved in February and May 2004.
The Working Party took note of these commitments.
89. The representative of Nepal confirmed that Nepal would administer its subsidy programmes,
including those provided for in the Industrial Ente rprise Act 1992, in full conformity with the WTO
Agreement on Subsidies and Countervailing Measures, including Article 27.2.  All necessaryinformation on such programmes would be notified to the Committee on Subsidies and
Countervailing Measures in accordance with Article 25 of the Agreement upon entry into force of
Nepal's Protocol of Accession.  The Work ing Party took note of these commitments.
Technical Regulations and Standards
90. The representative of Nepal submitted the Check List of Illustrative TBT Issues circulated in
document WT/ACC/NPL/5 and the following laws, "N epal Standards (Certification Mark) Act, 1980"
and "Standard Weights and Measures Act, 1968".  These laws set a transparent system with theintervention of laboratories to carry out tests, provision for judicial review and compliance with the
most favoured nation and national treatment obligations.
91. He said that the authority to determine standards in relation to any goods, process or services
was the Nepal Council of Standards (NCS).  The Council was a government body chaired by Minister
for Industry, Commerce and Supplies and the members include, among others, the president ofFederation of Nepalese Chambers of Commerce, and representatives from Tribhuvan University.  A
Technical Committee under the NCS sets standards based on internationally defined parameters,
national data and national requirements, among others.  The participation in the Technical Committee
currently included representatives of the concerned Ministries and Governmental agencies, the private
sector through the Federation of Nepalese Chambe rs of Commerce and Industry (FNCCI), Consumers
Forum and the universities.  The Council can  invite specialists to its meetings.
92. The Nepal Bureau of Standards and Metrology (NBSM) prepared preliminary drafts of the
standards or technical regulations which were th en submitted to the Technical Committee for review
and amendment, if necessary.  The NBSM elaborates all standards and technical regulations, except
for health and food products and oversees all mandatory certification activities.  The Ministry ofHealth through its Department of Drug Administra tion, and the Ministry of Agriculture through the
Department of Food Technology and Quality Control, are responsible for the formulation of standards
and technical regulations based on international standards, when available, to guarantee the protection
of health and food products, respectively.  Foreign organizations do not currently participate in
mandatory certification activities.
93. The Decisions of the Technical Committee were circulated to concerned agencies to provide
comments within 30 days.  With the agencies recommendations or suggestions a final draft is
produced by the NBSM.  The final draft is sent to the National Council for Standards, who review it
and, if necessary, introduce amendments and then the Council approves it.  Once approved, the
standards or technical regulations are sent for publication and implementation.  Technical regulations
are published in the Nepal Gazette.  Standards are published in booklet form.  Once standards were
set, the government may make them mandatory technical regulations upon the recommendation of theministry concerned e.g.  Ministry of Agriculture, Ministry of Health, Ministry of Environment, and
the consumers association.  Such recommendations were currently made without seeking additional
advice through the Technical Committee.  There was a very limited number of technical regulations
that applied basically to raw wool, cement, iron bars, mineral water, CGI Sheets, Dry Cell Battery, GI
Wire and LPG cylinders.  In the case of wool, it was necessary to guarantee the quality of Nepalesecarpet exports; in other cases the considerations related to consumer safety.  The importation of plant
and plant products had to meet the standards laid down by the Division of the Plant Protection of the
Department of Agriculture.  The Division examined samples of the non-food item before a permit isWT/ACC/NPL/16
Page 30
issued by the customs for import.  Nepal was a Corresponding Member of ISO and followed the
standards prescribed by ISO.  In elaborating National Standards, the NBSM follows international
standards.  National standards are based on ISO standards, standards of the British Standard Institute,
of the International Electrical Committee, on the Indian Standards, and if required on CODEX and
ESTM Standards.
94. The representative of Nepal said that currently technical regulations applied only to iron bar,
cement, mineral water, wool, CGI Sheets, Dry Cell  Batteries, GI Wire, and LPG cylinders, Nepal did
not currently accept as equivalent, certificates from third country certification bodies.  With regard to
standards, 596 product and testing methods had been  approved to date.  Another 200 were in the
process of drafting.  Most Nepalese National Standards are based on international standards.  If there
are no international standards then the NBSM will elaborate the national standard according to the
country's requirements.  The ratio of standards based on international standards is 90 per cent.
95. With reference to the quality certification system , the representative of Nepal said that the
National Certification Mark (NCM) currently in use consists of the authorization granted by the
NBSM, upon request to any company producing goods for which technical regulations and standards
exist in Nepal, to use a distinctive sign in thei r products which means that the product complies with
the required regulations or standards.  In order to grant authorization to use the distinctive mark in any
product, the NBSM conducts inspections, testing, and sets other requirements such as to have in-
house laboratories, necessary skill manpower and quality manuals, that the producer has to fulfil in
order to receive the authorization.  After authorization has been given, the NBSM undertakes frequent
inspections and testing in the industries and in the market.  To date quality certification marks have
been approved for 111 companies, covering 32 products.  The products and number of companies thathave received approval are listed in Annex V of this report.
96. The representative of Nepal recognized that amendments would have to be made to the
standards regime including the Nepal Standards (Certification Mark) Act 1980 and the Regulations
1982 (Amendment) to bring them into full comp liance with the WTO Agreement on Technical
Barriers to Trade.  Nepal also intended to review its technical regulations in light of WTO provisions,and was seeking technical assistance to help with this work.  As a first step, in June 2003 the Ministry
of Industry, Commerce and Supplies established an enquiry point in the Nepal Bureau of Standards
and Metrology.  A timetable for the enactment of legislation that implements the WTO Agreement on
Technical Barriers to Trade in Nepal's legal regime was provided in the Legislative Action Plan
circulated in document WT/ACC/NPL/10/Rev.1 and in the action plan circulated in document
WT/ACC/NPL/13.  Amendments would be prepared in June 2004 and September 2005 and would be
submitted to the Council of Ministers.  These amendments would be endorsed and adopted by theCouncil of Ministers by 31 January and 31 December 2005.  Having regard to the action plan, Nepal
would implement fully the provisions of the Agreement on Technical Barriers to Trade, including
compliance with the Code of Good Practice, by 31 December 2006.
97. In light of these plans, the representative of Nepal requested that the Working Party grant a
transitional period from the date of its accession until 1 January 2007 for implementation of the WTOAgreement on Technical Barriers to Trade, to allow Nepal to obtain and utilise technical assistance to
fully implement the obligations of the Agreement.   During this period, an enquiry point would be
brought into operation at an early stage and Nepal would provide national non-discriminatory and
MFN treatment to all imports in the application of technical regulations, standards and conformity
assessment procedures.  Measures in place already consistent with the provisions of the Agreementwould not be subject to transitions, and Nepal w ould ensure that any changes made in its laws,
regulations and practice during the transition period would not result in a lesser degree of consistency
with the provisions of the Agreement than existed on the date of accession.  Existing technical
regulations would be notified to the Committee on Technical Barriers to Trade and reviewed for
conformity to WTO requirements.  Any standards, technical regulations, and conformity assessmentWT/ACC/NPL/16
Page 31
procedures adopted during this period would be developed in conformity with the provisions of the
Agreement.  Nepal would fully participate in th e work of the Committee on Technical Barriers to
Trade.  He added that Nepal would seek out all available technical assistance including under Article
11 of the TBT Agreement to ensure that its capacity to fully implement the Agreement upon
expiration of the transition period is assured.  In response to requests from delegations for morespecificity, the representative of Nepal presented an Action Plan setting out details of the steps Nepal
would take in order to achieve this objective and a timetable for each step (Table 5).
 Table 5:  Action Plan for Implementation of the
Agreement on Technical Barriers to Trade
 Action Implementation
Date
 Establishment and operation of a single Contact Point for Information (“enquiry point”)
 Nepal Bureau of Standards and Metrology (NBSM)
 P O Box 985
 Balaju
 Kathmandu, Kingdom of Nepal
 Tel./Fax: +977 1 435 0689
 Email nbsm@nbsm.gov.np Prior to
1 January 2004
 Identification
 --of the authority responsible for notifications and publications and other internal
procedures to ensure transpar ency obligations are met on an ongoing basis (e.g., the Nepal
Bureau of Standards and Metrology (NBSM)
 --of the publication or website where notices  of standards, technical regulations and
conformity assessment procedures will appear Prior to
1 July 2004
 Strengthening of documentation and networking system and training of personnel
involved on TBT notification and publications  Approval of Amendments to Nepal Standards Act
 
 Initiation of prior publication for comment of all technical regulations, standards, and
conformity assessment procedures in  the identified journal or website Prior to
1 July 2005
 Approval of Amendment of Nepal Standards Regulations
  Establishment of procedures for the development and application of technical regulations
in conformity with WTO and compliance with Code of Good Conduct for establishment
of standards 
 Submission of Statement on Implementation (G/TBT/1) Prior to
1 January 2006WT/ACC/NPL/16
Page 32
 Action Implementation
Date
 Upgrading existing testing and calibration facilities
  Completion of review and adjustment of technical regulations and procedures in
accordance with WTO requirements
 
 Establishment of scheme of registration and certification of products
  Establishment of
  --a system of nondiscriminatory procedures for the recognition of conformity assessment;
and
  --a system for mutual recognition or accreditation (Articles 5 and 6)
  Full implementation of the WTO Agreement on Technical Barriers to Trade Prior to
1 January 2007
98. The representative of Nepal confirmed that Nepal would progressively implement the
Agreement on Technical Barriers to Trade in accordance with the Action Plan in Table 5 and with the
understanding that during this period the scope of implementation of other aspects of the Agreement,
as described in paragraph 97 would be applied by Nepal.  Nepal would implement fully the provisions
of the Agreement on Technical Barriers to Trade, including compliance with the Code of GoodPractice by 1 January 2007.  The Working Party took note of these commitments.
Sanitary and Phytosanitary Measures
99. The representative of Nepal said that the export and import of plant and plant materials such
as seeds, saplings, and seedlings was subject to phytosanitary measures at the border checkpoints and
at the Tribhuvan International Airport, Kathmandu in accordance with the Plant Protection Act, 1972and Plant Protection Rules, 1974.  These products were examined for the possible presence of any
obnoxious or restricted pathogens, pests, and weed seeds on the basis of the items listed in the act and
rules which are periodically updated following the recommendations of the Regional and International
Plant Protection conventions and the findings of national surveys and surveillance.  Check posts were
under the jurisdiction of a central level Plant Quarantine Section of the Plant Protection Directorate inthe Department of Agriculture.  The Contagious or Infectious Disease Act, 1963 authorized the
government to intercept any person, animal, animal products, and feeds suspected of carrying an
infectious disease or agent at entry points.  Such a person and animal may be hospitalized or isolated
for "examination and control" as per the act.  Animal quarantine check posts located at the border
areas were coordinated and administered by the Animal Quarantine Section of the Animal HealthDirectorate at the central level.  A separate Animal Health and Livestock Services Act was enacted
and enforced in 2000 that governs the Animal Quar antine.  Minimum standards or specifications had
been fixed for certain categories of agricultural products (food products—processed and unprocessed)
and animal feeds under the Food Act, 2023 (1967) and Food Rules, 2027 (1970) and the Animal
Concentrates Act, 1976.  The export and import of such products must comply with the fixed
standards.  The responsibility to implement these laws lies with Department of Food Technology and
Quality Control in association with the local administration.
100. The Pesticides Act, 1991 and Pesticides Rules, 1994 regulate the export and import of
pesticides with a view to protect the environment and ensure sanitary measures.  These acts and rules
authorize the Ministry of Agriculture and Cooperatives to ban and/or restrict any PIC pesticides that
are potentially hazardous to health.  With respect to Drug Policy and Regulatory Service, the
Department of Drug Administration had the responsibility of implementing the Drug Act, 2035(1978) and the Drugs Registration Regulation, 2038 and the Drugs Examination, Inspection,WT/ACC/NPL/16
Page 33
Regulation, 2040.  The department with the aid of various regulations has been implementing the
provisions of the act.  In accordance with the objectives of the "Health for all" and to improve and
manage coordination among the governmental, non-g overnmental and private organizations involved
in the activities related to drug production, import, export, storage, supply, sales, distribution, quality
assessment, regulatory control, rational use, and information flow, the National Drug Policy 1995 hadbeen implemented.  It puts emphasis on the maintenance, safeguarding and promotion of the health of
people by making the country self-reliant in drug production; ensuring the availability of sale of
effective, standard, and quality drugs at affordable price in quantities sufficient to cover the needs of
the country, and to cover effectively all the drug-related activities including production, import,
export, storage, safety, supply and distribution.  Medicines imported into the country should comply
with the standards laid down by the Ministry of Health.
101. In response to questions, the representative of Nepal submitted the Check List of Illustrative
SPS Issues (WT/ACC/NPL/6).  With reference to the Plant Protection Act, 1972 and the Plant
Protection Regulation, 1975, he said that the Act and Regulations cover the essential legal framework
to address all the requirements of enforcing phytosanitary measures for import and export of
agricultural commodities.  The Seed Act, 1998 required only notified seeds to be exported or imported
to help maintain seed quality.
102. At the request of Members of the Working Party, the representative of Nepal provided the
Pesticides Act, 1991, and Pesticides Regulation, 1994.He said that considering the shared
responsibility between the exporting and importing c ountry in protecting health and the environment
from harmful effects of listed pesticide and industrial hazardous chemicals, in accordance with the
prior informed consent procedures (PIC), Nepal bans all the PIC listed pesticides and chemicals (22pesticides and 5 industrial chemicals) except Methyl Parathion and Monocrotophos because there
were no alternatives for these products.  The importation of these products was under active review.
Nepal had participated in the Plenipotentiary Conf erence in Rotterdam (September 1998) for signing
the PIC Convention.WT/ACC/NPL/16
Page 34
Table 6:  PIC List – Pesticides and Industrial Chemicals
Pesticides Industrial Chemicals
2,4,5, - T Crocidolite
Aldrin Polybrominated biphenyl (PBB)
Captafol Polychlorinated biphenyl )PCB)
Chloroenzilate Polychlorinated trephines (PCT)
Chlordane Trist (2, 3 dibromopropy1) phosphate
Chlordimeform
DDT
Dieldrin
Dinsoeb
1, 2 – dibromoethane (EDB)
Fluoroacetamide
HCH
Heptachlor
Hexachlorobenzone
Lindane
Mercury compounds
Pentachlorophenol
Certain formulations of metlamidophos
Methyl-parathion
Monocrotophos
Parathion
Phosphamidon
103. With reference to international organizations, the representative of Nepal said that Nepal
adheres to the International Plant Protection Conv ention (IPPC) executed and administered by FAO.
Nepal was a member of the Asia Pacific Plant Protection Commission (APPPC).  Nepal had adhered
to the FAO "Plant Protection Agreement for the Asia and Pacific Region" on 5 August 1965.  APPPCwas a regional organisation adhering to IPPC charters for harmonizing the implementation of
phytosanitary measures.  Through APPPC, Nepal was trying to streamline and scientifically build
land border quarantine procedures considering that Nepal is geographically landlocked.  The Animal
Health and Livestock Service Act 1998, Slaugh ter House and Meat Inspection Act 1998 and the
Veterinary Council Act 1998 were in force.  Nepal was a member of the OIE; Codex Alimentarius
and Asia Pacific Plant Protection Commission.  He stressed that Nepal was fully committed to adopt
all the sanitary measures in relation to equity, transparency, harmonization, adoption of regionalconditions, risk assessment, and control inspection and approval procedures, and also for the
administration and implementation with all the WTO member countries.  Even though there were
constraints in terms of technical expertise and resources to fulfill these commitments, Nepal would
give priority to the strengthening of the plant an d animal quarantine service in the country to make
sanitary and phytosanitary measures consistent with WTO obligations.
104. In response to questions concerning the National Drug Policy, the representative of Nepal
said that the measures the Department of Drug Administration (DDA) had taken to achieve self-
sufficiency in drug production were as follows: provide technical inputs in drug production and
quality assurance; lower custom duties on the importation of raw materials, machinery and analytical
instruments at one per cent of the invoice value; lowered the income tax for five years; and providedforeign currency needed for purchasing raw materials and machinery.  There were some 25
pharmaceutical companies producing about 20 per cent of the national demand for drugs.  For the
purpose of protecting health, the administration had formulated and implemented different regulationsWT/ACC/NPL/16
Page 35
with respect to importation, exportation, supply and distribution of pharmaceutical products in Nepal.
The enforcement of industrial property rights in respect of pharmaceuticals was the responsibility of
the Department of Industry (DOI).
105. The representative of Nepal recognized that amendments would have to be made to the
sanitary and phytosanitary regime including the Plant Protection Act, 1972 (Amendment), the PlantProtection Regulation, 1975 (Amendment), the Seed Ac t, 1998 (First Amendment) and to other legal
texts to bring them into full compliance with the WTO Agreement on Sanitary and Phyto-Sanitary
Measures.  As a first step, the Ministry of Agriculture and Cooperatives would establish an enquiry
point by 1 January 2004.  A timetable for the enactment of legislation that implements the WTO
Agreement on Sanitary and Phyto-Sanitary Measures in Nepal's legal regime was provided in the
Legislative Action Plan circulated in document  WT/ACC/NPL/10/ Rev.1 reproduced in Annex II of
this Report, and in the action plan circulated in document WT/ACC/NPL/12.  Amendments preparedand approved during the period 2004-2005 would be submitted to the Council of Ministers.  These
amendments would be endorsed and adopted by the Council of Ministers in August 2004, April 2005
and December 2005.  Having regard to the action plan, Nepal would implement fully the provisions of
the Agreement on Sanitary and Phytosanitary Measures, by 31 December 2006. 
106. In light of these plans, the representative of Nepal requested that the Working Party grant a
transitional period from the date of its accession until 1 January 2007 for implementation of the WTO
Agreement on Sanitary and Phytosanitary Measures, to allow Nepal to obtain and utilise technical
assistance to fully implement the obligations of th e Agreement.  During this period, existing measures
would be applied on a non-discriminatory basis, i.e. providing for national treatment and MFN
treatment to all imports.  Measures in place already consistent with the provisions of the Agreementon Sanitary and Phytosanitary Measures would not be subject to transitions, and Nepal would ensure
that any changes made in its laws, regulations and practice during the transition period would not
result in a lesser degree of consistency with the provisions of the Agreement than existed on the date
of accession.  Technical regulations and other measures adopted during this period would be
developed in conformity with the provisions of the Agreement.  Priority would be given to the
establishment of a functioning enquiry point and the notification of all of Nepal's SPS measures to the
Committee on Sanitary and Phytosanitary Measures .  He added that Nepal would seek out all
available technical assistance including under Article 9 of the SPS Agreement to ensure that its
capacity to fully implement the SPS Agreement upon expiration of the transition period is assured.
Nepal would fully participate in the work of the Committee.  In response to requests from delegations
for more specificity, the representative of Nepal presented an Action Plan setting out details of the
steps that still remained to be taken in order to achieve this objective and a timetable for each step(Table 7).
107. The representative of Nepal confirmed that Nepal would progressively implement the
Agreement on Sanitary and Phytosanitary Measures in accordance with the Action Plan in Table 7
and with the understanding that during this period the scope of implementation of other aspects of the
Agreement, as described in paragraph 106 would be applied by Nepal.  Nepal would implement fullythe provisions of the Agreement on Sanitary and Phytosanitary Measures by 1 January 2007.  He also
confirmed that Nepal would consult with WTO Members upon request if they deemed that any
measures applied during the transition period affected their trade negatively.  The Working Party took
note of these commitments.WT/ACC/NPL/16
Page 36
Table 7:  Action Plan for Implementation of the
Agreement on Sanitary and Phytosanitary Measures
Action Implementation Date
Food Act 1966 – Codex Alimentarius Completed
Establishment and operation of a single Contact Point for Information
(“enquiry point”) (Article 7 and Annex B:2) Prior to 1 January 2004
Acquisition of equipment and training of SPS enquiry point personnel(Article 7 and Annex B:2) Prior to 1 January 2005
Approval or Amendments to:Plant Protection Act 1972Seed Act of 1988
Designation of authority responsible for making notifications to the WTO
and ensuring transparency obligations are met on an ongoing basis
Review of all existing regulations and new amendments to ensure
regulations are based on risk assessments and sufficient scientific evidence.
Upgrading of human resources with special emphasis on quarantine
management, meat inspection, veterinary investigation and animal diseaserisk analysis.
Declaration of pest or disease-free areas and areas of low pest or disease
prevalence (Article 6 and Annex A:6 and A:7) Prior to 1 July 2005
Approval or Amendments to:
Plant Protection Regulations 1975
Membership in the International Plant Protection Convention
Implementation of Publication and Notification procedures including a
process to take comments into account without discrimination (Annex B:1,3,5 and 10)
Initial notification of legislation and regulations to WTO Prior to 1 January 2006
Development of SPS guidelines and protocols Prior to 1 July 2006
Upgrading and strengthening of quality control unity, laboratory, quarantine
system and field veterinary system
Opening new quarantine check post and development of pre and post
quarantine facilities
Harmonization with international standards, guidelines, and
recommendations  (Article 3)
Control, inspection and approval procedures for all SPS measures
Full implementation of the WTO Agreement on Sanitary and Phytosanitary
Measures Prior to 1 January 2007
Trade-Related Investment Measures (TRIMs)
108. The representative of Nepal confirmed that Nepal would amend the trade related investments
measures regime included in the Foreign Investment and One Window Policy, 1992 (Amendments),Industrial Policy, 1992 (Amendment), Industrial Enterprises Regulations, Industrial Enterprises Act
1992 (Amendment), Foreign Investment and Technology Transfer Regulations and the Foreign
Investment and Technology Transfer Act 1992 (Amendm ent) to ensure that there was full complianceWT/ACC/NPL/16
Page 37
with the WTO Agreement on Trade Related Investment Measures.  A timetable for the enactment of
this legislation was provided in the Legislative Action Plan circulated in document
WT/ACC/NPL/10/Rev.1.  Policies would be prepared  by the Department of Industry by August 2003
and adopted by the Ministry of Industry, Commerce and Supplies by September 2003.  Draft bills and
regulations would be prepared by the Department of Industry and would be submitted by the Ministryof Industry, Commerce and Supplies to the Council of Ministers.  The expected approval dates for all
the legislation would be May 2004.
109. The representative of Nepal confirmed that Nepal had carefully reviewed the relevant
legislation and was unable to find any measures currently in place inconsistent with the Agreement on
Trade-related Investment Measures.  He added that these measures would be notified to the
Committee on TRIMs upon accession as part of Nepal's initial WTO notification.  The Government of
Nepal would ensure that, from the date of accession, no trade-related investment measures would beintroduced unless in conformity with the requirements of the Agreement, including Article 4.  The
Working Party took note of these commitments.
State trading
110. The representative of Nepal said that the State-owned enterprises in Nepal were independent
entities under the general supervision of the concerned ministries.  They had been establishedessentially with the objective of ensuring adequate supply of raw materials and essential goods.
These enterprises operated on commercial considerations and provide equal opportunities for all
suppliers as prescribed in GATT 1994 Article XVII and in the Understanding on the Interpretation of
Article XVII of GATT 1994.  The government had ma de statutory provisions for transparency and
cost-consciousness in the operations of these enterprises.  For example, they were obliged to call forat least three quotations for procurement and adopt competitive bidding for any contract.  The
information concerning the following State owned en terprises should not in any way be interpreted as
considering them State-trading enterprises with exclusive rights or privileges:
- Nepal Food Corporation mainly procures food grains to stabilize prices and supply of
food grains in deficit area.
- National Trading Limited imports essential goods such as cement, sugar, clothes, and
iron rods with a view to stabilize price.
- Nepal Coal Company imports coal for manufacturing firms.  (underway to
liquidation)
- Nepal Transit and Warehouse Company functions as an autonomous body
responsible for clearing and forwarding cargo.
Nepal Oil Corporation, which imports petroleum products and enjoyed exclusive rights to import
petroleum products excluding lubricants, and the Salt Trading Corporation, which imports salt and
sugar, have special privileges and would be notified under Article XVII of GATT 1994.
111. The representative of Nepal confirmed that upon accession Nepal would notify and provide
information on the activities of Nepal Oil Corporation and Salt Trading Corporation in accordance
with Article XVII of the GATT and the Understandi ng on that Article Nepal would apply its laws and
regulations governing the trading activities of ente rprises with special or exclusive privileges and
would otherwise act in full conformity with the provisions of the WTO Agreements, in particular
Article XVII of the GATT 1994 and the Understandin g on that Article; and Article VIII of the GATS.
The Working Party took note of these commitments.WT/ACC/NPL/16
Page 38
Free zones, special economic areas
112. The representative of Nepal said currently there were no free zones in Nepal.  If Nepal
establishes free zones, as a WTO Member, Nepal would apply the WTO Agreements and Nepal's
Protocol in the zones, and the application of normal customs formalities to goods produced in these
areas when they enter the rest of Nepal, including the application of tariffs and taxes.  The Working
Party took note of this commitment.
Government Procurement
113. The representative of Nepal said that in the fiscal year 1997/98 Government procurement had
been NRs 16.2 billion (US$238 million).  The rule s on Government procurement require publication
of tender notices in national dailies at least twice for procurements amounting more than NRs1
million.  In case of global tender, tender notice is circulated to the foreign diplomatic missions
situated in Nepal.  There was no offset policy.  The procurement of certain products was not reservedfor local industry but priority was given to Nepalese products if the price difference with foreign
products was not above 10 per cent.
114. In response to questions concerning participation in the Agreement on Government
Procurement, the representative of Nepal said that, at the moment, Nepal did not intend to take part in
Plurilateral Trade Agreements such as the Agreement on Government Procurement.  However,consideration would be given to the possibility and ability to seek observer status.
Agricultural policies
115. The representative of Nepal said that agriculture was the dominant sector of the Nepalese
economy, giving employment to about two-thirds of the total population and contributing more than
40 per cent to GDP.  This was basically a private sector activity in which the government played asupportive and facilitating role to enhance agricultural production and productivity.  Nepal imports
significant quantities of high value agricultural products such as fruits, vegetables, livestock, and
processed products mainly from India.  The import of grains, however, is made only during drought
years.  Nepal's major export items comprise basic agricultural products such as maize, mustard, ghee,
ginger, pulses (lentil and gram), broom grass, live animals, wheat flour, oil cake, jute, fresh vegetablesand vegetable seeds, orthodox tea, niger seeds, hide and skin, rice bran, vegetable oil, spices,
cardamom, and fruits.  The total value of agri cultural production was approximately NRs349,064
million.  The total value of import of agricultural commodities was NRs6,330.3 million in the fiscal
year 1996/1997.  Nepal was a net food-importing country.  In the fiscal year 1997/98, Nepal had
allocated NRs. 600 million (US$10 million approx.) for subsidy on the import and transport of
chemical fertilizers and US$12.7 thousand have been allocated to subsidize for soil tests to be carried
out on the request of farmers to establish the best crop for their plant of land.  There were no specificincentives for the export of agricultural commodities.  The government facilitates exports by
providing market information and easy access to foreign exchange as a general policy.  For this
purpose, the government provides to exporters technical facilities to open foreign currency accounts
out of the income generated from exports.  Restrictions on import of agricultural products were as
follows.WT/ACC/NPL/16
Page 39
Table 8:  Restriction on Import of Agricultural Products
Items Reason
Citrus sapling/ plants To prevent citrus decline syndrome as per PP Act 1972
Bread fruit plants To prevent pingalap disease as per PP Act 1972
Potato tuber from Indian wart-affected areas To prevent wart disease as per PP Act 1972
Lathyrus sativus Because of high content of BOAA (B-N-Oxalyl/Amino-L-
Alanine) responsible for causing Lathyrosis diseases
(published in Nepal Gazette ,1992)
BVO containing drinks For health reason (Food Act, 1967)
DDT, Methyl parathion For reasons of health and environment protection (Public
Enterprises Act, 1991)
Beef For religious reasons
116. The representative of Nepal stated that agricultural producers are assisted by Government
programmes in areas such as support for general research relating to different products, extension
services, marketing and promotion activities including agriculture market information, natural disasterrelief through crop subsidies, loans and grants for irrigation, natural disaster relief through crop
subsidies, other infrastructure support for small fa rmers, urea transport subsidies for remote areas,
subsidies for tea promotion and dairy development grants. He indicated that Nepal does not have
agricultural export subsidies.  Information concerning domestic support and export subsidies in the
agriculture sector was circulated in docume nt WT/ACC/SPEC/NP L/2/Rev.1 and Corr.1, where the
Base Total AMS was below the de minimis  percentage of 10 per cent.
117. Nepal’s commitments on domestic support and export subsidies for agricultural products are
contained in the Schedule of Concessions and Commitments on Goods (document
WT/ACC/NPL/16/Add.1) annexed to Nepal’s dr aft Protocol of Accession to the WTO.
Policies Affecting Foreign Trade in Other Sectors
118. The representative of Nepal said that the Tea and Coffee Development Board, and the Dairy
Development Board, which were composed of representatives of the public and private sectors, had
the basic function to propose policies for the development of these activities in Nepal and to conduct
product-related research.  Budget allocations were to finance the activities of the Boards.  No direct
support is given to the farmers.  Nepal was undertaking a Seeds Sectors Project, which aims toimprove seed quality.  The activities defined under this project are carried out by the Seeds
Committee composed of representatives of the public and private sectors.  Budget allocations were to
finance the activities, mainly seed research and improvements of the Seeds Committee.  There was no
direct support to the farmers.  The principal function of the Carpet and Wool Development Board was
to make the necessary arrangements for the development of production and the quality of carpets inNepal.  The Board did not give any kind of financial assistance.
Textiles Regime
119. The representative of Nepal confirmed that the quantitative restrictions on imports maintained
by WTO Members on textiles and clothing products originating in Nepal that were in force on the
date prior to the date of accession of Nepal to the WTO should be notified to the Textiles Monitoring
Body (TMB) by the Members maintaining such restrictions and would be applied for the purposes of
Article 2 of the Agreement on Textiles and Clothing.  Thus, for the purposes of Nepal's accession tothe WTO, the phrase "in force on the day before the entry into force of the WTO Agreement"
contained in Article 2.1 of the Agreement on Textiles and Clothing shall be deemed to refer to the day
prior to the date of accession of Nepal to the WTO.  To these base levels the increase in growth ratesWT/ACC/NPL/16
Page 40
provided for in Article 2.13 and 2.14 of the Agreement on Textiles and Clothing shall be applied, as
appropriate, in the Agreement on Textiles and Clothing from the date of Nepal's accession such base
level and growth rate coming to an end upon the termination of the Agreement on Textiles and
Clothing.  The Working Party took note of these commitments.
Trade-Related Intellectual Property Rights  (TRIPS)
General
Industrial Property Protection 
120. The representative of Nepal said that the policy objective in the area of intellectual property
was to provide effective and adequate protection to all categories of intellectual property in
conformity with the provisions of the Agreement on Trade-Related Aspects of Intellectual Property
Rights.  Detailed information concerning the Check List of Issues for the Implementation of theTRIPS Agreement had been circulated in document WT/ACC/NPL/7.  Intellectual property protection
was provided by the Patent, Design, and Trad emark Act, 1965.  Nepal was preparing the new
Industrial Property (Protection) Act, which would incorporate all the substantive provisions of the
TRIPS Agreement.  It would cover all categories of industrial property rights under Sections 2
through 7 of Part II of the Agreement, and would incorporate the basis for an adequate enforcementthereof, and be promulgated by December 2005.  For the protection of copyright, Nepal had enacted
the Copyright Act, 2002.  This Act will be amended as necessary.  Additional information concerning
the implementation of the TRIPS Agreement is reproduced in the Legislative Action Plan circulated
in document WT/ACC/NPL/10/Rev.1 and in the action plan circulated in document
WT/ACC/NPL/14 and are described in this section of the Working Party Report.
Agencies Responsible for Policy Formulation and Implementation
121. The representative of Nepal said that the formulation of industrial property policy and
necessary regulations was under the purview of the Ministry of Industry, Commerce and Supplies.
The implementation and execution of policy and regulations was the responsibility of the Department
of Industry (DOI) within the Ministry.  The Office of the Copy-Right Registrar was the authorizedagency for registering copyrights and hearing complaints.  The decisions of the Registrar could be
appealed to the Appellate Court.
Membership in International Inte llectual Property Conventions
122. The representative of Nepal stated that Nepal had been a member of the World Intellectual
Property Organization (WIPO) since 4 February  1997 and the Paris Convention since 22 June 2001. 
Nepal would join the Berne Convention, by December 2005, and join the Rome Convention and the
Treaty on Intellectual Property by 2006.  Nepal would also look at other WIPO and IP relatedConventions, eg. Geneva Phonograms Convention,  UPOV 1991, WIPO Copyright Treaty and the
WIPO Performances and Phonograms Treaty, in terms of national interest and explore the possibility
of joining them in the future, as appropriate.
Application of national and MFN treatment to foreign nationals
123. The representative of Nepal said that national and MFN treatment was granted to all foreign
nationals.  National and foreign citizens had to register the brand, trademarks, patent and art with the
responsible agency.  A member noted that Sect ion 13 of the Nepal Copyright Act, 2002 fails to
provide protection for foreign copyright works, sound recordings or performers.  The representative of
Nepal committed to amending this provision so that the Copyright Act, 2002 would provide full
national treatment and MFN treatment upon accession.  Nepal also committed to amending its feeWT/ACC/NPL/16
Page 41
schedule, described in paragraph 124 below, to remove any discrimination between domestic and
foreign nationals for fees charged to applicants upon accession.
Fees and taxes
124. The representative of Nepal said that there were no taxes on intellectual property.  Fees were
nominal but foreigners had to pay double the rates indicated below, except for penalty charges, inconvertible foreign currency.  A member noted that TRIPS national treatment obligations (TRIPS
Article 3) prohibits discrimination between foreign and domestic applicants with regard to fees, and
suggested that it would be permissible, however, to adopt a fee schedule that provided discounts to
individual applicants, or even small and medium-sized enterprises (SMEs), as opposed to large
corporations, so long as the discounts were not based on the nationality of the applicants.
Table 9:  Registration and Renewal Fees
S.  No. Particulars of FeesPatent
(NRs.)Design
(NRs.)Trademark
(NRs.)
1. Application 1,000 500 500
2. Application Amendment 200 200 200
3. Registration 5,000 2,000 1,500
4. Transfer of Ownership 2,500 1,000 750
5. Endorsement and Recording other than Transfer
of Ownership1,000 500 500
6. Details of Registration 500 500 200
7. Opposition and Case Filing 500 200 200
8. Copy of Registration Certificate 1,000 500 500
9. Renewal (Annual Rate)
a.  For the First Termb.  For the Second Term
c.  Perpetual Annual Rate2,000
4,000
-400
800
--
-
200
Substantive standards of protection, including pr ocedures for the acquisition and maintenance
of intellectual property rights
Copyright protection
125. The representative of Nepal said that the Copyright Act 2002 repealed the Copyright Act
1965 to comply with the provisions of the TRIPS Agreement and the Berne Convention.  As noted in
paragraph 120 above, if Nepal received the necessary technical assistance, a Copyright Information
Center would be established in December 2004.
Trademarks, including service marks
126. The representative of Nepal said that in accordance with the Legislative Action Plan, in 2005
the Patent, Design and Trademark Act, 1965 ame nded in 1987, would be replaced by a new Industrial
Property (Protection) Law consistent with the TR IPS Agreement.  At present any person wishing to
have trademark of his business registered should su bmit to the Department of Industry an application
according to the specimen form indicated in Schedule I(c) of the Act, along with four copies of such
trademark.  After completing this process the department would register such trademark in the nameof the applicant and then issue a trademark certificate.  If the trademark filed for the registration was
considered to hurt the prestige of any individual or institution, or adversely affect public conduct or
morality, or undermine the national interest, or the reputation of the trademark of any other person, orWT/ACC/NPL/16
Page 42
if the proposed trademark was found to have already been registered in the name of another person,
the registration could be denied.  Service marks were also subject to the same rule.  The Act provides
for exclusive rights for the person who has registered the trademark or service mark.  Trademarks and
service marks were initially registered for a period of seven years, and could be renewed for an
indefinite number of years after every seven-year interval.
Geographical indications, including appellations of origin
127. The representative of Nepal said that the present legislation did not cover geographical
indications.  In accordance with the action plan on the implementation of the TRIPS Agreement
reproduced in Table 10 of this Report, the protection of geographical indications would be included
when drafting the new Act.
Industrial designs
128. The representative of Nepal said that the industrial designs were covered by the Patent,
Design and Trademark Act, 1965.  As indicated in  the action plan on the implementation of the
TRIPS Agreement, the Act would be brought into conformity with the provisions of the TRIPS
Agreement by the Industrial Property (Protection) Act under preparation.  Under the present
legislation, any person wishing to protect the design of any article should submit an application to the
Department of Industry, which would register the design in the name of applicant and issue acertificate.  In case such design hurts the prestige of  any individual or institution, or adversely affects
public conduct or morality, or undermines the national interest, or in case such design had already
been registered in the name of any other person, the registration could be denied.  Industrial designs
were originally registered for a period of five years and could be renewed for two more terms at an
interval of five years.
Patents
129. The representative of Nepal said that patents designs were covered by the Patent, Design and
Trademark Act, 1965.  As indicated in the action plan on the implementation of the TRIPS
Agreement, the Act would be brought into conform ity with the provisions of the TRIPS Agreement
by the Industrial Property (Protection) Act under preparation.  The representative of Nepal declaredthat, as a WTO Member, Nepal would be entitled to the flexibilities provided in the Doha Declaration
on the TRIPS Agreement and Public Health.  Under the present legislation, any person wishing to
obtain exclusive rights over an invention should register a patent in the Department of Industry by
filing an application.  Upon its receipt, the Department would conduct investigations or studies to
ascertain whether the subject matter mentioned in the application was an invention and thereafter
decide whether or not to register a patent.  Patents were available for all kinds of products and
processes that fulfill the patentability requirements without any discrimination as to the technologicalfield or invention.  The title of the patentee to the patent registered under the Act remained valid for a
period of seven years at a time, with a possibility of two renewal periods of seven years.  The patent
holder had the exclusive right to transfer or licence a patent and to request the third person to stop
infringement, and could claim the compensation.  The current legislation did not include provisions
for the protection of prior user rights nor for compulsory licensing.
Plant variety protection
130. The representative of Nepal said that the present legislation did not cover the protection of
plant varieties.  In accordance with the action plan on the implementation of the TRIPS Agreement,
the protection of plant varieties would be included in the new Plant Variety Protection Act to be
promulgated by December 2005.  The drafting of the Plant Variety Protection Act was not yetWT/ACC/NPL/16
Page 43
initiated, however it would be intended to protect the rights of related stakeholders in accordance with
the needs of the country.  This law would be a separate free-standing Act.
Layout designs of integrated circuits
131. The representative of Nepal said that the present legislation did not cover the protection of
layout designs of integrated circuits.  In accordance with the action plan on the implementation of theTRIPS Agreement, the protection of layout designs of integrated circuits would be included in the
new Industrial Property (Protection) Act to be promulgated by December 2005.
Requirements on undisclosed information, including trade secrets and test data
132. The representative of Nepal said that the present legislation did not cover the protection of
undisclosed information including trade secrets and test data.  In accordance with the action plan on
the implementation of the TRIPS Agreement, the protection of undisclosed information including
trade secrets and test data would be included in the new Industrial Property (Protection) Act to be
promulgated by December 2005.
Enforcement
133. The representative of Nepal recognized that amendments would have to be made to the
enforcement regime concerning intellectual prope rty rights to bring into conformity with the
provisions of the TRIPS Agreement with respect to civil and judicial procedures and remedies,provisional measures, administrative procedures and remedies, special border measures, criminal
procedures, etc.  To this effect the Administration of Justice Act, 1991, Appellate Court Rules, 1972,
Summary Procedures Act, 1972, and the Patent, Design and Trademark Act, 1965 and other legal
texts would be modified to bring them into compliance with the WTO Agreement on TRIPS, as
indicated in the action plan on the implementation of the TRIPS Agreement.  As a first step, in 2004the Ministry of Industry, Commerce and Supplies w ould organize the training of personnel, customs
officials, police, judges and lawyers through technical assistance.
134. The representative of Nepal said that a timetable for the enactment of legislation that
implements the WTO Agreement on TRIPS in Nepal's legal regime was provided in the Legislative
Action Plan circulated in document WT/ACC/NPL/10/Rev.1 and in the TRIPS ImplementationAction Plan circulated in document WT/ACC/NPL/14.  New legislation or amendments with regard
to legal texts such as the Plant Resources, the Access to Genetics Resources Act, and the Industrial
Property Protection Act prepared during the peri od 2003-2005 would be submitted to the Council of
Ministers.  These amendments would be endorsed and adopted by the Council of Ministers in the
period 2003-2005.  Nepal would implement fully the provisions of the Agreement on TRIPS by
31 December 2006.
135. Having reviewed Nepal’s Action Plan for compliance with the requirements of the TRIPS
Agreement, a Member sought a realistic plan laying out the measures that Nepal would take over time
to bring its regime into compliance with specific provisions of the TRIPS Agreement as soon as
possible.  The plan would constitute an understanding between Nepal and the Working Party on how
Nepal would use the transition period, and form a blueprint for the technical assistance making
compliance possible within the timeframe contemplated.  Nepal should also provide specificassurances on its application of measures covered by the TRIPS Agreement during any transition
period approved by the Working Party.  TRIPS-consistent measures already in place should not be
subject to transitions, and Articles 3, 4 and 5 of  the TRIPS Agreement, providing for inter alia
national treatment and MFN treatment, should apply from the date of accession.  Moreover, Nepal
should not allow production of goods or works inconsistent with the substantive provisions of theTRIPS Agreement during the transition period.  Some members noted that a number of theseWT/ACC/NPL/16
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proposals would create implementation difficulties for Nepal during their transition period and did not
share the views expressed above.
136. The representative of Nepal thanked the Working Party members for their support and for
their pledges of technical assistance.  For the reasons given above, the Government of Nepal
requested that the WTO grant a transitional period to 31 December 2006 to obtain technical assistanceand equip the administration to implement fully the obligations of the TRIPS Agreement.  The
representative of Nepal confirmed that should a transition be granted for the implementation of the
WTO Agreement on TRIPS, his government was prepared to undertake the following commitments:
During the transition periods in the Action Plan for full implementation of the TRIPS Agreement,
Nepal will fully apply Articles 3, 4 and 5 of the Agreement that provide for, inter alia, national
treatment and MFN treatment under current legislation in place.  To this end, Nepal would amend the
Copyright Act, 2002 and the fees charged to applicants to ensure full national and MFN treatmentupon accession.  Nepal will also ensure that any change made in its laws, regulations and practice
during this period will not result in a lesser degree of consistency with the provisions of the TRIPS
Agreement.
137. The representative of Nepal further confirmed that, should a transition be granted, his
government would ensure that existing rates of in fringement would not significantly increase and that
any infringement of intellectual property rights would be addressed immediately in cooperation with
the assistance from affected right holders.  He added that Nepal would seek out all available technical
assistance to ensure that its capacity to fully enforce its TRIPS-consistent legal regime upon
expiration of the transition periods is assured and that Nepal would make available TRIPS legislation
in draft and promulgated form to the WTO Secretariat for circulation to interested WTO Members.  Inresponse to requests from delegations for more specificity, the representative of Nepal presented an
Action Plan in Table 10 setting out details of the st eps that still remained to be taken in order to
achieve this objective and a timetable for each step.
 Table 10:  Action Plan for Implementation of the
 Agreement on Trade Related Aspects of Intellectual Property Protection
 
 Action  Implementation
Date
 Approved Legislation:
 --Copyright Act, 2002
 --Patent, Design, and Trademark Act, 1965
 --Administration of Justice Act, 1991
 --Appellate Court Rules, 1972
 --Summary Procedures Act, 1972
 
 Participation in:
 -WIPO (since 1997)
 -Paris Convention (since 2001) Completed
 Establish MFN and national treatment in all areas  covered by TRIPS, in particular in the
following areas: -- extension in the Copyright Act, 2002 of protection to foreign works on a full national
treatment basis; and
 -- the elimination of discrimination in fees charged foreign vs.  domestic applicants. Upon accession
 Establishment and Strengthening Nepal Copyright Registrar Office  No later than
1 January 2005
 Establishment of Trademark Information Centre/
 Industrial Design Information Centre/
 Industrial Patent Information Centre/
 and Layout-designs Information Centre No later than
1 July 2005WT/ACC/NPL/16
Page 45
 Action  Implementation
Date
 Approval of: Industrial Property (Protection) Act
 Approval of Plant Variety Protection Act
 Participation in:
 -Berne Convention
 -Rome Convention
 -Treaty on Intellectual Property in Respect of Integrated Circuits No later than
1 January 2006
 Training of personnel involved in copyrights protection, trademarks protection,
protection of industrial design, protection of patents, protection of undisclosedinformation, customs officials and police  Orientation of judges and lawyers
 Computerization and networking of Patent Office
 
 Computerization of Intellectual Property Office
 Reorganization and establishment of Intellectual Property Offices
  Developing rules, regulations and work manuals
 
 Enhancing public awareness on the protection of intellectual property rights
  Full Implementation of the Agreement on Trade-related Intellectual Property Rights No later than
1 January 2007
138. The representative of Nepal confirmed that Nepal would apply the Agreement on Trade-
Related Intellectual Property Rights by no later than 1 January 2007 according to the action plan inTable 10 with the understanding that during this period protection for intellectual property rights
listed in paragraphs 136 and 137 would be applied in Nepal.  The Working Party took note of this
commitment.
POLICIES AFFECTING TRADE IN SERVICES
139. The representative of Nepal said that the services sector in Nepal had witnessed significant
growth over the last two decades.  It accounts for 32.3 per cent of GDP and provides employment to
almost 18 per cent of the total labour force.  During the last decade the average service exports of
Nepal had represented approximately US$200 million p.a.  Nepal was a net service exporter.  The
introduction of open and liberal policies, combined with full convertibility on current account
transactions, explains the significant growth of the service sector.  Public services enterprises wereavailable in Nepal in sectors such as business, transport and communications, distribution,
educational, environmental, financial, health-related, social, tourism and travel related services, and
recreational and sporting services.  Due to the support given by the government to road development,
transport services had grown significantly.  Rece ntly, the open and liberal policy had helped to
transform the financial sector a leading services sector in Nepal.  However, there still was a scarcity ofstatistical data pertaining to the nature, type, and size of the existing service sector in the country.  In
documents WT/ACC/NPL1 an d Add.1, the representative of Nepal described the overall market and
regulatory structure of the principal service sectors in Nepal and the relevant legal provisions.  The
legal framework was still under development, and a number of services sectors remained to be
regulated.  He noted that Nepal's legislation generally complied with the provisions of Articles II and
XVII of the General Agreement on Trade in Servi ces (GATS) concerning most favoured nation and
national treatment, however, exceptions existed with regard to a number of activities underdevelopment as described under the services sectoral classification list.  According to the Industrial
Enterprises Act, 1992, the manpower required for any industry, including all services, shall have to be
recruited from among Nepali citizens.  Nevertheless, foreigners were permitted to work in Nepal onWT/ACC/NPL/16
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technical grounds, and in accordance with the commitments made in Nepal's GATS schedule of
specific commitments, annexed to the Protocol of Accession, in particular with regard to the transfer
of technology.  A work permit issued by the Government was required for foreigners to work in
Nepal.  A foreigner could not be employed for more than 10 years.
140. The representative of Nepal said that consultancy services such as management, accounting,
engineering and legal services were not open to foreign investment under the Foreign Investment and
Technology Transfer Act, 1992.  The Nepal Bar Council Act, 1993 which regulates legal services,
prohibits foreigners from practising law in Nepal except if authorized by the competent Nepalese
Court to plead and represent a party to a case.  The Nepal Medical Council Act, 1963 (as amended)
was silent over the registration of a foreign medical practitioner in Nepal.  The Statistics Act, 1969
which established the Central Bureau of Statistics provides that foreigners must obtain the
authorization of the CBS to collect economic records and statistics for commercial purposes.  TheTelecommunications Act, 1997 and the Telecommunications Regulation, 1997 requires a licence from
the Nepal Telecommunications Authority to operate telecommunications services and permits foreign
investments in this sector.  Licenses are issued for a maximum period of ten years renewable for up to
twenty five years.  The Foreign Investment and Technology Transfer Act, 1992 did not limit foreign
equity participation in this sector.  In accordance with the Nepal Agency Act, 1958 and Agency(Amendment and Consolidation) Regulation, 1962 agents, distributors, stockists, nominees or
representatives of foreign or local firms must be registered.  Nepalese citizens are given preference for
getting registered as agents.  With respect to fina ncial services, the Insurance Act, 1992 established an
Insurance Board and required inter alia a licence to operate an insurance business, to set an office in
Nepal and to prove a paid capital of no less than NRs 250 million for life insurance and NRs 100million for non-life insurance.  With the deregulation of the sector, joint ventures had been initiated
and some nine insurance companies were active in Nepal.  Insurance services were regulated by the
insurance-related legislation, while banking and non-banking institutions were regulated by the Nepal
Rastra Bank, the Central Bank of the country, established under the Nepal Rastra Bank Act, 2002.
Approval for establishing a commercial bank was granted in the conditions set out by the CentralBank and in accordance with the Commercial Bank Act, 1974 (as amended), and other accompanying
legislation.  In addition to the State owned banks and banks with limited State participation, there
were in Nepal some nine private joint venture commercial banks, forty five finance companies and
one hundred and thirty financial institutions.  Tourism was one of the most important services sectors
in Nepal.  The contribution of tourism to GDP was approximately 3.8 per cent and provided 18 per
cent of the total foreign exchange.  Tourism was regulated by a whole set of general rules, laws, and
industrial acts such as the Tourism Act, 2035 (1978) amended in 2053 (1997), by the Hotel, Lodges,Restaurants, Bar and Tourist Guide Regulation, 2038 (1981), the Travel and Trekking Agency
Regulation, 2037 (1980), the Trekking and Rafting Regulation, 2044 (1985), and by the
Mountaineering Rules, 2036 (1979).  As provided by the Foreign Investment and Technology
Transfer Act, 1992, no permission was granted for the establishment of foreign companies, or foreign
investment in the Travel Agencies, Trekking Agencies, Water Rafting, Pony Trekking, Horse Riding,and Tourist Lodging.  Foreign direct investment was permitted in the hotel industry subject to
authorization as provided by FITTA, 1992.  In view of the economically underdeveloped status of the
country and the dependence of a large number of people for their livelihood on these sectors, Nepal
called for the understanding of WTO Members in the opening of the services sector at this stage.
141. Some members asked the representative of Nepal to explain the conditions that Nepal
imposes on foreign professionals working in Nepal under which they are required to acquire
membership of relevant Nepalese professional associations.  They asked Nepal to confirm that the
criteria governing such membership were not ap plied in a manner that would act as a barrier to
foreign professionals and that membership requirements were open and transparent.  In response, the
representative of Nepal explained that these requirements do not act as a barrier to foreignprofessionals seeking to work in Nepal.  Architects and all types of engineers are required to be
registered with Nepal Engineering Council.  Lawyers who appear before courts in Nepal are requiredWT/ACC/NPL/16
Page 47
to be registered with Nepal Bar Council.  However, practitioners of third country and international
law who do not appear before courts in Nepal are not required to join the Bar Council.  Accountants
are required to be registered with Nepal Chartered Accountants Institute, with requirements of the
same nature as those for architects and engineers.  The requirements for membership of these and
other professional associations were not onerous and included the possession of professionalqualifications from a recognised institution and the payment of a membership fee.  There was an open
and transparent mechanism for foreign institutions to  obtain recognition for this purpose.  These same
requirements were applicable equally to Nepalese and foreigners and were applied in a fully non-
discriminatory manner.
142. The representative of Nepal said that the authorities' decision affecting trade in services were
subject to judicial review under the provision of each law governing such a service sector.  There was
also a provision of appeal in such cases under Administration of Justice Act, 1991.  Generally theappeal lies with the Appellate Court which is an independent judicial body.  Under Section 7 of the
Foreign Investment and Technology Transfer Act, 1992 there is a provision for dispute settlement
through arbitration in respect to disputes that may arise between a foreign investor, national investor
or a concerning industry.  The arbitration award may be appealed to the Appellate Court in
accordance with the Arbitration Act, 1999.
143. The representative of Nepal referred to the Legislative Action Plan circulated in document
WT/ACC/10/Rev.1 and reproduced in Annex II of this Report.  He said that the Ministry of Industry,
Commerce and Supplies would establish in June 2003 the enquiry point provided in Article III:4
GATS.  Amendments to the Labour Act, 1991, the Company Act, 1997, the Nepal Bar Council Act,
1992, the Nepal Chartered Accountants (First Amendment) Act, 2002, the Insurance Act, 1992, theSecurities and Exchange Act, 1982, the Bank and Finance Institutions Act, and a draft Bill of the
Health Institutions Operating Act were being prepared by the Ministries of Labour, Industry,
Commence and Supplies, Finance, Law and Justice, Health and the Central Bank with a view to their
submission to the Council of Ministers of Nepal in 2003.  The expected date of approval of these
amendments would be February 2004 except for draft bill of the Health Institutions Operating Actwhich would be endorsed by the Council of Ministers in September 2003.
144. Nepal’s specific commitments on services are contained in the Schedule of Specific
Commitments on Services (document WT/ACC/NPL/16/Add.2) annexed to Nepal’s draft Protocol of
Accession to the WTO.
Transparency
Publication of information on trade
145. The representative of Nepal said that all trade measures and laws, regulations, and
Governmental or Administrative rulings of general application were published in the Nepal Gazette,
including multilateral Agreements or Treaties in which Nepal is a party.  Judgements of the Supreme
Courts are also published in the Nepal Law Journal by the Supreme Court of Nepal.  Laws enter into
force on the date of their publication unless another date is specified in the laws.  Some of thetransparency requirements of Article X of GATT  1994, Article III of the GATS, and other WTO
Agreements were provided in Section 3 of the Statute of Interpretation Act, 1953, His Majesty's
Government (Allocation of Business) Regulation,  2000, and Nepal Gazette of August 1955.  It had
been Nepal's practice to publish relevant acts, rules and regulations to give effect to these statutes.
146. He stated further that Nepal intended to establish or designate an official journal or web-site,
published or updated on a regular basis and readily available to WTO Members, individuals and
enterprises, dedicated to the publication of all regulations and other measures pertaining to orWT/ACC/NPL/16
Page 48
affecting trade in goods, services, and TRIPS prior to implementation, and that Nepal intended to
provide a reasonable period, e.g. no less than 15 days, for comment to the appropriate authorities of
Nepal before such measures are implemented, except for those regulations and other measures of
general application involving national emergency or security, or for which the publication would
impede law enforcement or be otherwise contrary to the public interest or prejudice the commercialinterests of particular enterprises, public or private.  Nepal intended to implement this facility as soon
as possible, and within the timeframe of its other WTO commitments.
147. The representative of Nepal confirmed that, as a Member of the WTO, Nepal would fulfill the
transparency requirements established in Article X of GATT 1994, Article III of GATS  and other
WTO Agreements.  Nepal confirmed that all laws, regulations or measures of general application
pertaining to or affecting trade in goods, services or TRIPS would be published promptly in the
Official Gazette or in the some single official source, and that no such law, regulation, etc.  wouldbecome effective or be enforced prior to such publication. The publication of such laws, regulations
and other measures of general application would include the effective date of these measures and list,
where appropriate and possible, the products and services affected by the particular measure,
identified for customs purposes by appropriate tariff line and classification.  The Working Party took
note of these commitments.
Notifications
148. The representative of Nepal said that within 12 months, at the latest, upon entry into force of
the Protocol of Accession, unless otherwise provided for in this Report, and in accordance with the
commitments set out in the Legislative Action Plan in Annex II, Nepal would submit all initial
notifications required by any Agreement constituting part of the WTO Agreement.  Any regulations
subsequently enacted by Nepal which gave effect to the laws enacted to implement any Agreement
constituting part of the WTO Agreement would also conform to the requirements of that Agreement.
Trade Agreements
149. The representative of Nepal said that Nepal had signed bilateral trade agreements with the
following 17 countries.  More recently a trade cooperation agreement had been signed with the
European Union.
Table 11:  Trade Agreements
Country Year
1. Republic of Bangladesh 1976
2. Republic of Bulgaria 1980
3. People's Republic of China 1981
4. Czechoslovak Socialist Republic 1992
5. Arab Republic of Egypt 1975
6. Republic of India
(a) Treaty of Transit 1991
(b) Treaty of Trade 1991
(c) Agreement of Co-operation 1991
7. Democratic People's Republic of Korea 1970
8. Republic of Korea 1971
9. Mongolia 1992
10. Islamic Republic of Pakistan 1982
11. Republic of Poland 1992
12. Republic of Romania 1984WT/ACC/NPL/16
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Country Year
13. Democratic Socialist Republic of Sri-Lanka 1979
14. United Kingdom of Great Britain and Northern Ireland 1965
15. United States of America 1947
16. Union of Soviet Socialist Republics 1970
17. Socialist Federal Republic of Yugoslavia 1965
150. The representative of Nepal said that these agreements provided most-favoured-nation
treatment.  They basically relate to trade in goods.  As a landlocked country, Nepal was interested in
maintaining good neighbourliness for transit and trade relations with India.  Nepal considers that the
treaties of transit and trade as well as the agreement of cooperation to control unauthorised tradesigned in 1991 (as amended) provide a good basis for the development and diversification of trade.
The two countries had signed these treaties with th e aim of promoting trade, facilitating transit and
controlling unauthorised trade.  They accord each other unconditional most-favoured-nation
treatment.  They also exempt imports of certain primary products from duties or any form of
quantitative restrictions on a reciprocal basis in the context of their trade.  The treaty of trade alsoprovides that India grants specially favourable (preferential) treatment to industrial products
manufactured in Nepal on the basis of non-reciprocity in order to promote the industrial development
of Nepal.  With reference to Article IV of the Treaty of Trade between Nepal and India, following
primary products would be eligible on a reciprocal basis to exempt from basic customs duty as well as
from quantitative restrictions:
- Agriculture, horticulture and forest produce and minerals which have not undergone any
processing
- Rice, pulses and flour
- Timber
- Jaggery(Gur and Shakhar)
- Animals, birds and Fish
- Bees, bees-wax and honey
- Raw wool, goat hair,and bones as are us ed in the manufacture of bone- meal
- Milk, home made products of milk and eggs
- Ghani- produced oil and oil cakes
- Ayurvedic and herbal medicines
- Articles produced by village artisans as are mainly use in villages
- Akara
- Yak tail
- Any other primary products which may be mutually agreed upon
With reference to Article V of the Treaty of Trade between Nepal and India, Government of India
provided access to the Indian market free of custom duties and the quantitative restrictions for allarticles with some restrictions on four products such as Vegetable Fats, Acrylic Yarn, Copper
Products under Chapter 74 and heading 8544 of HS Code, Zinc Oxide, manufactured in Nepal on the
basis of Certificate of Origin issued by the agency  designated by His Majesty’s Government of Nepal
except the following articles:
- Alcoholic liquors/Beverages and their concentrates except Industrial spirits
-  Perfumes and Cosmetics with non Nepalese/ non Indian brand names
- Cigarettes and Tobacco.
Nepal is a member of the South Asian Preferential Trade Arrangements (SAPTA).  SAARC (South
Asian Association for Regional Co-operation) had decided in principle to move from SAPTA toWT/ACC/NPL/16
Page 50
SAFTA (South Asian Free Trade Area).  Nepal is a member of SAARC which comprises seven
countries of South Asia that are Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.
It is an association based on the consciousness that, in an increasingly interdependent world, the
objectives of peace, freedom, social justice and economic prosperity are best achieved in the region by
fostering mutual understanding and meaningful co-operation among its member states.  At their firstSAARC summit held in Dhaka on 7-8 December 1985, the heads of state or government adopted the
charter formerly establishing the SAARC.  The Agreement on SAARC Preferential Trading
Arrangements (SAPTA) was signed on 11 April 1993, and entered into force on 7 December 1995.
Nepal was the first country to ratify SAPTA in 1993.  So far four rounds of trade negotiations have
been completed.  Each round contributed to increased product coverage and deepening of tariff
concessions.  Nepal has granted concessions on approximately 500 products under SAPTA.  The
percentage range of concessions granted by Nepal under SAPTA is 10-15 per cent of the applied rate.The tenth SAARC Summit decided to set up a Committee of Experts to draft a comprehensive treaty
design to create a free-trade area within the region.  The Committee has since been in the process of
preparing a draft treaty for the consideration of SAARC.  The Schedules of Nepal's commitments in
SAARC under SAPTA Agreement were communicated to WTO in document
WT/ACC/NPL/3/ Add.1/Corr.1.   A consolidated national schedule of concessions granted by Nepal
under first, second, and third rounds of trade negotiations under SAPTA can be accessed on web site
http//www.saarc-sec.org. Nepal confirms that at present Nepal is not a member of any Free Trade
Area and Customs Union.
151. The representative of Nepal confirmed that Nepal would observe the relevant provisions of
the WTO Agreement, including Article XXIV of the GATT 1994, the 1979 GATT Decision onDifferential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing
Countries (Enabling Clause) and Article V of the GATS, in trade agreements to which it belongs, and
would ensure that the applicable provisions of these WTO Agreements for notification, consultation,
and other requirements concerning free trade areas, customs unions or other preferential
arrangements, as the case may be, of which Nepal is, or may become, a member were met from thedate of accession.  The Working Party took note of these commitments.
Technical Assistance
152. The representative of Nepal said that as a least developed country with limited resources,
infrastructure and institutional and technical capabilities, Nepal would face serious difficulties to
implement the WTO Agreements expeditiously by its own means.  In the Legislative Action Plan and
in the various action plans reproduced in Tables 3, 5, 7 and 10, Nepal had identified the specific areas
and projects where technical assistance would be welcome, and asked that specific offers of assistancein these areas would be forthcoming.  In the view of Nepal it was of the utmost importance, that
individual WTO Members, bilateral donors, international agencies and the WTO Secretariat
coordinate their responses to the technical assistance requested as soon as possible. From Nepal’s
perspective, WTO Members clearly had an interest in working with Nepal to ensure that action plan
timetables were met.  He noted that a Member had offered to assist in the implementation of someaspects of the TRIPS Agreement.  Another Member had offered to assist in the development of
institutional capabilities concerning transparency, notifications and judicial review.  Nepal believed
that  additional technical assistance would be required with respect to these and other areas of WTO
implementation as noted in the action plans.
Conclusions
153. The Working Party took note of the explanations and statements of Nepal concerning its
foreign trade regime, as reflected in this Report.   The Working Party took note of the commitments
given by Nepal in relation to certain specific matters which are reproduced in paragraphs 20, 31, 36,
42, 44, 50, 53, 57, 64, 68, 71, 75, 79, 84, 88, 89, 98, 107, 109, 111, 112, 119, 138, 147 and 151 of thisWT/ACC/NPL/16
Page 51
Report.  The Working Party took note that these commitments had been incorporated in paragraph 2
of the Protocol of Accession of Nepal to the WTO.
154. Having carried out the examination of the foreign trade regime of Nepal and in the light of the
explanations, commitments and concessions made by the representative of Nepal, the Working Party
reached the conclusion that Nepal be invited to accede to the Marrakesh Agreement Establishing theWTO under the provisions of Article XII.  For this purpose, the Working Party has prepared the draft
Decision and Protocol of Accessi on reproduced in the Appendix to this Report, and takes note of
Nepal's Schedule of Concessions and Commitm ents on Goods (documen t WT/ACC/NPL/21/Add.1)
and its Schedule of Specific Commitments on Se rvices (document WT/ACC/NPL/21/Add.2) that are
annexed to the draft Protocol.  It is proposed that these texts be adopted by the General Council when
it adopts the Report.  When the Decision is adopted, the Protocol of Accession would be open for
acceptance by Nepal which would become a Member thirty days after it accepts the said Protocol.The Working Party agreed, therefore, that it had completed its work concerning the negotiations for
the accession of Nepal to the Marrakesh Agreement Establishing the WTO.
155. Having regard to the Decision of 10 December 2002 on the accession of the LDCs, the
Working Party agreed to propose that the General Council entrust the Sub-Committee on LDCs with
the task of monitoring the implementation of the commitments subject to transitional arrangements.WT/ACC/NPL/16
Page 52
ANNEX I
LIST OF LAWS AND LEGAL ACTS
1. Foreign Investment and Technology Transfer Act (1992)
2. Industrial Enterprises Act (1992)
3. Customs Act (1962)
4. Customs Regulation (1970)
5. Nepal Seeds Act, 2045 (1988)
6. The Seeds Regulation, 2054 (1997)
7. Company Act (1997)
8. Plant Protection Act, 2029
9. The Food Act (1966)
10. Export and Import Control Act (1957)
11. Export and Import Rules (1978)
12. Patent, Design and Trade-Mark Act (1965)
13. Food Regulation (1970)
14. Plants Protection Rules 2031 (1975)
15. Customs Act (1962) (amended 1997)
16. Summary Procedure Act (1972)
17. Customs Tariff (electronic format)
18. Treaty of Transit, Treaty of Trade and Agreement of Co-operation to Control Unauthorised
Trade between His Majesty's Government of Nepal and the Government of India 1991 (as
amended and updated 1999)
19. Schedules to Nepalese commitments in SAARC under SAPTA Agreement
20. Feed Act (Animal Concentrate) (1996)
21. Copyright Act (First Amendment) (1997)
22. Customs Tariff (electronic format)
23. First Amendment 2002 to the Nepal Chartered Accountant Act (1998)
24. Copyright Act (2002)WT/ACC/NPL/16
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ANNEX II
LEGISLATIVE ACTION PLAN
The document is divided into three sections.  The first section provides the synoptic picture of the
progress in adoption of legislation.  The second section provides revised agenda for enacting laws
and/or adopting regulations/decrees for WTO conformity.  The third section provides a calendar planindicating priorities.
Section I:  Progress in Adoption of Legislation
Since the submission of the Legislative Action Plan to the Working Party on the Accession of
the Kingdom of Nepal on 21 May 2002, the following progress has taken place in adoption of
legislation.
The following acts approved by the Parliament, have received royal seal and are in force:
- Copyright Act 2002;
- Special Court Act 2002;
- Nepal Chartered Accountant Act (First Amendment) 2002;
- Foreign Exchange (Regulation) Act 2002;
- Several Acts relating to Amending Court Management and Judicial Administration Act
2002; and
- Income Tax Act 2002.
The Department/Ministry has completed the following activities:
- Preparation of a preliminary draft of Law on Anti-dumping Measures;
- Preparation of a preliminary draft of Customs Act (Amendment) and Customs Regulation
(Amendment);
- Preparation of a preliminary draft of Export Import Act and Export Import Regulations;
and
- Preliminary draft of Industrial Policy Law.
The following bills/instruments were endorsed by the Councils of Ministers:
- Health Service (Regulation and Standard) Act 2002;
- Plant Resources Act 2002;
- Seeds (First Amendment) Act 2002; and
- Instruments of International Plant Protection Convention (IPPC).WT/ACC/NPL/16
Page 54Section II:  Revised Legislative Action Plan
(Present Status of and Agenda for Nepa l's Law-Making Process for WTO Conformity)
No.Laws/Regulations/
Administrative DecisionsWTO Agreement Status of Draft/Intended Actions Expected Approval Date
1. Instrument of Ratification of
WTO AgreementMarrakech Agreement
Establishing WTO 1994Council of Ministers will consider submitting to the Parliament
for ratification/accession of/to the WTO Agreement as soon asWTO approves membership to Nepal
2. Income Tax Act 2002 General Approved by the Parliament, April 2002 In force
3. Bankruptcy/Insolvency Act General Preparation of draft of the new Act by Ministry of Finance by
December 2004
Endorsement by Council of Ministers by July 2005September 2005
4. Foreign Exchange
(Regulating) Act 2002(Amendment)General Approved by the Parliament, April 2002 In force
5. Competition Act General Preparation of draft of the new Act by Ministry of Industry,
Commerce and Supplies by November 2003
Endorsement by Council of Ministers by February 2004July 2004
6. Export Import (Control) Act
1957 (Amendment)General Agreement on
Tariffs and Trade 1994
Agreement on Agriculture
Agreement on Import
Licensing Procedures.Initial draft being prepared by Department of Commerce by
August 2003
Submission by Ministry of Industry Commerce and Supplies to
Council of Ministers by September 2003
Endorsement by Council of Ministers by October 2003December 2003
7. Export Import (Control)
Regulations 1978(Amendment)General Agreement on
Tariffs and Trade 1994
Agreement on Agriculture
Agreement on Import
Licensing Procedures.Initial draft prepared by Department of Commerce in December
2002
Submission by Ministry of Industry Commerce and Supplies to
Council of Ministers by October 2003
Adoption by Council of Ministers by December 2003December 2003WT/ACC/NPL/16
Page 55No.Laws/Regulations/
Administrative DecisionsWTO Agreement Status of Draft/Intended Actions Expected Approval Date
8. Customs Act, 1962
(Amendment)Agreement on
Implementation of ArticleVII of GATT 1994 (CustomsValuation)
Agreement on Rules of
Origin.Initial draft prepared by Department of Customs in December
2002
Submission by Ministry of Finance to the Council of Ministers
by June 2003
Endorsement by Council of Ministers by September 2003December 2003
9. Customs Regulation, 1969
(Amendment)Agreement on
Implementation of ArticleVII of GATT 1994 (Customs
Valuation)
Agreement on Rules of
Origin.Initial draft prepared by Department of Commerce in December
2002
Adoption by Ministry of Finance and submission to Council of
Ministers by August 2003
Adoption by Council of Ministers by December 2003December 2003
10. Instruments of Ratification
For United Nations
Convention on Contracts for
the International Sale ofGoods (Vienna, 1980)General Endorsement by Council of Ministers by March 2004 December 2005
11. Law on Anti-dumping
MeasuresAgreement of
Implementation of Article VIof the GATT 1994 (Anti-dumping)Preparation of draft legislation by December 2003
Endorsement by Council of Ministers by March 2004July 2004
12. Nepal Standards
(Certification Mark) Act,
1980 (Amendment)Agreement on Technical
Barriers to TradePreparation of draft amendment by June 2004
Endorsement by Council of Ministers by January 2005April 2005
13. Nepal Standards
(Certification Mark)Regulations, 1982(Amendment)Agreement on Technical
Barriers to TradePreparation of draft amendment by September 2005
Adoption by Council of Ministers by December 2005December 2005
14. Decision on the
establishment of InquiryPointsAgreement on Technical
Barriers to TradeSubmission of proposal by WTO Division, Ministry of Industry,
Commerce and Supplies by April 2003
Adoption by Ministry of Industry, Commerce and Supplies by
June 2003June 2003
15. Plant Protection Act 1972
(Amendment)Agreement on the
Application of Sanitary andPhyto-Sanitary MeasuresPreparation of draft amendment by June 2004
Endorsement by Council of Ministers by January 2005April 2005WT/ACC/NPL/16
Page 56No.Laws/Regulations/
Administrative DecisionsWTO Agreement Status of Draft/Intended Actions Expected Approval Date
16. Plant Protection Regulation
1975 (Amendment)Agreement on the
Application of Sanitary andPhyto-Sanitary MeasuresPreparation of draft amendment by September 2005
Adoption by Council of Ministers by December 2005December 2005
17. Instrument of International
Plant Protection Convention
(IPPC)Agreement on the
Application of Sanitary and
Phyto-Sanitary MeasuresEndorsed by Council of Ministers in August 2002 December 2005
18. Seed Act 1998 (First
Amendment)Agreement on the
Application of Sanitary and
Phyto-Sanitary MeasuresEndorsed by Council of Ministers in August 2002 August 2004
19. Decision on the
establishment of InquiryPointsAgreement on Sanitary and
Phyto-Sanitary Measures
General Agreement on
Tariffs and Trade 1994Submission of proposal by WTO Division, Ministry of Industry,
Commerce and Supplies by April 2003
Adoption by Ministry of Industry, Commerce and Supplies by
June 2003June 2003
20. Environment Act, 1997
(Amendment)General Preparation of draft amendment by Ministry of Population and
Environment by December 2004
Endorsement by Council of Ministers by July 2005September 2005
21. Industrial Property
(Protection) ActAgreement on Trade-Related
Aspects of IntellectualPropertyPreparation of new draft legislation by the Department of
Industry by December 2003
Adoption by Ministry of Industry, Commerce and Supplies by
December  2004
Endorsement by Council of Ministers by July 2005December 2005
22. Copyright Act 2002
(Amendment)Agreement on Trade-Related
Aspects of IntellectualProperty RightsApproved by the Parliament in August 2002 In force
23. Instrument of Ratification of
Bern Convention for theProtection of Literary and
Artistic Works 1971Agreement on Trade-Related
Aspects of IntellectualProperty RightsEndorsement by Council of Ministers by December 2003 December 2005
24. Plant Resources Act Agreement on Trade-Related
Aspects of IntellectualProperty RightsEndorsed by Council of Ministers in 2002 December 2003
25. Access to Genetic
Resources ActAgreement on Trade-Related
Aspects of IntellectualProperty RightsPreparation of draft of the new legislation by Ministry of
Forestry and Soil Conservation by June 2003
Endorsement by Council of Ministers by December 2003April 2004WT/ACC/NPL/16
Page 57No.Laws/Regulations/
Administrative DecisionsWTO Agreement Status of Draft/Intended Actions Expected Approval Date
26. Pharmaceutical Act, 1978
(Amendment)General Preparation of draft amendment by Ministry of Health by
December 2004Endorsement by Council of Minister by April 2005September 2005
27. Cyber Act General Preparation of draft amendment by Ministry of Science and
Technology by December 2004
Endorsement by Council of Ministers by April 2005September 2005
28. Foreign Investment and
Technology Transfer Act,
1992.  (Amendment)General Agreement on Trade
in Services (GATS)
Agreement on Trade Related
Investment Measures.Preparation of draft bill by Department of Industry by August
2003
Submission by Ministry of Industry, Commerce and Supplies to
Council of Ministers by October 2003
Endorsement by Council of Ministers by December 2003February 2004
29. Foreign Investment and
Technology Transfer
RegulationsGeneral Agreement on Trade
in Services (GATS)
Agreement on Trade Related
Investment Measures.Preparation of draft regulation by Department of Industry by
March 2004
Submission by Ministry of Industry, Commerce and Supplies to
Council of Ministers by April 2004
Endorsement by Council of Ministers by May 2004May 2004
30. Industrial Enterprises Act,
1992 (Amendment)General Agreement on Trade
in Services (GATS);
Agreement on Trade RelatedInvestment Measures; andAgreement on Subsidies.Preparation of draft bill by Department of Industry by June
2003
Submission by Ministry of Industry, Commerce and Supplies to
Council of Ministers by October 2003
Endorsement by Council of Ministers December 2003February 2004
31. Industrial Enterprises
RegulationsGeneral Agreement on Trade
in Services (GATS)
Agreement on Trade Related
Investment Measures
Agreement on Subsidies.Preparation of draft regulations by Department of Industry by
March 2004
Submission by Ministry of Industry, Commerce and Supplies to
Council of Ministers by April 2004
Adoption by Council of Ministers by May 2004May 2004WT/ACC/NPL/16
Page 58No.Laws/Regulations/
Administrative DecisionsWTO Agreement Status of Draft/Intended Actions Expected Approval Date
32. Industrial Policy, 1992
(Amendment)General Agreement on Trade
in Services (GATS)
Agreement on Trade Related
Investment Measures
Agreement on Subsidies.Preparation of draft policy by Department of Industry by August
2003
Adoption by Ministry of Industry Commerce and Supplies by
September 2003September 2003
33. Foreign Investment and One
Window Policy, 1992(Amendments)General Agreement on Trade
in Services (GATS)
Agreement on Trade Related
Investment Measures.Preparation of draft Policy by Department of Industry by
August 2003
Adoption by Ministry of Industry, Commerce and Supplies by
September 2003September 2003
34. Labour Act, 1991
(Amendment)General Agreement on Trade
in Services (GATS)Preparation of draft amendment by Department of Labour by
August 2003
Submission by Ministry of Labour by October 2003
Endorsement by Council of Ministers by December 2003February 2004
35. Company Act, 1997
(Amendment)General Agreement on Trade
in Services (GATS)Preparation of draft amendment by the Office of Company
Registrar by August 2003
Adoption by Ministry of Industry, Commerce and Supplies by
October 2003
Endorsement by Council of Ministers by December 2003February 2004
36. Nepal Bar Council Act,
1992 (Amendment)General Agreement on Trade
in Services (GATS)Preparation of draft amendment by Ministry of Law and Justice
by October 2003
Endorsement by Council of Ministers by December 2003February 2004
37. Nepal Chartered
Accountants (FirstAmendment) Act, 2002General Agreement on Trade
in Services (GATS)Approved by the Parliament in July 2002 In force
38. Insurance Act, 1992
(Amendment)General Agreement on Trade
in Services (GATS)Preparation of draft amendment by Ministry of Finance by
October 2003
Endorsement by Council of Ministers by December 2003February 2004
39. Securities Exchange Act,
1982 (Amendment)General Agreement on Trade
in Services (GATS)Preparation of draft bill by Ministry of Finance by October 2003
Endorsement by Council of Ministers by December 2003February 2004WT/ACC/NPL/16
Page 59No.Laws/Regulations/
Administrative DecisionsWTO Agreement Status of Draft/Intended Actions Expected Approval Date
40. Bank and Finance
Institution ActGeneral Agreement on Trade
in Services (GATS)Draft already submitted by Central Bank of Nepal to the
Ministry of Finance
Adoption by Ministry of Finance by October 2003
Endorsement by Council of Ministers by December 2003February 2004
41. Health Institutions
Operating ActGeneral Agreement on Trade
in Services (GATS)Endorsed by the Council of Ministers in August 2002 September 2003
42. Decision on the
establishment of InquiryPointsGeneral Agreement on Trade
in Services (GATS)Submission of proposal by WTO Division, Ministry of Industry
Commerce and Supplies by April 2003
Adoption by Ministry of Industry, Commerce and Supplies by
June 2003June 2003WT/ACC/NPL/16
Page 60
Section III:  Calendar Plan
2003 – Expected approval date:
- Decision on the Establishment of Inquiry Point on TBT, June;
- Decision on the Establishment of Inquiry Point on SPS, June;
- Decision on the Establishment of Inquiry Point on Services, June;
- Industrial Policy, 1992 (Amendment), September;
- Foreign Investment and One Window Policy, 1992 (Amendment), September;
- Health Institutions Operating Act, September;
- Export Import (Control) Act, 1957 (Amendment), December;
- Export Import  (Control) Regulations, 1978 (Amendment), December;
- Customs Act, 1962 (Amendment), December;
- Customs Regulations, 1969 (Amendment), December; and
- Plant Resources Act, December.
 2004 – Expected approval date:
- Industrial Enterprises Act, 1992 (Amendment), February;
- Labour Act, 1991 (Amendment), February;
- Company Act, 1997 (Amendment), February;
- Nepal Bar Council Act, 1992 (Amendment), February;
- Insurance Act, 1992 (Amendment), February;
- Securities Exchange Act, 1982 (Amendment), February;
- Bank and Finance Institution Act, February;
- Foreign Investment and Technology Transfer Act, February;
- Access to Genetic Resources Act, April;
- Foreign Investment and Technology Transfer Regulations, May;
- Industrial Enterprises Regulations, May;
- Law on Anti-Dumping Practices, July;
- Competition Act, July; and
- Seed Act, 1998 (First Amendment), August.
2005 – Expected approval date:
- Plant Protection Act, April;
- Nepal Standards (Certification Mark) Act, 1980, April;
- Bankruptcy/Insolvency Act, September;
- Environment Act, September;
- Pharmaceutical Act, 1978 (Amendment), September;
- Cyber Act, September;
- Nepal Standards (Certification Mark) Regulations, 1982, December;
- Plant Protection Regulation, 1975 (Amendment), December;
- Industrial Property (Protection) Act, December;
- Instrument of Ratification of Bern Convention, December;
- Instrument of International Plant Protection Convention (IPPC), December; and
- Instrument of Ratification for the UN Convention on Contracts for the International Sale
of Good, December.WT/ACC/NPL/16
Page 61
ANNEX III
VAT Exemptions
Exempted from VAT:
1. Basic Agricultural Products
(a) Paddy rice, wheat, maize, millet, pulses, flour, and similar unprocessed food
materials.
(b) Green and fresh vegetables, fresh fruits, fresh eggs and similar products.(c) Unprocessed cereals, oil seeds (tobacco, sugar, cotton, cardamom, jute,
soybean, ground nuts, linseed rape seed, sun flower and similar basic
agricultural products to be used to make edible oil).
2. Goods of Basic Needs
(a) Edible oil (produced through local oils mills).
(b) Piped water, including water supplied by tankers.
(c) Fuel wood and coal.
(d) Kerosene.
3. Live Animals and Animal Products
(a) He goat, sheep, yak, he buffalo, bore, pigs, rabbit, and similar other animals;
their fresh milk, and uncooked/unprocessed varieties.
(b) Cows, she buffalo and she goat.
(c) Ducks, hens, cocks, turkey and similar other birds, and their fresh meat, eggs,
and similar uncooked varieties.
4. Agricultural Inputs
(a) Seeds of any plants listed in Group 2.
(b) Manure, fertilizer and soil conditioners.
(c) Agricultural hand implements.
5. Pesticides, made mainly for use on crops
Medicine, Medical and Similar Health Services
(a) Services provided by any hospital, clinics or other institutions approved by
the Government in order to provide medical or surgical treatment.
(b) Professional services provided by medical practitioners (doctor, nurse, health
assistance, etc.) individually or institutionally.
(c) Goods provided to the recipients in connection with the supply of services
listed in group (a) and (b) above.
(d) Human blood and products derived from human blood.
(e) Human or animal organs or tissue for medical research.
(f) The supply of services by persons on the registry of veterinary surgeons and
veterinary doctors.
(g) Medicine for the treatment of human being and animals.(h) The supply of goods made for, and suitable only for the use of, disabled
persons.WT/ACC/NPL/16
Page 62
6.  Education
a) The provision of research in a school or university.
b) The provision, otherwise than for profit, of professional or vocational training
or refresher training.
c) The provision of education in a school or university and supply of goods
made in connection with such services.
7.  Books, Newspapers etc.
(a) Books, brochures and pamphlets.
(b) Newspapers, newsletters and periodicals.
(c) Maps, and charts.
(d) Covers, cases and other articles supplied with items (a) to (c) above if not
separately charged.
(e) Radio and television transmissions.
8.  Artistic and Cultural Goods and Services, Carving Services
(a) Cultural and artistic services (painting, carving and related services).
(b) Cultural programme.(c) Admission to libraries, archaeology, museums, zoos and botanical gardens.
9.  Passenger Transportation Services
- The provision of services for the transport of person from one point in the
Kingdom of Nepal to another point in the Kingdom of Nepal (except
sightseeing trips).
10.  Personal or Professional Service
- Personal services rendered by lawyers, auditors, engineers, artists, actors,
singers, dancers, sportsmen, authors, writers, designers, professionalsportsmen, insurers, booksellers, translators and interpreters institutionally or
individually.
11.  Other Goods or Services
(a) Postal services (provided by Nepal only)
(i) The service of conveyance of letters, money and postal packets by
the Post Office.
(ii) The supply by the Post Office of any service in connection with the
conveyance of letters, money and postal packets.
(iii) Postage stamps.
(b) Financial and insurance services
- Bank notes, and cheque books
(i) The printing and issue of bank notes.WT/ACC/NPL/16
Page 63
(ii) The supply of bank notes from outside the Kingdom of Nepal to the
Kingdom of Nepal.
(iii) Cheque book.
(c) Gold and silver
(i) Gold and gold coins (other than ornaments and goods made of gold).
(ii) Silver and silver coins (other than ornaments and goods made of
silver).
12.  Land and Building
Purchase and rent of land and buildings
13.  Betting, Casinos, Lotteries
(a) The provision of any facilities for the placing of bets or the playing of games
of chance.
(b) Lottery.
The following goods or services attract  zero rate  of value added tax:
1. Goods or services purchased or imported by His Majesty the King, Her Majesty the
Queen, His Majesty the Crown Prince, and other members of the Royal Family.
2. Export of goods
(a) Goods exported outside the Kingdom of Nepal; or
(b) Goods shipped for use as stores on a flight to an eventual destination outside
the Kingdom of Nepal; or
(c) Goods loaded for use as stores on aircraft to a destination outside the
Kingdom of Nepal or as merchandise for sale by retail or supplied to persons
in the course of such a flight.
3.  Export of services
(a) A supply of services by a person resident in the Kingdom of Nepal to a
person outside the Kingdom of Nepal and having no business establishment,
agent, or legal representative acting on his behalf in the Kingdom of Nepal.
(b) Where goods are supplied on a hire or loan basis by a registered person
resident in Nepal to a person resident outside the Kingdom of Nepal.
4.  Imports of goods and services by accredited diplomats.
In accordance with Section 5 of the Value Added Tax Act, 1996, the exemptions to the VAT were
equally available to imports and domestic products.WT/ACC/NPL/16
Page 64
ANNEX IV
Excise Taxes
S.No. HS Code Items Excise duty
1. 1703.10 Can molasses Rs.  25 per quintal
2. Raw sugar in solid form Rs.  55 per quintal
3. 2106.90.20 Betel/Areca (Pan Parag) nuts mixed with catechu and
lime with or without nicotineRs.  165 per kg
4. 2206 Champagne, Perry mead etc. Rs.  125 per litre
5 2204.29 Wine or fresh fruits not exceeding 17 per cent alcoholic
contentRs.  70 per litre
6. 2306.00 Cider Rs.   70 per litre
7. 2203.00 Beer Rs.  36 per litre
8. 2206.00 Chhyang Rs.   15 per litre
9. 2207.20 Denatured spirits Rs.  6 per litre
10. 2207.20 Thinner Rs.  25 per litre
11. 2208.00 Industrial spirits with 57.38 to 80 per cent alcohol
content by volume, to be used as raw material for
spirituous drinkRs.  70 per litre
12. 2207.10 Rectified spirit, silent spirit (ENA) used as raw
material for alcoholic products with an alcoholicstrength of 80 per cent or higher by volumeRs.  25 per litre
13.
2208.20.902208.30.902208.50.90All alcoholic products
Up to strength of 40 UP
Strength of 40 to 60 UPStrength 60 UP and higher
(25 UP is equivalent to 43.04%
40 UP is equivalent to 34.43%65 UP is equivalent to 20.08%)Rs.  260 per LPL
Rs.  150 per LPLRs.  44 per LPL
14. 24.02.20 All kinds of cigarette
i. Cigarettes up to 70 mm in length
a)  Without filterb)  With filter
ii. 70 mm to 75 mm (with filter)
iii. 76 mm to 85 mm (with filter)iv. More than 85 mm (with filter)Rs.  100 per M
Rs.  285 per M
Rs.  365 per M
Rs.  500 per MRs.  675 per M
15. 2402.10 All kinds of cigar Rs.  2.25 per stick
16. 2403.10.10 Pipe tobacco Rs.  350 per kg
17. 2403.99 Tobacco extracts and essences including chewing
tobaccoRs.  165 per kg
18. 2403.99 Raw chewing tobacco Rs.  100 per kg
19. 2523 All kinds of cement Rs.  100 per M.T.
20. 6901-5 All kinds of bricks Rs.  500 per thousand
(Equalizing duty)
21. 8702,
8703,8704Motor Vehicles
Car, jeep, vans
Microbuses (11 to 14 seats)Double Cab Pick Up
Three Wheeler Vehicles (Auto Rickshaw)
Single Cab Pick UpDelivery VanMinibuses32%
32%32%
32%
15%15%4%
22. 3501 All kind of polythene bags Rs.  15 per kgWT/ACC/NPL/16
Page 65
ANNEX V
Certification Chart
Certification Chart
No. of Quality Certification Mark issued
for products
Name of Product No. of Industries
High Density Polythene Pipe 12
Biscuits   2
Ordinary Portland Cement   3
Mineral Water   3
Writing and Printing Paper   2
Toothpaste   1
Bitumen Emulsion   1
GI Wire   3
Deformed Steel Bar and Wires for Concrete
Reinforcement13
Paints 5 Types   2
Gun Metal Gate Valve   1
Soybean Oil and Vegetable Ghee – 2 types   8
Galvanized Mild Steel Pipe for Water Supply    3
PVC Cable   6
Instant Noodles   3
Hand Made Woollen Carpet   2
PVC Pipe for Drinking Water Supply   3
Dry Cell Battery   2
Beer   4
LPG Cylinder   1
Polythene Water Storage Tank   1
Textile   1
Tiles 1
Total 78WT/ACC/NPL/16
Page 66
ANNEX VI
Export Duties as of July 2002
Heading
No.Sub
heading
No.Description of ArticleCurrent
Applied
Rate (in %)
12 3 4
15.07 Soyabean oil and its fractions, whether or not refined, but not chemically
modified.
1507.10.00 -Crude oil, whether or not degummed 5
1507.90.00 -Other 5
15.11 Palm oil and its fractions, whether or not refined, but not chemically
modified.
1511.10.00 -Crude oil 5
1511.90.00 -Other 5
15.13 Coconut (copra), palm kernel or babassu oil and fractions thereof, whether or not
refined, but not chemically modified.
-Coconut (copra) oil and its fractions:
1513.11.00 --Crude oil 2
1513.19.00 --Other 2
-Palm kernel or babassu oil and fractions thereof:
1513.21.00 --Crude oil 5
1513.29.00 --Other 5
15.16 Animal or vegetable fats and oils and their fractions, partly or wholly hydrogenated,
inter-esterified, reesterified or elaidinised, whether or not refined, but not further
prepared.
1516.10.00 -Animal fats and oils and their fractions 5
1516.20.00 -Vegetable fats and oils and their fractions 5
15.17 Margarine; edible mixtures or preparations of animal or vegetable fats or oils or o f
fractions of different fats or oils of this Chapter, other than edible fats or oils or their
fractions of Heading 15.16.
1517.90.00 -Other 5
17.03 Molasses resulting from the extraction or refining of sugar.
1703.10.00 -Cane molasses 5
1703.90.00 -Other 5
25.05 Natural sands of all kinds, whether or not coloured, other than metal- bearing sands o f
Chapter 26.
2505.10.00 -Silica sand and quartz sands Rs.  100
per cubic
meter
2505.90.00 -Other Rs.  100
per cubicmeter
25.16 Granite, porphyry, basalt, sandstone and other monumental or building stone, whether
or not roughly trimmed or merely cut, by sawing or otherwise, into blocks or slabs of arectangular (including square) shape.
-Granite:
--Crude or roughly trimmed
2516.21.10 -- Crushed stones and stone chips upto the size 2 inches for road building Rs.  50 per
cubicmeterWT/ACC/NPL/16
Page 67
Heading
No.Sub
heading
No.Description of ArticleCurrent
Applied
Rate (in %)
12 3 4
2516.21.20 -- Crushed stones and stone chips of a size more than 2 inches for road
buildingRs.  100
per cubicmeter
2516.21.30 -- Boulders and uncrushed stones for road building Rs.  300
per cubic
meter
2516.21.90 -- Mixture of sand and pebbles (chhary) Rs.  100
per cubicmeter
--Merely cut, by sawing or otherwise, into blocks or slabs of a rectangular(including square) shape:
2516.22.10 -- Crushed stones and stone chips upto the size 2 inches for road building Rs.  50 per
cubicmeter
2516.22.20 -- Crushed stones and stone chips of a size more than 2 inches for road
buildingRs.  100
per cubicmeter
2516.22.90 -- Boulders and uncrushed stones for road building Rs.  300
per cubic
meter
25.17 Pebbles, gravel, broken or crushed stone, of a kind commonly used for concrete
aggregates, for road metalling or for railway or other ballast, shingle and flint, whetheror not heat-treated; macadam of slag, dross or similar industrial waste, whether or notincorporating the materials cited in the first part of the heading tarred macadam;granules, chippings and powder, of stones of Heading 25.15 or 25.16,  whether or notheat-treated
-Pebbles, gravel, broken or crushed stone, of a kind commonly used for
concrete aggregates, for road metalling or for railway or other ballast,
shingle and flint, whether or not heat-treated :
2517.10.10 -- Crushed stones and stone chips upto the size 2 inches for road building Rs.  50 per
cubicmeter
2517.10.20 -- Crushed stones and stone chips of a size more than 2 inches for road
buildingRs.  100
per cubic
meter
2517.10.90 -- Boulders and uncrushed stones for road building Rs.  300
per cubicmeter
-Macadam of slag, dross or similar Industrial waste, whether or notincorporating the materials cited in Sub-heading 2517.10 :
2517.20.10 -- Crushed stones and stone chips upto the size 2 inches for road building Rs.  50 per
cubicmeter
2517.20.90 -- Crushed stones and stone chips of a size more than 2 inches for road
buildingRs.  100
per cubicmeter
2517.30.00 -Tarred macadam Rs.  50 per
cubic
meter
-Granules, chippings and powder, of stones of Heading 25.15 or 25.16, whether or not
heat-treated:WT/ACC/NPL/16
Page 68
Heading
No.Sub
heading
No.Description of ArticleCurrent
Applied
Rate (in %)
12 3 4
2517.41.00 --Of marble 6
2517.49.00 --Other 6
25.19 Natural magnesium carbonate (magnesite); fused magnesia; dead-burned (sintered)
magnesia, whether or not containing small quantities of other oxides added beforesintering; other magnesium oxide, whether or not pure.
2519.10.00 -Natural magnesium carbonate (magnesite) Rs.  200
per cubic
meter
2519.90.00 -Other Rs.  200
per cubicmeter
28.17 2817.00.00 Zinc oxide; zinc peroxide. 3
32.03 Colouring matter of vegetable or animal origin (including dyeing extracts
but excluding animal black), whether or not chemically defined;preparations based on colouring matter of vegetable or animal origin asspecified in note 3 to this Chapter:
3203.00.10 -- Cutch of acacia (Kachha) Per Kg Rs.
2/-
3203.00.20 -- Catechu of acacia (Kathas) Per Kg Rs.
5/-
39.15 Waste, parings and scrap, of plastics.
3915.10.00 -Of polymers of ethylene 4
3915.20.00 -Of polymers of styrene 4
3915.30.00 -Of polymers of vinyl chloride 4
3915.90.00 -Of other plastics 4
39.16 Monofilament of which any cross-sectional dimension exceeds 1mm, rods, sticks and
profile shapes, whether or not surface-worked but not otherwise worked, of plastics.
3916.10.00 -Of polymers of ethylene 4
3916.20.00 -Of polymers of vinyl chloride 4
3916.90.00 -Of other plastics 4
39.17 Tubes, pipes and hoses, and fittings therefor (for example, joints, elbows, flanges), o f
plastics.
3917.10.00 -Artificial guts (sausage casings) of hardened rotein or of cellulosic
materials4
-Tubes, pipes and hoses, rigid:
3917.21.00 --Of polymers of ethylene 4
3917.22.00 --Of polymers of propylene 4
3917.23.00 --Of polymers of vinyl chloride 4
3917.29.00 --Of other plastics 4
Other tubes, pipes and hoses:
3917.31.00 --Flexible tubes, pipes and hoses, having a minimum burst pressure of 27.6
Mpa.4
3917.32.00 --Other, not reinforced or otherwise combined with other materials,
without fittings.4
3917.33.00 --Other, not reinforced or otherwise combined with other materials, with
fittings.4
3917.39.00 --Other 4WT/ACC/NPL/16
Page 69
Heading
No.Sub
heading
No.Description of ArticleCurrent
Applied
Rate (in %)
12 3 4
3917.40.00 -Fittings 4
39.18 Floor coverings of plastics, whether or not self-adhesive, in rolls or in the form of tiles;
wall or ceiling coverings of plastics, as defined in Note 9 to this Chapter.
3918.10.00 -Of polymers of vinyl chloride 4
3918.90.00 -Of other plastics 4
39.19 Self-adhesive plates, sheets, film, foil, tape, strip and other flat shapes, of plastics,
whether or not in rolls.
3919.10.00 -In rolls of a width not exceeding 20 cm 4
3919.90.00 -Other 4
39.20 Other plates, sheets, film, foil and strip, of plastics, non-cellular and not reinforced,
laminated, supported or similarly combined with other materials.
3920.10.00 -Of polymers of ethylene 4
3920.20.00 -Of polymers of propylene 4
3920.30.00 -Of polymers of styrene 4
-Of polymers of vinyl chloride:
3920.43.00 - Containing by weight not less than 6% of plasticiser 4
3920.49.00 -- Other 4
-Of acrylic polymers:
3920.51.00 --Of polymethyl methacrylate 4
3920.59.00 --Other 4
-Of polycarbonates, alkyd resins, polyallylesters or other polyesters:
3920.61.00 --Of polycarbonates 4
3920.62.00 --Of polyethylene terephthalate 4
3920.63.00 --Of unsaturated polyesters 4
3920.69.00 --Of other polyesters 4
-Of cellulose or its chemical derivatives:
3920.71.00 --Of regenerated cellulose 4
3920.72.00 --Of vulcanised fibre 4
3920.73.00 --Of cellulose acetate 4
3920.79.00 --Of other cellulose derivatives 4
-Of other plastics:
3920.91.00 --Of polyvinyl butyral 4
3920.92.00 --Of polyamides 4
3920.93.00 --Of amino-resins 4
3920.94.00 --Of phenolic resins 4
3920.99.00 --Of other plastics 4
39.21 Other plates, sheets, film, foil and strip, of plastics.
-Cellular:
3921.11.00 --Of polymers of styrene 4
3921.12.00 --Of polymers of vinyl chloride 4
3921.13.00 --Of polyurethanes 4
3921.14.00 --Of regenerated cellulose 4
3921.19.00 --Of other plastics 4
3921.90.00 -Other 4
39.22 Baths, shower-baths, wash-basins, bidets, lavatory pans, seats and covers, flushing
cisterns and similar sanitary ware, of plastics.
3922.10.00 -Baths, shower-b\aths and wash-basins 4WT/ACC/NPL/16
Page 70
Heading
No.Sub
heading
No.Description of ArticleCurrent
Applied
Rate (in %)
12 3 4
3922.20.00 -Lavatory seats and covers 4
3922.90.00 -Other 4
39.23 Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and
other closures, of plastics.
3923.10.00 -Boxes, cases, crates and similar articles 4
-Sacks and bags (including cones):
3923.21.00 --Of polymers of ethylene 4
3923.29.00 --Of other plastics 4
3923.30.00 -Carboys, bottles, flasks and similar articles 4
-Spools, cops, bobbins and similar supports:
3923.40.10 -- Video and audio cassettes without magnetic tape 4
3923.40.90 -Other 4
3923.50.00 -Stoppers, lids, caps and other closures 4
3923.90.00 -Other 4
39.24 Tableware, kitchenware, other household articles and toilet articles, of
plastics.
-Tableware and kitchenware:
3924.10.10 --Infant feeding bottles 4
3924.10.90 --Other 4
3924.90.00 -Other 4
39.25 Builders' wares of plastics, not elsewhere specified or included.
3925.10.00 -Reservoirs, tanks, vats and similar containers, of a capacity exceeding 300
L.4
3925.20.00 -Doors, windows and their frames and thresholds for doors 4
3925.30.00 -Shutters, blinds (including venetian blinds) and similar articles and parts
thereof4
3925.90.00 -Other 4
39.26 Other articles of plastics and articles of other materials or Headings 39.01
to 39.14.
3926.10.00 -Office or school supplies 4
3926.20.00 -Articles of apparel and clot hing accessories (including gloves) 4
3926.30.00 -Fittings for furniture, coachwork or the like 4
3926.40.00 -Statuettes and other ornamental articles 4
-Other:
3926.90.10 --Bangles, tika, tikuli and beads 4
3926.90.20 -- Plastic dye for shoe making 4
3926.90.30 -- Plastic for laboratory equipment 4
3926.90.40 -- Pet bottle (raw material for bottle) 4
3926.90.90 --Other 4
44.01 Fuel wood, in logs, in billets, in twigs, in faggots or in similar forms; wood in chips or
particles; sawdust and wood waste and scrap, whether or not agglomerated in logs
briquettes, pellets or similar forms.
4401.10.00 -Fuel wood, in logs, in billets, in twigs, in faggots or in similar forms;
wood in chips or particles; sawdust and wood waste and scrap, whether ornot agglomerated in logs briquettes, pellets or similar forms.200
-Wood in chips or particles:
4401.21.00 --Coniferous 200WT/ACC/NPL/16
Page 71
Heading
No.Sub
heading
No.Description of ArticleCurrent
Applied
Rate (in %)
12 3 4
4401.22.00 --Non-coniferous 200
4401.30.00 -Sawdust and wood waste and scrap, whether or not agglomerated in logs,
briquettes, pellets or similar forms200
44.03 Wood in the ro ugh, whether or not stripped of bark or sapw ood, or ro ughly
squared.
4403.10.00 -Treated with paint, stains, creosote or other preservatives 200
4403.20.00 -Other coniferous 200
-Other, of tropical woodspecified In subheading Note 1 to this Chapter.
4403.41.00 -- Dark red meranti, light red meranti and meranti bakau 200
4403.49.00 --  Other 200
-Other:
4403.91.00 --Of oak (Quercus spp.) 200
4403.92.00 --Of beech (Fagus spp.) 200
4403.99.00 --Other 200
44.04 Hoopwood; split poles; piles, pickets and stakes of wood, pointed but not sawn
lengthwise; wooden sticks, roughly trimmed but not turned, bent or otherwise worked,
suitable for the manufacture of walking-sticks, umbrellas, tool handles or the like;
chipwood.
4404.10.00 -Coniferous 200
4404.20.00 -Non-coniferous 200
44.05 4405.00.00 Wood wool; wood flour. 200
44.06 Railway or tramway sleepers (cross-ties) of wood.
4406.10.00 -Not impregnated 200
4406.90.00 -Other 200
44.07 Wood sawn or chipped lengthwise, sliced or peeled, whether or not planed, sanded or
finger-jointed, of a thickness exceeding 6 mm.
4407.10.00 -Coniferous 200
-Of tropical wood specified In subheading Note 1 to this Chapter:
4407.24.00 -- Virola, mahogany (swietenia spp.), imbuia and balsa 200
4407.25.00 -- Dark red meranti, right red meranti and meranti bakau 200
4407.26.00 -- White lauan, white meranti, white seraya, yellow meranti and alan 200
4407.29.00 -- Other 200
-Other:
4407.91.00 --Of oak 200
4407.92.00 --Of beech 200
4407.99.00 --Other 200
44.08 Veneer sheets and sheets for plywood (whether or not spliced) and other wood sawn
lengthwise, sliced or peeled, whether or no t planed, sanded or finger-jointed, of a
thickness not exceeding 6 mm.
4408.10.00 -Coniferous 70
- Of tropical wood specified In subheading Note 1 to this Chapter:
4408.31.00 -- Dark red meranti, light red meranti and meranti bakau 70
4408.39.00 -- Other 70
4408.90.00 -Other 70
54.02 Synthetic filament yarn (other than sewing thread), not put up for retail sale, including
synthetic monofilament of less than 67 decitex.
-Other yarn, single, with a twist exceeding 50 turns per metreWT/ACC/NPL/16
Page 72
Heading
No.Sub
heading
No.Description of ArticleCurrent
Applied
Rate (in %)
12 3 4
--Of nylon or other polyamides :
5402.51.10 -- Texturised yarn made by POY 2
5402.51.90 -- Other 0.5
--Of polyesters :
5402.52.10 -- Texturised yarn made by POY 2
5402.52.90 -- Other 0.5
--Other :
5402.59.10 -- Texturised yarn made by POY 2
5402.59.90 -- Other 0.5
-Other yarn, multiple (folded) or cabled:
--Of nylon or other polymides :
5402.61.10 -- Texturised yarn made by POY 2
5402.61.90 -- Other 0.5
--Of polyesters :
5402.62.10 -- Texturised yarn made by POY 2
5402.62.90 -- Other 0.5
-Other :
5402.69.10 -- Texturised yarn made by POY 2
5402.69.90 -- Other 0.5
73.04 Tubes, pipes and hollow profiles, seamless or iron (other than cast iron) or
steel.
7304.10.00 - Line pipe of a kind used for oil or gas pipelines 2
- Casing, tubing and drill pipe, of a kind used in drilling for oil or gas:
7304.21.00 -- Drill pipe 2
7304.29.00 -- Other 2
- Other, of circular cross-section, or iron or non-alloy steel:
7304.31.00 -- Cold-drawn or cold-rolled (cold-reduced) 2
7304.39.00 -- Other 2
- Other, of circular cross-section, or iron or non-alloy of stainless steel:
7304.41.00 -- Cold-drawn or cold-rolled (cold-reduced) 2
7304.49.00 -- Other 2
- Other, of circular cross-section, of other alloy steel:
7304.51.00 -- Cold-drawn or cold-rolled (cold-reduced) 2
7304.59.00 -- Other 2
7304.90.00 - Other 2
73.05 Other tubes and pipes (for example, welded, riveted or similarly closed), having
circular cross-sections, the external diameter of which exceeds 406.4 mm, or iron orsteel.
- Line pipe of a kind used for oil or gas pipelines:
7305.11.00 -- Longitudinally submerged arc welded 2
7305.12.00 -- Other, longitudinally welded 2
7305.19.00 -- Other 2
7305.20.00 - Casing of a kind used in the drilling for oil or gas 2
-Other, welded:
7305.31.00 -- Longitudinally welded 2
7305.39.00 -- Other 2
7305.90.00 - Other 2WT/ACC/NPL/16
Page 73
Heading
No.Sub
heading
No.Description of ArticleCurrent
Applied
Rate (in %)
12 3 4
73.06 Other tubes, pipes and hollow profiles (for example, open seam or welded, riveted or
similarly closed), or iron or steel.
7306.10.00 - Line pipe of a kind used for oil or gas pipelines 2
7306.20.00 - Casing and tubing of a kind used in drilling for oil or gas 2
7306.30.00 - Other, welded, of circular cross-section of iron or non-alloy steel 2
7306.40.00 - Other, welded, of circular cross-section of stainless steel 2
7306.50.00 - Other, welded, of circular cross-section of other alloy steel 2
7306.60.00 - Other, welded, of non-circular cross-section 2
7306.90.00 - Other 2
73.07 Tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or
steel.
-Cast fittings:
7307.11.00 -- Of non-malleable cast iron 2
7307.19.00 -- Other 2
- Other of stainless steel:
7307.21.00 -- Flanges 2
7307.22.00 -- Threaded elbows, bends and sleeves 2
7307.23.00 -- Butt welding fittings 2
7307.29.00 -- Other 2
- Other:
7307.91.00 -- Flanges 2
7307.92.00 -- Threaded elbows, bends and sleeves 2
7307.93.00 -- Butt welding fittings 2
7307.99.00 -- Other 2
74.08 Copper wire.
-Of refined copper:
7408.11.00 -- Of which the maximum cross-sectional dimesnion exceeds 6 mm 3
7408.19.00 --Other 3
- Of copper alloys:
7408.21.00 -- Of copper-zinc base alloys (brass) 3
7408.22.00 -- Of copper-nickel base alloys (cupro-nickel) or copper-nickel-zinc base
alloys (nickel silver)3
7408.29.00 -- Other 3
94.03 Other furniture and parts thereof.
9403.70.00 - Furniture of plastics 4WT/ACC/NPL/16
Page 74
[ DRAFT DECISION
ACCESSION OF THE KINGDOM OF NEPAL
Decision of […]
The Ministerial Conference,
Having regard to  paragraph 2 of Article XII and paragraph 1 of Article IX of the Marrakesh
Agreement Establishing the World Trade Organization (the "WTO Agreement"), and the Decision-Making Procedures under Articles IX and XII of the WTO Agreement agreed by the General Council
(WT/L/93),
Conducting  the functions of the Ministerial Conference pursuant to paragraph 1 of Article IV
of the WTO Agreement,
Taking note of the application of the Kingdom of Nepal for accession to WTO Agreement
dated 17 February 1997,
Noting  the results of the negotiations directed toward the establishment of the terms of
accession of the Kingdom of Nepal to the WTO Agreement and having prepared a Protocol on the
Accession of the Kingdom of Nepal,
Decides  as follows:
1. The Kingdom of Nepal may accede to the WTO Agreement on the terms and conditions set
out in the Protocol annexed to this Decision.
_______________WT/ACC/NPL/16
Page 75
DRAFT PROTOCOL
ON THE ACCESSION OF THE KINGDOM OF NEPAL
Preamble
The World Trade Organization (hereinafter referred to as the "WTO"), pursuant to the approval
of the General Council of the WTO accorded under Article XII of the Marrakesh Agreement
Establishing the World Trade Organization (hereinafter  referred to as the "WTO Agreement"), and the
Kingdom of Nepal,
Taking note of the Report of the Working Party on the Accession of the Kingdom of Nepal to
the WTO Agreement reproduced in document WT /ACC/NPL/16, dated 28 Au gust 2003 (hereinafter
referred to as the "Working Party Report"),
Having regard to the results of the negotiations on the accession of the Kingdom of Nepal to the
WTO Agreement,
Agree as follows:
PART I -  GENERAL
1. Upon entry into force of this Protocol pursuant to paragraph 8, the Kingdom of Nepal accedes
to the WTO Agreement pursuant to Article XII of that Agreement and thereby becomes a Member of
the WTO.
2. The WTO Agreement to which the Kingdom of Nepal accedes shall be the WTO Agreement,
including the Explanatory Notes to that Agreement, as rectified, amended or otherwise modified by such
legal instruments as may have entered into force before the date of entry into force of this Protocol.  This
Protocol, which shall include the commitments referred to in paragraph 153 of the Working Party
Report, shall be an integral part of the WTO Agreement.
3. Except as otherwise provided for in para graph 153 of the Working Party Report, those
obligations in the Multilateral Trade Agreements  annexed to the WTO Agreement that are to be
implemented over a period of time starting with the entry into force of that Agreement shall be
implemented by the Kingdom of Nepal as if it had accepted that Agreement on the date of its entry into
force.
4. The Kingdom of Nepal may maintain a measure inconsistent with paragraph 1 of Article II of
the GATS provided that such a measure was recorded in  the list of Article II Exemptions annexed to this
Protocol and meets the conditi ons of the Annex to the GATS on Article II Exemptions.
PART II - SCHEDULES
5. The Schedules reproduced in Annex I to th is Protocol shall become the Schedule of
Concessions and Commitments annexed to th e General Agreement on Tariffs and Trade 1994
(hereinafter referred to as the "GATT 1994") and th e Schedule of Specific Commitments annexed to the
General Agreement on Trade in Services (hereinafter referred to as "GATS") relating to the Kingdom of
Nepal.  The staging of the concessions and commitments listed in the Schedules shall be implemented asspecified in the relevant parts of the respective Schedules.WT/ACC/NPL/16
Page 76
6. For the purpose of the reference in paragraph 6(a) of Article II of the GATT 1994 to the date of
that Agreement, the applicable date in respect of the Schedules of Concessions and Commitments
annexed to this Protocol shall be the date of entry into force of this Protocol.
PART III - FINAL PROVISIONS
7. This Protocol shall be open for acceptance, by signature or otherwise, by the Kingdom of Nepal
until 31 March 2004.
8. This Protocol shall enter into force on the thirtieth day following the day upon which it shall
have been accepted by the Kingdom of Nepal.
9. This Protocol shall be deposited with the Dire ctor-General of the WTO.  The Director-General
of the WTO shall promptly furnish a certified copy of this Protocol and a notification of acceptance by
the Kingdom of Nepal thereto pursuant to paragraph 7 to each Member of the WTO and to the
Kingdom of Nepal.
This Protocol shall be registered in accordance with the provisions of Article 102 of the Charter
of the United Nations.
Done at [place] this [....  date ] of [............month] two thousand and th ree, in a single copy in the
English, French and Spanish languages, each text being authentic, except that a Scheduleannexed hereto may specify that it is authentic in only one of these languages.
_______________WT/ACC/NPL/16
Page 77
ANNEX I
SCHEDULE  CLVII – THE KINGDOM OF NEPAL
Authentic only in the English language.
(Circulated in document WT/ACC/NPL/16/Add.1)
_______________
SCHEDULE OF SPECIFIC COMMITMENTS ON SERVICES
LIST OF ARTICLE II EXEMPTIONS
Authentic only in the English language.
(Circulated in document WT/ACC/NPL/16/Add.2) ]
__________