RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/NPL/9
15 October 2001
(01-5018)
Working Party on the Accession
of the Kingdom of NepalOriginal:  English
ACCESSION OF NEPAL
Additional Questions and Replies
Additional questions submitted by Members on the replies thereto provided by the authorities
of the Kingdom of Nepal are reproduced hereunder.  The annexes mentioned in this document are
available in the Secretariat (Accessions Division, Room 1126) for consultation and upon request inelectronic format from accessions@wto.org.
_______________
TABLE OF CONTENTS
Question Page
II ECONOMY, ECONOMIC POLICIES AND FOREIGN TRADE
Economic Policies
Foreign and Domestic Investment Policy 1-4 1-2Privatization Policy 5 2-3
III FRAMEWORK FOR MAKING AND ENFORCING POLICIES
AFFECTING FOREIGN TRADE IN GOODS AND TRADE IN
SERVICES
1. Power of the Executive, Legislative and Judicial Branches of the Government 6-12 4-6
6. Description of Judicial, Arbitral or Administrative Tribunals or Procedures, if
any13-14 6-7
IV POLICIES AFFECTING TRADE IN GOODS
1. Import Regulation
Registration Requirements for Engaging in Importing 15-16 7-9
b. Characteristics of National Tariff 17-18 9d. Other duties and Charges, Specifying any Charges for Services Rendered 19-20 9-10e. Quantitative Import Restrictions, including Prohibitions, Quotas and
Licensing Systems21-24 10-11
f. Licensing Procedures 25-30 11-16
Customs Valuation 31-33 16
i. Other Customs Formalities 34 17k. Application of Internal Taxes on Imports 35-37 17-18l. Rules of Origin 38 18-19
m. Anti-dumping Regime
n. Countervailing Duty Regime39 19
o. Safeguard Regime 40-42 19-20
2. Export Regulation 43 20-21a. Registration Requirements for Engaging in Exporting 44 21a. Customs Tariff Nomenclature, Types of Duties, Duty Rates, Weighted
Averages of Duty Rates45-46 21
b. Quantitative Export Restrictions, including Prohibitions, Quotas and
Licensing Systems47-48 22
f. Export Financing, Subsidy and Promotion Policies 49 23
h. Import Duty Drawback Schemes 50 23WT/ACC/NPL/9
Page ii
3. Internal Policies Affecting Foreign Trade in Goods
a. Industrial Policy, Including Subsidy Policies 51-55 23-24b. Technical Regulations and Standards, including Measures taken at the Border
with respect to Imports56-60 25-29
c. Sanitary and Phytosanitary Measures, including Measures taken with respect
to Imports61-63 29-30
e. State-Trading Practices 64-65 30
l. Government Procurement Practices, including General Legal Regime and
Procedures for Tendering, Dealing with Tenders and Award of Contracts66-68 30-31
4. Policies Affecting Foreign Trade in Agricultural Products
b. Exports 69 31c. Export Prohibitions and Restrictions 70 32e. Internal Policies 71 32
V TRADE-RELATED INTELLECTUAL PROPERTY REGIME
1. General 72 32
a. Intellectual Property Policy 73-76 32-344. Enforcement 77-86 34-37
VI TRADE-RELATED SERVICES REGIME
1. General Introduction
Professional Services
Legal Services 87 38
Accounting, Auditing and Bookkeeping 88 38Engineering Services 89 38Telecommunications Services 90 38-39Financial Services 91-92 39
2. Policies Affecting Trade in Services 93-99 39-41
VII INSTITUTIONAL BASIS FOR TRADE AND ECONOMIC
RELATIONS WITH THIRD COUNTRIES
2. Economic Integration:  Customs Union and Free-Trade Area Agreements 100-102 42-43
Annexes:
Annex I – Application form for fore ign investment/technology transfer.
Annex II – Schedule – 1 (relating to Rule 3).Annex III – Schedule – 2 (relating to sub-rule (1) of Rule 4) (Importation for Commercial Purpose).
Annex IV – Schedule – 2 (relating to sub-rule (1) of Rule 4) (Importation for Industrial Purpose).
Annex V – Schedule – 2 (relating to sub-rule (1) of Rule 4) (Importation by Office, Corporation etc.).
Annex VI – Nepal Standards (Certification Mark) Act, 1980.
Annex VII – Standard Weights and Measures Act, 1968.WT/ACC/NPL/9
Page 1
II. ECONOMY, ECONOMIC POLICIES AND FOREIGN TRADE
Economic Policies
Foreign and domestic investment policy
Question 1.  
Nepal has stated that the current industry policy allows for development of almost all industrial
ventures without licence.  However Nepal's respon se to Question 6 states "as per the Foreign
Investment and Technology Transfer Act of 1992, Ar ticle 3, permission from the Department of
Industries is required for all Foreign Investment" and that "the specific requirements to get the
permission are not detailed in either of these acts ."  Given that the specific requirements are not
detailed in the Foreign Investment and Technology Transfer and Industrial Enterprises Acts of
1992, would Nepal please advise the criteria used  in assessing proposals by Foreign Investors
and where these criteria are published?
Answer:
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 foreign
investment. Accordingly, the Department of Industr y has issued a Form which has to be completed by
all Foreign Investors. This Form, in effect, includes the criteria (specific requirements) and theproposals are assessed accordingly. The said Form is attached herewith (please see Annex-I) and is
available at the Department of Industry.
HMG/Nepal assumes existing practices of evaluating foreign investment to be transparent
one. Nonetheless, Nepal is examining to publish th e criteria through appropriate instrument such as
administrative decree of enactment of rules/regulations.
Question 2.  
With regard to Question 32 of WT/ACC/NPL/3, Nepal explains that investments by foreign-
owned companies, or joint companies with fo reign participation, are required to obtain
permission by the Ministry of Industry.  Which laws states the criteria for such permission?
Answer:
Section 2 & 3 of the Foreign Investment and Technology Transfer Act, 1992 prescribe major
criteria for the permission of investment by fo reign-owned companies. The Department of Industry
prescribes other detail requirements for this purpose under an application Form issued by it.
HMG/Nepal assumes existing practices of evaluating foreign investment to be transparent one.
Nonetheless, Nepal is examining to publish the criteria through appropriate instrument such as
administrative decree of enactment of rules/regulations.
Question 3.  
The response to Question 23 on restrictions on Foreign Enterprises refers to the answer to
Question 3 which states "The Privatization Act 1992, in general, does not discriminate between
national and foreign investors.  However, while evaluating proposals, if the proposals of two or
more investors are found to be identical, priority shall be given to the national investor or the
group of national investors".  Could Nepal ad vise what mechanisms are in place to ensure
transparency in the process and what review /appeal/recourse mechanisms are available to
unsuccessful foreign investor tenders?WT/ACC/NPL/9
Page 2
Answer:
The provision under Section 6 of the Privatization Act, 1992 states that the Government, if it
thinks appropriate to privatize any Government Co rporation, shall publish a notice in respect to the
privatization of such a Government Corporation in Nepal Gazette. The Act makes it mandatory for the
Government to initiate the privatization process only after the publication of a 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 to Section 9 of the same Act the Government must call for public
tender for privatization by publishing a notice which has to be in accordance with international
practice. Section 10 of the same Act describes the basis of evaluation of tender and the privatization
committee evaluates the proposals received from the private parties accordingly. In accordance to theSection 11(4) of the same Act, the terms and conditions mentioned in the Agreement in respect to
privatization must be published to inform the public.
Besides, the concerning party may ask for attested copy of relevant documents under number
17 of "kagaz jach ko mahal" (Chapter with respect to paper examination) of the Muluki Ain (Civil
Code). Likewise Article 16 of the Constitution of the Kingdom of Nepal provides a right to seek andget information in respect to matters of public im portance. Nepal is also ready to adopt a better
mechanism in regard to transparency in the concerning Act.
The Privatization Act, 1992 as such is 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 th e Court of Appeal under the Justice Administration
Act, 1991.
Question 4.  
1. We understand that the World Bank and the IMF have advised you to streamline your
regulatory framework for foreign direct investment.  What is the status of these plans?
Answer:
The recommendations of studies conducted so far by FIAS and World Bank have already
been incorporated in the amendments of Industrial Enterprises Act, 1992 and the Foreign Investment
and Technology Transfer Act, 1992.
(f) Privatization Policy
Question 5.  
WT/ACC/NPL/3 states that Nepal has completed privatization of a number of previously
government-owned firms.  Please describe how th e firms listed in the response to question 21
were privatized, e.g., were they sold intact to private buyers, converted to shares that were sold
or otherwise distributed, or dismantled and sold piece by piece?   Approximately what portion
of Nepal’s GDP is currently accounted for by the sales of remaining State-owned firms?WT/ACC/NPL/9
Page 3
Answer:
Nepal has completed privatization of a number of previously government owned enterprises. The
methods of privatization and other information are given below. The net (book value) worth of the
remaining state-owned enterprises account for about 15 percent of Nepal's GDP.
General description of privatized enterprises
S.No. Name of the Company Year of
PrivatizationMethod of
PrivatizationSales
Proceeds
(Rs. '000)#Proportionate
Share
MgtEm
pPubl
ic
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
business sale226,900 72 5 23
3. Bansbari Leather and Shoe
FactoryMar. 1992 Asset and
business sale22,400 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 Corporation Ltd.
(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 33♣
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)1Dec. 1996 Management
contractBusiness
contract-- -- --
14. Nepal Bank Ltd. (NBL)2Mar. 1997 Share sale 125,140 -- 5 54∧
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
                                                     
# It includes the price of management share only.
♣ Rest of the shares are in the name of other corporations
1 BJM is a semi-government enterprise in which private s ector has majority shares. The decision to contracting
out was taken by the company's board and all the procedures were taken accordingly.
2 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 the major ity shareholder. So it floated 10% of the shares in the
share market. Now the government is a minority shareholder i.e. it holds only 39% of the total shares.
∧ HMGN owns 39% sharesWT/ACC/NPL/9
Page 4
III. FRAMEWORK FOR MAKI NG AND ENFORCING POLICIES AFFECTING
FOREIGN TRADE IN GOODS AND TRADE IN SERVICES
1. Power of the Executive, Legislative and Judicial Branches of the Government
Question 6.  
What internal procedures will be necessary to ratify the WTO Agreement in Nepal? What will
be its position in the hierarchy of laws once ratified?
Answer:
His Majesty's Government of Nepal (HMG/N) shall table the resolution for the ratification in
the House of Representatives. The resolution concerning the ratification must be passed by a majority
of the members present in the House of Representatives. After the resolution is passed by the House
of Representatives, HMG shall notify the WTO Secretariat about the ratification of the treaty.
The position of the WTO Agreement in the hierarchy of Nepalese laws after ratification shall
be as an international treaty in conformity with Article 26 and 27 of the Vienna Convention on the
Law of Treaties.
Question 7.  
Please describe the process that Nepal’s Government will use to ratify the accession package
approved by WTO Members, and indicate about how long it should take.
Answer:
After the accession package approved by WTO Members, HMG/N shall table a resolution for
ratification in the House of Representatives (Lower House of the parliament). The resolution
concerning the accession must be passed by a majority of the members present in the House ofRepresentatives. HMG/N shall notify the WTO Secretariat and the UN Secretariat about the
ratification after a resolution is passed by the House of Representatives.
The ratification process may take about six months.
Question 8.  
Please describe how Nepal will adopt WTO provisions in its laws, as called for in Article XVI:4
of the Agreement Establishing the WTO, and how Nepal’s terms of accession contained in the
accession package adopted by the WTO General Council will be accepted or ratified.  Please
outline the existing hierarchy of laws, i.e., wh ich types of legislative instruments supercede
others where there are inconsistencies in two or more laws.
Answer:
Nepal will adopt the spirit of the WTO provisions in its laws by enactment of new laws and
regulations, and amendments of existing Acts, regulations and administrative procedures.
Nepal's terms of accession contained in the accession package adopted by the WTO General
Council will be accepted by enacting laws, making necessary amendments in laws or in GovernmentWT/ACC/NPL/9
Page 5
decisions to fulfil its obligations. The details of the legislative action plan are provided in a separate
document.
Regarding the hierarchy of laws, the constitution shall be the Fundamental Law of the land
and in case the provisions of the constitution conflict with the provisions of current laws, the latter
shall be held invalid to the extent of such co nflicts in accordance with the Constitution of the
Kingdom of Nepal. Likewise the Provisions of Acts supersede the Provisions of Regulations (by-
laws), and provisions of Acts and Regulations supersede the provisions of Government decisions or
Directives where there are inconsistencies.
Question 9.  
What will be the legal status of the WTO Agreem ents in Nepal after it becomes a member, e.g.,
will the Agreements automatically supersede existing laws and regulations?
Answer:
The legal status of the WTO Agreements in Nepal, after Nepal becomes a member, will be
that of an "international treaty". (Please see Answer to question 6.)  Although Section 9 of the Nepal
Treaty Act, 1990 states that in case the provisions of a treaty conflict with the provisions of current
laws, the latter shall be held invalid to the extent of such conflict for the purpose of that treaty, the
provisions of the WTO Agreements shall come in to effect only after the enactment/amendments of
national laws.
Question 10.  
Article X of the GATT states that all "laws, regulations, judicial decisions and administrative
rulings of general application, made effective by any contracting party, pertaining to the
classification or the valuation of products for customs purposes, or to rates of duty, taxes or
other charges, or to requirements, restrictions, or  prohibitions on imports or exports or on the
transfer of payments therefore, or affecting thei r sale, distribution, transportation, insurance,
warehousing, inspection, exhibition, processin g, mixing or other use, shall be published
promptly in such a manner as to enable governments and traders to become acquainted with
them."    Please address how Nepal intends to meet these requirements after accession.
Question 11.  
Are all legal acts of the executive, legislature, and judiciary published in the same place prior to
entry into force?  If not there, then where?  Is it required that they be published to come into
force?
Question 12.  
What provision of law provides for publication of laws and other legislative instruments prior to
entry into force?  Does Nepal’s current legislation cover the provisions of Article X and theother WTO transparency requirements?
Answers to Questions 10-12:
All trade measures and laws, regulations, and Governmental or Administrative rulings of
general application are published in the Nepal Gazette, including Agreements or Treaties in which
Nepal is a party. Judgements of the Supreme Courts are also published in the Nepal Law Journal bythe Supreme Court of Nepal. Laws enter into force on the date of their publication unless another date
is specified in the laws.WT/ACC/NPL/9
Page 6
Some of the transparency requirements of  Article X of GATT 1994 and other WTO
Agreements are provided in Section 3 of the Statute of Interpretation Act, 1953, the Division of Work
of His Majesty's Government Regulation, 2000, and Nepal Gazette of August 1955. However, it has
been the practice to publish relevant acts/rules/regulations to give this effect. HMG/Nepal gives
positive consideration to legislate these existing practices.
As a Member of the WTO, Nepal will fulfill transparency requirements as per Article X of
GATT 1994 and other WTO Agreements.
6. Description of Judicial, Arbitral or Administrative Tribunals or Procedures, If Any
Question 13.  
Is there any appeal system in areas other than th at of the IPRs where any person has the right
to appeal decisions made by the Department of Industry?  In particular, Article 11.2 of the
Customs Valuation Agreement stipulates that th e legislation of each Member shall provide for
the right of appeal with regard to the determin ation of a customs value.  Does Nepal intend to
introduce such an appeal system  relating to customs valuation?
Answer:
There is a provision of appeal against the de cisions taken by Department of Industry under
Article 18 of Industrial Enterprise Act, 1992 to the Industrial Promotion Board.
The importer has 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.
Question 14.  
The response to Question 30 of WT/ACC/NPL/3 addresses the issue of Nepal’s current
arrangements for dealing with judicial appeals from administrative rulings on customs matters,as provided for in Article X of the GATT.  It reports that there is a permanent Revenue
Tribunal to adjudicate and resolve revenue disputes, including decisions related to custom
duties, and that the Custom Act of 1962 as am ended, provides for appeal against orders of
custom duty assessment or punishment issued by customs to the Revenue Tribunal.  We
appreciate Nepal’s statement in the response  to question 30 that it will examine the
compatibility of its current procedures with Article X:3(b) and (c) of GATT 1994.  We
understand this to mean that Nepal is examin ing whether currently established  institutions
provide for the right of appeal to an inde pendent tribunal for the "prompt review and
correction of administrative action relating to customs matters," and that Nepal intends to
establish such an institution if the review indicate s that it does not currently exist.  Can Nepal
confirm that understanding to be correct?  We suggest that, during this examination, Nepal also
take into account the requirements of other WTO Agreements that provide for the right ofappeal, e.g., the Agreements on Customs Valuation, TBT, SPS, Import Licensing and TRIPS.
We look forward to the results of this review.
Answer:
Please see Answer number 13.
Nepal is currently examining to establish an independent administrative tribunal to review the
decision of customs authority regarding customs valuation. The decision of administrative tribunal
could be appealed to the revenue tribunal. Nepal assumes that such institutional system wouldWT/ACC/NPL/9
Page 7
provided prompt review and correction of administrative action relating to customs matters in
accordance to the Article X:3(b) and (c) of GATT 1994.
The Nepalese legislation provides right to appeal to the affected party on the decision of the
authorities on the matters related to technical barriers to trade, sanitary and phyto-sanitary measures,
import licensing, copyrights, trademarks, patent an d design. Please also refer to WT/ACC/NPL/5,
WT/ ACC/NPL/6 and WT/ACC/NPL/7.
IV. POLICIES AFFECTING TRADE IN GOODS
1. Import Regulation
Registration requirements for engaging in importing
Question 15.  
Please provide in writing the details of the req uirements necessary for obtaining the registration
to engage in business.
Answer:
The Nepalese legislation provides different procedures for the registration of a private firm
and a company. 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 and the act of running a private firm wit hout registration is prohibited. The Department of
Commerce registers the firm relating to commerce whereas Department of Industry is the concerned
department for the firms relating to industry. Any individual desiring to register a private firm may
submit the form as prescribed by the Private Firm Registration Regulation 1978 Rule 3. Schedule-1
along with the prescribed application fees to the c oncerned department (Please refer Annex II). If the
concerning Department finds the statement of the application to be true and reasonable to register, itwill register the private firm and issue a certificate of registration accordingly.
The registration of a company is governed by the Company Act, 1997. An application with a
Memorandum of Association and an Article of Association of the proposed company along with
application fee has to be submitted to the Office of the Company Registrar (Section : 4). The
Registrar, with necessary inquiries, registers the company and issues a certificate of incorporationwithin 15 days (Section 5). The Registrar has the authority to reject the application if the proposed
name of the company is already registered, or the proposed name is against public moral or the
objective of the company is contradictory to the existing laws, or the conditions required to
incorporate company under this Act is not fulfilled (Section 6). However, the Registrar gives due
notice and the reasons for rejection to the applicant.
The registration of entity with respect to trade in services is governed by other laws, e.g.,
Nepal Agency Act, 1958, Partnership Act, 1964.WT/ACC/NPL/9
Page 8
Question 16.  
The response to Question 33 of WT/ACC/NPL/3 states that "all companies, national or foreign,
have to be registered with the competent au thority to engage in business in Nepal." This
includes export and import activities. Limited liability companies, including joint venture
agencies, sole proprietor and partnerships, business undertakings for industrial ventures,
register at the Ministry of Industry. But agencies, sole proprietor undertakings and partnership
businesses for trading are required to register at the Department of Commerce.
- Please confirm if this means that manufacturing firms and service firms other than for
international trade register with the Ministry of Industry and that international trading
firms register with the Department of Commerce.
- Are the registration requirements in the two agencies the same?  Please describe how
businesses register and indicate any differen ces.  Are the criteria for registration
published officially?
- Please describe any limitations on individuals or firms seeking to register for the right to
import or export.
- What is the purpose of the registration fees?
- Please confirm that any fees, charges or taxe s levied for registration are in conformity
with WTO obligations, that their rate is ba sed on the cost of the service rendered, that
they do not burden imports, and that the fees are not more onerous for those registering
for importation and exportation than for firms that produce domestic goods.
In document WT/ACC/NPL/3, Nepal states that preference is given to nationals when obtaining
a licence to work as an agent for the delivery of goods, and the response to question 64 statesthat in the "issuance of licenses...  preference may be given to nationals."
- Please expand the information provided on this point, noting how preference is given,
the purpose, and any legal restrictions on foreigners attempting to be agents for the
delivery of goods or obtaining import licenses.
We seek a commitment from Nepal that there are no restrictions on the right of individuals and
enterprises to import and export goods into Nepal’s customs territory, except as provided in
WTO Agreements, and that individuals and firms are not restricted in their ability to import or
export based on their registered scope of business.  We also seek to ensure that fees associated
with the right to import and export are ap plied in conformity with the WTO, including
Articles VIII:1(a), XI:1 and III:2 and 4 of the GATT 1994.
Answer:
The application fee and the registration fee of different kinds of legal entities are very
nominal, non-discriminatory and are not related to the value/ volume of export and import.
HMG/Nepal would appreciate if the Working Party points out which Article of GATT or
GATS are referred to wherein registration fees are mentioned.
Nepal believes that agency business is covered by GATS and its market access conditions
will be governed by the schedule of specific commitments on services sector. Upon accession, Nepalcommits not to adopt any restriction on the right of individuals and enterprises to import and export
goods except as provided for WTO Agreements.WT/ACC/NPL/9
Page 9
Please see Answer number 15 for other information.
(b) Characteristics of national tariff
Question 17.  
Is "country beer" (Chhyang) produced in Nepa l?  Is it taxed differently than "beer"?  Does
Nepal consider this practice consistent with Article III GATT?  If not, what does Nepal intendto do to eliminate the discrimination?
Answer:
The "Chhyang" is not "beer" but is a home made drink produced in a small scale by
indigenous peoples with indigenous traditional knowledge and is related to their religion and social
custom. Chhyang and beer are not identical or similar goods.
Question 18.  
The responses to questions 35 and 38 of WT/ACC/NPL/3 appear to state that for domestic
products subject to the excise tax, an "equalizing duty" of the same level is applied to similar
imported goods in lieu of a customs tariff.
- Can Nepal confirm that imported goods to which the "equalizing tax" is applied are not
subject to additional customs duties, i.e., that the "equalizing duty", which is applied at
the same level as the excise tax on similar domestic goods, acts as the customs tariff onthese goods?
- Can Nepal clarify what taxes and charges are applied (a) to domestic goods generally,
e.g., the VAT; (b) to imports generally, e .g., the customs tariff and the VAT; (c) to
domestic and imported goods that are subject to the excise tax and the "equalizing
duty".
Answer:
Nepal imposes "equalizing duty" equal to the excise tax for corresponding domestic products
in a non-discriminatory manner above the customs tariff. Equalizing duty is an excise tax which is
applied just once and is collected at the custom office for convenience.
Domestic goods are subject to VAT, in general, and excise tax on specified goods. Imported
goods are subject to custom duty, VAT, equalizing duty (on specified goods) equal to excise tax
imposed on domestically produced similar goods and the local development fee replacing previous
octroi tax.
(d) Other duties and charges, specifying any charges for services rendered
Question 19.  
Please reply to Question 48 of WT/ACC/NPL/3.
Answer:
Nepal intends to change 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 reserves the right to introduce customsWT/ACC/NPL/9
Page 10
processing/customs fee equivalent to the cost of services rendered for the items not requiring import
licence.
Question 20.  
Please confirm that Nepal charges no customs pr ocessing or other customs fees on imports or
exports, except for the 1 percent licensing fee on imports or exports that require a licence or
that lack an opened letter of credit in customs documentation.
Answer:
Please see Answer number 19.
(e) Quantitative import restrictions, including prohibitions, quotas and licensing systems
Question 21.  
Why is the importation of liquor above 60 degrees banned when their national production is
allowed?  How does Nepal intend to eliminate this discrimination?
Answer:
Nepal has not allowed to produce liquor above 60 degrees for commercial purposes.
Question 22.  
The response to question 50 in WT/ACC/NPL/3 states that quota system described operates
only for those goods subject to export restrictions or price controls in one of the Parties to the
Trade Agreement.  Are the quotas applied to the products listed actually set by India’s export
quotas?
Answer:
The quota system described operates only for those goods subject to export restriction or price
control in one of the parties to the Trade Agreement (answer 50 in WT/ACC/NPL/3). Based on theconsumption requirement of Nepal, such quotas are mutually decided by the governments of Nepal
and India and have no direct link with overall India's export quotas.
Question 23.  
Concerning licenses required for the import ation of products listed in Annex 3.2:
- Which of the products listed are banned for import?- What products listed in Annex 3.2 are restricted for import?
- What procedures must be followed to ob tain approval for importation of restricted
products?
Answer:
Following products listed in Annex 3.2 (WT/ACC/NPL/3) are banned for import:
a. Narcotic drugs like opium and morphine.
b. Liquor containing more than 60 per cent alcohol.WT/ACC/NPL/9
Page 11
c. Beef and beef products.
Following products listed in Annex 3.2 (WT/ACC/NPL/3) are restricted for import:
a. Materials used in the production of arms and ammunition.
b. Guns and cartridges.
c. Capes without paper.d. Arms and ammunition, and other explosives.
e. Wireless, walkie talkie and other similar audio communication equipments.
f. Valuable metals and precious stones.
The restricted products can be imported under import licence. Regarding the procedures to
obtain an import licence please refer to the answer to question number 27.
Question 24.  
WT/ACC/NPL/3 states that Nepalese producers do not manufacture any of the banned or
restricted items listed in WT/ACC/NPL/2/Add.1 Annex 3.2 except jewelry and home-made
liquor.  What restrictions, if any, are placed on  domestic producers of these products?  Article
XX(c) was intended to address the flow of gold and silver for monetary purposes, not
restrictions on commerce in jewelry.   Are the restrictions on imported jewelry a form of
protection for domestic production?  If not, please elaborate on why these items are notimported for commercial sale.
Answer:
Products injurious to health e.g. narcotic drugs; and beef and beef products are banned to
produce domestically whereas other products listed  in Annex 3.2 of NPL/2/Add.1 could be produced
domestically under government licence.
Currently, Nepal does not restrict importation of jewelry made of valuable metals but there is
restriction on the importation of gold, silver and other valuable metals and precious stones. However,
maximum of 10 kg. of gold and 150 kg of silver are allowed to be imported by paying custom duties
under personal baggage provisions.
(f) Licensing procedures
Question 25.  
Nepal’s documentation appears to indicate th at the current laws governing import licensing
have not been revised since 1978.
i. What steps is Nepal taking to review its system to assess to what extent it will have to be
amended to make it WTO compliant?
ii. What administrative or other objectives does the Government of Nepal have that
require the submission of an application or other documentation (other than that
required for customs purposes) to various re levant administrative bodies as a prior
condition for importation into the customs te rritory of Nepal, whether or not they are
considered import licensing procedures?WT/ACC/NPL/9
Page 12
iii. How are the rules and all other information concerning procedures for the submission
of applications for import licenses published?  Does such publication take place at least
21 days prior to the effective date of the requirement?
iv. Please provide the list of products subj ect to import licensing by HS number and
description, and indicate what provision of the WTO Agreement and its annexesjustifies the requirement.  Please list all Governmental agencies that must be
approached to get the licence.
Answer:
i. The import licensing system of Nepal is go verned by Export Import (Control) Act, 1957 and
Export Import Regulation, 1978. Section 6 of the Export Import (Control) Act, 1957. Rule 16
of the Export Import Regulation, 1978 provide a provision of appeal. All related notices underthese laws are published in Nepal Gazette. The Export Import Regulation 1978 describes in
detail about the authority to grant export/import licence, process of application, format of
application, fees of application and licence, grounds of cancellation of licence, etc. However,
it is felt to examine the Provision of Section 3 of the Export Import (Control) Act, 1957 which
authorizes the government to prohibit export a nd/ or import of any goods during the review of
relevant laws and regulations in order to make WTO compatible.
ii. The importer does not need to submit any other administrative or other documentation for
importation except as prescribed by Import Export (Control) Act, 1957 and Import Export
Regulation, 1978.
iii. The laws and other information concerning procedures for the submission of applications for
import licenses are published in the Gazette. Such publications take place before it comes into
effect. However, the regulation is silent in regard to prior notification and thus, the
government may, publish, whenever practicable, such information 21 days prior to the date of
enforcement.
iv. The following is the list of 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 equipment
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/transceiverWT/ACC/NPL/9
Page 13
HS Number Description Justifying Provision of WTO
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 Capes without paper
93.07 Arms and ammunition and other explosives
Chapter 71 Valuable metals and precious stones Article XX(c) of GATT 1994
iv. The licence issuing authority for all products listed above is the Department of Commerce.
The Department issues licence on the basis of the recommendation of the concerned
ministries e.g. Ministry of Information for telecommunication equipment and Ministry of
Home for arms ammunition and explosives.
Question 26.  
In document WT/ACC/NPL/2/Add.1, Nepal states that personal baggage exceeding the
"allowance" is subject to import licensing.  What is the personal baggage allowance and why ispersonal baggage subject to an import licence?
Answer:
The personal baggage of an air traveller as defined by a Notice in the Nepal Gazette, includes
accompanied personal goods of the traveller, i.e., clothes, medicine, watch, etc. and is not subject to
an import licence. Importation of goods in excess of the personal baggage, are subject to customduties and in case of banned or restricted items the goods are liable to be forfeited and the persons to
be punished.
Question 27.  
In document WT/ACC/NPL/2/Add.1, Nepal identifies the purposes for which an import licence
can be issued and states that there are different applications needed depending on the purposesuch as a commercial purpose licence.  Please provide all of the procedures and documentation
necessary to get an import licence for all purposes.
Answer:
Export Import Regulations 1978 governs the procedures and the requirement of
documentation to obtain an import licence.
An application in the format prescribed in Schedule-2 of the Export Import Regulation 1978
(the prescribed Schedule-2 is attached herewith – Annex III, IV and V) should be submitted to the
Director General of the Department of Commerce. The applicant is required to provide information
and documents as specified in the prescribed application form. The applicant is also required to pay
the prescribed application fee and the licence fee.
The import licence may be issued for different purposes: importation by the government
office, corporations, committees or project, importation by social institutions, importation for
commercial and industrial purposes, importation fo r private use or for the use of professional
firms/companies and institutions for specimen purposes.
The import licence for commercial purposes sha ll be issued only to registered firms or
companies or government corporations (Rule: 7).WT/ACC/NPL/9
Page 14
On examination of application forms and the information and documents provided thereof,
the authority issues the import licence, if  deemed appropriate.
Question 28.  
In document WT/ACC/NPL/2/Add.1, Nepal states that import licenses are valid for six months
and in special situations valid for one year.  Wh at are the special situat ions for getting a licence
that is valid for more than six months?
Answer:
If an importer is unable to import goods within six months of the issuance of the licence due
to external factors beyond his control and requests the authority for the extension of the import
licence, the authority after examining the case based on the nature of goods and the prevailing
situation may extend the licence up to another six months at a time.
Question 29.  
Concerning automatic import licenses:
WT/ACC/NPL/2/Add.1 indicates that all products being imported or exported to/from Nepal
are subject to licensing and use the same licensing procedures.  Both WT/ACC/NPL/2/Add.1
and NPL/3 indicate, however, that only the banne d or restricted items listed in Annex 3.1 and
3.2 are actually subject to the licensing system since Nepal has "relaxed" its enforcement of the
automatic licensing system.  Please clarify.
- Please confirm that if a letter of credit op ened for imports or exports is presented with
customs documentation, no import or export licence is necessary, except for the goods
listed in Annex 3.1 and 3.2.  Is this pr ovided for in regulation or law?
- Why does a firm have to present a letter of  credit opened for import in order to avoid
paying the one per cent import licensing fee?   Is the Government of Nepal considering
other documents, such as a bill of lading, as  alternatives to requiring the presentation of
a letter of credit?
- Alternatively, if specific automatic licensin g requirements remain, please identify the
products covered, including HS number.  What would be the purpose of such licensing?Would such licenses require payment of the one percent import licensing fee?  How long
does it take to process automatic licence applications?
Answer:
HMG/Nepal confirms that if a letter of credit opened for imports or exports is presented with
customs documentation no import or export licence is necessary except for goods listed in Annex 3.1
and 3.2. Such a Governmental order was published in accordance to Section 3 of Export Import
Control Act, 1957 in the Gazette.
The purpose of requiring the presentation of a letter of credit for import is not to avoid paying
import licensing fee (licensing fee is not charged in  such situations) but to get information about the
goods to be imported and to ensure that the import transaction takes place. HMG/Nepal does not have
any plan to introduce alternative documents to the letter of credit. Since an import licence is required
only for restricted products, the import licensing system of Nepal as we understand is more liberalthan the automatic licensing system pursuant to Agreement on Import Licensing Procedures.WT/ACC/NPL/9
Page 15
Nevertheless, HMG/Nepal reserves the right to adopt a system consistent with the Agreement on
Import Licensing Procedures.
Please see Answer to Question number 25 for the list of products subject to import licensing.
Question 30.  
Import and Export Licensing Fee:WT/ACC/NPL/2/Add.1 and WT/ACC/NPL/3 state that Nepal applies an import and export
licensing fee of one percent of th e invoice value of the goods.  It also states that there are other
nominal application fees associated with importin g, including an additional fee if any alterations
are made to the licence.
Article VIII of the WTO states that all "fees and charges of whatever character (other than
import and export duties ... ), shall be limited in amount to the approximate cost of services
rendered and shall not represent an indirect protection to domestic products or a taxation ofimports or exports for fiscal purposes."  A GATT Panel has ruled that ad valorem  fees are a
violation of Article VIII of the GATT. Article VIII:3 also prohibits penalties for mistakes on
customs documentation that are easily rectifiable, which would appear to conflict with Nepal’s
practice of charging additional fees for minor licence application changes
- Please describe the steps that Nepal intends to take to bring its ad valorem  import
licensing fee into line with Arti cle VIII of the GATT, i.e., relate the fee to the cost of the
service of issuing the licence, not to the value of the import.
- We seek Nepal’s cooperation in addressing the WTO-consistency of applying additional
fees for alterations of the licence.
- Please provide a list of all licensing fees, the level of their application, and describe how
and when they are applied to imports.
- Please describe how Nepal intends to change the import licence charge to approximate
the cost of services rendered, in accordance with GATT Article VIII.
Answer:
Nepal is examining the total cost of services provided in the context of import. After the
revelation of the cost of services, Nepal will charge import licence fee approximately equivalent to the
cost of services rendered in line with Article VIII of the GATT. Nepal will apply WTO consistency
additional fees for alterations of the licence by the time Nepal becomes Member of WTO.
As per the Rule 8(1) of the Export Import Regulation 1978, the application fee for import
licence is NRs 10/-. Regarding import licence fee, Rule 8(4) of the Export Import Regulations 1978
has given power to the Government to fix the f ee of import licence. Accordingly, Government has
issued a notice in the Nepal Gazette and has fixed 1 per cent of the total price of imported goods asimport licensing fee.
The applicant requires to submit an application fee and licence fee at the time of submission
of application. In case the licence is not issued, the licence fee will be refunded.WT/ACC/NPL/9
Page 16
Customs Valuation
Question 31.  
We have reviewed Nepal’s documentation on Customs Valuation, including the Customs Act of
1997, and appreciate Nepal’s acknowledgment that its current legal provisions for the valuation
of imports are not in conformity with the WTO Valuation Agreement.  In particular, in addition
to lacking the procedural requirements of the Agreement, Nepal apparently uses local prices
and reference prices when it doubts that the invo ice price corresponds to the price actually paid
or payable.  Valuation based on the value of lo cal goods and on reference prices is contrary to
the WTO Valuation Agreement.  Provisions are lacking to implement the valuation methods in
Articles 5 and 6 of the Agreement, and we can find no reference to prohibited methods of
valuation or provisions for determining related parties.  We have provided Nepal with detailed
comments on these points and others identified deficiencies that we hope will assist in the
development of the necessary legal provisions to implement a WTO-consistent regime.  While
we recognize that such a statement is subject to change, we request that Nepal submit a more
detailed timetable for the enactment of legisl ation that incorporates the WTO Agreement on
Customs Valuation into Nepal’s law.
Answer:
Recognizing the fact that custom valuation based on the value of local goods and on reference
prices is contrary to the WTO Customs Valuation Agreement, and desiring to adopt the valuation
methods of Article 5 and 6 of the Agreement and to improve Nepalese legal provisions to implement a
WTO – consistent regime, Nepal will incorporate th e remaining provisions of the WTO Agreement on
Customs Valuation into Customs Act, 1962 and Custom Regulation, 1969. A timetable for theenactment of legislation that incorporates the WTO Agreement on Customs Valuation into Nepal's
law is provided in the Legislative Action Plan.
Question 32.  
While noting that a timetable for bringing the customs valuation rules into full conformity with
the WTO Agreement on customs valuation is depe ndant on technical assistance being provided,
is Nepal nevertheless able to give any indication of an implementation timetable?
Answer:
An implementation timetable, provided Nepal receives required technical assistance, is
presented in the Legislative Action Plan.
Question 33.  
We welcome the efforts Nepal is undertaking to assure the respect of the relevant WTO
Agreement and we can certainly discuss bilaterall y whether technical assistance is necessary. At
the same time, we would also welcome a submission by Nepal, when available but before the
completion of the accession process, of a detailed  action plan for the full implementation of the
Agreement indicating the measures necessary to assure compliance and the timetable for their
adoption.
Answer:
Please refer to answers to question 32.WT/ACC/NPL/9
Page 17
(i) Other customs formalities
Question 34.  
Does Nepal require any sort of certification of customs documentation by consular officials in
the country of export?  If so, why, and what sort of fees are charged?
Answers:
Nepal does not require any kind of certification of customs documentation by Consular
Officials.
(k) Application of internal taxes on imports
Question 35.  
The table of excise taxes in the response to question 35 in WT/ACC/NPL/3 is incomplete, i.e., no
tariff is listed for "Wine of fresh fruits not exceeding 17 per cent alcoholic content", for "beer"
or for "country beer".  Please revise the table to supply this information.  We would alsoappreciate the information provided on a HS tari ff line basis, rather than by product category.
Answer:
The revised table of excise taxes in response to question 35 in WT/ACC/NPL/3 is as follows:
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 R s. 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 forspirituous drinkRs. 70 per litre
12. 2207.10 Rectified spirit, silent spirit (ENA) used as raw
material for alcoholic products with an alcoholic
strength 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 higherRs. 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 filter
b)  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 stickWT/ACC/NPL/9
Page 18
S.No. HS Code Items Excise duty
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, 3, 4 Vehicle fuelled by petrol or diesel
Motor vehicle for transport (single cab, delivery van)30 to 80%
(Equalizing duty)
22. 3501 All kind of polythene bags Rs. 15 per kg
Question 36.  
Concerning the exemptions to the VAT listed in the response to question 76 of WT/ACC/NPL/3:
Are any of the exemptions available only fo r domestically produced goods (e.g. for raw
agricultural products), or are all exemptions equally available for both imports and domestic
products?
Answer:
Concerning the exemptions to the VAT, all ex emptions are equally available for both imports
and domestic products under Section 5 of the Value Added Tax Act, 1996.
Question 37.  
Concerning the octroi tax.  Could Nepal give a st atus report on the elimination of this tax and
the alternative measures that will replace  the revenues lost with its elimination?
Answer:
His Majesty's Government has eliminated the octroi tax and has adopted a system of levying
"Local Development Fee" as alternative measures to replace revenues loss from the elimination octroi
tax by the Finance Act, 2000. The Local Development Fee is levied on the imported goods, fixed by
His Majesty's Government by a notice published in the Nepal Gazette.  Currently, local development
fee is 1.5 per cent of the value of imports. The collected amount will be distributed to the
Municipalities for their development works.
(l) Rules of origin
Question 38.  
WT/ACC/NPL/3 states that "Nepal only requires proof of origin to determine whether goods
qualify for  preferential treatment under the trade Agreements to which it is a Party or by
national legislation.," and describes its rules of origin for such imports.  Please confirm Nepal’s
commitment to notify and implement regulations  consistent with the WTO Agreement on Rules
of Origin prior to using any trade measure that requires determination of origin for imports for
either preferential or non-preferential trade.  Please confirm that Nepal will provide, from the
date of accession, the procedural protections of the WTO Agreement on Rules of Origin, e.g.,
covering the requirements of Article 2(h) and Annex II, paragraph 3(d), which require WTOWT/ACC/NPL/9
Page 19
Members to provide, upon request and prior to the time of importation, an assessment of the
origin of the import and outline the terms under which it will be provided.
Answer:
Nepal will notify and implement regulations consistent with the WTO Agreement on Rules of
Origin prior to using any trade measure that requi res determination of origin for imports for either
preferential or non-preferential trade. Nepal also confirms its commitments on the procedural
protection covering the requirements of Article 2 (h) and Annex ii and paragraph 3(d) of the WTO
Agreement on Rules of Origin from the date of accession.
(m) Anti-dumping regime
(n) Countervailing duty regime
Question 39.  
WT/ACC/NPL/3 states that Nepal is not certain when legislation authorizing the imposition of
anti-dumping and countervailing duties might be developed.   We seek a commitment from
Nepal that it will not apply any anti-dumping or countervailing duty measures until it has
notified and implemented appropriate laws in conformity with the provisions of the WTO
Agreements on the Implementation of Article VI and on Subsidies and Countervailing
Measures, and that after accession, Nepal will apply any anti-dumping duties or countervailingduties only in full conformity with the relevant WTO provisions.
Answer:
Nepal confirms its commitment that it will not apply any anti-dumping or countervailing duty
measures until it has notified and implemented appropriate laws in conformity with the provisions of
the WTO Agreements on the Implementation of Article VI and on Subsidies and CountervailingMeasures, and that after accession, Nepal will apply any anti-dumping duties or countervailing duties
only in full conformity with the relevant WTO Provisions.
(o) Safeguard régime
Question 40.  
WT/ACC/NPL/3 states that Nepal may restrict the quantity or value of imports as well as
capital movement in order to safeguard its external financial position and its balance-of-
payments. Please cite the legal authority that  would authorize the Government to apply such
restrictions.
Answer:
The Government may restrict imports by issuing an order in accordance to Section 3 of the
Export Import (Control) Act, 1957. The involved authorities are the Ministry of Industry, Commerce
and Supplies, Department of Commerce and the Ce ntral Bank. See also answer to questions 25, 41
and 42.
Question 41.  
Please elaborate on how Nepal may restrict the quantity or value of imports to safeguard its
balance of payments. How will the consistency with the relevant WTO rules be assured? DoesWT/ACC/NPL/9
Page 20
Nepal undertake to introduce trade restrictions for balance of payment purposes only in the
cases specified in the WTO Agreement (Question 10)?
Answer:
Nepal may restrict the quantity of imports by issuing an order in accordance to Section 3 of
the Export Import (Control) Act, 1957. However, currently, there is no quantitative restriction onimports and thus, the question of WTO consistent rule in respect of import restriction does not arise.
Nepal undertakes to introduce trade restrictions for the balance of payment purposes and to
prevent or remedy serious injury or threat to serious injury to a domestic industry as specified in the
WTO Agreements.
Question 42.  
In document WT/ACC/NPL/2/Add.1 and WT/ACC/NPL/3, Nepal states that it reserves the
right to introduce import controls in the case of balance of payments problems and foreconomic development reasons, noting that the provisions of Articles XVIII and XIX would be
relevant in such cases.
- Do the provisions contained in current legi slation authorizing such measures conform to
the provisions of Article XIX of the GATT and the WTO Safeguards Agreement?
- We seek a commitment from Nepal that it will not apply any safeguard measures until it
has notified and implemented appropriate laws in conformity with the provisions of the
WTO Agreement on Safeguards, and that af ter its WTO accession it will apply any
safeguard measures only in full conformity with the relevant WTO provisions.
- Can Nepal confirm that any import controls justified under balance of payments
problems would be applied in compliance with GATT Article XVIII and theUnderstanding on the Balance of Payment Provisions of the General Agreement on
Tariffs and Trade 1994?
Answer:
Nepal confirms that any safeguard measures will not be applied until it is notified to the WTO
and appropriate laws in conformity with the provisions of the WTO Agreement on Safeguards areimplemented. Nepal will apply safeguard measures, after accession to WTO, only in full conformity
with the relevant WTO provisions.
Please see Answer number 41 regarding invocation  of Article XVIII of GATT 1994 and
Understanding on Balance of payments provisions.
2. Export Regulation
Question 43.  
Please explain in detail why export duties are levied on 16 items and why the import and export-
licensing regime has been introduced?
Answer:
The import and export licensing regime has been introduced for statistical purposes. Currently
HMG/Nepal has levied export duties on 23 items as provided on the answer to the question 91 of theWT/ACC/NPL/9
Page 21
WT/ACC/NPL/3. The purposes of levying export duties are partly to discourage environmental
degradation, partly to ensure food security and partly to discourage trade deflection to neighboring
countries.
 (a) Registration requirements for engaging in exporting
Question 44.  
We have the same interest in Nepal’s requirement s for exporting as outlined in section IV:1(a),
registration requirements for engaging in importing.
Answer:
The application for the export licence is to be 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 necessary documents and information required are mentioned in the application
form. The export licenses are granted for different purposes, e.g., for commercial purpose, forpurposes 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 certificate of export licence, if  it thinks it is appropriate, in accordance to the
format prescribed in Schedule-4 of the Export Import Regulation 1978. The Application fee for export
licence is Nepalese Rupees 10.00 and there is no other charge/fees for Export licence.
(a) Customs tariff nomenclature, types of duties, duty rates, weighted averages of duty rates
Question 45.  
There is an export charge of 0.5 per cent.  While we recognize its limited impact on exports, we
maintain that, by being ad valorem  it is inconsistent with Article VIII GATT.  Could Nepal
specify what is the service rendered to the ex porter that justifies the charge (Question 92)?
Answer:
Nepal is examining the approximate cost for services rendered in respect to the export
charges.
Question 46.  
Nepal’s export service fee of .05 percent of the value of exported goods. Such an ad valorem  fee
is not based on the cost of processing exports, but rather on the value of the goods, and is thus
inconsistent with Article VIII.  Nepal should revi se the fee, along with the import licensing fee,
to bring them both into line with WTO requirements prior to accession.
Answer:
Nepal is examining the cost for the services rendered in export and import and, Nepal intends
to revise the export charge, along with the import licensing fee, to bring them both into line with
WTO requirements.WT/ACC/NPL/9
Page 22
(b)  Quantitative export restrictions, includ ing prohibitions, quotas and licensing systems
Question 47.  
Could Nepal update the Working Party on the review of the prohibition to export all imported
raw materials, parts and capital goods (Question 99)?
Answer:
Nepal is examining the impact of lifting the ban on the export of imported raw materials, parts
and capital goods on the illegal deflection.
Question 48.  
Annex 3.2 of WT/ACC/NPL/2/Add.1 lists the following products banned from exportation:
- Raw hides and skin (including dry salted);
- Raw wool;
- All imported raw materials, parts and capital goods;- Mamira; and
- Logs and timber.
Nepal has justified its ban on the export of raw hides and skins, raw wool, and logs and timber
by invoking Articles XI(a) and XX(g) of the GATT.
- Per Article XX(g), In what way do the restrictions on export of logs and timber and
Mamira (i.e., a wild herbal medicinal plant) conserve exhaustible natural resources, i.e.,
which of these resources are "exhaustible" if  they are replanted?  In what way are the
export restrictions made effective in co njunction with restrictions on domestic
production or consumption?
- Per Article XI(a), in what way do the restrictions on raw hides and skins and raw wool
prevent or relieve critical shortages of foodstuffs or other products essential to Nepal?
Is it Nepal’s contention that these products are,  by definition, always in a state of critical
shortage?  If so, why doesn’t Nepal import to relieve the shortage?
- Why does Nepal ban the export of imported raw materials, parts and capital goods?
Answer:
We believe that logs, timber and mamira obtained from naturally grown plants are exhaustible
natural resources and it is our responsibility as a signatory of various Environment Conventions, to
preserve and protect natural resources. Thus, there are restrictions even for domestic consumption
except for authorized uses. However, Nepal is considering to lift the ban or restriction on the export of
these products which are planted (not natural resources) and grown for commercial purposes.
Regarding the export restriction on raw hides and skins and raw wool, it has been temporarily
applied and Nepal intends to lift this export restriction at an appropriate time.
Nepal has banned the export of imported raw materials, parts and capital goods due to the
possibility of trade deflection.WT/ACC/NPL/9
Page 23
(f) Export financing, subsidy and promotion policies
Question 49.  
Nepal has invoked Article 27.2 of the WTO Agreement on Subsidies and Countervailing
Measures, i.e., the prohibition of industrial export subsidies does not apply to least developed
countries, to justify its refusal to eliminate the export subsidy program that exempts income
from manufacture for export from taxation.
Answer :
Not Applicable.
(h) Import duty drawback schemes
Question 50.  
Please describe Nepal’s system for duty drawback.
Answer:
As per Section 15 of the Industrial Enterprises Act, 1992, the customs duties/if any, Value
Added Tax (VAT), and excise duty levied on raw materials used by any industry in connection with
its product during its production is reimbursed on the basis of the value/quantity of export. Industries
producing intermediate goods that are utilized in the production of exportable goods are also entitled
to the reimbursement of duties and taxes levied on raw materials. The exporter is required to apply ina prescribed form for such reimbursement within one year from the date of export to the Secretariat,
One window Committee, constituted under Industrial Enterprises Act 1992. Such reimbursement shall
be made within sixty days from the date of an application to that effect. If exporter  fails to submit an
application within one year from the date of export, the said reimbursement can not be available for
export.
3. Internal Policy Affecting Foreign Trade in Goods
(a) Industrial policy, including subsidy policies
Question 51.  
In response to Question 117 Nepal refers to the answer to Question 116.  One of the incentives
available to industry (Question 116, provision (N)) is that no income tax is levied on the profitsearned through export.  Would Nepal please explain how this subsidy is consistent with Article
3 of the Agreement on Subsidies and Countervailing Measures which prohibits subsidies
contingent on export performance?
Answer:
It is our view that Nepal being a least deve loped country (LDC) should benefit from Article
27, particularly 27.2 (a) of the Agreement on Subsidies and countervailing Measures.
Question 52.  
A tax rebate contingent on the use of national products is a measure inconsistent with the
TRIMS Agreement.  What are the steps that Nepal intends to take to eliminate this measure by
2001 as foreseen by that Agreement (Question 115)?WT/ACC/NPL/9
Page 24
Answer:
The Nepalese legislation do not have any mandatory or enforceable provisions requiring any
industry to use specific percentage of indigenous raw materials in the production process. The 10
percent rebate of the income tax is applicable both for domestic and foreign investment and thus, as
we understand, is not inconsistent with the provisi ons of  the Agreement on Trade-Related Investment
Measures (TRIMS).
Question 53.  
Are the fiscal benefits described in the reply to Question 116 available to all industries, foreign
and domestic, operating in Nepal?
Answer:
The benefits described in the reply to Question 116, WT/ACC/NPL/3, are available to all
industries foreign and domestic operating in Nepal.
Question 54.  
The response to question 26 of WT/ACC/NPL/3 states that Nepal applies a price subsidy on
urea that had been planned to be eliminated by  the end of 1999.  Was this subsidy eliminated?
Nepal states in response 115 of WT/ACC/NPL/3 that it grants a 10 percent rebate of the income
tax to industries using not less than eighty per cent indigenous raw materials in its products andemploying all its manpower from among Nepalese citizens.  While this rebate is not contingent
upon export performance, it is a prohibited subs idy within the meaning of Article 3:1(b) of the
WTO Agreement on Subsidies and Countervailing Measures.  Nepal should use the accession
process as an opportunity to find WTO consistent methods of promoting exports and
encouraging the expansion of employment and development.  Economic activity based on suchmeasures is not based on a sound economic foundation.
Answer:
Yes, the price subsidies have already been eliminated by the cabinet decision of
25 November 1999. See also answer to questions 51 and 55.
Question 55.  
In light of the programs described in the response to question 116 of WT/ACC/NPL/3 we seek a
commitment from Nepal that upon accession it will administer its subsidy programmes in
conformity with the Agreement on Subsidies and Countervailing Measures, and that all
necessary information on such programmes woul d be notified to the Committee on Subsidies
and Countervailing Measures in accordance  with Article 25 of the Agreement.
Answer:
Nepal will administer subsidy programmes in conformity with the Agreement on Subsidies
and Countervailing Measures upon Nepal's accession to WTO and also taking into account of Article
27 of that Agreement. Nepal will notify all necessary information on such programmes to the
Committee on Subsidies and Countervailing Measures in accordance with Article 25 of the
Agreement upon Nepal's accession to WTO.WT/ACC/NPL/9
Page 25
(b) Technical regulations and standards, including measures taken at the border with
respect to imports
Question 56.  
We welcome the efforts Nepal is undertaking to assure the respect of the relevant WTO
Agreement and we can certainly discuss bilaterall y whether technical assistance is necessary. At
the same time, we would also welcome a submission by Nepal, when available but before the
completion of the accession process, of a detailed  action plan for the full  implementation of the
Agreement indicating the measures necessary to assure compliance and the timetable for their
adoption.
Answer:
The detailed legislative action plan is submitted in a separate document.
Question 57.  
Nepal has stated that it uses many internat ional standards as a basis of their technical
regulations. What international standards does Nepal use for its technical regulations?  It is also
stated that in regard to standards, Nepal currently has 577 product and testing methods.
- Please expand on the process to establish thes e and if they what international standards
were used?
- Can Nepal please provide documentation of the standard setting process to determine
voluntary standards and mandatory technical regulations?
- What role does the public and foreign stakeholders play in the development of standards
and mandatory regulations?  Is there an opportunity to comment and to what degree
does the Nepal standards setting organizations take these comments underconsideration?  How many days are provided for comments?
- Can Nepal provide a copy of its Standards, Weight and Measurement Act and the
Quality Certificate Make and Rules Act?
Answer:
Nepal is a Corresponding Member of ISO and ha s followed the standards prescribed by ISO,
beside this Nepal also follows other national standard such as Indian Standard and British Standard as
and when required.
The authority to determine standards in relation to any goods, process or services is Nepal
Council of Standards (NCS). The Council is a go vernment body chaired by Minister for Industry,
Commerce and Supplies and the members include, among others, president of Federation of Nepalese
Chambers of Commerce, representative from Tribhuvan University. A Technical committee under the
NCS sets the standard based on internationally defined parameters, national data and nationalrequirements, among others. The participation on the  Technical Committee is opened to all interested
national or foreign persons/institutions. The decision of the Committee is circulated to concerned
parties to provide comments within 30 days. After the completion of the process of collecting
responses and adapting them, the set standards are published/notified and only implemented.WT/ACC/NPL/9
Page 26
Once standard are set, the government may make them mandatory technical regulations upon
the recommendation of concerned ministry e.g. Minist ry of Agriculture, Ministry of Health, Ministry
of Environment, and consumers association.
Nepal welcomes suggestions provided by the domestic and foreign stakeholders in the
development of standards and mandatory regulations. It has been the practice to provide 30 days forcomments on the development of standards and mandatory regulations.
The copies of concerning laws, "Nepal Standards (Certification Mark) Act, 1980" and
"Standard Weights and Measures Act, 1968" are attached herewith for the consideration of the
Working Party. [Please see Annex VI & VII.]
Question 58.  
Nepal has stated that Nepal is ready to comply with its future obligations under the TBT
Agreement.
- Please provide documentation, such as impl ementing legislation, or current laws that
demonstrate how Nepal will comply with its TBT obligations.
- Is the Nepal Gazette a publicly available publication?
Answer:
The existing laws relevant to the Agreement on Technical Barriers to Trade are attached
herewith. Please see Annex VI & VII. See also WT/ACC/NPL/5.
Nepal Gazette is a publicly available publication which covers laws, regulations and major
Government decisions.
Question 59.  
WT/ACC/NPL/3 states that most Nepalese National standards are based on international
standards.
i. Please explain how Nepal sets Conformity Assessment Procedures (CAPs)? Are
they based on internationally accepted CAPs?
ii. Is the Nepal Council of Standards a government agency?
iii. Please elaborate on the Nepalese insp ection process to allow products to be
certified to use the National Certification Mark.  What is involved?  How many
inspections are required?  What tests are used?
Answer:
i. Nepal sets conformity assessment procedures as follows:
Step 1 - Establishment of national standards
Preliminary draft standard (product standard, methods of analysis labelling requirements and
other compliance procedures) ----> Technical Comm ittee ----> Draft standard ----> Circulation for
comments ----> Final draft standard ----> Nepal C ouncil for Standards ----> Nepal Standards.WT/ACC/NPL/9
Page 27
Most of the Nepal standards so produced are voluntary but if it is the case of public safety and
health some of these standards are made mandatory and are published in Nepal Gazette.
Step 2
Factory inspection and market inspection procedures as well as the procedures to collect
representative sample are established as per ISO, BS, IS standards.
Step 3
Methods of analysis (physical as well as chemical) are adopted as per international standards
industrial establishments are also made to follow the standard method as per Nepal Standard.
Step 4
Inter laboratory proficiency testing are carried out at regular basis and analyst are made to
meet in case of any dispute.
Step 5
Samples are collected in duplicate and in some case triplicate samples are also prepared as per
necessity.
Duplicate samples are analyzed in the factory premises and also at Nepal Bureau of Standards
and Metrology (NBSM) laboratory. Comparisons are made. In case of dispute, the sample is also sent
to some other domestic laboratory (private accredited or public laboratory). This way, the qualityconformity to required standards assessed.
Step 6
egular quality audit of the laboratories are also carried out.
Step 7
Calibrations and verifications of the equipment being used in the factory premises and
laboratory are regularly carried out by Nepal Bureau of Standards and Metrology. Secondary
Standards at NBSM are regularly calibrated by Na tional Physical Laboratory at New Delhi, India.
As far as possible, internationally accepted CAPs are followed.
ii Nepal Council for Standards is a governmental body.
iii. The Nepalese inspection process to allow products to be certified to use the National
Certification Mark (Nepal Standard NS Mark) and with regards to it person involved,
inspection required, tests used are as follows:
Step I 
Application from the producer to have licence to  use NS Mark in his product. (in the standard
format) to Nepal Bureau of Standards and Metrology.
Step II
Analysis of the applicationWT/ACC/NPL/9
Page 28
Step III
Preliminary inspection of (a) producer's commitment to product as per required quality and in
compliance with the established standard. (b) Laboratory facilities along with required technical
persons. (c) Calibration of the equipments. (d) Laboratory manual as per ISO guide. (e) International
quality auditing system or implementation of the quality manual and evidences to prove that.
Step IV
Counseling by Nepal Bureau of Standard a nd Measurement (NBSM) to comply with the
requirements laid down to have the licence.
Step V
Inspection of the industry as per the checklist developed by NBSM,        Collection of the
sample in duplicate, Verification of the results of chemical and physical analysis, Calibration
certificate
Step VI
Collection of the market sample, Result of the analysis, Final inspection of the factory
premises and collection of sample in duplicate, Verification of results of analysis and compliance
procedures.
Step VII
At this point NBSM is assured that the industry in question is capable, has commitment and
will go on production of the quality produce in compliance with Nepal Standard.
Step VIII
Case is put forward to the committee (internal) headed by Director General and is being
represented by inspection unit, certification unit, metrology unit laboratory unit and other seniormembers.
Step IX
Approved by committee to award the licen ce to use NS Mark in the product.
Number of inspection depends upon how the indu stry is efficient in  complying with the
NBSM requirements and implementing the directives given by NBSM as well as its monitoringprocess.
Once the licence is awarded and the industry starts manufacturing the product with NS Mark,
frequency of the inspection at factory premises and market inspection in general given due importance
in the beginning and if assurance is continued the frequency is lowered but if the industry is found to
come across any non conformity, the industry is asked to take immediate corrective action or
otherwise the licence to use NS Mark is suspended until the industry proves that the goods are being
produced in compliance with the required standard or specifications.
Question 60.  
Concerning the Nepal Standards (Certification Mark) Act of 1980 - please provide a copy.WT/ACC/NPL/9
Page 29
Nepal has stated that there are no unnecessary obstacles to international trade under the Nepal
Standards Act and the Standard Weight and Measures Act.  Could Nepal elaborate further on
this point?
Answer:
The Nepal Standards (Certification Mark) Act, 1980 is attached herewith [Please see Annex
VI]. The Nepal Standards (Certification Mark) Act, 1980 has prescribed the provision of a laboratory
for the purpose of determination of standards or tests. It has respected the most favoured nation and
national treatment obligations. The system of transparency and judicial review are inherent parts of
the Act. The Standard Weights and Measures Act, 1968 also follows the same principles.
(c) Sanitary and photo-sanitary measures, including measures taken with respect to
imports
Question 61.  
We welcome the tentative plans of action include d in reply to Question 141 and the checklist of
illustrative SPS issues (WT/ACC/NPL/6).  Would Nepal provide a progress report on
implementation of the tentative action plans?
Answer:
There is not much progress on implementation of the tentative action plan provided in
Question 141 WT/ACC/NPL/3 in respect to Sanitary and Phytosanitary measures. Nepal expects to
benefit adequate technical assistance from WTO members to make a successful implementation of the
action plan.
Question 62.  
We are reviewing Nepal’s sanitary and phytosanita ry regime in light of the checklist contained
in WT/ACC/NPL/6 and other information provided.  We appreciate the difficulties that Nepal
may have in implementing the SPS Agreement, but we believe that the timetable outlined in
WT/ACC/NPL/3 is unrealistic in light of Nepal’s commitment to utilize WTO to the fullest
extent possible.  We also note that the transparency provisions are not slated for
implementation prior to accession. This is necessary.  We will submit our questions andcomments in writing, along with a proposal for implementation that may be able to accelerate
Nepal’s compliance.
Answer:
Nepal highly appreciates suggestions and welcomes the Working Party comments, along with
a proposal for implementation that will be able to accelerate Nepal's compliance in this respect.
Question 63.  
We welcome the presentation of a tentative plan of action for the implementation of the SPS
Agreement.  It is important that such an action plan is constantly updated during the accession
process so that the Working Party could keep tr ack of the developments or problems arising in
the course of its implementation.WT/ACC/NPL/9
Page 30
Answer:
Upon receiving the proposal for implementation from the Working Party as noted in Question
number 62, Nepal will present an updated tentative plan of action for the implementation of the SPS
Agreement.
(e) State-trading practices
Question 64.  
The response to question 25 of WT/ACC/NPL/3 states that Nepal is prepared to notify the Nepal
Oil Corporation as a state trading enterprise within the definition of paragraph 1 of the
Understanding on the In terpretation of Article XVII of the GATT 1994.  Please confirm that
after accession to the WTO Nepal will apply it s laws and regulations governing the trading
activities of State-owned enterprises and other enterprises with special or exclusive privileges in
conformity with the provisions of the WTO Agre ement, in particular Article XVII of the GATT
1994 and the Understanding on that Article and Article VIII of the GATS, and that Nepal will
notify any enterprise falling within the scope of Article XVII.
Answer:
Nepal confirms, after accession to the WTO, that it will apply its laws and regulations
governing the trading activities of state-trading enterprises and other enterprises with special or
exclusive privileges in conformity with the provis ions of the WTO Agreement, in particular Article
XVII of the GATT 1994 and the Understanding of that Article and Article VIII of the GATS, and it
will notify any enterprise falling within the scope of Article XVII.
Question 65.  
The response to question 151 of WT/ACC/NPL/3 is incomplete.  We acknowledge Nepal’s
statement that the Nepal Food Corporation, th e National Trading Limited, the Salt Trading
Corporation, the Agriculture Imports Corporation, the Cottage and Handicraft Emporium, the
Nepal Coal Company and the Nepal Transit and Warehouse do not have any exclusive rights or
privileges.   Do any of these enterprises have special rights or privileges, e.g., do they enjoy
Government patronage or buy or sell on behalf of the government?
Answer:
With respect to these enterprises, Nepal is aware that upon the accession such enterprises
shall, in its purchases or sales involving either imports or exports, act in a manner consistent with the
general principles of non-discriminatory treatment prescribed in GATT and Understanding on the
Interpretation of Article XVII of the General Agreement on Tariffs and Trade 1994.
(l) Government procurement practices, including general legal regime and procedures for
tendering, dealing with tenders and award of contracts
Question 66.  
One of the primary ways companies do business in Nepal is through government contracting.
The answers to questions 160-175 indicate that th ere is still some preferential treatment given to
Nepalese companies in government procurement.  For example, Nepalese citizens need only
deposit five per cent of the tender value when competing for government contracts, whereasforeigners must deposit ten per cent.  Further, the Nepalese government has indicated that it
will give preference to Nepalese products if the price difference with foreign products is notWT/ACC/NPL/9
Page 31
above 7.5 per cent.  Finally, there is not central agency in Nepal which controls the legislation
relating to government procurement and monitors possible infringements.  Could Nepal please
advise what steps it is prepared to take to bring government procurement into conformity with
the national treatment provisions in the WTO?
Answer:
At the moment, Nepal does not intend to take pa rt on Plurilateral Trade Agreements including
Agreement on Government Procurement.
Question 67.  
We would welcome a commitment by Nepal to become an observer to the Government
Procurement Agreement (GPA).
Answer:
In regard to the observer status of the Government Procurement Agreement, Nepal will
seriously examine it.
Question 68.  
Given its relatively open procurement policies, we continue to urge Nepal to initiate negotiations
to join the Agreement on Government Procurement soon after accession.
Answer:
Please see answer 66.
4. Policies Affecting Foreign Trade in Agricultural Products
(b) Exports
Question 69.  
Measures Exempt from Reductions (Table DS:1).  We note Nepal's Domestic Support Table
DS:1 includes three-year average expenditure of Nr 2,737,860,000 on infrastructural services,
specifically "irrigation and drainage".  Could Nepal confirm that this expenditure met the
criterion in paragraph 2 of Annex 4 of the Agreement, namely that the infrastructure is
generally available to the public?  We would appreciate Nepal clarifying the nature of the
"Crop Subsidies" expenditure under "Payment for Relief from Natural Disasters".  Inparticular, could Nepal confirm the payments conformed to the criteria under paragraph 8 of
Annex 2 of the Agreement?  We would apprec iate Nepal elaborating on the nature of the
programs listed under the category "others" in table DS:1, in particular how the support for
seeds and dairy development meets the criteria in Annex 2 of the
Answer:
Revised and updates of ACC 4 will be provided in due course of time. The revision will
address the above questions.WT/ACC/NPL/9
Page 32
(c) Export prohibitions and restrictions
Question 70.  
Nepal considers (Question 179) the restriction on  the export of raw wool could be justified
under Article XI:2(A) of GATT 1994 which concerns export prohibitions or restrictions which
are "temporarily applied".  Would Nepal advise how long it anticipates maintaining therestriction?
Answer
Nepal will examine this issue.
 (e) Internal policies
Question 71.  
In response to Question 26 (Marketing and Price Regulation of Basic Agricultural Products),
Nepal advised that the respective commodity associations determine the "support indicativeprices" which are established for sugar cane, tobacco and cotton.  Could Nepal provide details
of how the commodity associations determine the support prices?  We are also still interested in
more information on the Ministry of Agricultur e's Marketing and Price Regulation Policies and
their operation.
Answer:
The support indicative prices, and marketing and price regulation policies do not exist any
more.
V. TRADE-RELATED INTELLECTUAL PROPERTY REGIME
1. General
Question 72.  
We welcome the efforts Nepal is undertaking to assure the respect of the relevant WTO
Agreement and we can certainly discuss bilaterall y whether technical assistance is necessary. At
the same time, we would also welcome a submission by Nepal, when available but before the
completion of the accession process, of a detailed  action plan for the full  implementation of the
Agreement indicating the measures necessary to assure compliance and the timetable for theiradoption.
Answer:
The detail legislative action plan is submitted in a separate document.
(a) Intellectual property policy
Question 73.  
In WT/ACC/NPL/3 (Q.260) Nepal indicated that a patent may not be registered where the
registration of the patent will constitute a cont ravention of existing Nepal law.  How is this
exclusion from patentability in conformity with Article 27.2 "provided that such exclusion is not
made merely because the exploitati on is prohibited by their law"?WT/ACC/NPL/9
Page 33
Answer:
The provision of Nepalese law catches the spirit of Article XX: (d) of GATT and Article 27:2
of TRIPS. The Department of Industry shall not grant patent registration: a) if the patent is already
registered in the name of any person, or b) if the applicant himself is not the inventor of the patent
sought to be registered by him, nor has he acquired rights over it from the original inventor, or c) if
the patent sought to be registered is likely to adversely affect the public health, conduct or morality or
the national interest, or d) if the registration of the patent will constitute a contravention of existing
Nepal Law. Regarding the last condition,  the law will be amended in full conformity with the TRIPS
Agreement as indicated in Legislative Action Plan.
Question 74.  
With regards to patents or sui generis protection of plant varieties, Nepal has indicated that IPR
protection may have implications for bio-divers ity and that Nepal would make an assessment of
these implications (Q.283-284, WT/ACC/NPL/3).  What implications is Nepal considering and
how would this effect the introduction of plan t variety protection given that the granting of
protection as required by TRIPS Article 27.3(B) does not prevent a country from introducing
other regulations?
Answer:
In regard to patents or sui generis  protection of plant varieties, Nepal is studying the
implications of an alternative legal framework for biodiversity. Nepal does not intend, however, to
make any provision inconsistent to Article 27.3(B) and any other Article of TRIPS.
Question 75.  
We welcome the amendments and plans for amendments that Nepal has undertaken since 1999.
(WTO/ACC/NPL/3).  Does Nepal believe that it can make the requisite amendments to its laws
by the date provided for by TRIPS Article 66.2, and what, if any assistance has Nepal received
from the WTO Secretariat or other organizations, i.e. WIPO or countries?
Answer:
Yes, Nepal believes that it can make the requisite amendments to its laws by the date
provided for by Article 66 of TRIPS Agreement. If Nepal receives substantive assistance from the
WTO Secretariat or other organizations, the amendment of  relevant laws could be completed earlier
than the transition period of 10 years as provided in Article 66.1 of  TRIPS Agreement.
Question 76.  
Nepal has stated that it is preparing the draft of a new Industrial Property Law and reviewing
the Copyright Act 1965 to make it fully compatible with the TRIPS Agreement. We also note
Nepal’s statement that it intends to incorporate all the substantive provisions of the TRIPSAgreement in its legal framework.
- Nepal’s commitment to bring its regime into conformity with TRIPS is very
encouraging.  We especially urge Nepal to use the comments provided in
WT/ACC/NPL/3 and provided after this meeting to ensure that the noted issues in the
IPR sector are addressed in the new laws.
- Is any additional legislation in development,  e.g., how will provisions for the protection
of undisclosed information be adopted?WT/ACC/NPL/9
Page 34
- We look forward to reviewing the draft legislation and helping Nepal address the
identified issues.
Answer:
Nepal is thankful for the Working Party proposal and highly appreciates the assistance of
Working Party in respect to bringing Nepal' s IPR regime into conformity with TRIPS.
4. Enforcement
Question 77.  
Document WT/ACC/NPL/7 indicates that enacting new laws or regulations will be necessary to
implement several of the enforcement provisions found in TRIPS, Part III. The following
questions seek information on Nepal’s specific plans and the expected date of enactment for the
pertinent new legislation or regulations
a) Concerning the response to Question 295:i. What is the expected time-frame for enactm ent of the new Industrial Property Law and
amending existing intellectual property a nd enforcement laws to comply with the
enforcement provisions in Part III of the Agreement on Trade-Related Aspects of
Intellectual Property (TRIPS)?
Answer:
a.i. Nepal expects that she would be able to develop required institutional mechanism and human
resource to assume the enforcement obligations as envisioned in TRIPs by January 2006 and
thus will enact a new Industrial Property Law and amend existing intellectual property and
enforcement laws by that time to comply with  the enforcement provisions of the Agreement
on Trade-Related Aspects of Intellectual Property Rights.
Question 78.  
ii. Please provide a list of all the existing intellectual property and enforcement laws that
will be amended to comply with TRIPS, Part III.
Answer:
a.ii. The existing intellectual property and enforcement laws which are to be amended to comply
with TRIPS Agreement are (i) Patent, Design and Trademark Act, 1965 and (ii) Copyright
Act, 1965. Nepal is considering to enact Industrial Property Right Act instead of Patent,
Design and Trademark Act, 1965 which will broaden the scope of the patentable subjects
including geographical indications, layout designs and undisclosed information.
Question 79.  
b) Concerning the response to Questions 296, 314 and 315:
i. Please clarify whether additional procedures and remedies will be enacted to provide
protection for intellectual property rights at  the border and describe how they will meet
the requirements of Articles 51 – 61 of Section 4 (Special Requirements Related to
Border Measures).WT/ACC/NPL/9
Page 35
Answer:
b.i. Concerning the border measures, Nepal is going to enact additional procedures and remedies
to provide protection for intellectual property rights at the border and this enactment will be in
line with the provisions of the Agreement on Trade-Related Aspects of Intellectual Property
Rights.
Question 80.  
c) The answer to Question 297 indicates that administrative procedures (i.e. Registrar of
Copyrights) exist for copyright infringement actions.
i. Do copyright owners also have the option of  filing an infringement action directly with
judicial authorities?
ii. If yes, must the action be filed with the Registrar of Copyrights first and then with
judicial authorities?
iii. If no, under what circumstances would a copyright infringement action be filed with
judicial versus administrative authorities?
iv. Does the Short Procedural Act 1971 also govern procedures in copyright infringement
actions filed with judicial authorities?
v. Please describe how the procedures under the Short Procedural Act 1971 comply with
the provisions of TRIPS, Articles 42-48.
Answer:
c.i-v. Concerning the remedy procedures in resp ect to copyright infringement, the owner of the
copyright has to file an infringement action directly with the Registrar of Copyrights which
delivers its decision under its tribunal capacity. If a party of the case is not satisfied with thedecision of the tribunal, it can file an appeal  at the Court of Appeal. The Copyright Act, 1965
has prescribed some procedures in this respect and if some area of the procedure is not
covered by the Copyright Act, 1965, it will be covered by the provisions of the Short
Procedural Act, 1971. The Short Procedural Act, 1971 is a General law applied by courts and
tribunals in certain cases. The Short Procedural Act, 1971 is aimed to finalize cases promptlyin a short time and it governs summon notices, limitations, evidences, witnesses etc. It is not a
substantive law and does not cover the areas described by Article 44, 45, 46, 48 of the
Agreement on Trade-Related Aspects of Intellectual Property Rights.
Question 81.  
vi. Describe all remedies (e.g. injunctions, da mages, disposition of infringing goods) that
judicial and administrative authorities in Ne pal can impose in civil infringement actions
and, specifically, how they comply with TRIPS, Articles 44-46.
vii. Please clarify whether remedies are available in copyright infringement cases, filed
before judicial and administrative authorities only if the copyright is registered with the
Registrar of Copyrights.WT/ACC/NPL/9
Page 36
Answer:
c.vi-vii. All remedies, i.e., damages etc. ar e available under Copyright Act, 1965 in civil
infringement action. Remedy of injunction is not available under Copyright Act, 1965 but a
concerning party may request for the issuance of an injunction order with the Court of
Appeal for the protection of copyright under Justice Administration Act, 1991. There is alsoa provision for border measures and a provision of imprisonment up to two years under
Copyrights Act, 1965. Nepal is considering to amend the Copyright Act, 1965 and to
arrange all laws thus improving it in accordance to the TRIPS. Nepal intends to amend the
provision that infringement remedies are available only to the registered copyright.
Question 82.  
d) Concerning the response to question 299:
i. Does the Government of Nepal intend to amend its laws or regulations to provide the
following procedures in infringement action s brought before judicial and administrative
authorities?
ii. A means to identify and protect confidential information, as required by TRIPS, Article
42.
iii. To provide reasoned, written decisions on the merits, which are promptly made
available to the parties as required by TRIPS, Article 41 (3).
iv. Compensation to a party wrongfully enjoined or restrained as required by TRIPS,
Article 48.
v. If yes, what is the expected time-fram e for enactment of the new legislation or
regulations?
Answer:
d.i-v. Concerning the enforcement procedures, Government of Nepal intends to amend its laws to
provide procedures to identify and protect confidential information as required by Article 42
of TRIPS, make provisions for the availability of reasoned decisions promptly to the parties
as required by Article 41:3 of TRIPS, make provisions for compensation to a partywrongfully enjoined or restrained as required by Article 48 of TRIPS. Nepal expects technical
assistance in the process of drafting and the expected time-frame for amendments or
enactment of the new legislation or regulations is January 2006.
Question 83.  
e) Concerning the response to question 301:
i. Please clarify whether new fines will be imposed for violations of the Patent, Design and
Trademark Act, 1965? How would the amount be determined and what is the time-frame for enactment?
Answer:
e.i. The provision of the fine for infringers for the violations of the Patent, Design and Trademark
Act, 1965, will be reviewed in the amendment of the Patent, Design and Trademark Act,
1965. If the Industrial Property Right Act is enacted instead of amending the Patent, DesignWT/ACC/NPL/9
Page 37
and Trademark Act, 1956 the same standard will be adopted. The amount of fine will be in
accordance to the losses caused to the owner of the intellectual property. The time frame for
enactment of new legislation would be provided in Legislative Action Plan.
Question 84.  
f) Concerning the response to question 305:i. Under what circumstances in IP infringement actions do Appellate Courts issue an
order of mandamus or injunction?
Answer:
f.i. Concerning the order of mandamus or inj unction, the Appellate Court may issue an order of
injunction to prohibit further infringement or continuation of illegal acts and an order of
mandamus in the name of Authority for the performance of legal duties under Justice
Administration Act, 1991.
Question 85.  
g) Concerning the response to question 311:
i. Please elaborate on the procedures that will be enacted to comply with TRIPS, Article
50 and indicate an anticipated date for enactment of the new legislation or regulations.
Answer:
g.i. Regarding the Provisional Measures of Article 50 of the Agreement on Trade-Related
Aspects of Intellectual Property Rights, Nepal wi ll adopt the Provisional Measures of Article
50 of TRIPS and follow all norms and standards prescribed in the said Article 50 by
amending present intellectual property rights laws or enacting new laws. The anticipated date
for enforcement of the new legislation or regulation would be January 2006.
Question 86.  
h) Concerning the response to question 316:
i. Please elaborate on the procedures that will be enacted to comply with TRIPS, Article
61 and indicate an anticipated date for enactment of the new legislation or regulations.
Answer:
h.i. Concerning the criminal procedures of Article 61 of the Agreement on Trade-Related Aspects
of Intellectual Property Rights, the Copyright Act, 1965 has already provided criminal
procedures and penalties in cases of pirated copyrighted goods. Nepal will provide criminal
procedures and penalties in cases of willful trademark counterfeit by amending the Patent,
Design and Trademark Act, 1965 or enacting Industrial Property Right Act in accordance to
the Article 61 of the Agreement on Trade-Related Aspects of Intellectual Property Rights.
The anticipated date for enforcement of the new legislation or regulations would be January2006.WT/ACC/NPL/9
Page 38
VI. TRADE-RELATED SERVICES REGIME
1. General Introduction
Professional Services
Legal Services
Question 87.  
When scheduling commitments to legal services would Nepal consider allowing foreign
investment and participation in legal services, particularly in home, third country and
international law?
Answer:
The revised schedule of initial commitments on services sector will be submitted separately.
Accounting, Auditing and Bookkeeping
Question 88.  
Under the Company Act 2021, to what end must a Nepalese licensed auditor be appointed to
work with a foreign auditor?
Answer:
The Company Act, 2021 is repealed by the Company Act, 2053 (1997) and in the New Act
there is no such provision of requiring a foreign auditor to work with a Nepalese licensed auditor.
Moreover, Foreign investment on accounting, auditing and book-keeping is not allowed under the
Foreign Investment and Technology Transfer Act, 1992.
Engineering Services
Question 89.  
Architectural Engineering, Integrated Engineering, and Urban Planning and Landscape
Architectural Services - Would Nepal please cons ider removing the restrictions placed on these
subsectors?  We also seek information on the process of obtaining permission for the
establishment of a foreign construction company.
Answer:
The revised schedule of initial commitments in services sector will be submitted separately.
The process of obtaining permission for the establishment of a foreign construction company
is the same as for other foreign companies. Please see answers to question number 1 and 2 for the
process of obtaining permission by a foreign company.
Telecommunications services
Question 90.  
Would Nepal please provide information on the process of how foreign service providers are to
ascertain whether a Nepalese national can provide these services?  We would welcome an offerWT/ACC/NPL/9
Page 39
from Nepal which allows open foreign investment and participation in this sector and so
encourage Nepal to remove restrictions (Questions 333-336).  We encourage Nepal to adopt in
full the WTO reference paper on basic telecommunications (Questions 333-336).  The answers
to Questions 332-336 demonstrate that Nepal does have a policy of encouraging the involvement
of foreign investors in the telecommunication s sector.  The Telecommunications Act 1997 says
that no-one may operate a telecommunications serv ice without obtaining a licence.  Further, the
Act establishes the Nepal Telecommunication Authority (NTA).  One of the functions of the
NTA is to ensure private sector participation, both domestic and foreign, in the operation of
telecommunications services in Nepal. Although  the legislation was passed in 1997, the NTA is
not yet operational.  Could Nepal advise when  it expects the NTA to become operational?
Answer:
Nepal would positively consider to adopt WTO Reference Paper on basic telecommunication.
The Nepal Telecommunication Authority (NTA) has already been in operation. All
information regarding the telecommunication services is available in the web site of NTA, i.e.
http//nta.gov.np .
Financial Services
Question 91.  
We strongly recommend Nepal use the financial services Annex in scheduling their
commitments, to assist in increasing tran sparency and compatibility between countries
(Questions 339-354).  There is currently a manda tory requirements that foreign financial
institutions have a local joint venture partner when operating in Nepal.  The Nepalese
Government directs foreign joint venture banks on matters such as lending policy and the
number and location of branches.  We would welc ome an offer on financial services (insurance
and banking) from Nepal which when in the standard schedule format, applied no restrictions
on market access or national treatment, especially in modes 1), 2) and 3).
Answer:
With regards to Nepal's commitments, please see revised Nepal's Schedule of Commitments.
Question 92.  
Please explain the scope and rationale of the econo mic needs test in the financial services sector.
Answer:
The Central Bank has not set out any criteria for economic needs test as such. The applicant is
required to submit the feasibility study report based on the sound financial operation of the proposed
company.
2. Policies Affecting Trade in Services
Question 93.  
According to the response to Question 16 of WT/ACC/NPL/3, consultancy services, such as
management, accounting, engineering and legal services, are not open to foreign investment.
Please explain in detail the reason for such, as  it seems more appropriate that these areas be
open to foreign investment in order to promote the transfer of advanced expertise.WT/ACC/NPL/9
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Answer:
Consultancy services, such as management, accounting, engineering and legal services, are
not open to foreign investment under the Foreig n Investment and Technology Transfer Act, 1992.
However, the authority may grant permission for fo reign technology transfer on such areas under the
restrictive clause of Sub-section (4) of Section 3 of the said Act.
Question 94.  
Please provide information on how Nepal is complying with or will make changes to ensure that
its regulatory regime fully complies with GATS  requirements.  With regard to each of the
services sectors subject to regulation where Nepal has specified the agency in charge of licensing
and/or granting permission for each service ac tivity, please report on how the requirements are
made available to service providers and ho w the licensing system works in practice.
Answer:
Nepal's regulatory regime of the service sector listed in the Schedule of Commitment
including the licensing system and the requirements will be made fully compatible with the General
Agreement on Trade in Services by enacting and/or amending the concerning laws and regulations.
Question 95.  
Please specify what judicial, arbitral or admini strative procedures are available for the review
of, and, where justified, remedy of administrative decisions affecting trade in services.  Where
such procedures are not independent of the agency entrusted with the decision, please indicate
whether there are procedures to ensure that such reviews or remedies are applied in an
objective and impartial manner.
Answer:
The authorities' decision affecting trade in services are subject to judicial review under the
provision of each law governing such a service sector. There is also a provision of appeal in such
cases under Justice Administration Act, 1991. Generally the appeal lies with the Court of Appeal
which is an independent judicial body.
Question 96.  
We would like to offer the following points to assist Nepal in their progress, taking into
consideration the provisions of Article IV.3 of th e GATS.  We will raise additional issues once
Nepal submits a Services Schedule.
Answer:
Nepal welcomes further assistance and questions.
Question 97.  
According to the answer to Question 18 of WT/ACC/NPL/3, the Foreign Investment and
Technology Act does not provide an appeal pr ocedure against any non-successful application.
Does this mean that no non-successful application can be appealed?  Are there any laws other
than the Foreign Investment and Technology Act,  which stipulate such an appeal procedure?WT/ACC/NPL/9
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Answer:
Under Section 7 of the Foreign Investment and Technology Transfer Act, 1992 there is a
provision of Arbitration for dispute settlement in re spect to disputes that may arise between a foreign
investor, national investor or a concerning industry. The decision of the Arbitration will be appealable
to the Court of Appeal in accordance with the Arbitration Act, 1999.
The Justice Administration Act, 1991 provides provision of an appeal against the decision of
any Authority in respect to disputes between parties but not in the case of non-successful application
in respect to permission for foreign investment.
Question 98.  
Please provide more information about the regulation of public sector entities, particularly
those in the business, transport, communications, distribution, financial services and tourism
sectors.  Are regulatory functions separate from management and operation of the enterprises?In this regard note that GATS provisions may en tail specific obligation s where such enterprises
are exclusive service providers or otherwise benefit from monopoly status.
Answer:
Some of the public sector entities are regulated by the Act made for them as such, i.e. Royal
Nepal Airlines Corporation Act, 1962, Telecommunication Corporation Act, 2028, GorkhapatraCorporation Act, 1962, Agriculture Development Ba nk Act, 1966, Nepal Drinking Water Corporation
Act, 1988 and other public sector entities are re gulated by the Corporation Act, 2021. Likewise,
public sector entities relating to financial services are regulated by the Central Bank Act 1955 and the
Commercial Bank Act, 1974.
Question 99.  
Nepal states that all foreign investments require governmental approval.  Why is permission
necessary on a case-by-case basis, above and beyond regular licensing procedures?  Please
describe the criteria by which foreign investment applications are judged, and how this process
differs from regular licensing procedures, for instance by specifying at what level of government
the decision is made, whether it applies to additional investments by incumbent foreign
investors or only new investments, and what co nditions and criteria a foreign investor must
meet.  Also, indicate whether or not it is the case that if all conditions and criteria are met, then
approval is automatically granted.
Answer:
Please see answers to question number 1 and 2 for the criteria of foreign investment and the
authority which gives decision in respect to foreign investment. A foreign investor must meet this
criteria only in case of new investments. If all c onditions and criteria for foreign investments are met,
then approval is granted without any discrimination.
It is our understanding that none of the WTO Agreements provide rights to foreigners to
invest and it is the investment policy of Nepal which requires permission for foreign investment.WT/ACC/NPL/9
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VII. INSTITUTIONAL BASIS FOR TRADE AND ECONOMIC RELATIONS WITH
THIRD COUNTRIES
2. Economic Integration: Customs Union and Free Trade Area Agreements
Question 100.  
Preferential arrangements, whether consistent with Article XXIV or not, undermine the value
of all MFN commitments.  As a consequence, Nepal has a responsibility to be fully transparent
in its participation in such arrangements.  Please provide in detail the information requested in
WT/ACC/NPL/3 on the scope and nature of Nepal’s preferential system.
Answer:
Nepal has entered into a number of bilateral trade Agreements and treaties with other
countries. To date, Nepal has concluded bilateral trade Agreements with 17 countries including its
closest neighbours such as India, Bangladesh, China, Pakistan, Russia, Mongolia and Sri Lanka aswell as the countries of Bulgaria, Czech Republic, Egypt, Republic of Korea, Democratic People’s
Republic of Korea, Poland, Romania, UK, USA a nd Yugoslavia. More recently, a new trade deal
between Nepal and the European Union was signed. At the same time, it has been a member of the
South Asian Association for Regional Cooperation (SAARC), actively involved in the current
negotiations for the creation of a free trade area among the SAARC members (i.e. Bangladesh,Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.
Trade diversification and export promotion are the basic objectives of Nepal's foreign trade
policy  The policy instruments, commonly used in these Agreements to achieve the objectives, can be
summarized as follows: the adoption of the Most Fa voured Nation treatment principle, reciprocal and
discriminatory trade concessions (in case of India, Tibet), facilitation of the movement of goodsacross borders by adopting clear and common transit procedures and provision of the facilities
required for the goods in transit, and the granting of unilateral non-reciprocal special treatment for
least developed countries.
Copy of the South Asia Preferential Trade Arrangement (SAPTA) and the Treaty of Trade
between Nepal and India will be notified to the WTO.
Question 101.  
What portion of Nepal’s total imports in a recen t period are imported on a preferential basis,
under its Agreements with India, Tibet, and SAPTA?
Answer:
Nepal's imports, on a preferential basis, under its Agreement with SAPTA is 36.5 per cent of
Nepal's total imports. Likewise imports from India is 35.1 per cent and Tibet is 1.2 per cent of Nepal's
total imports. India is one of the members of the SAPTA.
Question 102.  
We would like to see information on these arrangements included in the Working Party report.
We also seek Nepal’s Agreement that it will no tify these arrangements to the WTO for review in
the Committee on Regional Trade Arrangements.WT/ACC/NPL/9
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Answer:
Nepal agrees to notify preferential arrangements to the WTO.
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