RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/ACC/SPEC/NPL/5/Rev.2 
15 August 2003 
 (03-4272) 
Working Party on the 
Accession of Nepal  
 
 
 
DRAFT REPORT OF THE WORKING PARTY 
 ON THE ACCESSION OF THE KINGDOM OF NEPAL  
TO THE WORLD TRADE ORGANIZATION 
Revision  
 
Introduction  
1. At its meeting on 21-22 June 1989, the Counc il of Representatives established the Working 
Party to examine the application of His Majesty's Government of Nepal (HMG /N) for accession to the 
General Agreement on Tariffs a nd Trade (GATT 1947) under Article XXXIII, and to submit to the 
Council recommendations which might include a draf t Protocol of Accession.  In a communication 
dated 17 February 1997, HMG/N applied for acces sion to the World Trade Organization (WTO).  
Having regard to the decision adopted by the Ge neral Council on 31 January 1995 (WT/GC/M/1), the 
existing Working Party on the Accession of Nepal to the GATT 1947 continued as a WTO Accession Working Party with the mandate to examine the a pplication of HMG/N to accede to the World Trade 
Organization under Article XII, and to submit to  the General Council recommendations which may 
include a draft Protocol of Accession.  The terms of reference and the membership of the Working 
Party are reproduced in document WT/ACC/NPL/4/Rev.7. 
2. The Working Party met on 22 May 2000,  12 September 2002, 23 May and [.............]  2003.  
At its meeting on 15 October 2002, the General Council took note that H.E. Mr. P.-L. Girard 
(Switzerland) had been appointed Chairman of the Working Party in replacement of 
H.E. Mr. R. Farrell (New Zealand) who had left Geneva and was no longer available. 
Documentation provided
 
3. The Working Party had before it, to serve as a basis for its discussions, a Memorandum on the 
Foreign Trade Regime of Nepal (document WT/A CC/NPL/2 and Corr.1 and A ddenda), the questions 
submitted by Members on the foreign trade regime of Nepal, together with the replies thereto, and 
other information provided by the authorities of  Nepal (WT/ACC/NPL/3 and Corr.1 and Addenda;  
WT/ACC/NPL/5; WT/ACC/NPL/6; WT/ACC/NPL/7; WT/ACC/NPL/9; WT/ACC/NPL/10 and WT/ACC/SPEC/NPL/5/Rev.2 
Page 2  
 
 Revision 1; WT/ACC/NPL/11; WT/ACC/NPL/ 12; WT/ACC/NPL/13; WT/ACC/NPL/14;  
WT/ACC/NPL/15; ...), including the legislative texts and other documentation lis ted in Annex I.  The 
Legislative Action Plan of Nepal aimed at the impl ementation of the WTO Agreements circulated in 
document WT/ACC/NPL/10/Rev.1 is reproduced in Annex II.   
Introductory statements
 
4. The representative of Nepal said that the Kingdom  of Nepal, a least developed land-locked 
mountainous country with a small but open econom y, had been facing the problems of poverty, 
marginalization, weak institutional capacities and fina ncial and technical constraints.  The population 
of the country was estimated to be 23 million peopl e.  Per capita income was US$240, with  38 per 
cent of the population living with less than one dolla r a day, and 82 per cent living with less than two 
dollars a day.  Agriculture which was dependent on the vagaries of the monsoon was the main source 
of income and employment.  Agriculture accounted for around 41 per cent of GDP and more than 80 
per cent of employment.  Rice was the major cereal product followed by maize, wheat and millet.  
Woollen carpets and ready made clothing were th e leading export items constituting about 85 per cent 
of total overseas exports.  Other important indus trial products were food,  beverage and cement 
production.  Tourism contributes about 12 per cent of the total foreign exchange.  High transit costs, 
absence of basic infrastructures, dependence on trad itional technologies, etc. were some of Nepal's 
structural limitations.  Due to the fact that total exports met less than half Nepal's import requirements, 
donor support was essential for the country's economic survival.   
5. The representative of Nepal said that notw ithstanding a difficult economic and political 
environment and internal instability and strife, Nepa l had sought to achieve a peaceful settlement of 
the internal problem and to systematically reform  and open its economy.  HMG/N had liberalized the 
economy unilaterally over the years because of th e conviction that economic reform and trade 
liberalization would attract investments, promote development and, contribut e to generate productive 
employment and alleviate poverty,  in a general fra mework of equity, participation and market based 
efficiency.  Limited physical, material and human resources had constrained Nepal's capacity to reap 
the benefits of globalization and liberalization.  In order to pursue the accession process effectively, 
Nepal had very important technical assistance need s including capacity building.  Accession to WTO 
was an essential component of the country's integr ation into the world economy.  The commitments to 
be undertaken by Nepal in the accession negotiations s hould be consistent with the capacity of a land-
locked LDC and, in accordance w ith the decision adopted by WTO General Council on 10 December 
2002 with respect to the accession of LDCs,  taking in to account the important development, financial 
and trade needs of Nepal.  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 3 
 
 
 6. The representative of Nepal noted that trade was not  an end itself.  It was a means to develop 
the underdeveloped economies, ensure the flows of knowledge, technology and resources with the 
aim of improving the global standards of living of all mankind, including in particular the poorer 
segments of mankind.  Globalization should pave the way towards a new era of humanity and 
civilization with a fair and equitable distribution of welfare. 
7. Recalling the decisions adopted at the Fourth WTO Ministerial Conference and at the Third 
UN Conference on LDCs, the representative of Nepal noted that as an LDC Nepal would need 
transitional arrangements in order to  bring its foreign trade regime in to full consistency with the WTO 
Agreements on Customs Valuation, TBT, SPS and TR IPS.  HMG/N planned to accomplish this task 
in accordance with the Legislative Ac tion Plan submitted to the WTO.   
8. Members of the WTO welcomed Nepal's a pplication to accede to the World Trade 
Organisation.  They expressed the view that WT O membership would be important for Nepal's 
development and integration into the world trading system and would also constitute a major step forward in the WTO evolution to achieving the goal of universality and representation of the interests 
of all trading nations.  In expressing appreciation for the significant efforts already undertaken by 
Nepal to achieve compliance with WTO rules and prin ciples, they noted that further work was needed 
in order to implement some important WTO Agreements.  WTO Members pledged to work 
constructively with Nepal in accomplishing this objec tive, and offered to provide technical assistance 
to facilitate Nepal's accession.  WTO Memb ers looked forward to Nepal's early accession on 
appropriate terms including transitional arrangeme nts to enact and implement the legislative 
modifications required.  Recalling Nepal's status as a least-developed country, some 
Members acknowledged Nepal's commitment to the principles of the multilateral trading system, economic reform and market policies.  They noted that Nepal was a key member of the South Asian 
Association for Regional Cooperation (SAARC),   w hose population constituted almost one fourth of 
humanity and of South Asian Preferential Trading Arrangement (SAPTA).  In their view, economic, 
intellectual and moral arguments, including the credib ility of the WTO, justified according special and 
differential treatment similar to that enjoyed by  other LDCs in the existing and forthcoming WTO 
Agreements when agreeing on Nepal's terms of accession. 
9. The Working Party reviewed the economic polici es and foreign trade regime of Nepal and the 
possible terms of a draft Protocol of Accession to the WTO.  The views expressed by members of the Working Party on the various aspects of Nepal's fore ign trade regime, and on the terms and conditions 
of Nepal's accession to the WTO are summarized below in paragraphs 10 to 152. WT/ACC/SPEC/NPL/5/Rev.2 
Page 4  
 
 ECONOMIC POLICIES   
Monetary and fiscal policy
 
10. The representative of Nepal said that the monetary policy of Nepal was geared towards 
managing liquidity so as to achieve the domestic price stability, and to improve the balance of 
payments situation of the country.  Accordingl y, broad money and narrow money aggregates were 
targeted to increase in line w ith the predetermined benchmarks.  The Central Bank (Nepal Rastra 
Bank, NRB) had given up exercising direct instruments of monetary control since the early 1990s and 
has resorted to indirect instruments only.  In th is context, open market operations had become the 
main instrument of monetary control in Nepal.  Tr easury bills are the main instruments used in such 
operations.  NRB bonds were also used as open mark et instruments in the past.  Besides the open 
market operations, the bank rate and the cash rese rve ratio are the other additional instruments 
deployed by the Central Bank for monetary control.   
11. The representative of Nepal said that since the st art of the 1990s the Government had pursued 
an ambitious tax reform programme with the aim of  raising public savings, br oadening the tax net and 
to improve the overall efficiency and fairness of the tax system.  Reforms had been undertaken to 
broaden the tax base, lower income tax rates, and to  simplify the rate structure across a whole range of 
taxes.  The fiscal policy of the Government wa s to pursue the following major objectives: (i) 
reduction of unproductive expenditure in the public sect or;  (ii) reform of the income tax structure by 
reducing high rates and br oadening the tax base; (iii ) reduction of net domestic borrowing to 0.5 per 
cent of GDP; and (iv) streamlining of bureaucracy.   
Foreign exchange and payments  
12. The representative of Nepal said that t he Central Bank published exchange rates for its 
internal purpose and the market rate was determined by the foreign exchange market.  Import licenses 
to obtain foreign currency for specific goods are no longer required.  The present system facilitates 
100 per cent of capital transfer in the form of forei gn investment and subsequent  repatriation of profit 
in foreign currencies.  Foreign currency bank accounts can be freely opened.  In case of the emergence 
of balance of payments (BOP) problems, the Government may resort to restrictive measures.  He added that the Nepalese Rupee has been pegged to the Indian Rupee at the rate of NRs. 1.6 per Indian 
Rupee since February 1993.  The cu rrent exchange rate is about 76.00 Nepalese Rupees per US Dollar 
(June 2003).  Several amendments ha d been made in the Foreign Exch ange (Regularisation) Act, 2019 
(1962) in order to reflect the liberalisation policy.  Money changers had been authorized to operate in 
the main cities of Nepal.  Moreover, the Governme nt had declared its commitment to make Nepal an  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 5 
 
 
 international financial services centre and had formul ated an Act in this regard.  Nepal had also 
entered into negotiations with respect to the Pove rty Reduction and Growth Facility (PRGF) with the 
International Monetary Fund. 
13. The representative of Nepal said that the current international payments regime consists of 
different provisions for payments made through c onvertible currency and n on-convertible Indian 
Rupees.  For countries other than India, payment was made through convertible currency, mainly US 
Dollars.  Selected commodities could be imported from India through US Dollar payments as well.  
Nepal's exchange rate system is presently free of restrictions on the making of payments and transfers 
for current international transactions except for restrictions on payments for personal travel.  
However, the necessary foreign exchange will be ma de available (either thr ough commercial banks or 
the Central Bank) upon the production of the re quired documentary evidence for all bonafide 
transactions.  All exporters are required to bring the export payment to Nepal within 6 months.  
However, the exporters could reta in up to 100 per cent of the export proceeds for themselves through 
the opening of a foreign currency account with the local commercial banks.  There was no time limit 
for such retention.  To import goods from India, th e Letter of Credit could be opened in Indian Rupees 
in favour of the exporter.  The Nepalese bank could also, if requested by the importer, make direct 
payment to the exporter, in Indian Rupees, thr ough an Indian Bank.  The importer could receive 
Indian Rupees from the Nepalese bank to make direct  payment to the Indian exporter.  Nepal had 
accepted Article VIII of the Articles of Agreement of the IMF.  However, Nepal may restrict the 
quantity or value of imports in order to safeguard  its external financial position and its balance of 
payments.  Nepal was also a member of the Asian Clearing Union (ACU).  Trade transactions among 
ACU members were cleared through the Asian Cu rrency Unit.  As far as capital transaction was 
concerned, the Ban on Investments in Foreign Count ries Act, 1964 prohibits any form of investment 
including the purchase of property, bank deposits, investments in shares and bonds by Nepalese 
citizens in foreign countries.  The repatriation of capital investments and profits by foreigners was 
allowed in accordance with the Foreign Inv estment and Technology Transfer Act 1992. 
Investment regime  
14. The representative of Nepal said that a major objective of national economic policy was to 
promote and encourage a transparent and fair business environment for both domestic and foreign 
investment, and to increase the role of the private sector in Nepal’s development process.  For this 
purpose, a liberal industrial policy was adopted in 1992 consisting of the Industrial Enterprises Act, 
1992, the Foreign Investment and Technology Tran sfer Act, 1992, and the One Window Policy of 
1992.  Sections 2, 3 and the annex of the Foreign Investment and Technology Transfer Act, 1992 are WT/ACC/SPEC/NPL/5/Rev.2 
Page 6  
 
 relevant for all foreign investment and cover the major criteria for the permission of foreign 
investment.  Under this policy, a high level committ ee had been formed with the Director General of 
the Department of Industries as its Coordinator in order to coordinate the activities of various agencies 
related to industrial enterprises.  The major thrust of these Acts an d policies lies in their openness with 
emphasis on market-driven strategies, and the dominan t role of private initiative and enterprise.  The 
Government acts as a facilitator to the private sect or and concentrates its efforts on the development 
of the infrastructure required, as well as in guarant eeing a stable macroeconomic environment.  The 
policies and Acts mentioned above apply to all sect ors of economic activities within the country.  The 
Industrial Policy of 1992 identified foreign inv estment promotion as an important strategy in 
achieving the objectives of increasing industrial produc tion, meeting the basic needs of the people, 
creating maximum employment opportunities, and pavi ng the way for improvement in the balance of 
payments situation.  Foreign investment was expe cted to supplement domestic private investment 
through foreign capital flows, technology transfer, a nd providing access to international markets.  The 
first amendment of the Foreign Investment and Technology Transfer Act (FITTA), 1992 in 1996 had 
opened further avenues for investors, and had also simplified the administrative procedures.  Some of 
the salient features of the Industrial Enterprises Act, 1992 and of the Foreign Investment and 
Technology Transfer Act, 1992 (as amended) were  as follows:  foreign investment requires an 
approval from the Department of Industry.  A pers on desiring to avail the foreign investment or 
technology transfer shall be required to make an a pplication to the Department.  It grants permission 
directly in the case of an industry with fixed asset s up to 1 billion Rupees and in accordance with the 
decision of the Industrial Promotion Board in the c ase of an industry with fixed assets of more than 
one billion Rupees within 30 days from the date of app lication; foreign investors were allowed to hold 
100 per cent ownership in industries; foreign i nvestment was open in every sector of economic 
activities, except for very few sectors such as co ttage industries, arms and ammunitions, security 
printing, currencies and coinage, retail business, tr avel and trekking agencies, consultancy services, 
etc.  (specified in an Annex of the Forei gn Investment and Technology Transfer Act, 1992); 
technology transfer was encouraged in all public enterprises of industries; the law prohibits the 
nationalization of any private sector industries; the Government does not intervene in fixing the prices 
of industrial products in the private sector indust ries.  The statutory provision of FITTA guarantees 
full repatriation of the amount received from the sale of equity, profits, or dividends and interest on 
foreign loans, and the repatriation of the amount received under an agreement for the transfer of 
technology.  Foreign investors were granted a busin ess visa as long as the investment was retained.  A 
resident visa would be provided for a foreign invest or, who at a time makes an investment in excess of 
US$100,000 or equivalent and retains it.  Nepal was a member of the Multilateral Investment 
Guarantee Agency (MIGA), had signed Reciprocal  Encouragement and Protection of Investment  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 7 
 
 
 Agreements with France, Germany, the United Kingdom and Mauritius and would conclude such 
agreements with a number of other countries.  Agreements avoiding double taxation were effective 
with India, Norway, Thailand, Sri Lanka, Mauritius, Austria, Pakistan, China, and Republic of Korea. 
15. In response to questions concerning the need of approval for industrial ventures, the 
representative of Nepal said that in accordance w ith Section 3 of the Foreign Investment and 
Technology Transfer Act, 1992, approval from th e Department of Industries was required for all 
foreign investment.  As provided by the Industria l Enterprises Act, 1992, permission for domestic as 
well as foreign investment was required only for industries producing explosives, including arms, 
ammunition and gun powder, security printing, bank no tes and coin industries; cigarette, bidi, cigar, 
chewing tobacco, khaini industries and industri es producing goods of a similar nature utilizing 
tobacco as the basic raw material and alcohol or beer producing industries.  The specific requirements 
to get the permission were not detailed in either of these Acts.  He said that the sectors listed below 
were not open for foreign investment.  Most of these sectors were reserved for nationals, mainly in order to promote the activities of small entrepreneurs who generally  use indigenous skills, resources 
and technology.  Some sectors were restricted for national security reasons: co ttage industry; personal 
service business (business such as hair cutting, beauty parlour, tailoring, driving training, etc.); arms 
and ammunitions industries; Explos ives, gunpowder; Industries related to radioactive materials; Real 
estate (excluding construction industries); Motion pi cture industries (produced in national languages 
and the language of the nation); Security printing;   Currency and coinage business;  Retail business;  
Travel agency;  Trekking agency;  Water rafti ng;  Pony trekking; Horse riding;  Cigarette, bidi, 
alcohol (excluding those exporting for more than 90 per cent);  Internal courier services;  Atomic 
energy;  Tourist lodging;  Poultry farming;  Fisher ies;  Bee keeping;  Consultancy services such as 
management, accounting, engineering and legal ser vices etc.  Approval from the Government was 
required for foreign investment in other areas.  Inte rested foreign investors should apply in writing, in 
the prescribed format, to the Department of Industr y or Department of Sma ll and Cottage Industry or 
any other office as prescribed by the Governme nt.  The decision on the application shall be 
communicated to the applicant within 30  days from filing of the application. 
16. The representative of Nepal also indicated th at the recommendations made in the studies 
conducted by FIAS had been incorporated in the am endments of Industrial Enterprises Act, 1992 and 
the Foreign Investment and Technology Transfer Act, 1992. 
State ownership and privatization 
 
17. The representative of Nepal said that Nepal had completed the privatization of a number of 
previously government owned enterprises listed be low.  The methods of privatization and other WT/ACC/SPEC/NPL/5/Rev.2 
Page 8  
 
 information are given below.  The net (book value)  worth of the remaining state-owned enterprises 
account for about 15 per cent of Nepal's GDP.   
Table 1:  Privatization of Previously Government-Owned Enterprises
 
Proportionate Share 
S.No Name of the Company Year of 
Privatization  Method of 
Privatization  Sales 
Proceeds 
(Rs.  '000)1 Mgt Emp Public 
1. Bhrikuti Paper Mills (BPM) Oct. 1992 Asset and 
business sale 229,800 70 5 25
2. Harisidhi Brick and Tile 
Factory (HBTF) Oct. 1992 Asset and 
business 
sale 226,900 72 5 23
3. Bansbari Leather and Shoe 
Factory Mar. 1992 Asset and 
business sale 22,400 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 5 332
9. Nepal Jute Trade and 
Development Company 1993 Liquidation Liquidation -- -- --
10. Tobacco Development 
Company 1994 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)3 Dec. 1996 Manageme
nt contract Business 
contract -- -- --
14. Nepal Bank Ltd.  (NBL)4 Mar. 1997 Share sale 125,140 -- 5 545
15. Agriculture Tools Factory 
(ATF) May 1997 Share sale 95,100 65 5 30
16. Bhaktapur Bricks Factory 
(BBF) Aug. 1997 Lease 20,300 
(10 years, 
lease) -- -- 100 
HM
GN
 
                                                      
1 It includes the price of management share only. 
2 Rest of the shares are in the name of other corporations. 
3 BJM is a semi-government enterprise in which priv ate sector has majority shares.  The decision to 
contracting out was taken by the company's board and all the procedures were taken accordingly. 
4 In this bank the government had majority shares.  The government d ecided to sell some of its shares 
in the market, so that the private sector could become the majority shareholder.  So it floated 10 per cent of the shares in the share market.  Now the government is a minority shareholder i.e.  it holds only 39 per cent of the 
total shares. 
5 HMGN owns 39 per cent shares.  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 9 
 
 
 18. The representative of Nepal said that Section 6 of  the Privatization Act, 1992 states that when 
the Government intends to privatize any Government  Corporation, it shall publish a notice in respect 
of the privatization of such a Government Cor poration in the Nepal Gazette.  The Act makes it 
mandatory for the Government to initiate the priv atization 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 Corporati on in this respect.  Section 8 of the same Act has 
given alternatives of the privatization process to the Government, i.e., converting shares or selling 
intact to private buyers or giving on lease etc.  In accordance with Section 9 of the same Act the 
Government must call for public tender for privati zation by publishing a notice which has to be in 
accordance with international practice.  Section 10 of the same Act describes the basis for the 
evaluation of tenders.  The privatization committee evaluates the proposals received from private 
parties accordingly.  In accordance with Section 11(4) of the same Act, the terms and conditions 
mentioned in the Agreement in respect to privati zation must be published to inform the public.  The 
parties concerned may ask for attested copies of relevant documents under number 17 of the Chapter 
on Document Scrutiny of the Country Code (Muluki Ai n).  Likewise, Article 16 of the Constitution of 
the Kingdom of Nepal provides the right to seek and get information in respect of matters of public 
importance.  Nepal is also ready to adopt a better mechanism in regard to transparency through proper 
legislation.  The Privatization Act, 1992 was silent  on the mechanism of review or appeal regarding 
any unsuccessful tenders by investors whether nationa l or foreign.  Nevertheless, the unsuccessful 
tender participant, in principle, may approach the Court of Appeal under the Administration of Justice 
Act, 1991.   
Pricing policies
  
19. The representative of Nepal said that in accord ance with the Foreign Investment and One 
Window Policy 1992, the Government did not interv ene in fixing the prices of industrial products 
either by the private sector industries or State- owned enterprises except for necessary products as 
defined by the Acts.  The products concerned we re petroleum products (HS codes 2710, 2711) and 
salt (HS code 2501), however in the interest of consum er protection price controls could be applied to 
other products. 
20. The representative of Nepal stated that in the application of price controls now or in the 
future, Nepal would apply such measures in a WTO- consistent fashion, and take account of the 
interests of exporting WTO Members as provided for in Article III:9 of the GATT 1994, and in 
Article VIII of the General Agreement on Trade in Services (GATS).  He also confirmed that Nepal WT/ACC/SPEC/NPL/5/Rev.2 
Page 10  
 
 published the list of goods and services subject to Stat e control and any changes in its Official Gazette 
and would continue to do so after accession.  The Working Party took note of this commitment. 
Competition policy
 
21. The representative of Nepal said that Nepal di d not at present have a competition law, but 
Nepal was seeking assistance to draft legislation to ensure fair competition in various business 
activities in due course.  The respective legislation would be consistent with  the WTO Agreements.  
The Legislative Action Plan circulated in docum ent WT/ACC/NPL/10/Rev.1 which is reproduced in 
Annex II of this Report indicates that the Ministry  of Industry, Commerce and Supplies would prepare 
a draft Competition Bill by November 2003, the Council of Ministers was expected to endorse the Bill by February 2004 and the expected  approval date was July 2004. 
FRAMEWORK FOR MAKING AND ENFORCING POLICIES 
22. The representative of Nepal said that in 1990 a democratic constitution had replaced the 
Panchayat System.  The Constitution of the Kingdo m of Nepal, 1990 had established the King as the 
Head of the State and the Prime Minister, responsible to the parliament, as the Head of the Government, and an independent judiciary.  Th e parliament was a bicameral legislative body, 
consisting of the lower house, the House of Repr esentatives, and the Natio nal Assembly, the upper 
house.  The executive, legislative, and judicial  powers were well defined and separated.  The 
executive power of the Kingdom of Nepal was vested with His Majesty the King and the Council of Ministers and the responsibility of issuing ge neral directives, contro lling and regulating the 
administration of the Kingdom of Nepal lies in the Council of Ministers.  His Majesty the King as the 
Head of the State appoints the leader of the Pa rty which commands a majority in the House of 
Representatives as Prime Minister and constitutes the Council of Ministers on his recommendation and under his Chairmanship.  The Prime Minister and the other ministers in the government are 
collectively responsible to the Parliament.  The ot her ministers are also individually responsible for 
the business of their respective ministries to th e House of Representatives as well as to the Prime 
Minister.  Due to the lack of internal security Parliamentary el ections were not held in 2002 as 
scheduled.  His Majesty the King had appointed the cu rrent Prime Minister under the provisions of the 
present Constitution.  A cease fire reached in Februa ry 2003 had suspended hostilities.  The current 
talks with all political entities and groupings were e xpected to lead to Parliamentary elections being 
held in the coming period.  In the meantime, th e government exercised le gislative authority in 
conformity with constitutional provisions by means of Ordinances.    WT/ACC/SPEC/NPL/5/Rev.2 
 Page 11 
 
 
 23. In accordance with the Constitution,  the parliament consists of His Majesty the King and the 
two Houses of parliament.  The House of Represen tatives consists of two hundred and five members 
elected from one-man election constituency on the basis of one-person-one-vote system through a 
secret ballot.  Nepal had adopted the simple plura lity or "first past the post" election system under 
which a candidate receiving the largest number of popular votes in a given constituency is elected.  
The National Assembly consists of sixty members, ten of which are nominated by His Majesty the 
King from amongst persons of high reputation, and 35 members, including at least three women 
members, are elected by the House of Representativ es on the basis of proportional representation by 
means of the single transferable vote system.  Fifteen members are elected from five Development regions.  The tenure of the members of the House of Representative is five years.  The tenure of the members of the National Assembly, which is a permanent House, is six years and tenure of one third 
of the members expires every two years. 
24. Except as otherwise expressly provided in the c onstitution, the parliament is empowered to 
enact any law.  A bill passed by one house of th e parliament is transmitted to the other house as soon 
as possible and if the receiving house passes it, it is  presented to His Majesty the King for his assent.  
The bill becomes an Act upon such assent.  The Gove rnment is empowered to promulgate rules or 
regulations under a delega ted legislative power vested under an Act of Parliament.  The constitution 
provides certain specific provisions concerning ratification of, accession to, approval of, and 
acceptance of a treaty.  Depending on the content, nature, and term of a treaty, a joint sitting of both 
houses of the parliament or the House of Repres entatives is authorized to ratify or accede to.  
Normally, multilateral treaties concerning trade whic h require ratification or accession are ratified or 
acceded to by the House of Representatives by a simple  majority vote.  Once treaties are ratified, they 
are executed at the national and international levels .  A treaty may be invoked on a collateral issue, 
which the courts may have to determ ine before adjudicating on the rights of the parties.  However, the 
Supreme Court, in case it decides that the provision of  an Act is inconsistent with the provision of a 
treaty to which His Majesty's Government is a party,  the provision of the treaty in question prevails.  
Under the Nepal Treaties Act, 2047 (1990) in case of divergence between the provisions of Nepalese 
law and provisions of the international treaty to which the Kingdom is a party, the provision of the 
treaty shall apply to the extent of the divergen ce.  Following its ratific ation by the House of 
Representatives, the WTO Agreement would be an international treaty. 
25. The judiciary is an independent organ.  The powers relating to justice in the kingdom are 
exercised by the courts and other judicial tr ibunals in accordance with the provisions of the 
constitution, the laws of the country , and universally recognized principles of justice.  The judiciary 
comprises three tiered courts consisting of 75 Distri ct Courts, 16 Appellate Courts, and one Supreme WT/ACC/SPEC/NPL/5/Rev.2 
Page 12  
 
 Court.  The Chief Justice of the Supreme Court of  Nepal is appointed by His Majesty the King on the 
recommendation of the Constitutional Council, a constitu tional body composed of the Prime Minister, 
the Chief Justice, the Speaker of the House of  Representatives, the Chairman of the National 
Assembly, and the Leader of the Opposition in th e House of Representatives as its members.  The 
appointment of other judges of the Supreme Court, A ppellate Courts, and District Courts is made by 
His Majesty the King on recommendation of the Judicial Council.  In Nepal, judges are not part of the 
civil service and the terms and conditions of their ser vice have been determined by law as required by 
the constitution.  The Supreme Court, the apex of th e judicial system, has, inter alia, extraordinary 
jurisdiction for the enforcement of fundamental rights as provided by the constitution in Part 3 and can issue appropriate orders and writs including the writ of habeas corpus, mandamus, certiorari, 
prohibition and quo warranto.  Moreover, it is also em powered to declare any law or any part thereof 
either void ab initio or from the date of its  decision on the ground of inconsistency with the 
constitution, because such law imposes an unreasona ble restriction on the enjoyment of the 
fundamental rights of the citizen.  Similarly, a ppellate courts may issue habeas corpus, mandamus 
writs and injunction orders.  Nepa lese courts are competent to entertain and adjudicate all suits 
concerning real estate located in Nepal and estate ma tters with respect to assets in Nepal and also any 
other suits, if the defendant is do miciled in Nepal or the claim deri ves from an event that has occurred 
in Nepal or from any act made or done in Nepal regarding the defendant's domicile.  If a foreign 
company has a branch in Nepal, it is treated as a domiciled party.  A Nepalese court may also 
adjudicate suits concerning transactions made abroad  if both the plaintiff and defendant are domiciled 
in Nepal.  Summons are to be served on defendants domiciled abroad through letters rogatory issued 
by the courts.  No. 34 of Adalati Bandobasta (c ourt management) of Muluki Ain (Country Code) 
provides that summons to be served on defendants domiciled in Nepal through letter rogatory issued 
by the foreign courts are satisfactory only if a reci procal agreement to that effect has been concluded 
by the Government with the foreign state concerned.   Muluki Ain is the general law of the land and 
any other specific act may replace the provision of th e Muluki Ain if a specific act to that effect is 
made.  In addition to the above mentioned courts, there is also a provision in the constitution which 
stipulates that law may provide for the establishment of special types of courts and tribunals for the 
purpose of hearing of special types of cases.  Ho wever, a special court or tribunal may not be 
constituted for the purpose of hearing a particular case.  In practice, ther e are special permanent 
tribunals to adjudicate and resolve revenue disput es (Revenue Tribunals), labour disputes (Labour 
Court) and disputes concerning dismissal of civil service employees (Administrative Court).  Pursuant 
to the Arbitration Act, 1998, arbitration had become  an effective mechanism for settlement of disputes 
arising out of commercial contracts.  Nepal was a party to the Convention on the Recognition and 
Enforcement of Foreign Arbitral Awards.    WT/ACC/SPEC/NPL/5/Rev.2 
 Page 13 
 
 
 26. Under Articles 35 and 41 of the Constitution of  the Kingdom of Nepal, 1990, and the His 
Majesty's Government (Allocation of Business) Regulation 2000, the following Ministries are 
responsible for making and enforcing the policies affecting foreign trade in goods and services:  
(a) The Ministry of Industry, Commerce and Supplies6 is principally responsible for 
making and enforcing policies on trade including foreign trade.  The responsibilities of this ministry include: Formulating and enforcing trade policy.  Study, research, and 
survey on internal and international trade.  Making policy decisions on import and 
export trade regime and conducting intern ational trade relations.  Formulating 
policies and setting requirements for publ ic trade enterprises.  Preparing and 
negotiating treaties and agreem ents relating to foreign trade (and transit), as well as 
participating in bilateral and multi-latera l intergovernmental trade negotiations.  
Contact, assistance and coordination with  national, regional, international 
organizations pertaining to trade and transit.   Study and survey of different means of 
carriage of goods in the internal and inte rnational trade, and of the management 
necessary for cheaper ca rriage, including multi-modal transport schemes.  Training to 
develop capable manpower in the appropria te areas.  The Department of Commerce 
deals with technical issues such as the registration of trade firms, and where 
appropriate, permits licenses or authorization for goods to be imported in or exported 
from Nepal.  The Trade Promotion Cent re operates as a separate government 
undertaking to promote foreign trade, particularly overseas trade.   
The Ministry is responsible for policies related to foreign investment, promotion 
thereof and matters relating thereto; promo tion of industrial investment; development 
and transfer of technology; industrial prom otion and protection; patent design and 
trade mark. 
The Ministry is responsible for issues relate d to the policy on supplies of basic needs 
goods and its implementation; supervision of the market and regulation of policy 
prices for enterprises under it; regular and balanced supply of consumer goods and 
necessary consumer goods through these enterprises. 
(b) The Ministry of Finance is responsible  for activities related to public expenditure, 
currency; banking, insurance, revenue po licy and planning; revenue administration 
and collection of customs duties and taxes levied by the government from time to time; general price policy for State-owne d enterprises; exchange and control of 
foreign currencies and control of accounts as well as mobilisation of foreign aid.   
(c) The Ministry of Culture, Tourism and Ci vil Aviation is responsible for issues related 
to tourism industry and touris m promotion; trekking, mount aineering; development of 
air transportation and other tourism trade related service and issues. 
(d) The Ministry of Labour and Transpor t Management is responsible for activities 
related to policy on development of in land and water transport; regulation of 
transportation and carriage by land and s ea including multi-modal transport and trade 
facilitation.  It is also responsible fo r activities related to labour policy and its 
implementation; study and research of labour  force and labour market, and its use; 
work permit to foreigners; administ ration and management of labour. 
                                                     
 
6 The Ministry of Commerce, the Mini stry of Industry and the Ministry of Supplies were merged in the 
year 2000 WT/ACC/SPEC/NPL/5/Rev.2 
Page 14  
 
 (e) The Ministry of Agriculture and Coopera tives is responsible for activities related to 
policy on agriculture and agriculture production in general; development and 
improvement of food, cash and industrial crops; agricultural engineering and sophisticated agricultural inputs; agricultural nurseries and development of seeds; development of dairy and dairy products; fi shery; marketing and price regulation of 
basic agricultural products, agricultural inputs, and development of agricultural 
technology; plant quarantines; food research , and import, sale and distribution of 
fertilizers and agricultural inputs. 
27. The Constitution of Nepal provides a unitary form of government.  There was no division of 
authority between central and sub-central or regional governments in Nepal.  However, the laws of the 
country provide for the delegation of authority to the local authorities as and when required. 
28. The representative of Nepal said that the implementation of the WTO Agreements would 
require the preparation of important pieces of legisl ation.  He submitted the action plans circulated in 
documents WT/ACC/NPL/10/Rev.1, 12, 13, 14 and 15 (reproduced in Annex II and Tables 3, 5, 7 and 
10) which set up a precise calendar plan aimed at en acting the legislation required to implement the 
WTO Agreements during the period 2003-2006.  The representative of Nepal said that Nepal 
undertook the commitment that any changes in laws , regulations and practices during the transitional 
arrangements would not result in a lesser degree of consistency with the provisions of the relevant 
WTO Agreements than existed on the date of accessi on, and that the scope of  application of existing 
inconsistencies with WTO provisions in tho se areas would not be allowed to increase.  
29. In response to questions concerning the existen ce of the right to appeal against decisions 
made by the Department of Industry and othe r administrative entities as required by the WTO 
Agreements on Import Licensing, Customs Valuatio n, TBT, SPS and TRIPS, the representative of 
Nepal said that under Article 18 of the Industrial En terprise Act, 1992 there was a provision of appeal 
against the decisions taken by Department of I ndustry to the Industrial Promotion Board.  The 
importer had the right to appeal to the Revenue Tribunal over the decision of customs officials in 
respect to the determination of customs value under Section 37 of Custom Act, 1962.  Nepal was 
currently examining the possibility of establishing an  independent administrative tribunal to review 
the decision of the customs authority regardin g customs valuation.  The decisions of the 
administrative tribunal could be appealed to th e Revenue Tribunal which should provide prompt 
review and correction of administrative action relati ng to customs matters, in accordance with Article 
X:3(b) and (c) of GATT 1994.  The Nepalese legisla tion provides the right to appeal to the affected 
party concerning decisions of the authorities on matters  related to technical barriers to trade, sanitary 
and phytosanitary measures, import licensing, copyrights, trademarks, patent and design.    WT/ACC/SPEC/NPL/5/Rev.2 
 Page 15 
 
 
 30. A member of the Working Party expressed readin ess to provide technical assistance to Nepal 
for the establishment of a system for the review and appeal against administrative decisions in areas 
covered by specific transitional arra ngements and in other areas.  The representative of Nepal said that 
Nepal would review the legislation on administrative  appeals to ensure that a system for review of 
decisions will be in place by enactment or amendment of appropriate legislation, in some cases new tribunals may be established. 
31. The representative of Nepal said that upon the date of accession, Nepal would establish or 
designate tribunals or procedures for the prompt re view of all administrative actions relating to the 
implementation of laws, regulati ons, judicial decisions and admi nistrative rulings of a general 
application referred to in Article X:1 of the GA TT 1994, Article VI of GATS.  The tribunals or 
procedures would also include actions relating to the implementation of national treatment, 
conformity assessment, the regulation, control, s upply or promotion of a service, including the grant 
or denial of a licence to provide a service and othe r matters.  The tribunals or procedures responsible 
for such reviews would be impart ial and independent of the agency  entrusted with administrative 
enforcement and shall not have any substantial interest in the outcome of the matter.  The review 
procedure would include the opportunity for appeal , without penalty, by individuals or enterprises 
affected by any administrative action subject to re view.  Notice of the decision on appeal should be 
given to the appellant and the reasons for such a decision provided in writing.  The Working Party took note of these commitments.   
POLICIES AFFECTING TRADE IN GOODS  
Registration Requirements
 
32. In response to questions concerning the requirements necessary for obtaining the registration 
to engage in business, the representative of Nepal said that all companies, national or foreign, have to 
be registered with the competent authority to enga ge in business in Nepal.  This includes export and 
import activities.  Limited liability companies, incl uding joint venture agencies, sole proprietor and 
partnerships, business undertakings fo r industrial ventures, register at the Department of Industry.  
Agencies, sole proprietor undertakings and partne rship businesses for trading are required to register 
at the Department of Commerce.  The Nepalese legislation provided different procedures for the 
registration of a private firm and a company.  The Private Firm Registration Act, 1956 governs the 
registration of a private firm- defined as any firm, a company or a concern set up by any person – to engage in the business of export or import.  The running of a private firm without registration was 
prohibited.  The Department of Commerce registers firms engaged in commerce whereas the Department of Industry was concerned with firms engaged in industry.  Any individual desiring to WT/ACC/SPEC/NPL/5/Rev.2 
Page 16  
 
 register a private firm must submit the form prescr ibed by the Private Firm Registration Regulation 
1978 Rule 3, Schedule-1 along with the prescribed application fees to the concerned department.  If 
the Department finds the statement of the applica tion to be true and reas onable to register, it will 
register the private firm and issue a certificate of  registration accordingly.  The registration of a 
company was governed by the Company Act, 1997.   An application with a Memorandum of 
Association and the Articles of Association of the company along with application fee must be 
submitted to the Office of the Company Registrar.   The Registrar, makes any necessary inquiries, 
registers the company and issues a certificate of in corporation within 15 days.  The Registrar had the 
authority to reject the application if the proposed name of the company is already registered, or the 
proposed name is against public morals or the objec tive of the company is contradictory to existing 
laws, or the conditions required to incorporate the company under the Act are not fulfilled.  In this 
case, the Registrar gives due notice and explain the reasons for rejection to the applicant.  The 
registration of entities with respect to trade in  services was governed by other laws, e.g., Nepal 
Agency Act, 1958, Partnership Act, 1964. 
33. In response to questions concerning the registrati on fees, the representative of Nepal said that 
the application fee and the registration fee of di fferent kinds of legal entities were nominal, non-
discriminatory and not related to the value/ vol ume of export and import.  He requested the 
identification of the specific GATT 1994 and GATS ob ligations applicable to the registration fees. 
The system of corporate registration in Nepal had been primarily introduced for statistical purposes.  
The level of such fees varied depending on the nature  of legal entity - sole proprietorship, partnership 
or company, and only approximated the cost of co llecting statistics and veri fication of documents.  
These registration fees were not more onerous for those registering for importation and exportation 
than for firms that produce domestic goods. 
34. The commitment was sought that there would be no restrictions on the right of individuals 
and enterprises to import and export goods into Ne pal’s customs territory, except as provided in WTO 
Agreements, and that individuals a nd firms would not be restricted in their ability to import or export 
based on their registered scope of business.  The co mmitments should ensure that fees associated with 
the right to import and export were applied in conf ormity with the WTO, including Articles VIII:1(a), 
XI:1 and III:2 and 4 of the GATT 1994.   
35. The representative of Nepal confirmed that all registered companies could import and export 
goods for business purposes on the basis of the import and export regulations of  Nepal.  Individuals 
could import for business as long as they were registered as sole proprietor undertakings. Foreign firms could register to import or export their own produce without establishing a physical presence or  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 17 
 
 
 investment in Nepal and without having the intent to distribute imports in the domestic market. A 
registered firm or company could change or exte nd the scope of business, e.g., to include importation 
and exportation, by submitting appli cation indicating the desire to do so to the agency where it was 
originally registered, with the exception of proh ibited sectors and with the stipulation that the 
applicant should get an activity license in advance if  he applies for changing or extending the scope of 
business to include a sector where such a license is required. Retail businesses were reserved for 
Nepalese nationals.  Nepal believe d that the agency business (which  was not required for importation 
or exportation) was covered by GATS.  The relevant market  access conditions would be governed by 
Nepal's schedule of specific commitments on service s.  The registration requirements for companies 
that conduct purely domestic activities and for co mpanies engaged in import and export activities 
were the same.  The registration requirements were  the same for both national and foreign firms.  
36. The representative of Nepal said that Nepal confirmed that from the date of accession, its 
laws and regulations relating to exportation and importation of goods and all fees, charges and taxes 
levied thereof, including registration requirement s would be applied in full conformity with WTO 
obligations, including Articles I, VIII:1(a), XI:1 and III:2 of the GATT 1994 and that Nepal would 
implement such laws and regulations in full conf ormity with these obligations.  The Working Party 
took note of these commitments. 
Import Regulation  
Customs tariff  
37. The representative of Nepal said that the prevaili ng basic customs tariff rates were 5, 10, 15, 
25, 40, 80 and 130 per cent.  There was a significant number of tariff lines with zero duty.  The majority of the import items fall in the customs duty range of 10-20 per cent.  The unweighted average customs duty rate for imports was appr oximately 11 per cent since1996/97.  The maximum 
tariff rate of 130 per cent applied to cars and je eps will be reduced and specified in the goods 
schedule.  A minimum tariff rate up to 5 per cent ap plied for daily consumpti on items.  As a general 
rule, Nepal applied ad valorem  duties.  A very limited number of products such as motor fuels, 
kerosene oils, gas and fuel oils, cement clinke rs and some cements, liquor, tobacco and tobacco 
products were subject to specific duties.  The Harmonized System of Commodity Classification (HS) 
was incorporated in Nepal since the fiscal year 1992 /93.  The 2002 version of the HS Nomenclature 
had been put into effect.  Nepal's Customs Tariff is available in the Secretariat. 
[Nepal's draft goods schedule will be circulated in document WT/ACC/SPEC/NPL/5/Rev.1/Add.1 and 
Corr.]  WT/ACC/SPEC/NPL/5/Rev.2 
Page 18  
 
 Tariff rate quotas, tariff exemptions
 
38. The representative of Nepal said that there were no tariff quotas for imports in effect in Nepal.  
The current legislation provides for certain tariff exem ptions and tariff reductions , in order to facilitate 
the import of specific goods on a provisional basis.   These measures were taken by the government 
and published in the Nepal Gazette.  They were valid  for all suppliers of the goods specified in the 
Custom Tariff.  Import duty exemptions were in  effect for the importation of the following goods: 
books; equipment and vehicles for trolley bus services;  medical equipment for public health projects; 
cold storage equipment for the preservation of agricultural products including fish and fruits; 
alternative power development equipment; high qualit y printed materials imported for the promotion 
and publicity of the tourism in Nepal; threshing machines and husk-machines (Pankhi); raw jute; and 
crates for keeping eggs, falling under chapter 48.  The list of exemptions and tariff reductions was 
published in the Customs Tariff. 
Other duties and charges  (ODCs)  
39. Some members of the Working Party noted that Nepal levied on a number of products the 
Local Development Fee, the special  fee, the agriculture development fee, the cigarettes and alcohol 
fee and the alcohol control service fee.  They request ed that the fees be incorp orated into the customs 
tariff rates, or as a minimum bound at the currently applied rates, upon accession, in accordance with the Understanding on Article II pa ragraph 1(b) of GATT 1994.  
40. The representative of Nepal said that for reasons  related to local development, health and 
education, including the need to generate fiscal reve nue earmarked to respond to critical local needs, 
the Local Development Fee of 1.5 per cent of the va lue of imports had been set up.  Other duties and 
charges in the range of 2.5 per cent - 11.5 per cent we re levied on industrial goo ds, and in the range of 
2.5 per cent – 14.5 per cent were levied on agri cultural goods. These non-tariff charges were applied 
to the c.i.f. value of the imported goods.  In the revised market access offer on goods, Nepal 
confirmed the elimination of ODCs for all tariff lin es over a period of time between two and ten years 
as reflected in the Goods Schedule annexed to the Prot ocol of Accession of Nepal.  After that date all 
ODCs would be bound at zero. 
41. The representative of Nepal confirmed that fro m the date of accession Nepal would eliminate 
ODCs in accordance with the timetable contained in  the Goods Schedule annexed to the Protocol of 
Accession of Nepal.  Nepal also undertook not to introduce new ODCs.  The Working Party took note of these commitments.  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 19 
 
 
 Charges for Services Rendered  
42. The representative of Nepal said that currently  there are no duties and charges imposed on 
imports for customs processing.  Nevertheless, th e Customs Act of 1962 and customs regulations 
provide the authority to the Customs Office to char ge for the services rendered.  There was a charge 
of 1 per cent of the total value of the imported goods as import licence fee.  He acknowledged that 
such a fee was based on import value, not the cost of services, and indicated that Nepal intended to 
change the import licence fee to the system of de termining the fee based on the flat rate or the ad 
valorem  rates, whichever is lower.  Nepal reserved  the right to introduce customs processing/customs 
fee equivalent to the cost of services rendered for the items not requiring import licences. 
43. The representative of Nepal said that from the date of accession Nepal would charge an 
import licence fee representing the approximate cost of  the services rendered.  Nepal would apply this 
and any other fees and charges for services rend ered in accordance with WTO Agreements, in 
particular with Article VIII of the GATT 1994.  The current charge of 1 per ce nt would be at a flat 
rate in NRs to ensure that it did not exceed the approximate cost of administering application of 
import licenses.  The Working Party took note of this commitment.   
Quantitative import restriction including prohibitions  
44. The representative of Nepal said that all items we re free for import.  Nepal at present applied 
no import quotas.  The products banned for import, dom estic production and sale, in accordance with 
the Export Import (Control) Act, 1957, the Narcotic s Drug Control Act, 1976, and the Country Code 
(Muluki Ain), are listed hereunder.   
(a) Narcotic drugs like opium and morphine; 
(b) Liquor containing more than 60 per cent alcohol; 
(c) Beef and beef products.   
The products restricted for import and domestic production are listed hereunder: 
(a) Materials used in the production of arms and ammunition; 
(b) Guns and cartridges; (c) Caps without paper; (d) Arms and ammunition, and other explosives. (e) Wireless, walkie talkie and similar other audio communication equipment's  
(f) Valuable metals and precious stones.  Nepal did not restrict the importation of 
jewellery made of valuable metals but th ere was a restriction on the importation of 
gold, silver and other valuable metals and precious stones.   WT/ACC/SPEC/NPL/5/Rev.2 
Page 20  
 
 Licensing procedures
 
45. The representative of Nepal said that auto matic licensing was applied for information 
purposes both for the import and export of all goods not  restricted.  Licenses were also applied for the 
personal baggage exceeding the established allowance.  In addition, the Treaties of Trade and Transit 
between Nepal and India envisage licensing in order to ensure that the transit of goods does not 
violate Articles 8 and 9 of the Transit Treaty, which embody restrictions applied in India in the spirit 
of Articles XX and XXI of GATT 1994 (general and security exceptions).  The Department of 
Commerce issues the licenses in accord ance with the following procedures.  The licensing system is 
not intended to restrict either the quantity or the valu e of imported goods.  It is simply intended to protect 
public health, consumer and environment welfare and na tional security.  Alternative methods in the form 
of the requirement to present to the competent authorities the letters of credit have been introduced in 
order to obtain the necessary information and simpli fy the procedures.  Import licensing was authorized 
and maintained under Export Import  (Control) Act, 1957, Export - Import Rules, 1978,  Customs Act, 
1962, Customs Regulation, 1969, Annual Finance Act based on annual Budget Speech of Finance Minister, and the order made by the Ministry of Commerce pursuant to the Export and Import (Control) 
Act, 1957 and Rules, 1978.  Import licensing was stat utorily required.  The desi gnation of products to be 
licensed and the licensing of produc ts to be imported was not left to administrative discretion.  The 
government may abolish the system of licensing only by statutory action.  At  present, the automatic 
licensing system had been relaxed and the submissi on of application for ob taining a licenses was not 
required.  However, the letters of credit opened for imports and exports must be presented at the customs 
office during the time of export and import.   
46. For the restricted import products an import lic ence is required.  The Export Import (Control) 
Act, 1957 gives the right to the government to introduce import controls in the case of BOP problems and 
in specific cases of governmental assistance to economic development.  The government may specify 
whether to apply them by value or quantity.  Ther e is no requirement as to how far in advance an 
application for a licence must be made.  A licence can be obtained within a shorter time limit or for goods arriving at the port without a licence, if all documents are in order.  A licence can be granted immediately 
upon request, if all documents are in order.  There are no limitations as to the period of the year during 
which applications for licenses and/or importation can be made.  Import licenses are, in most cases, 
issued by a single administrative organ which is the Department of Commerce.  Applications for licenses are submitted to the DOC.  Application may also be reviewed by experts of another agency in certain cases involving goods where assessmen t of conformity with standard s and technical regulations is 
required.  In this case, the Department of Commerce coordinates with the agencies concerned.  There are 
no circumstances under which an application for a lice nce may be refused other than for failure to meet  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 21 
 
 
 the basic requirements.  When a licence is refused the applicant is advised of the reasons.  He may appeal 
to the Ministry of Industry, Commer ce and Supplies, within 35 days of the notice issued to him of such 
refusal.  The applicant should clearly mention in hi s complaint his name and ad dress, subject-matter to 
complaint, claims and reasons of cl aims.  He must submit copies of all the relevant documents along with 
the complaint for evidence and a copy of the complaint should also be sent to the licensing authority.   
47. The representative of Nepal said that the following products are subject to import licensing: 
Table 2:  Products Subject to Import Licensing  
HS Number Description Justifying Provision of WTO 
85.28 All types of radio communication system with the 
frequency range of 30 Khz to 300 Khz. Article XXI of GATT 1994 
85.28 Radio transmitter and transceiver  
85.29 Television transmitter, FM radio transmitter  
85.25 Wireless transceiver  
85.25 Walkie talkies  
85.17 Cordless telephone  
85.29 Video sender  
85.28 Amateur radio  
85.17 Inmarsat terminal (portable satellite hand set)  
85.17 Satellite communications 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/transceiver  
85.17 Radio determination transceiver, receivers  
93.05 Materials used in the production of arms and 
ammunition.  
93.01-93.04 Guns and cartridges  
93.06 Caps without paper  
93.07 Arms and ammunition and other explosives   
Chapter 71 Valuable metals and precious stones  
 
48. The representative of Nepal said that Nepal w ould enact legal instruments codifying the 
substance of the WTO Agreement on Import Licen sing Procedures and to bring its licensing 
provisions for valuable metals and precious stones in to conformity with WTO by applying automatic 
licensing.  Provisions relating to gold and silver  would be administered in conformity with 
Article XX(c) of GATT 1994.  As stated in the Legi slative Action Plan reproduced in Annex II of this 
Report, amendments to the Export Import (Control)  Act, 1957 (Amendment) and to the Export Import 
(Control) Regulations, 1978 (Amendments) had alread y been prepared, or would be prepared by the 
Department of Commerce in Augus t 2003, and would be submitted by the Ministry of Industry, WT/ACC/SPEC/NPL/5/Rev.2 
Page 22  
 
 Commerce and Supplies to the Council of Ministers by September and October 2003, respectively.  It is 
expected that endorsement and adoption by the Council of Ministers of the amendments to the Act and 
the Regulations would be a pproved in December 2003.   
49. The representative of Nepal confirmed that, from  the date of accession,  Nepal would eliminate 
and would not introduce, re-introduce or apply quant itative restrictions on imports or other non-tariff 
measures such as licensing, quotas, bans, permits , prior authorization requirements, licensing 
requirements, and other restrictions having equiva lent effect, that cannot be justified under the 
provisions of the WTO Agreement.  If balance-o f-payments measures were necessary, Nepal would 
impose them in a manner consistent with the rele vant WTO provisions, including Article XII and 
Article XVIII of the GATT and the Understanding on Balance-of-Payments Provisions of the GATT 
1994.  He further confirmed that the legal authorit y of the His Majesty's Government of Nepal to 
suspend imports and exports or to apply licensing requi rements that could be used to suspend, ban, or 
otherwise restrict the quantity of trade would be a pplied from the date of accession in conformity with 
the requirements of the WTO.  The Worki ng Party took note of these commitments. 
Customs Valuation 
 
50. The representative of Nepal said that in accordan ce with the Customs Act, as amended in 
1997, the customs value of the imported goods was as sessed on the basis of the invoice price shown in 
the invoice document provided by the importer.  If the customs had reasonable doubt that the invoice price did not correspond to the price actually paid  for the goods, that is the transaction value, the 
customs would refer to the value of similar, or  identical goods imported into Nepal.  If this 
information was not available, the customs would refe r to the international prices, local market price, 
suggested price lists of manufacturers, recorded pr ices of previous imports of identical or similar 
goods, a list of reference prices and other available information.  The Customs was not applying the 
provisions of Articles 5 and 6 of the Agreemen t on Implementation of Article VII of GATT 1994 
regarding imputed or computed valuation.  There we re no provisions in the current legislation to the 
case when the buyer and seller are related and how th e customs should act in those cases.  There were 
no minimum prices in effect.  Due to the need to ensure revenue protection and trade facilitation, a 
reference price list was still used for comparison purposes with the invoice price with respect to 
sensitive products.  Nepal was examining the modifi cations that would have to be introduced in 
current legislation and practices to fully implement the WTO Custom Valuation Agreement.  To attain 
this objective it would be necessary to train pers onnel, to prepare implementation measures and to 
upgrade the institutional capabilities and material infr astructure of the Customs Administration.  The  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 23 
 
 
 timetable for complete implementation would depe nd on the progress that would be achieved on those 
issues.  Nepal would require technical assistance in this respect.   
51. The representative of Nepal recognized the fact th at custom valuation based on the value of 
local goods and on reference prices was contrary to the WTO Customs Valuation Agreement.  He 
confirmed that Nepal intended to adopt the valua tion methods of Articles 5 and 6 of the Agreement 
and to improve Nepalese legal provisions to implement a WTO c onsistent regime.  Nepal would 
incorporate the remaining provisions of the WTO Agreement on Customs Valuation into the Customs 
Act, 1962 and the Customs Regulation, 1969.  A timetable for the enactment of legislation that implements the WTO Agreement on Customs Valuati on in Nepal's legal regime was provided in the 
Legislative Action Plan circulated in documen t WT/ACC/NPL/10/Rev.1 and in the action plan 
circulated in document WT/ACC/NPL/15.  The Department of Customs had prepared the 
amendments to the Customs Act, 1962 (Amendm ent) and to the Customs Regulations, 1969 
(Amendment) which would be submitted by the Mini stry of Finance to the Council of Ministers by 
August 2003.  These amendments would be endor sed and adopted by the Council of Ministers by 
31 December 2003.  Having regard to the action plan, Nepal would implement the provisions of Articles 
7 and 10 of the Customs Va luation Agreement at the time of accessi on if the valuation of imported goods 
for customs purposes could be ascertained on the basis of the transaction value, the transaction value of identical goods or the transaction value of similar goods.   
52. In response to questions concerning the right to appeal referred to in Article 11 of the Customs 
Valuation Agreement, the representative of Nepal said  that in accordance with Section 37 of the Customs 
Act 1962, the importer had the right to appeal to  the Revenue Tribunal against the decisions of 
customs officials in respect of the determination of  customs value.  Nepal wa s currently preparing the 
establishment of an independent administrative tr ibunal to review the decisions of the customs 
authority regarding customs valuation.  It was foreseen that the decisions of the administrative 
tribunal would be subject to appeal to the Revenue Tribunal, which was a part of judicial system.  
Nepal believed that such institutional system w ould provide prompt review and correction of 
administrative actions relating to customs matters, in accordance with Article X:3(b) and (c) of GATT 
1994 and the Agreement on Customs Valuation.  He c onfirmed that in pursuance of the action plan 
contained in Table 3, the right to appeal to an i ndependent administrative tri bunal would be in effect 
on 31 December 2004.  The Working Party took note of this commitment. 
53. Some Members of the Working Party requested  that Nepal describe the surety bond system 
provided for in section 13.6 of the Customs Act 1962, provide a timetable for enacting the 
Interpretative Notes referred to in Article 14 of the Customs Valuation Agreement,  and clarify the WT/ACC/SPEC/NPL/5/Rev.2 
Page 24  
 
 manner of publication of customs issues including valuation referred to in Article 12 of the Customs 
Valuation Agreement.  One member also indicated that it did not appear that section 13.6 of the 
Customs Act, 1962 meets the requirements of Artic le 13 of the Agreement.  The representative of 
Nepal responded that The Financial Ordinance 2003 secti on 8 (3) has further elaborated the system of 
surety bond as provided in section 13.6 of the Customs Act, 1962.  The Ordinance provides that if the transaction value of the goods could not be ascertai ned and the importer wishes to clear up the goods 
beforehand, the Customs Officer may fix a provisio nal value for immediate clearance.  The importer 
will have the right to clear the goods after payi ng the duty on such provisional value by making a 
deposit in an earnest account.  The Ordinance had the force of law.  Concerning publication of 
legislation, regulations and administrative d ecisions on customs issues including valuation, 
amendments to the Customs Law and Customs Regulati ons will provide that they will be published in 
the Nepal Gazette or in the notification of the Cu stoms Department or may be available in the web-
site of the Customs Department.  The Interpretativ e Notes will be incorporated in law and regulation 
in accordance with Nepal's action plan for the im plementation of the Customs Valuation Agreement. 
54. The representative of Nepal requested that the Working Party grant a transitional period from 
the date of its accession to allow Nepal to obtain an d utilize technical assistance to assist in the full 
implementation of the obligations of the Agreem ent.  Full implementation of the Agreement on 
Customs Valuation would be carried out gradually and progressively and would be completed, at the 
latest prior to 1 January 2007, in accordance with the timetable contained in Table 3 below.  He 
confirmed that during the transition Nepal will not be required to observe the provisions of Article 
7:2(a) or (f), thereby allowing for the application of reference values and values based on local prices 
to be applied to imports for the purposes of customs valuation.  In addition, the provisions of Articles 
5, 6, 10, 11, 12 and 14 of the Agreement would be gradually adopted in accordance with Table 3.  If 
such a transitional period were granted, Nepal's deviations from the provisions of the Agreement 
would be strictly limited to these Articles, and all other provisions of the Agreement would be 
implemented for all imports. 
55. During this period, Nepal would ensure that its  regulations under current legislation in place 
and additional legislation implemented during the transition concerning customs valuation would be 
applied on a non-discriminatory MFN basis to all impor ts.  Any changes made in its laws, regulations 
and practice during the transition period would not r esult in a lesser degree of consistency with the 
provisions of the Agreement on Customs Valuati on than existed on the date of accession.  Nepal 
would participate in the work of the Committe e on Customs Valuation and would seek out all 
available technical assistance, including under Articl e 20:3 of the Agreement, to ensure that its 
capacity to fully implement the Agreement upon expi ration of the transition period is assured.  The  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 25 
 
 
 representative of Nepal presented an Action Plan setting out details of the steps that still remained to 
be taken in order to achieve  this objective and a timetable for each step (Table 3). 
56. The representative of Nepal stated that legislation on the valuation of imports for customs and 
taxation purposes conforming to the requirements of  the Agreement on Customs Valuation would be 
enacted by 1 July 2004.  Nepal would progressively implement the Agreement on Customs Valuation in accordance with the action plan in Table 3, and with the understanding that during this period the 
scope of implementation of other aspects of the Ag reement, as described in paragraphs 53 and 54 
would be applied by Nepal.  Fu ll implementation will start from 1 January 2007.  The Working Party 
took note of this commitment. 
Table 3:  Action Plan for Implementation of the Agreement on Customs Valuation
 
 
Action Implementation 
Date 
Current legal provisions provide the right of appeal of administrative decisions to the 
Revenue Tribunal (Article 11) 
 Sureties for the release of merchandise provided for in current Customs Act 1962 Article 
13.6 and the Financial Ordinance 2003   (Article 13) Completed  
Approval of amendments to the Customs Act and the Customs Regulations, enacting the 
legislative framework for the following measures:  
Gradual implementation of valuation hierarchy: 
--Transaction valuation (Article 1) --Transaction value of identical goods (Article 2) 
–Transaction value of similar goods (Article 3) 
--Enforcement of Prohibited forms of Valuatio n when transaction value or transaction 
value of identical or similar merchandise is app licable  (Article 7(b), (c), (d), (e) and (g)) 
 
Provision in legislation for the protection of confidential information (Article 10)  
Publication of relevant laws and regulations (Article 12)   
 Importer's right to an explanation in writing from the customs administration concerning 
the determination of customs value (Article 16) Prior to  
1 January 2004 
Amendments to current legislation to establish an independent administrative tribunal for right to appeal from administrative decisions (Article 11)  
Training of customs officials in the areas of  clearance, verification, audit and the method 
to combat valuation fraud  
Preparation Customs Valuation Manual  Prior to  
1 January 2005 
Provision in law and regulations of the Interpretative Notes (Article 14)  Prior to  
1 January 2007 WT/ACC/SPEC/NPL/5/Rev.2 
Page 26  
 
 Action Implementation 
Date 
Gradual implementation of valuation hierarchy:  further amendments to legislation to complete implementation: 
--Imputed value (Article 5) 
--Computed value (Article 6) --Enforcement of Prohibited forms of Valuation (Article  7(a) and 7(f) Prior to  
1 January 2007 
 
Full implementation of Agreement on Customs Valuation Prior to  
1 January 2007 
 
Application of Internal Taxes  
57. The representative of Nepal said that consiste nt with Article III of GATT 1994 domestically 
produced goods and imported goods were both subject  to the same taxes, namely value added tax 
(VAT)  and excise taxes.  The Local Self Gove rnance Act 1998 had abolished the local transit tax 
called octroi. 
VAT  
58.  The representative of Nepal said that in the fiscal year 1997/98, the VAT had replaced the 
sales tax and all the existing taxes on services, includi ng entertainment and hotel, and contract taxes.  
VAT had been introduced with the rate of 10 per cent for taxpayers registered in the VAT office and 
20 per cent for taxpayers who do not report to the VAT  office, in order to enhance tax collection and 
discourage tax avoidance.  At the time when th e Value Added Tax Act was enacted, every person 
(defined in the Act as any individual, firm, comp any, association, institution, partnership firm, 
cooperative, joint business, religious endowment, or  fund; or any Government body, any religious 
organisation, charitable trust or similar other bodies and branches or sub-branches there engaged, with 
or without profit, in taxable transactions) enga ged in any transaction is required to apply for 
registration in a prescribed form to the tax officer w ithin 90 days from the commencement of this Act.  
After the commencement of this Act, every person  desirous to be involved in any commercial 
transaction is required to register in the tax office  before beginning to engage  in such transactions.  
While evaluating the application, tax officers may ask the applicants for additional information and 
documents and it shall be the duty of an individual to submit such information/document within seven 
days to the concerned authority.  Upon the verificat ion of the application form, the tax authority shall 
issue the Registration Certificate to the concerned i ndividual within 30 days from the date of filing the 
application.  The Certificate should be displaye d in a conspicuous place at his principal place of 
transaction.  If there is more than one place of tran saction, he should display a copy of the registration 
certificate, attested by a tax officer, conspicuously  at each place.  It shall be the duty of every 
registered person to use the registration number for a ll transactions related to value added tax, excise  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 27 
 
 
 duty and to other transactions as prescribed.  Ex emption from registration was provided to small 
vendors whose commercial transaction value was less than NRs 2.0 million (approximately 
US$26,000 at current exchange rates) during the last twelve months.   
59. The representative of Nepal said that the Valu e Added Tax Act 1996 provided a number of 
goods and services exempted from the application of VAT.  In addition, VAT is applied to certain 
other goods and services at a zero rate.  Section 5 of the Act provides that these exemptions from 
VAT application are applied equally to imports a nd domestic products.  These exemptions and zero 
rates are listed in Annex III. 
60. In response to questions concerning the tax exem ptions in favour of cottage industries, the 
representative of Nepal said that cottage industri es having transactions less than the annual taxable 
transaction threshold level of 2 million NRs turnover established in the VAT regulations were exempt 
from VAT.  The Industrial Enterprises Act 1992 de fines 'Cottage Industry' as industries utilizing 
specific skills or local raw materials and resources,  and labour intensive an d related with national 
tradition, art culture such as handloom; pedal-l oom; semi-automatic loom; warping, dyeing and 
printing; tailoring (other than ready made garments ); knitting, hand knitted wool len mats and blankets 
(radi, pakhi ); woollen carpet; pasmina ; woollen garments; carpentry; wooden artistic product; cane 
and bamboo works; natural fibre products; hand made  paper and goods made up thereof; gold; filigree 
products including silver, brass, copper, precious and semi precious stones; ornaments; sculpture and 
pottery; honey, chauri , cardamom processing; clay or ceramic pottery; leather cutting and tanning; 
rural tanning and leather goods producing works; jute, sabai  grass, babio , choya , cotton thread 
products; artistic products made up of bones and horns; stone carving; ceramic fine arts; pauwa;  
boutique; incense stick ( dhup ); dolls and toys industries with the fixed assets of up to two hundred 
thousand rupees.   
Excise Tax  
61. The representative of Nepal said that the excise ta x was levied to the products specified in the 
Finance Act.  This tax did not apply to impor ted goods.  Imported goods were subject to the 
equalising duty levied at the rate of the excise ta x applicable to the products  listed in the Financial 
Act.  The objective of this measure was to provide the same treatment to domestically produced and 
imported goods.  The excise tax was applied to do mestic goods on the basis of ex-factory price.  
Imported goods were taxed on the basis of C.I.F pri ce.  Excise taxes as of July 2002 are listed in 
Annex IV. WT/ACC/SPEC/NPL/5/Rev.2 
Page 28  
 
 62. Noting that chhyang, beer, cider and other be verages were subject to tax differentials, a 
Member asked that Nepal explain whether chhyang was produced in Nepal for commercial sale, if 
chhyang was exported, if the excise tax on chhyang was collected at the time of production or at the 
point of sale, and whether chhyang was a fermented be verage like beer or wine, or a distilled beverage 
like whisky or vodka.  The representative of Nepal responded that chhyang was a fermented beverage 
like beer and its alcohol content depends on the manne r the diverse local tribal people ferment it.  At 
present, chyyang was neither produced for commerc ial sale nor was it exported.  In case it was 
produced for commercial sale, the excise tax w ould be collected at the time of production. 
63. The representative of Nepal confirmed that, from the date of accession, Nepal would apply its 
domestic taxes, including value-added and excise taxes, in a non-discriminatory manner consistent 
with Articles I and III of the GATT 1994.  For be verages classified as "chhyang", a fermented 
beverage similar to beer, Nepal would maintain an equal rate of excise duty for chhyang and beer 
from the date of accession.  The Working Party took note of these commitments. 
Rules of Origin
 
64. The representative of Nepal said that the appli cation for import requires the importer to state 
the country of origin of the goods to be imported.  Nepal was applying the rules of origin under the 
SAPTA agreement in order to establish whether pr eferences should be applied on imported goods.  In 
case of exports, document certifying the origin of g oods, export declaration form, invoice, letter of 
credit, packing list, visa for ready-made garmen ts for exports were required along with the 
application.  Members of the Federation of Nepa lese Chambers of Commerce and Industry were the 
only agencies authorized to issue a certificate of origin for certifying the export of Nepalese origin 
goods. 
65. In response to further questions, the representa tive of Nepal said that proof of origin was 
required for products originating in those countri es exporting to Nepal under preferential treatment.  
The certificate of origin issued by an authority d esignated by the Government of the exporting country 
and notified in accordance with the Certification Pr ocedure constituted the proof of origin.  Products 
wholly produced or obtained in the exporting country or products not wholly produced or obtained but processed in the exporting country were considered to originate in the exporting country.  Raw or 
mineral products extracted from its soil, its water or  sea beds, agricultural pr oducts harvested, animals 
born and raised and the products obtained from these animals, products obtained by hunting or 
fishing, products of sea fishing and other marine products taken from the high seas by its vessels and 
processed and/or made on board its factory ships, used articles collected and the recovery of raw 
materials, waste and scrap resulting from manufact uring operations and goods produced exclusively  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 29 
 
 
 from the above products were c onsidered products wholly produced or obtained in the exporting 
country.  Products worked on or processed as a result of which the total value of materials, parts or 
produce originating in other countries or of undetermin ed origin used, did not exceed 50 per cent of 
the f.o.b.  value of the products produced or obt ained, and the final process of manufacture was 
performed within the territory of  the exporting country, were elig ible for preferential concessions.  
Similarly, products covered by sectoral agreements  between member countries of regional groupings 
were also eligible for preferential treatment.  Nepa l only requires proof of origin to determine whether 
goods qualify for preferential treatment under the tr ade agreements to which it is a Party or by 
national legislation.  Nepal was ready to implement the WTO Agreement on Rules of Origin.   
66. The representative of Nepal confirmed that Nepa l would introduce a WTO-consistent regime 
with respect to rules of origin upon accession, inco rporating the provisions of the WTO Agreement on 
Rules of Origin.  Nepal would incorporate the provisions of the WTO Agreement on Rules of Origin 
into the Customs Act, 1962 and the Customs Regula tion, 1969.  A timetable for the enactment of 
legislation that implements the WTO Agreement on Rules of Origin in Nepal's legal regime was 
provided in the Legislative Action Plan circulated in document WT/ACC/NPL/10/Rev.1.  The 
Department of Customs had prepared the amendmen ts to the Customs Act, 1962 (Amendment) and to 
the Customs Regulations, 1969 (Amendment) which w ould be submitted by the Ministry of Finance 
to the Council of Ministers by August 2003.  It is expected that the Council of Ministers would endorse and adopt these amendments by 31 December  2003 and the provisions of the new law would 
come into force in 2004. 
67. The representative of Nepal confirmed that Ne pal, from the date of accession, would adopt 
the procedural protection covering the requirements of  Article 2(h) and Annex II, paragraph 3(d) of 
the WTO Agreement on Rules of Origin in its domes tic legislation and that for non-preferential and 
preferential rules of origin, respectively, the relevant Nepalese authorities would provide, upon 
request of an exporter, importer or any person with a justifiable cause, an assessment of the origin of 
the import and outline the terms under which it will be provided.  The Working Party took note of these commitments. 
Other customs formalities
 
68. The representative of Nepal confirmed that Nepal did not require any kind of certification of 
the customs documentation by consular officials.   WT/ACC/SPEC/NPL/5/Rev.2 
Page 30  
 
 Preshipment inspection
 
69. The representative of Nepal said that there was no sy stem of preshipment inspection in Nepal.   
70. The representative of Nepal confirmed that if in the future Nepal engaged the services of a 
preshipment inspection enterprise, Nepal would put into place a preshipme nt inspection system 
programme in conformity with the WTO Agreement on Preshipment Inspection and would ensure that 
preshipment inspection enterprises operating on its be half complied with the provisions of the WTO 
Agreements, including the Agreements on Custom s Valuation, Import Licensing Procedures, and 
Technical Barriers to Trade.  Provision would be made that decisions by such firms could be appealed by importers in the same way as administrative deci sions taken by the His Majesty's Government of 
the Kingdom of Nepal.  Any preshipment inspection regime would be temporary.  Nepal would also 
give due consideration to the recommendations of the Working Party on Pre-shipment Inspection of 
2 December 1997 and subsequent recommendations issued by that Working Party.  The Working 
Party took note of these commitments.   
Anti-dumping, countervailing duties and safeguard regimes
 
71. The representative of Nepal said that Nepal di d not have an antidum ping or countervailing 
duty regime at this time, but intended to introduce a WTO-consistent legal regime with respect to anti-
dumping and countervailing measures.  A timetable for the enactment of legislation to introduce an 
anti-dumping law that implements the WTO Agreem ent on Anti-Dumping in Nepal's legal regime 
was provided in the Legislative Action Plan circulated in document WT/ACC/NPL/10/Rev.1.  Draft 
legislation would be prepared in December 2003, th e endorsement by the Council of Ministers would 
take place in March 2004 and the expect ed approval date was July 2004.   
72. A timetable for the enactment of legislati on that implements the WTO Agreement on 
Subsidies and Countervailing Measures in Nepal's le gal regime was also provided in the Legislative 
Action Plan circulated in document WT/ACC/NPL/10/Re v.1.  A draft bill, policies and regulations to 
establish a countervailing duty regime would be prepar ed by the Department of Industry, submitted to 
the Ministry of Industry, Commerce and Supplies and were expected to be adopted by the Council of 
Ministers in May  2004.   
73. With reference to the safeguards regime and protection of the balance-of-payments, the 
representative of Nepal said his Government was author ised to restrict imports by issuing an order in 
accordance with 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 Central Bank who  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 31 
 
 
 would only use that authority in conformity with WTO provisions.  Currently, there were no 
quantitative restrictions on imports other than t hose banned for import or domestic production listed 
in paragraph 45 to 48 above.  The representative of  Nepal noted that it was the intent of his 
Government to introduce WTO-consistent legisl ation and amend the Export Import (Control) Act 
(1957) and Regulations (1978) in accordance with  the Legislative Action Plan contained in 
WT/ACC/NPL/10/Rev.1, authorizing trade restrictions  for trade remedies and for balance of payment 
purposes only in the cases specified in the WT O Agreements and in accordance with WTO 
provisions. 
74. The representative of Nepal confirmed that from the date of accession Nepal would only use 
the authority in Section 3 of Export Import (C ontrol) Act of 1957 in conformity with WTO 
provisions, including in compliance with GATT 1994 Article XVIII and the Understanding on the 
Balance of Payments Provisions  on the General Agreement on Ta riffs and Trade 1994.  Nepal 
planned to introduce WTO-consistent legislation and regulations on safeguard measures and other 
trade remedies as indicated in the Legisla tive Action Plan circulated in document 
WT/ACC/NPL/10/Rev.1.  He further confirmed that  Nepal would apply safeguard, anti-dumping, or 
countervailing duty measures only after notifying a nd implementing laws in conformity with the 
provisions of WTO Agreements on Safeguards, the Implementation of Article VI of the GATT, and 
on Subsidies and Countervailing Measures, and that  after accession Nepal would apply any such 
measures only in conformity with the relevant WTO provisions.  The Working Party took note of 
these commitments. 
Export regulation  
Registration requirements, customs tariffs, fees  and charges for services rendered, application 
of internal taxes to exports  
75. The representative of Nepal said that the same registration requirements and tariff 
nomenclature were used for imports and exports.  The import and export licensing regime had been 
introduced for statistical purposes.  Currently Nepa l levied export duties on the items listed below.  
The purposes of levying export duties are to discourag e environmental degradation, to ensure food 
security and to discourage trade diversion to neig hbouring countries.  The application for the export 
licence was submitted to the Direct or-General of the Department of Commerce under the prescribed 
form indicated in Schedule-2 of the Export Im port Regulation 1978.  The necessary documents and 
the information required were mentioned in the a pplication form.  The export licenses were granted 
for different purposes, e.g., for commercial purpose,  for purposes of private use for specimen purpose, 
for purposes of Government office use, for mainte nance purpose etc.  The commercial purpose export WT/ACC/SPEC/NPL/5/Rev.2 
Page 32  
 
 licence is granted only to registered entities.  The Authority issues the certificate of export licence, in 
accordance with the format prescr ibed in Schedule-4 of the E xport Import Regulation 1978.   
76. The purpose of the export duties on natural resources were aimed at preserving the 
environment and the country's afforestation resour ces.  The legal basis for the export duties was the 
Finance Act.  The export duties applied by Nepal are listed in Annex VI. 
77. The representative of Nepal said that Nepal levied an export service fee of 0.5 per cent ad 
valorem .  The export service charge is applied on the basis of f.o.b. price, to all exports from Nepal.  
Nepal has not considered reducing further the ser vice charge.  An important reduction has already 
been implemented from 2 per cent to the current 0.5 per cent.  The current level of the service charge 
did not represent a tax on export for fiscal purposes.  Nepal was examining the cost of the services 
rendered by the administration with respect to exports and imports and would revise the export 
charge, along with the import licensing fee, to brin g them into conformity with the requirements of 
Article VIII of GATT 1994.   
78. The representative of Nepal said that from the date of accession Nepal would charge an 
export service fee representing the approximate cost of the services rendered, and would apply this 
and other fees and charges for services rendered to  exports in accordance with WTO Agreements, in 
particular with Article VIII of the GATT 1994.  In  this regard, the current charge of 0.5 per cent 
would be at a flat rate expressed in NRs to ensure  that it did not exceed the approximate cost of the 
export services fee.  The Working Party took note of these commitments. 
Quantitative export restrictions, including prohibitions, quotas and licensing systems 
 
79. Some Members of the Working Party noted th at Nepal banned from exportation the following 
products: Raw hides and skin (including dry salted);  Raw wool; All imported raw materials, parts and 
capital goods; Mamira; and Logs and timber.  In th eir view, the ban on the export of raw hides and 
skins, raw wool, and logs and timber could not be  justified under Articles XI(a) and XX(g) of the 
GATT 1994, unless the export restrictions were made effective in conjunction with restrictions on 
domestic production or consumption,  or action was taken to prevent or relieve critical shortages of 
foodstuffs or other products essential to Nepal.  The ban on the export of imported raw materials, 
parts and capital goods appeared to be inconsistent  with Article III and XI of GATT 1994 and should 
be eliminated.  The representative of Nepal said that  logs, timber and mamira obtained from naturally 
grown plants were exhaustible natural resources and it was Nepal's responsibility as a signatory of 
various Multilateral Environmental Conventions, to preserve and protect natural resources.  Thus, 
there were also restrictions for domestic consumpti on and for authorized uses.  Nepal would consider  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 33 
 
 
 lifting the ban or restriction on the export of these pr oducts which were planted (not natural resources) 
and grown for commercial purposes.  The export rest rictions on raw hides and skins and raw wool, 
had been temporarily applied and Nepa l intended to lift this export rest riction at an appropriate time.  
Nepal had banned the export of imported raw materi als, parts and capital goods due to the possibility 
of trade deflection.  These measures would be re viewed in the light of Article III and XI of 
GATT 1994. 
80. The representative of Nepal said that as a party to the Convention on International Trade in 
Endangered Species of Flora and Fauna (CITES), Ne pal honoured the obligations stemming from the 
said Convention.  The Forest Act, 1992 did not award any export licence for the products prohibited by the Convention.  The list of protected wild anim als and forest based produc ts banned for exports as 
of July 2001 is as follows: 
Table 4:  List of Protected Wild Animals and Forest-based Products
 
Wild Animal 
HS Code Scientific Name English Name 
01.06 Macaca assamensis Assamese monkey 
01.06 Manis pentadactyla Indian pangolin 
01.06 Caprolagus hispidus Hispid hare 
01.06 Canis lupus Wolf 
01.06 Usrus arctos Himalayan bear 
01.06 Ailurus fulgens Red panda 
01.06 Prionodon pardicolor Spotted linsang 
01.06 Felis bengalensia Leopard cat 
01.06 Felis lynx Lynx 
01.06 Neofelis nebulosa Clouded leopard 
01.06 Panthera tigris Tiger 
01.06 Panthere uncia Snow leopard 
01.06 Elephas maximus Asiatic elephant 
01.06 Rhiniceros unicornis Rhinoceros 
01.06 Sus salvanius Pygmi hog 
01.06 Moschus moschiferos Musk deer 
01.06 Cervus duvauceli Swamp deer 
01.06 Bos gaurus Gaur 
01.06 Bos grunniens Wild yak 
01.06 Bubalus bubalis  Wild buffalo 
01.06 Ovis ammon Great Tibetan sheep 
01.06 Pantholops hodgsoni Tibetan antelope 
01.06 Antilope cervicapra Black buck 
01.06 Tetraceros quadricornis For horned antelope 
01.06 Hyaena hyaena Striped hynae 
01.06 Platanista gangetica Gangetic dolphin 
 WT/ACC/SPEC/NPL/5/Rev.2 
Page 34  
 
 HS Code Forest Based Products, Restricted for Exports 
12.11 Cordyceps sinensis 
12.11 Orchis incanata  
12.11 Nardostachys grandiflora 
12.11 Rauwolfia serpentine 
12.11 Cinnamum glaucescens 
12.11 Valeriana jatamansi 
12.11 Lichen spp 
12.11 Rock exudete (Silazit) 
12.11 Abis spectabilis 
12.11 Taxus baccata 
12.11 Michelia chanpaca 
12.11 Acacia ctechu 
12.11 Shorea robusta 
 
81. With reference to the export of handicrafts, the representative of Nepal said that there were no 
fixed valuation prices for handicrafts, or an expor t minimum price list.  The exporter submits its 
export prices to the Handicrafts Association, who ev aluates the proposed prices on the basis of certain 
criteria, to recommend the exporter an export price.   Criteria used by the Handicrafts Association 
were: Measurement - height and weight; Cost of materials incorporated: domestic and from third 
country;  Cost of labour incorporated in the products ; and the Quality of the product.  The Handicrafts 
Association is a private entity, with no Government al intervention.  It evaluates export prices as a 
service to producers to avoid them under-pricing their products for export.  For the export of 
handicrafts made from the parts of domestic animals, the exporters must present the exporters declaration form, the invoice and a sample of the goods  to be exported to the Handicrafts Association.  
The Association issues a No Objection Letter if they are made from parts of domestic animals.  The 
service fee charged by the Association for this purpose is:  NRs 50 for FOB value less than NRs 
10,000; and NRs 100 for FOB value NRs 10,000 and above.  The Association reviews the price 
according to the criteria described above, and if it is  approved the certificate is issued.  In the case of 
archaeological goods the exporter has to produce th e approval certificate from  the Department of 
Archaeology.  The service fee charged by the Handicrafts  Association is 0.5 per cent of f.o.b.  price of 
exported goods.   
82. The representative of Nepal said that as stated in the Legislative Action Plan circulated in 
document WT/ACC/NPL/10/Rev.1 the Export Import  (Control) Act, 1957 (Amendment) and the 
Export Import (Control) Regulation 1978 (Amendments ) would be amended.  Amendments to bring 
any export licensing requirements or other export c ontrol requirements into conformity with WTO 
provisions had already been prepared, or would be prepared by the Department of Commerce in 
August 2003, and would be submitted by the Minist ry of Industry, Commerce and Supplies to the 
Council of Ministers in September and October 2003, respectively.  Nepal would review and identify  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 35 
 
 
 provisions inconsistent with the WTO, and the expo rt/import legislation would be amended to bring it 
into conformity with the relevant WTO provisi ons.  Endorsement and adoption by the Council of 
Ministers of the amendments to the Act and the Regulations would be approved by 
31 December 2003.     
83. The representative of Nepal confirmed that from the date of accession, Nepal would apply its 
export licensing requirements and other export co ntrol requirements in conformity with WTO 
provisions, including those contained in Articles XI, XVII, XX and XXI of the GATT 1994.  The 
Working Party took note of these commitments. 
Export financing, subsidy and promotion policies  
84. The representative of Nepal said that in order to provide a macro-environment conducive for 
export promotion, the Government had formulated  trade policy, export policy, foreign exchange 
policy and domestic trade policy.  A Commercial Counc il with majority participation of the private 
sector had been formed to coordinate activities of  all agencies involved in the export activities.  
Foreign exchange for the purpose of current account tr ansactions of the balance of payments had been 
made convertible.  Income from exports had been  exempted for income tax purposes.  The duty 
drawback system for the import of raw material s for exportable commodities had been made more 
effective.  Other export promotion activities such as participation on internatio nal trade fairs, product 
development, product diversification and quality im provement of exportable commodities have been 
encouraged.  The Government had undertaken or planned to undertake export promotion activities for 
the following commodities: Agricu ltural Commodities such as lentils , Niger seeds, tea and coffee, 
ginger, cardamom, vegetable seeds, flower, silk a nd silk products, medicina l herbs, fruits etc.; 
Industrial Goods such as woollen carpets, readymad e garments, leather and leather products, cotton 
products, woollen sweaters, woollen mufflers etc.; Traditional Handicraft Products etc.; Products of 
Cottage and Small Industries and Other Products such as computer software.  The Trade Promotion 
Centre, established in 1971, had been working as the Secretariat of the Nepal Trade Promotion Board, 
constituted under an order of the Development Boar d Act 2013.  The primary objective of the Centre 
was to promote Nepal's export trade in particular a nd foreign trade in general.  In 1995 amendments 
were made to the Nepal Trade Promotion Board (F ormation Order) and the scope of the activities of 
the Centre was extended to import management.  The Board was chaired by the Secretary of the 
Ministry of Industry, Commerce and Supplies and included representation of the Ministries of Industry, Commerce and Supplies, Finance, business associations and communities.   WT/ACC/SPEC/NPL/5/Rev.2 
Page 36  
 
 Internal Policy Affecting Foreign Trade in Goods
 
Industrial policy, including subsidy policies  
85. The representative of Nepal said that Nepal did not provide direct payment of incentives to 
any industry.  There were certain exemptions in terms of income tax, sales tax, excise duty and 
customs duties to the industries qualifying under th e conditions stated in Industrial Enterprise Act 
1992.  The purpose of the incentives was to ensure balanced industr ial development both regionally 
and sector-wise.  Nepal had not compiled data on the revenue exempted by such incentives and on the 
identification of recipients.  The following provisions governed the incentives provided:  
(a) cottage industries are exempted from sales tax, excise duty and income tax; 
(b) income tax in excess of twenty per cent is  not levied on the income derived from any 
industries except industries utilizing tobacco as their basic raw material, and alcohol or beer producing industries; 
(c) except for industries utilizing tobacco as their basic raw material, alcohol or beer 
producing industries and saw-m ill and catechu industries, any industry using 80 or 
more than 80 per cent of indigenous raw mate rial in its products and supplying all its 
manpower from among Nepalese citizens are en titled to obtain a rebate at the rate of 
10 per cent of the income tax; 
(d) any national priority industry which constr ucts and operates road, bridge, tunnel, rope 
way, flying bridge, and manufactures and operates trolley buses and trams are entitled 
to a rebate of 50 per cent of the income tax on their income for ten years from the 
date of operation.  Other national priority industries such as agro and forest-based industries, engineering industry (producing agricultural and industrial machinery), industry manufacturing fuel saving or pollution control devices, solid waste processing industry, hospital and nursing home (only outside the Kathmandu valley), industries producing ayurvedic, homeopa thic and other traditional medicine, 
industries producing crutch, seat belt, wheel chair stretcher and stick and so on to be 
used in aid of the disabled and orthopaedic, cold storage installed for the storage of 
fruits and vegetables, are entitled to get a re bate of 50 per cent of the income tax on 
their income for seven years from the date of operation; 
(e) any industries except industries utilizing tobacco as their basic raw material, and 
alcohol or beer producing industries established in remote, undeveloped and 
underdeveloped areas are entitled to get a re bate of 30, 25, and 20 per cent of the 
income tax respectively and 35, 25 and 15 pe r cent of the excise duty respectively for 
a period of ten years from the date of operation; 
(f) Fruit-based fruit processing and cider and wine industries with fixed assets up to 
NRs2.5 million, established in particular ar eas, are entitled to an excise duty and sales 
tax exemption for a period of ten years, and fruit based alcohol are entitled to excise duty and sales tax exemption for a period of five years.  Such exemption could be extended for additional period of three years; 
(g) if an industry diversifies itself throu gh reinvestment, in the same or any other 
industry, and expands its installed capacity by 25 per cent or more, modernizes its 
technology or develops ancillary industries,  it is entitled to a deduction of 40 per cent 
of new additional fixed assets from its taxable income;  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 37 
 
 
 (h) any industry investing in process or equi pment, which has the objective of controlling 
pollution or which may have a minimum effect on the environment is entitled to reductions of up to 50 per cent from the taxable income for such investment; 
(i) any industry is entitled to deduct 10 pe r cent of the gross profit from the taxable 
income on account of expenses related to technology, product development and 
efficiency improvement; 
(j) no income tax is imposed on dividends earned out of the investment made in any 
industry; 
(k) up to 5 per cent of gross income spent for the advertisement of the products or 
promotion services, hospitality and any othe r similar expenses is allowed to be 
deducted while assessing the taxable income; 
(l) If an industry provides direct employment to 6 hundred or more than 6 hundred 
Nepalese citizens round the year, an additional income tax rebate at the rate of 10 per 
cent for that year is granted in addition to other facilities; 
(m) If any industry utilizes locally available raw materials, chemicals and packing 
materials etc.  on which excise duty or sales tax or both are already imposed, the 
excise duty, sales tax or both shall be re imbursed to the industry utilizing such raw 
materials, chemicals and packing materials; 
(n) No income tax is levied on the profits earned through export; (o) An industry is entitled, for the purpose of the income tax, to deduct the amount of 
expenses incurred by it for the long-term benefit provided its workers and employees 
including housing, life insurance, health  facilities, education and training.   
(p) Subsidies in seeds, plants, irrigati on pipes and pumping were provided by the 
respective line agencies.  Th ese subsidies, though small in quantity, were provided 
directly to the producer-farmers who use th ese products as inputs.  Only farmers were 
eligible for these subsidies. 
86. Some Members of the Working Party said that they considered that the exemption from 
incomes taxes for profits earned through export, sale s and excise tax exemptions for use of local raw 
materials, as well as the rebate of 10 per cent of the income tax for industries using eighty per cent or more local raw materials in their output were pr ohibited subsidies under Article 3 of the Subsidies 
Agreement.  In their view this subsidy should be  eliminated and notified under Article 25.  The 
representative of Nepal said that as a least devel oped country, Nepal should benefit from the special 
and differential treatment provided in Article 27 of  the Agreement on Subsidies.  The representative 
of Nepal said that the Income Tax Act, 2000 had e liminated a number of rebates previously given by 
related legislation.  For example, it had delete d the following provisions on income tax related 
facilities and concessions as provided for in the Industrial Enterprises Act, 1992. 
(a) Exemption of income tax in excess of 20 per cent on the income derived from any 
industries other than the ones producing cigarettes, bidis, cigars, chewing tobacco, 
and industries producing other goods of a si milar nature utilizing as their basic raw 
materials and alcohol or beer producing industries, 
(b) Exemption of a rebate at a rate of 10 pe r cent of the income tax for any industry using 
80 or more than 80 per cent of indigenous ra w materials in its products and supplying 
all its manpower from among Nepalese citizen s, except for cigarette, bidi, cigar, 
chewing tobacco, khaini industries and indus tries producing other goods of a similar 
nature utilizing tobacco as their basic raw ma terial and industries providing alcohol or 
beer, and saw mill and catechu industries. WT/ACC/SPEC/NPL/5/Rev.2 
Page 38  
 
 (c) A rebate of 50 per cent of the income ta x of income earned by any national priority 
industry, which constructs and operates ro ads, bridges, tunnels, rope ways, flying 
bridges, etc. for a period of ten years from the date of operation. 
(d) Entitlement of an industry that diversifi es itself through reinvestment in the same or 
expending its installed capacity by 25 per cent or more, modernizes its technology or 
develops ancillary industries to a deduc tion of 40 per cent of new additional fixed 
assets from its taxable income. 
(e) Permission to capitalise pre-operation costs incurred by any industry in connection 
with skill development training. 
(f) Permission to deduct up to five per cent of  gross income spent for the advertisement 
of the products or promotion services, hosp itality and other similar expenses, while 
assessing taxable income. 
It had also repealed the provision contained in the Foreign Investment and Technology Transfer Act 
(FITA), 1992 under which a foreign investor shall be levied income tax at the rate of 15 per cent only, on the income earned from a foreign technical as well as management service fee and royalty. 
87. The representative of Nepal said that as stated in the Legislative Action Plan reproduced in 
Annex II of this Report, the Industrial Enterpri ses Act, 1992 (Amendment), the Industrial Enterprises 
Regulations and the Industrial Policy 1992 (Amend ment) would be amended to bring them into 
conformity with the WTO Agreements on Subs idies and Countervailing Measures and on Trade 
Related Investment Measures.  Amendments had alr eady been prepared, or would be prepared by the 
Department of Industry in June  and August 2003 and March 2004.  These amendments would be 
submitted by the Ministry of Industry, Commerce and Supplies to the Council of Ministers in December 2003 and May 2004, respectively.  Nepal would identify subsidy measures incompatible 
with the WTO and these would be eliminated.  En dorsement and adoption by the Council of Ministers 
of the amendments to the Acts and the Regulations  would be approved in February and May 2004.  
The Working Party took note  of these commitments.   
88. The representative of Nepal confirmed that Nepa l would administer its subsidy programmes, 
including those provided for in the Industrial Enterprise Act 1992, in full conformity with the WTO 
Agreement on Subsidies and Countervailing Measu res, including Article 27.2.  All necessary 
information on such programmes would be notified to the Committee on Subsidies and 
Countervailing Measures in accordance with Article 25 of the Agreement upon entry into force of 
Nepal's Protocol of Accession.  The Work ing Party took note of these commitments. 
Technical Regulations and Standards
 
89. The representative of Nepal submitted the Check List  of Illustrative TBT Issues circulated in 
document WT/ACC/NPL/5 and the following laws, "N epal Standards (Certification Mark) Act, 1980" 
and "Standard Weights and Measures Act, 1968".  These laws set a transparent system with the  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 39 
 
 
 intervention of laboratories to carry out tests, provision for judicial review and compliance with the 
most favoured nation and national treatment obligations.   
90. He said that the authority to determine sta ndards in relation to any goods, process or services 
was the Nepal Council of Standards (NCS).  The Council was a government body chaired by Minister for Industry, Commerce and Supplies and the me mbers include, among others, the president of 
Federation of Nepalese Chambers of Commerce,  and representatives from Tribhuvan University.  A 
Technical Committee under the NCS sets standards based on internationally defined parameters, 
national data and national requireme nts, among others.  The particip ation in the Technical Committee 
currently included representatives of the concerned Ministries and Governmental agencies, the private 
sector through the Federation of Nepalese Chambers  of Commerce and Industry (FNCCI), Consumers 
Forum and the universities.  The Council can  invite specialists to its meetings. 
91. The Nepal Bureau of Standards and Metrology (NBSM) prepared preliminary drafts of the 
standards or technical regulations which were th en submitted to the Technical Committee for review 
and amendment, if necessary.  The NBSM elaborates all standards and technical regulations, except for health and food products and oversees all manda tory certification activities.  The Ministry of 
Health through its Department of Drug Administra tion, and the Ministry of Agriculture through the 
Department of Food Technology and Quality Control,  are responsible for the formulation of standards 
and technical regulations based on international sta ndards, when available, to guarantee the protection 
of health and food products, respectively.  Fore ign organizations do not currently participate in 
mandatory certification activities. 
92. The Decisions of the Technical Committee were circulated to concerned agencies to provide 
comments within 30 days.  With the agencies re commendations or suggestions a final draft is 
produced by the NBSM.  The final draft is sent to  the National Council for Standards, who review it 
and, if necessary, introduce amendments and then  the Council approves it.  Once approved, the 
standards or technical regulations are sent for pub lication and implementation.  Technical regulations 
are published in the Nepal Gazette.  Standards are published in booklet form.  Once standards were 
set, the government may make them mandatory tech nical regulations upon the recommendation of the 
ministry concerned e.g.  Ministry of Agriculture, Ministry of Health, Ministry of Environment, and 
the consumers association.  Such recommendations were currently made without seeking additional 
advice through the Technical Committee.  There wa s a very limited number of technical regulations 
that applied basically to raw wool, cement, iron ba rs, mineral water, CGI Sheets, Dry Cell Battery, GI 
Wire and LPG cylinders.  In the case of wool, it was necessary to guarantee the quality of Nepalese 
carpet exports; in other cases the considerations rela ted to consumer safety.  The importation of plant WT/ACC/SPEC/NPL/5/Rev.2 
Page 40  
 
 and plant products had to meet the standards laid down by the Division of the Plant Protection of the 
Department of Agriculture.  The Division examined  samples of the non-food item before a permit is 
issued by the customs for import.  Nepal wa s a Corresponding Member of ISO and followed the 
standards prescribed by ISO.  In elaborating Na tional Standards, the NBSM follows international 
standards.  National standards are based on ISO stan dards, standards of the British Standard Institute, 
of the International Electrical Committee, on the In dian Standards, and if required on CODEX and 
ESTM Standards. 
93. The representative of Nepal said that currently t echnical regulations applied only to iron bar, 
cement, mineral water, wool, CGI Sheets, Dry Cell Batteries, GI Wire, and LPG cylinders, Nepal did 
not currently accept as equivalent, certificates from third country certification bodies.  With regard to standards, 596 product and testing methods had been  approved to date.  Another 200 were in the 
process of drafting.  Most Nepalese National Standa rds are based on international standards.  If there 
are no international standards then the NBSM will  elaborate the national standard according to the 
country's requirements.  The ratio of standards b ased on international standards is 90 per cent.   
94. With reference to the quality certification system, the representative of Nepal said that the 
National Certification Mark (NCM) currently in u se consists of the authorization granted by the 
NBSM, upon request to any company producing goods for which technical regulations and standards 
exist in Nepal, to use a distinc tive sign in their products which means that the product complies with 
the required regulations or standards.   In order to grant authorization to use the distinctive mark in any 
product, the NBSM conducts inspections, testing, and sets other requirements such as to have in-
house laboratories, necessary skill manpower and qua lity manuals, that the producer has to fulfil in 
order to receive the authorization.  After author ization has been given, the NBSM undertakes frequent 
inspections and testing in the industries and in th e market.  To date quality certification marks have 
been approved for 111 companies, covering 32 products.  The products and number of companies that 
have received approval are listed in Annex V of this report. 
95. The representative of Nepal recognized that am endments would have to be made to the 
standards regime including the Nepal Standards (Certification Mark) Act 1980 and the Regulations 
1982 (Amendment) to bring them into full compliance with the WTO Agreement on Technical 
Barriers to Trade.  Nepal also intended to review its technical regulations in light of WTO provisions, 
and was seeking technical assistance to help with this work.  As a first step, in June 2003 the Ministry 
of Industry, Commerce and Supplies established an enquiry point in the Nepal Bureau of Standards and Metrology.  A timetable for the enactment of legislation that implements the WTO Agreement on 
Technical Barriers to Trade in Nepal's legal regi me was provided in the Legislative Action Plan  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 41 
 
 
 circulated in document WT/ACC/NPL/10/Rev.1 and in the action plan circulated in document 
WT/ACC/NPL/13.  Amendments would be prepared in June 2004 and September 2005 and would be 
submitted to the Council of Ministers.  These ame ndments would be endorsed and adopted by the 
Council of Ministers by 31 January and 31 December  2005.  Having regard to the action plan, Nepal 
would implement fully the provisions of the Agre ement on Technical Barriers to Trade, including 
compliance with the Code of Good Practice, by 31 December 2006.  
96. In light of these plans, the representative of Ne pal requested that the Working Party grant a 
transitional period from the date of its accession un til 1 January 2007 for implementation of the WTO 
Agreement on Technical Barriers to Trade, to allow Nepal to obtain and utilise technical assistance to 
fully implement the obligations of the Agreement.  During this period, an enquiry point would be 
brought into operation at an early stage and Ne pal would provide nationa l non-discriminatory and 
MFN treatment to all imports in the application of technical regulations, standards and conformity 
assessment procedures.  Measures in place already c onsistent with the provisions of the Agreement 
would not be subject to transitions, and Nepal wo uld ensure that any changes made in its laws, 
regulations and practice during the transition period would not result in a lesser degree of consistency 
with the provisions of the Agreement than existe d on the date of accession.  Existing technical 
regulations would be notified to the Committee on Technical Barriers to Trade and reviewed for 
conformity to WTO requirements.  Any standards,  technical regulations, and conformity assessment 
procedures adopted during this period would be deve loped in conformity with the provisions of the 
Agreement.  Nepal would fully participate in th e work of the Committee on Technical Barriers to 
Trade.  He added that Nepal would seek out all av ailable technical assistance including under Article 
11 of the TBT Agreement to ensure that its capacity to fully implement the Agreement upon 
expiration of the transition period is assured.  In response to requests from delegations for more 
specificity, the representative of Nepal presented an  Action Plan setting out details of the steps Nepal 
would take in order to achieve this objectiv e and a timetable for each step (Table 5). 
Table 5:  Action Plan for Implementation of the  
Agreement on Technical Barriers to Trade  
Action Implementation 
Date 
Establishment and operation of a single Contact Point for Information (“enquiry point”)  Nepal Bureau of Standards and Metrology (NBSM)  
 P O Box 985 
 Balaju  Kathmandu, Kingdom of Nepal 
 Tel./Fax: +977 1 435 0689 
 Email  nbsm@nbsm.gov.np Prior to  
1 January 2004 WT/ACC/SPEC/NPL/5/Rev.2 
Page 42  
 
 Action Implementation 
Date 
Identification  --of the authority responsible for notifications and publications and other internal procedures to ensure transpar ency obligations are met on an ongoing basis (e.g., the Nepal 
Bureau of Standards and Metrology (NBSM)  
--of the publication or website where notices of standards, technical regulations and 
conformity assessment procedures will appear Prior to  
1 July 2004 
Strengthening of documentation and networking system and training of personnel involved on TBT notification and publications  
Approval of Amendments to Nepal Standards Act 
 Initiation of prior publication for comment of all technical regulations, standards, and 
conformity assessment procedures in the identified journal or website Prior to  
1 July 2005 
Approval of Amendment of Nepal Standards Regulations 
 
Establishment of procedures for the development and application of technical regulations 
in conformity with WTO and compliance with  Code of Good Conduct for establishment 
of standards  
Submission of Statement on Implementation (G/TBT/1) Prior to  
1 January 2006 
Upgrading existing testing and calibration facilities 
 
Completion of review and adjustment of technical regulations and procedures in 
accordance with WTO requirements  
Establishment of scheme of regist ration and certification of products 
 
Establishment of  
 --a system of nondiscriminat ory procedures for the recognition of conformity assessment; 
and 
 --a system for mutual recogniti on or accreditation (Articles 5 and 6) 
 Full implementation of the WTO Agreem ent on Technical Barriers to Trade Prior to  
1 January 2007 
 
97. The representative of Nepal confirmed that Nepal would progressively implement the 
Agreement on Technical Barriers to Trade in accordan ce with the Action Plan in Table 5 and with the 
understanding that during this period the scope of implementation of other aspects of the Agreement, 
as described in paragraph 96 would be applied by Ne pal.  Nepal would implement fully the provisions 
of the Agreement on Technical Barriers to Trade,  including compliance with the Code of Good 
Practice by 1 January 2007.  The Working Party took note of these commitments. 
Sanitary and Phytosanitary Measures  
98. The representative of Nepal said that the export and import of plant and plant materials such 
as seeds, saplings, and seedlings was subject to ph ytosanitary measures at the border checkpoints and  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 43 
 
 
 at the Tribhuvan International Airport, Kathmandu in accordance with the Plant Protection Act, 1972 
and Plant Protection Rules, 1974.  These products were examined for the possible presence of any 
obnoxious or restricted pathogens, pests, and weed se eds on the basis of the items listed in the act and 
rules which are periodically updated following the recommendations of the Regional and International 
Plant Protection conventions and the findings of natio nal surveys and surveillan ce.  Check posts were 
under the jurisdiction of a central level Plant Quaranti ne Section of the Plant Protection Directorate in 
the Department of Agriculture.  The Contagious or Infectious Disease Act, 1963 authorized the 
government to intercept any person, animal, anim al products, and feeds suspected of carrying an 
infectious disease or agent at entry points.  Such a person and animal may be hospitalized or isolated 
for "examination and control" as per the act.  Anim al quarantine check posts located at the border 
areas, were coordinated and administered by the Animal Quarantine Section of the Animal Health 
Directorate at the central level.  A separate Anim al Health and Livestock Services Act was enacted 
and enforced in 2000 that governs the Animal Quar antine.  Minimum standards or specifications had 
been fixed for certain categories of agricultu ral products (food products—processed and unprocessed) 
and animal feeds under the Food Act, 2023 (1967)  and Food Rules, 2027 (1970) and the Animal 
Concentrates Act, 1976.  The export and import of  such products must comply with the fixed 
standards.  The responsibility to implement these laws lies with Department of Food Technology and 
Quality Control in association with the local administration.   
99. The Pesticides Act, 1991 and Pesticides Rul es, 1994 regulate the export and import of 
pesticides with a view to protect the environment and ensure sanitary measures.  These acts and rules 
authorize the Ministry of Agriculture and Cooperativ es to ban and/or restrict any PIC pesticides that 
are potentially hazardous to health.  With respect to Drug Policy and Regulatory Service, the Department of Drug Administration had the r esponsibility of implementing the Drug Act, 2035 
(1978) and the Drugs Registration Regulation, 2038 and the Drugs Examination, Inspection, 
Regulation, 2040.  The department with the aid of various regulations h as been implementing the 
provisions of the act.  In accordance with the objec tives of the "Health for all" and to improve and 
manage coordination among the governmental, non- governmental and private organizations involved 
in the activities related to drug production, import, e xport, storage, supply, sales, distribution, quality 
assessment, regulatory control, rational use, and information flow, the National Drug Policy 1995 had 
been implemented.  It puts emphasis on the maintena nce, safeguarding and promotion of the health of 
people by making the country self-reliant in drug production; ensuring the availability of sale of 
effective, standard, and quality drugs at affordable  price in quantities sufficien t to cover the needs of 
the country, and to cover effectively all the drug -related activities including production, import, 
export, storage, safety, supply and distribution.  Medicines imported into the country should comply 
with the standards laid down by the Ministry of Health. WT/ACC/SPEC/NPL/5/Rev.2 
Page 44  
 
 100. In response to questions, the representative of Nepal submitted the Check List of Illustrative 
SPS Issues (WT/ACC/NPL/6).  With reference to  the Plant Protection Act, 1972 and the Plant 
Protection Regulation, 1975, he said that the Act and Regulations cover the essential legal framework 
to address all the requirements of enforcing p hytosanitary measures for import and export of 
agricultural commodities.  The Seed Act, 1998 requir ed only notified seeds to be exported or imported 
to help maintain seed quality. 
101. At the request of Members of the Working Pa rty, the representative of Nepal provided the 
Pesticides Act, 1991, and Pesticides Regulation,  1994.He said that considering the shared 
responsibility between the exporting and importing count ry in protecting health and the environment 
from harmful effects of listed pesticide and indus trial hazardous chemicals, in accordance with the 
prior informed consent procedures (PIC), Nepal bans  all the PIC listed pesticides and chemicals (22 
pesticides and 5 industrial chemicals) except Me thyl Parathion and Monocrotophos because there 
were no alternatives for these products.  The impor tation of these products was under active review.  
Nepal had participated in the Plenipotentiary Conf erence in Rotterdam (September 1998) for signing 
the PIC Convention. 
Table 6:  PIC List – Pesticides and Industrial Chemicals
 
 
Pesticides Industrial Chemicals 
2,4,5, - T Crocidolite 
Aldrin Polybrominated biphenyl (PBB) 
Captafol Polychlorinated biphenyl )PCB) 
Chloroenzilate Polychlorinated trephines (PCT) 
Chlordane Trist (2, 3 dibromopropy1) phosphate 
Chlordimeform 
DDT 
Dieldrin 
Dinsoeb 
1, 2 – dibromoethane (EDB) 
Fluoroacetamide 
HCH 
Heptachlor 
Hexachlorobenzone 
Lindane 
Mercury compounds 
Pentachlorophenol 
Certain formulations of metlamidophos 
Methyl-parathion 
Monocrotophos 
Parathion 
Phosphamidon 
  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 45 
 
 
 102. With reference to internati onal organizations, the representa tive of Nepal said that Nepal 
adheres to the International Plant Protection Conve ntion (IPPC) executed and administered by FAO.  
Nepal was a member of the Asia Pacific Plant Protection Commission (APPPC).  Nepal had adhered 
to the FAO "Plant Protection Agreement for the Asia and Pacific Region"  on 5 August 1965.  APPPC 
was a regional organisation adhering to IPPC charters for harmonizing the implementation of 
phytosanitary measures.  Through APPPC, Nepal w as trying to streamline and scientifically build 
land border quarantine procedures considering that Ne pal is geographically landlocked.  The Animal 
Health and Livestock Service Act 1998, Slaughter  House and Meat Inspection Act 1998 and the 
Veterinary Council Act 1998 were in force.  Nepa l was a member of the OIE; Codex Alimentarius 
and Asia Pacific Plant Protection Commission.  He st ressed that Nepal was fu lly committed to adopt 
all the sanitary measures in relation to equity, transparency, harmonization, adoption of regional 
conditions, risk assessment, and control inspecti on and approval procedures, and also for the 
administration and implementation with all the WTO member countries.  Even though there were constraints in terms of technical expertise a nd resources to fulfill these commitments, Nepal would 
give priority to the strengthening of the plant a nd animal quarantine service in the country to make 
sanitary and phytosanitary measures consistent with WTO obligations. 
103. In response to questions concerning the Nati onal Drug Policy, the representative of Nepal 
said that the measures the Department of Drug Administration (DDA) had taken to achieve self-sufficiency in drug production were as follows: provide technical inputs in drug production and 
quality assurance; lower custom duties on the importa tion of raw materials, machinery and analytical 
instruments at one per cent of the invoice value; lo wered the income tax for five years; and provided 
foreign currency needed for purchasing raw mate rials and machinery.  There were some 25 
pharmaceutical companies producing about 20 per cen t of the national demand for drugs.  For the 
purpose of protecting health, the administration had formulated an implemented different regulations 
with respect to importation, expor tation, supply and distribution of pharmaceutical products in Nepal.  
The enforcement of industrial property rights in respect of pharmaceuticals was the responsibility of 
the Department of Industry (DOI). 
104. The representative of Nepal recognized that am endments would have to be made to the 
sanitary and phytosanitary regime including the Pl ant Protection Act, 1972 (Amendment), the Plant 
Protection Regulation, 1975 (Amendment), the Seed Act, 1998 (First Amendment) and to other legal 
texts to bring them into full compliance with th e WTO Agreement on Sanitary and Phyto-Sanitary 
Measures.  As a first step, the Ministry of Ag riculture and Cooperatives would establish an enquiry 
point by 1 January 2004.  A timetable for the en actment of legislation that implements the WTO 
Agreement on Sanitary and Phyto-Sanitary Measur es in Nepal's legal regime was provided in the WT/ACC/SPEC/NPL/5/Rev.2 
Page 46  
 
 Legislative Action Plan circulated in document WT/ACC/NPL/10/ Rev.1 reproduced in Annex II of 
this Report, and in the action plan circulated in document WT/ACC/NPL/12.  Amendments prepared 
and approved during the period 2004-2005 would be submitted to the Council of Ministers.  These 
amendments would be endorsed and adopted by th e Council of Ministers in August 2004, April 2005 
and December 2005.  Having regard to the action plan , Nepal would implement fully the provisions of 
the Agreement on Sanitary and Phyto-San itary Measures, by 31 December 2006.   
105. In light of these plans, the representative of Ne pal requested that the Working Party grant a 
transitional period from the date of its accession un til 1 January 2007 for implementation of the WTO 
Agreement on Sanitary and Phytosanitary Measures,  to allow Nepal to obtain and utilise technical 
assistance to fully implement the oblig ations of the Agreement.  Duri ng this period, existing measures 
would be applied on a non-discriminatory basis, i.e.  providing for national treatment and MFN 
treatment to all imports.  Measures in place already consistent with the provisions of the Agreement 
on Sanitary and Phytosanitary Measu res would not be subject to tran sitions, and Nepal would ensure 
that any changes made in its laws, regulations and practice during the transition period would not 
result in a lesser degree of consistency with the provisions of the Agreement than existed on the date 
of accession.  Technical regulations and other measures adopted during this period would be 
developed in conformity with the provisions of th e Agreement.  Priority would be given to the 
establishment of a functioning enquiry point and the notification of all of Nepal's SPS measures to the 
Committee on Sanitary and Phytosanitary Measures.   He added that Nepal would seek out all 
available technical assistance including under Articl e 9 of the SPS Agreement to ensure that its 
capacity to fully implement the SPS Agreement upon e xpiration of the transition period is assured.  
Nepal would fully participate in the work of the Committee.  In response to requests from delegations 
for more specificity, the representative of Nepal pr esented an Action Plan setting out details of the 
steps that still remained to be taken in order to achieve this objective and a timetable for each step 
(Table 7). 
106. The representative of Nepal confirmed that Nepal would progressively implement the 
Agreement on Sanitary and Phytosanitary Measures in accordance with the Action Plan in Table 7 
and with the understanding that during this period th e scope of implementation of other aspects of the 
Agreement, as described in paragraph 105 would be applied by Nepal.  Nepal would implement fully 
the provisions of the Agreement on Sanitary and Phyt osanitary Measures by 1 January 2007.  He also 
confirmed that Nepal would consult with WTO Members upon request if they deemed that any 
measures applied during the transition period affected their trade negatively.  The Working Party took 
note of these commitments.    WT/ACC/SPEC/NPL/5/Rev.2 
 Page 47 
 
 
 Table 7:  Action Plan for Implementation of the  
Agreement on Sanitary a nd Phytosanitary Measures  
Action Implementation Date 
Food Act 1966 – Codex Alimentarius Completed 
Establishment and operation of a si ngle Contact Point for Information 
(“enquiry point”) (Article 7 and Annex B:2) Prior to 1 January 2004 
Acquisition of equipment and traini ng of SPS enquiry point personnel 
(Article 7 and Annex B:2) Prior to 1 January 2005 
Approval or Amendments to: 
Plant Protection Act 1972 
Seed Act of 1988  
Designation of authority responsible for making notifications to the WTO 
and ensuring transparency obligati ons are met on an ongoing basis 
 
Review of all existing regulations and new amendments to ensure 
regulations are based on risk assessments and sufficient scientific evidence.  
Upgrading of human resources with special emphasis on quarantine 
management, meat inspection, veterinary investigation and animal disease risk analysis. 
 
Declaration of pest or disease-free ar eas and areas of low pest or disease 
prevalence (Article 6 and Annex A:6 and A:7) Prior to 1 July 2005 
Approval or Amendments to: 
Plant Protection Regulations 1975 
Membership in the International Plant Protection Convention  
Implementation of Publication and Notification procedures including a 
process to take comments into account without discriminati on (Annex B:1,3, 
5 and 10) 
Initial notification of legislation and regul ations to WTO Prior to 1 January 2006 
Development of SPS guidelines and protocols Prior to 1 July 2006 
Upgrading and strengthening of quality control unity, laboratory, quarantine 
system and field veterinary system 
 Opening new quarantine check post and development of pre and post 
quarantine facilities 
 
Harmonization with international standards, guidelines, and 
recommendations  (Article 3)  
Control, inspection and approval procedures for all SPS measures 
 Full implementation of the WTO Agreement on Sanitary and Phytosanitary 
Measures Prior to 1 January 2007 
 
Trade-Related Investment Measures (TRIMs)  
107. The representative of Nepal confirmed that Ne pal would amend the trade related investments 
measures regime included in the Foreign Invest ment and One Window Policy, 1992 (Amendments), 
Industrial Policy, 1992 (Amendment), Industrial En terprises Regulations, Industrial Enterprises Act WT/ACC/SPEC/NPL/5/Rev.2 
Page 48  
 
 1992 (Amendment), Foreign Investment and Tec hnology Transfer Regulations and the Foreign 
Investment and Technology Transfer Act 1992 (Amendm ent) to ensure that there was full compliance 
with the WTO Agreement on Trade Related Investment  Measures.  A timetable for the enactment of 
this legislation was provided in the Legisl ative Action Plan circulated in document 
WT/ACC/NPL/10/Rev.1.  Policies would be prepared  by the Department of Industry by August 2003 
and adopted by the Ministry of Industry, Commerce and Supplies by September 2003.  Draft bills and 
regulations would be prepared by the Department of Industry and would be submitted by the Ministry 
of Industry, Commerce and Supplies to the Council of Ministers.  The expected approval dates for all 
the legislation would be May 2004. 
108. The representative of Nepal confirmed that Ne pal had carefully reviewed the relevant 
legislation and was unable to find any measures current ly in place inconsistent with the Agreement on 
Trade-related Investment Measures.  He adde d that these measures would be notified to the 
Committee on TRIMs upon accession as part of Nepal's initial WTO notification.  The Government of Nepal would ensure that, from the date of accession, no trade-related investment measures would be introduced unless in conformity with the requireme nts of the Agreement, including Article 4.  The 
Working Party took note of these commitments.   
State trading 
 
109. The representative of Nepal said that the State- owned enterprises in Ne pal were independent 
entities under the general supervision of the conc erned ministries.  They had been established 
essentially with the objective of ensuring adequate  supply of raw materials and essential goods.  
These enterprises operated on commercial considera tions and provide equa l opportunities for all 
suppliers as prescribed in GATT 1994 Article XVII and in the Understanding on the Interpretation of 
Article XVII of GATT 1994.  The government had made statutory provisions for transparency and cost-consciousness in the operations of these enterprises.  For example,  they were obliged to call for 
at least three quotations for procurement and ad opt competitive bidding for any contract.  The 
information concerning the following State owned ente rprises should not in any way be interpreted as 
considering them State-trading enterprises with exclusive rights or privileges:  
- Nepal Food Corporation mainly procures food grains to stabilize prices and supply of 
food grains in deficit area.   
- National Trading Limited imports essential goods  such as cement, sugar, clothes, and 
iron rods with a view to stabilize price. 
- Nepal Coal Company imports coal for manufacturing firms.  (underway to 
liquidation) 
- Nepal Transit and Warehouse Company functions as an autonomous body 
responsible for clearing and forwarding cargo.  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 49 
 
 
 Nepal Oil Corporation, which imports petroleum products and enjoyed exclusive rights to import 
petroleum products excluding lubricants, and the Sa lt Trading Corporation, which imports salt and 
sugar, have special privileges and would be notified under Article XVII of GATT 1994. 
110. The representative of Nepal confirmed that  upon accession Nepal would notify and provide 
information on the activities of Nepal Oil Corpor ation and Salt Trading Corporation in accordance 
with Article XVII of the GATT and the Understanding on that Article Nepal would apply its laws and 
regulations governing the trading activities of ente rprises with special or exclusive privileges and 
would otherwise act in full conformity with the provisions of the WTO Agreements, in particular 
Article XVII of the GATT 1994 and th e Understanding on that Article; and Article VIII of the GATS.  
The Working Party took no te of these commitments. 
Free zones, special economic areas  
111. The representative of Nepal said currently ther e were no free zones in Nepal.  If Nepal 
establishes free zones, as a WTO Member, Nepal would apply the WTO Agreements and Nepal's 
Protocol in the zones, and the application of nor mal customs formalities to goods produced in these 
areas when they enter the rest of Nepal, including the application of tariffs and taxes.  The Working 
Party took note of this commitment.   
Government Procurement  
112. The representative of Nepal said that in the fiscal year 1997/98 Government procurement had 
been NRs 16.2 billion (US$238 million).  The rules on Government procurement require publication 
of tender notices in national dailies at least twic e for procurements amounting more than NRs1 
million.  In case of global tender, tender notice is  circulated to the foreign diplomatic missions 
situated in Nepal.  There was no offset policy.  Th e procurement of certain products was not reserved 
for local industry but priority was given to Nepa lese products if the price difference with foreign 
products was not above 10 per cent. 
113. In response to questions concerning partic ipation in the Agreement on Government 
Procurement, the representative of Nepal said that, at  the moment, Nepal did not intend to take part in 
Plurilateral Trade Agreements such as the Agr eement on Government Proc urement.  However, 
consideration would be given to the possib ility and ability to seek observer status.   WT/ACC/SPEC/NPL/5/Rev.2 
Page 50  
 
 Agricultural policies
 
114. The representative of Nepal said that agriculture was the dominant sector of the Nepalese 
economy, giving employment to about two-thirds of  the total population and contributing more than 
40 per cent to GDP.  This was basically a private sector activity in which the government played a 
supportive and facilitating role to enhance agricu ltural production and producti vity.  Nepal imports 
significant quantities of high value agricultural pr oducts such as fruits, vegetables, livestock, and 
processed products mainly from India.  The import of  grains, however, is made only during drought 
years.  Nepal's major export items comprise basic ag ricultural products such as maize, mustard, ghee, 
ginger, pulses (lentil and gram), broom grass, live animal s, wheat flour, oil cake, jute, fresh vegetables 
and vegetable seeds, orthodox tea, niger seeds, hide and skin, rice bran, vegetable oil, spices, cardamom, and fruits.  The total value of agri cultural production was approximately NRs349,064 
million.  The total value of import of agricultu ral commodities was NRs6,330.3 million in the fiscal 
year 1996/1997.  Nepal was a net food-importing country.  In the fiscal year 1997/98, Nepal had 
allocated NRs. 600 million (US$10 million approx.)  for subsidy on the import and transport of 
chemical fertilizers and US$12.7 thousand have been a llocated to subsidize for soil tests to be carried 
out on the request of farmers to establish the best cr op for their plant of land.  There were no specific 
incentives for the export of agri cultural commodities.  The government facilitates exports by 
providing market information and easy access to fore ign exchange as a general policy.  For this 
purpose, the government provides to exporters tec hnical facilities to open foreign currency accounts 
out of the income generated from exports.  Restri ctions on import and export of agricultural products 
were as follows. 
Table 8:  Restriction on Import of Agricultural Products
 
Items Reason 
Citrus sapling/ plants To prevent citrus decline syndrome as per PP Act 1972 
Bread fruit plants To prevent ping alap disease as per PP Act 1972 
Potato tuber from Indian wart-affected areas To prevent wart disease as per PP Act 1972 
Lathyrus sativus Because of high content of BOAA (B-N-Oxalyl/Amino-L-
Alanine) responsible for causing Lathyrosis diseases 
(published in Nepal Gazette ,1992) 
BVO containing drinks  For health reason (Food Act, 1967) 
DDT, Methyl parathion For reasons of health and environment protection (Public 
Enterprises Act, 1991) 
Beef For religious reasons 
 
115. The representative of Nepal stated that agri cultural producers are assisted by Government 
programmes in areas such as support for general resear ch relating to different products, extension 
services, marketing and promotion activities including agriculture market information, natural disaster  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 51 
 
 
 relief through crop subsidies, loans and grants fo r irrigation, natural disaster relief through crop 
subsidies, other infrastructure support for small farm ers, urea transport subs idies for remote areas, 
subsidies for tea promotion and dairy development grants. He indicated that Nepal does not have 
agricultural export subsidies.  Information con cerning domestic support and export subsidies in the 
agriculture sector was circulated in documen t WT/ACC/SPEC/NPL/2/Rev.1, where the Base Total 
AMS was below the de minimis  percentage of 10 per cent.  
[Nepal's commitments on domestic  support and export subsidies fo r agricultural products are 
contained in the Schedule of Concessions  and Commitments on Goods (document 
WT/ACC/SPEC/NPL/5/Rev.1/Add.1 and Corr.) ] 
Policies Affecting Foreign Trade in Other Sectors  
116. The representative of Nepal said that the Tea and Coffee Development Board, and the Dairy 
Development Board, which were composed of repr esentatives of the public and private sectors, had 
the basic function to propose policies for the develo pment of these activities in Nepal and to conduct 
product-related research.  Budget allo cations were to finance the activ ities of the Boards.  No direct 
support is given to the farmers.  Nepal was undertaking a Seeds Sectors Project, which aims to 
improve seed quality.  The activities defined unde r this project are carried out by the Seeds 
Committee composed of representatives of the public and private sectors.  Budget allocations were to 
finance the activities, mainly seed research and im provements of the Seeds Committee.  There was no 
direct support to the farmers.  The principal func tion of the Carpet and Wool Development Board was 
to make the necessary arrangements for the developm ent of production and the quality of carpets in 
Nepal.  The Board did not give any kind of financial assistance. 
Textiles Regime   
117. The representative of Nepal confirmed that the quantitative restrictions on imports maintained 
by WTO Members on textiles and clothing products or iginating in Nepal that were in force on the 
date prior to the date of accession of Nepal to th e WTO should be notified to the Textiles Monitoring 
Body (TMB) by the Members maintaining such rest rictions and would be applied for the purposes of 
Article 2 of the Agreement on Textiles and Clothing.   Thus, for the purposes of Nepal's accession to 
the WTO, the phrase "in force on the day before the entry into force of the WTO Agreement" 
contained in Article 2.1 of the Ag reement on Textiles and Clothing sha ll be deemed to refer to the day 
prior to the date of accession of Nepal to the WTO.  To these base levels the increase in growth rates 
provided for in Article 2.13 and 2.14 of the Agreem ent on Textiles and Clothing shall be applied, as 
appropriate, in the Agreement on Textiles and Clot hing from the date of Nepal's accession such base WT/ACC/SPEC/NPL/5/Rev.2 
Page 52  
 
 level and growth rate coming to an end upon th e termination of the Agreement on Textiles and 
Clothing.  The Working Party took note of these commitments. 
Trade-Related Intellectual Property Rights  (TRIPS)
 
General  
Industrial Property Protection  
 
118. The representative of Nepal said that the policy objective in the area of intellectual property 
was to provide effective and adequate protection to all categories of intellectual property in 
conformity with the provisions of the Agreement on Trade-Related Aspects of Intellectual Property 
Rights.  Detailed information concerning the Chec k List of Issues for the Implementation of the 
TRIPS Agreement had been circulated in documen t WT/ACC/NPL/7.  Intellectual property protection 
was provided by the Patent, Design, and Tradem ark Act, 1965.  Nepal was preparing the new 
Industrial Property (Protection) Act, which would incorporate all the substantive provisions of the 
TRIPS Agreement.  It would cover all categori es of industrial property rights under Sections 2 
through 7 of Part II of the Agreement, and would incorporate the basis for an adequate enforcement 
thereof, and be promulgated by December 2005.  Fo r the protection of copyright, Nepal had enacted 
the Copyright Act, 2002.  This Act will be amende d as necessary.  Additional information concerning 
the implementation of the TRIPS Agreement is repr oduced in the Legislative Action Plan circulated 
in document WT/ACC/NPL/10/Rev.1 and in the action plan circulated in document WT/ACC/NPL/14 and are described in this  section of the Working Party Report. 
Agencies Responsible for Policy Formulation and Implementation
 
119. The representative of Nepal said that the fo rmulation of industrial property policy and 
necessary regulations was under the purview of the Ministry of Industry, Commerce and Supplies.  
The implementation and execution of policy and regula tions was the responsibility of the Department 
of Industry (DOI) within the Ministry.  The Office of the Copy-Right Registrar was the authorized 
agency for registering copyrights and hearing compla ints.  The decisions of the Registrar could be 
appealed to the Appellate Court. 
Membership in International Intellectual Property Conventions  
120. The representative of Nepal stated that Nepal had been a member of the World Intellectual 
Property Organization (WIPO) since 4 February 199 7 and the Paris Convention since 22 June 2001.  
Nepal would join the Berne Convention, by Dece mber 2005, and join the Rome Convention and the 
Treaty on Intellectual Property by 2006.  Nepal would also look at other WIPO and IP related  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 53 
 
 
 Conventions, eg. Geneva Phonograms Convention,  UPOV 1991, WIPO Copyright Treaty and the 
WIPO Performances and Phonograms Treaty, in terms of national interest and explore the possibility 
of joining them in the future, as appropriate. 
Application of national and MFN treatment to foreign nationals  
121. The representative of Nepal said that national a nd MFN treatment was granted to all foreign 
nationals.  National and foreign citi zens had to register the brand, tr ademarks, patent and art with the 
responsible agency.  A member noted that Secti on 13 of the Nepal Copyright Act, 2002 fails to 
provide protection for foreign copyright works, sound  recordings or performers.  The representative of 
Nepal committed to amending this provision so th at the Copyright Act, 2002 would provide full 
national treatment and MFN treatment upon accession.   Nepal also committed to amending its fee 
schedule, described in paragraph 122 below, to remove any discrimination between domestic and 
foreign nationals for fees charge d to applicants upon accession. 
Fees and taxes  
122. The representative of Nepal said that there were no taxes on intellectual property.  Fees were 
nominal but foreigners had to pay double the rat es indicated below, except for penalty charges, in 
convertible foreign currency.  A member noted th at TRIPS national treatment obligations (TRIPS 
Article 3) prohibits discrimination between foreign and domestic appli cants with regard to fees, and 
suggested that it would be permissible, however, to adopt a fee schedule that provided discounts to 
individual applicants, or even small and medi um-sized enterprises (SMEs), as opposed to large 
corporations, so long as the discounts were not based on the nationality of the applicants. 
Table 9:  Registration and Renewal Fees  
S.  No. Particulars of Fees Patent 
(NRs.) Design 
(NRs.) Trademark 
(NRs.) 
1. Application 1,000 500 500
2. Application Amendment 200 200 200
3. Registration 5,000 2,000 1,500
4. Transfer of Ownership 2,500 1,000 750
5. Endorsement and Recording other than Transfer 
of Ownership 1,000 500 500
6. Details of Registration 500 500 200
7. Opposition and Case Filing 500 200 200
8. Copy of Registration Certificate 1,000 500 500
9. Renewal (Annual Rate) 
 a.  For the First Term 
 b.  For the Second Term  c.  Perpetual Annual Rate  
2,000 
4,000 
-  
400 
800 
-  
- 
- 
200
 WT/ACC/SPEC/NPL/5/Rev.2 
Page 54  
 
 Substantive standards of protection, including pr ocedures for the acquisition and maintenance 
of intellectual property rights  
Copyright protection    
123. The representative of Nepal said that the Copy right Act 2002 repealed the Copyright Act 
1965 to comply with the provisions of the TRIPS Ag reement and the Berne Convention.  As noted in 
paragraph 119 above, if Nepal re ceived the necessary technical assi stance, a Copyright Information 
Center would be established in December 2004. 
Trademarks, including service marks  
124. The representative of Nepal said that in accord ance with the Legislative Action Plan, in 2005 
the Patent, Design and Trademark Act,1965 amended in 1987, would be replaced by a new Industrial 
Property (Protection) Law consistent with the TRI PS Agreement.  At present any person wishing to 
have trademark of his business registered should subm it to the Department of Industry an application 
according to the specimen form indicated in Schedul e I(c)of the Act, along with four copies of such 
trademark.  After completing this process the department would register such trademark in the name of the applicant and then issue a trademark certificat e.  If the trademark filed for the registration was 
considered to hurt the prestige of any individual or  institution, or adversel y affect public conduct or 
morality, or undermine the national interest, or the re putation of the trademark of any other person, or 
if the proposed trademark was found to have already b een registered in the name of another person,  
the registration could be denied.  Service marks were also subject to the same rule.  The Act provides 
for exclusive rights for the person who has registered  the trademark or service mark.  Trademarks and 
service marks were initially registered for a peri od of seven years, and could be renewed for an 
indefinite number of years after every seven-year interval. 
Geographical indications, including appellations of origin
 
125. The representative of Nepal said that the pr esent legislation did not cover geographical 
indications.  In accordance with the action plan  on the implementation of the TRIPS Agreement 
reproduced in Table 10 of this Report, the protec tion of geographical indications would be included 
when drafting the new Act.   
Industrial designs  
126. The representative of Nepal said that the indus trial designs were covered by the Patent, 
Design and Trademark Act, 1965.  As indicated in  the action plan on the implementation of the  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 55 
 
 
 TRIPS Agreement, the Act would be brought into  conformity with the provisions of the TRIPS 
Agreement by the Industrial Property (Protection)  Act under preparation.  Under the present 
legislation, any person wishing to protect the design of any article should submit an application to the 
Department of Industry, which would register th e design in the name of applicant and issue a 
certificate.  In case such design hurts the prestige of any individual or institutio n, or adversely affects 
public conduct or morality, or undermines the nationa l interest, or in case such design had already 
been registered in the na me of any other person, the registratio n could be denied.  Industrial designs 
were originally registered for a period of five y ears and could be renewed for two more terms at an 
interval of five years.   
Patents  
127. The representative of Nepal said that patents d esigns were covered by the Patent, Design and 
Trademark Act, 1965.  As indicated in the action plan on the implementation of the TRIPS 
Agreement, the Act would be brought into confor mity with the provisions of the TRIPS Agreement 
by the Industrial Property (Protection) Act under pr eparation.  The representative of Nepal declared 
that, as a WTO Member, Nepal would be entitled to the flexibilities provided in the Doha Declaration 
on the TRIPS Agreement and Public Health.  Unde r the present legislation, any person wishing to 
obtain exclusive rights over an invention should regist er a patent in the Department of Industry by 
filing an application.  Upon its receipt, the Depa rtment would conduct investigations or studies to 
ascertain whether the subject matter mentioned in the application was an invention and thereafter 
decide whether or not to register a patent.  Pa tents were available for all kinds of products and 
processes that fulfill the patentability requirements w ithout any discrimination as to the technological 
field or invention.  The title of the patentee to the patent registered under the Act remained valid for a 
period of seven years at a time, with a possibility of  two renewal periods of seven years.  The patent 
holder had the exclusive right to transfer or licence a patent and to request the third person to stop 
infringement, and could claim the compensation.  Th e current legislation did not include provisions 
for the protection of prior user rights nor for compulsory licensing.   
Plant variety protection  
128. The representative of Nepal said that the present legislation did not cover the protection of 
plant varieties.  In accordance with the action pl an on the implementation of the TRIPS Agreement, 
the protection of plant varieties would be include d in the new Plant Variety Protection Act to be 
promulgated by December 2005.  The drafting of  the Plant Variety Protection Act was not yet 
initiated, however it would be intended to protect the rights of related stakeholders in accordance with 
the needs of the country.  This law would be a separate free-standing Act. WT/ACC/SPEC/NPL/5/Rev.2 
Page 56  
 
 Layout designs of integrated circuits
 
129. The representative of Nepal said that the present legislation did not cover the protection of 
layout designs of integrated circuits.  In accordan ce with the action plan on the implementation of the 
TRIPS Agreement, the protection of layout designs of  integrated circuits would be included in the 
new Industrial Property (Protection) Act to  be promulgated by December 2005.   
Requirements on undisclosed information,  including trade secrets and test data  
130. The representative of Nepal said that the present legislation did not cover the protection of 
undisclosed information including trade secrets and test  data.  In accordance with the action plan on 
the implementation of the TRIPS Agreement, the protection of undisclosed information including 
trade secrets and test data would be included in the new Industrial Property (Protection) Act to be 
promulgated by December 2005. 
Enforcement  
131. The representative of Nepal recognized that am endments would have to be made to the 
enforcement regime concerning intellectual propert y rights to bring into conformity with the 
provisions of the TRIPS Agreement with respect to civil and judicial procedures and remedies, 
provisional measures, administrative procedures and remedies, special border measures, criminal 
procedures, etc.  To this effect the Administrati on of Justice Act, 1991, Appellate Court Rules, 1972, 
Summary Procedures Act, 1972, and the Patent, Design and Trademark Act, 1965 and other legal 
texts would be modified to bring them into compliance with the WTO Agreement on TRIPS, as 
indicated in the action plan on the implementation of  the TRIPS Agreement.  As a first step, in 2004 
the Ministry of Industry, Commerce and Supplies would organize the training of personnel, customs officials, police, judges and lawyers through technical assistance.   
132. The representative of Nepal said that a timeta ble for the enactment of legislation that 
implements the WTO Agreement on TRIPS in Nepal' s legal regime was provided in the Legislative 
Action Plan circulated in document WT/ACC/NP L/10/Rev.1 and in the TRIPS Implementation 
Action Plan circulated in document WT/ACC/NPL/14.  New legislation or amendments with regard 
to legal texts such as the Plant Resources, the Ac cess to Genetics Resources Act, and the Industrial 
Property Protection Act prepared during the peri od 2003-2005 would be subm itted to the Council of 
Ministers.  These amendments would be endorsed a nd adopted by the Council of Ministers in the 
period 2003-2005.  Nepal would implement fully the provisions of the Agreement on TRIPS by 31 December 2006.    WT/ACC/SPEC/NPL/5/Rev.2 
 Page 57 
 
 
 133. Having reviewed Nepal’s Action Plan for comp liance with the requirements of the TRIPS 
Agreement, a Member sought a realistic plan layi ng out the measures that Nepal would take over time 
to bring its regime into compliance with speci fic provisions of the TRIPS Agreement as soon as 
possible.  The plan would constitute an understandi ng between Nepal and the Working Party on how 
Nepal would use the transition period, and form a blueprint for the technical assistance making 
compliance possible within the timeframe contem plated.  Nepal should also provide specific 
assurances on its application of measures covered by the TRIPS Agreement during any transition 
period approved by the Working Party.  TRIPS-c onsistent measures already in place should not be 
subject to transitions, and Articles 3, 4 and 5 of  the TRIPS Agreement, providing for inter alia 
national treatment and MFN treatment, should apply from the date of accession.  Moreover, Nepal 
should not allow production of goods or works incons istent with the substantive provisions of the 
TRIPS Agreement during the transition period.  Some members noted that a number of these 
proposals would create implementation difficulties for Nepal during their transition period and did not share the views expressed above. 
134. The representative of Nepal thanked the Working Party members for their support and for 
their pledges of technical assistance.  For the reasons given above, the Government of Nepal 
requested that the WTO grant a transitional period to 31 December 2006 to obtain technical assistance 
and equip the administration to implement fully the obligations of the TRIPS Agreement.  The 
representative of Nepal confirmed that should a tran sition be granted for the implementation of the 
WTO Agreement on TRIPS, his government was prep ared to undertake the following commitments: 
During the transition periods in the Action Plan for full implementation of the TRIPS Agreement, 
Nepal will fully apply Articles 3, 4 and 5 of the Agreement that provide for, inter alia, national 
treatment and MFN treatment under current legislation in place.  To this end, Nepal would amend the 
Copyright Act, 2002 and the fees charged to appli cants to ensure full national and MFN treatment 
upon accession.  Nepal will also ensure that any cha nge made in its laws, regulations and practice 
during this period will not result in a lesser degree of consistency with the provisions of the TRIPS 
Agreement.   
135. The representative of Nepal further confirmed that, should a transition be granted, his 
government would ensure that existing rates of infri ngement would not significantly increase and that 
any infringement of intellectual property rights woul d be addressed immediately in cooperation with 
the assistance from affected right holders.  He added that Nepal would seek out all available technical assistance to ensure that its cap acity to fully enforce its TRI PS-consistent legal regime upon 
expiration of the transition periods is assured and that Nepal would make available TRIPS legislation 
in draft and promulgated form to the WTO Secretariat for circulation to interested WTO Members.  In WT/ACC/SPEC/NPL/5/Rev.2 
Page 58  
 
 response to requests from delegations for more sp ecificity, the representative of Nepal presented an 
Action Plan in Table 10 setting out details of the st eps that still remained to be taken in order to 
achieve this objective and a timetable for each step. 
Table 10:  Action Plan for Implementation of the 
 
Agreement on Trade Related Aspects of Intellectual Property Protection  
 
Action Implementation 
Date 
Approved Legislation: --Copyright Act, 2002 
--Patent, Design, and Trademark Act, 1965 
--Administration of Justice Act, 1991 --Appellate Court Rules, 1972 
--Summary Procedures Act, 1972 
 Participation in: 
-WIPO (since 1997) 
-Paris Convention (since 2001) Completed 
Establish MFN and national treatment in all areas  covered by TRIPS, in particular in the 
following areas: 
-- extension in the Copyright Act, 2002 of protection to foreign works on a full national 
treatment basis; and  -- the elimination of discrimination in fees charged foreign vs.  domestic applicants. Upon accession 
Establishment and Strengthening Nepal Copyright Registrar Office No later than  
1 January 2005 
Establishment of Trademark Information Centre/ 
Industrial Design Information Centre/ 
Industrial Patent Information Centre/ and Layout-designs Information Centre No later than  
1 July 2005 
Approval of: Industrial Property (Protection) Act  Approval of Plant Variety Protection Act 
Participation in:  -Berne Convention  
-Rome Convention  
-Treaty on Intellectual Property in Respect of Integrated Circuits No later than  
1 January 2006 
Training of personnel involved in copyrights protection, trademarks protection, 
protection of industrial design, protection of patents, protection of undisclosed information, customs officials and police 
 
Orientation of judges and lawyers 
Computerization and networking of Patent Office  
 Computerization of Intellectual Property Office 
Reorganization and establishment of Intellectual Property Offices 
 Developing rules, regulations and work manuals 
 
Enhancing public awareness on the protection of intellectual property rights  
Full Implementation of the Agreement on Tr ade-related Intellectual Property Rights No later than  
1 January 2007 
  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 59 
 
 
 136. The representative of Nepal confirmed that  Nepal would apply the Agreement on Trade-
Related Intellectual Property Rights by no later th an 1 January 2007 according to the action plan in 
Table 10 with the understanding that during this period protection for intellectual property rights 
listed in paragraphs 134 and 135 wo uld be applied in Nepal.  The Working Party took note of this 
commitment.  
POLICIES AFFECTING TRADE IN SERVICES 
137. The representative of Nepal said that the servi ces sector in Nepal had witnessed significant 
growth over the last two decades.  It accounts for 32.3 per cent of GDP and provides employment to almost 18 per cent of the total labour force.  Duri ng the last decade the av erage service exports of 
Nepal had represented approximately US$200 million p. a.  Nepal was a net service exporter.  The 
introduction of open and liberal policies, combin ed with full convertibility on current account 
transactions, explains the significant growth of th e service sector.  Public services enterprises were 
available in Nepal in sectors such as business,  transport and communications, distribution, 
educational, environmental, financ ial, health-related, social, tourism and travel related services, and 
recreational and sporting services.  Due to the suppor t given by the government to road development, 
transport services had grown significantly.  Recently, the open and liberal policy had helped to 
transform the financial sector a leading services sector in Nepal.  However, there still was a scarcity of 
statistical data pertaining to the nature, type, and size of the existing service sector in the country.  In documents WT/ACC/NPL1 and Add.1, the representa tive of Nepal described the overall market and 
regulatory structure of the principal service sectors in  Nepal and the relevant legal provisions.  The 
legal framework was still under development, and a number of services sectors remained to be 
regulated.  He noted that Nepal's legislation genera lly complied with the provisions of Articles II and 
XVII of the General Agreement on Trade in Servic es (GATS) concerning most favoured nation and 
national treatment, however, exceptions existed with regard to a number of activities under 
development as described under the services sectoral cl assification list.  According to the Industrial 
Enterprises Act, 1992, the manpower required for any i ndustry, including all services, shall have to be 
recruited from among Nepali citizens.  Nevertheless, foreigners were permitted to work in Nepal on 
technical grounds, and in accordance with the commitments made in Nepal's GATS schedule of 
specific commitments, annexed to the Protocol of Acces sion, in particular with regard to the transfer 
of technology.  A work permit issued by the Gove rnment was required for foreigners to work in 
Nepal.  A foreigner could not be employed for more than 10 years. 
138. The representative of Nepal said that consulta ncy services such as management, accounting, 
engineering and legal services were not open to fore ign investment under the Foreign Investment and WT/ACC/SPEC/NPL/5/Rev.2 
Page 60  
 
 Technology Transfer Act, 1992.  The Nepal Ba r Council Act, 1993 which regulates legal services, 
prohibits foreigners from practising law in Nepal except if authorized by the competent Nepalese 
Court to plead and represent a party to a case.  The Nepal Medical Counc il Act, 1963 (as amended) 
was silent over the registration of a foreign medical  practitioner in Nepal.  The Statistics Act, 1969 
which established the Central Bureau of Statis tics provides that foreigners must obtain the 
authorization of the CBS to collect economic r ecords and statistics for commercial purposes.  The 
Telecommunications Act, 1997 and the Telecommuni cations Regulation, 1997 requires a licence from 
the Nepal Telecommunications Authority to operate  telecommunications services and permits foreign 
investments in this sector.  Licenses are issued fo r a maximum period of ten years renewable for up to 
twenty five years.  The Foreign Investment a nd Technology Transfer Act, 1992 did not limit foreign 
equity participation in this sector.  In accord ance with the Nepal Agency Act, 1958 and Agency 
(Amendment and Consolidation) Regulation, 1962  agents, distributors, stockists, nominees or 
representatives of foreign or local firms must be registered.  Nepalese citizens are given preference for getting registered as agents.  With respect to fina ncial services, the Insurance Act, 1992 established an 
Insurance Board and required inter alia a licence to operate an insurance business, to set an office in 
Nepal and to prove a paid capital of no less th an NRs 250 million for life insurance and NRs 100 
million for non-life insurance.  With the deregula tion of the sector, joint ventures had been initiated 
and some nine insurance companies were active in Ne pal.  Insurance services were regulated by the 
insurance-related legislation, while banking and no n-banking institutions were regulated by the Nepal 
Rastra Bank, the Central Bank of the country, est ablished under the Nepal Rastra Bank Act, 2002.  
Approval for establishing a commercial bank was gran ted in the conditions set out by the Central 
Bank and in accordance with the Commercial Bank Act, 1974 (as amended), and other accompanying 
legislation.  In addition to the State owned banks  and banks with limited State participation, there 
were in Nepal some nine private joint venture commercial banks, forty five finance companies and 
one hundred and thirty financial institutions.  To urism was one of the most important services sectors 
in Nepal.  The contribution of tourism to GDP was approximately 3.8 per cent and provided 18 per 
cent of the total foreign exchange.  Tourism was regul ated by a whole set of general rules, laws, and 
industrial acts such as the Tourism Act, 2035 (19 78) amended in 2053 (1997), by the Hotel, Lodges, 
Restaurants, Bar and Tourist Guide Regulation, 2038 (1981), the Travel and Trekking Agency 
Regulation, 2037 (1980), the Trekking and Raf ting Regulation, 2044 (1985), and by the 
Mountaineering Rules, 2036 (1979).  As provide d by the Foreign Investment and Technology 
Transfer Act, 1992, no permission was granted for th e establishment of foreign companies, or foreign 
investment in the Travel Agencies, Trekking Agenci es, Water Rafting, Pony Trekking, Horse Riding, 
and Tourist Lodging.  Foreign direct investment  was permitted in the hotel industry subject to 
authorization as provided by FITTA, 1992.  In view  of the economically underdeveloped status of the  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 61 
 
 
 country and the dependence of a large number of people for their livelihood on these sectors, Nepal 
called for the understanding of WTO Members in the opening of the services sector at this stage.   
139. Some members asked the representative of Nepal to explain the conditions that Nepal 
imposes on foreign professionals working in Ne pal under which they are required to acquire 
membership of relevant Nepalese professional associ ations.  They asked Nepal to confirm that the 
criteria governing such membership were not applie d in a manner that would act as a barrier to 
foreign professionals and that membership requirement s were open and transparent.  In response, the 
representative of Nepal explained that these requirements do not act as a barrier to foreign professionals seeking to work in Nepal.  Architects and all types of engineers are required to be registered with Nepal Engineering Council.  Lawyer s who appear before courts in Nepal are required 
to be registered with Nepal Bar Council.  Howeve r, practitioners of third country and international 
law who do not appear before courts in Nepal are not required to join the Bar Council.  Accountants 
are required to be registered with Nepal Chartere d Accountants Institute, with requirements of the 
same nature as those for architects and engineers.   The requirements for membership of these and 
other professional associations were not oner ous and included the possession of professional 
qualifications from a recognised institution and the pa yment of a membership fee.  There was an open 
and transparent mechanism for foreign institutions to obtain recognition for this purpose.  These same 
requirements were applicable equa lly to Nepalese and foreigners and were applied in a fully non-
discriminatory manner.  
140. The representative of Nepal said that the authoriti es' decision affecting trade in services were 
subject to judicial review under the provision of  each law governing such a service sector.  There was 
also a provision of appeal in such cases under Ad ministration of Justice Act, 1991.  Generally the 
appeal lies with the Appellate Court which is an in dependent judicial body.  Under Section 7 of the 
Foreign Investment and Technology Transfer Act,  1992 there is a provision for dispute settlement 
through arbitration in respect to disputes that ma y arise between a foreign investor, national investor 
or a concerning industry.  The arbitration awar d may be appealed to the Appellate Court in 
accordance with the Arbitration Act, 1999. 
141. The representative of Nepal referred to the Legislative Action Plan circulated in document 
WT/ACC/10/Rev.1 and reproduced in Annex II of this Re port.  He said that the Ministry of Industry, 
Commerce and Supplies would establish in June 2 003 the enquiry point provided in Article III:4 
GATS.  Amendments to the Labour Act, 1991, th e Company Act, 1997, the Nepal Bar Council Act, 
1992, the Nepal Chartered Accountants (First Ame ndment) Act, 2002, the Insurance Act, 1992, the 
Securities and Exchange Act, 1982, the Bank and Fi nance Institutions Act, and a draft Bill of the WT/ACC/SPEC/NPL/5/Rev.2 
Page 62  
 
 Health Institutions Operating Act were being pr epared by the Ministries of Labour, Industry, 
Commence and Supplies, Finance, Law and Justice, H ealth and the Central Bank with a view to their 
submission to the Council of Ministers of Nepal in  2003.  The expected date of approval of these 
amendments would be February 2004 except for draf t bill of the Health Institutions Operating Act 
which would be endorsed by the Council of Ministers in September 2003. 
[Nepal's draft schedule of specific commitments on trade in services will be circulated in document 
WT/ACC/SPEC/NPL/5/Rev.1/Add.2.] 
Transparency
 
Publication of information on trade  
142. The representative of Nepal said that all trade measures and laws, regulations, and 
Governmental or Administrative rulings of genera l application were published in the Nepal Gazette, 
including multilateral Agreements or Treaties in whic h Nepal is a party.  Judgements of the Supreme 
Courts are also published in the Nepal Law Journal by  the Supreme Court of Nepal.  Laws enter into 
force on the date of their publication unless another date is specified in the laws.  Some of the transparency requirements of Article X of GA TT 1994, Article III of the GATS, and other WTO 
Agreements were provided in Section 3 of the St atute of Interpretation Act, 1953, His Majesty's 
Government (Allocation of Business) Regulation, 2 000, and Nepal Gazette of  August 1955.  It had 
been Nepal's practice to publish relevant acts, rules an d regulations to give effect to these statutes.   
143. He stated further that Nepal intended to establish or designate an official journal or web-site, 
published or updated on a regular basis and readily  available to WTO Members, individuals and 
enterprises, dedicated to the publication of all regulations and other measures pertaining to or 
affecting trade in goods, services, and TRIPS prio r to implementation, and that Nepal intended to 
provide a reasonable period, e.g. no less than 15 days, for comment to the appropriate authorities of 
Nepal before such measures are implemented, exce pt for those regulations and other measures of 
general application involving natio nal emergency or security, or for which the publication would 
impede law enforcement or be ot herwise contrary to the public in terest or prejudice the commercial 
interests of particular enterprises, public or private.   Nepal intended to implement this facility as soon 
as possible, and within the timeframe of its other WTO commitments. 
144. The representative of Nepal confirmed that, as a Member of the WTO, Nepal would fulfill the 
transparency requirements established in Article X of GATT 1994, Article III of GATS  and other 
WTO Agreements.  Nepal confirmed that all laws, regulations or measures of general application  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 63 
 
 
 pertaining to or affecting trade in goods, services  or TRIPS would be published promptly in the 
Official Gazette or in the some single official sour ce, and that no such law, regulation, etc.  would 
become effective or be enforced prior to such pub lication. The publication of such laws, regulations 
and other measures of general application would incl ude the effective date of these measures and list, 
where appropriate and possible, the products and services affected by the particular measure, 
identified for customs purposes by appropriate tariff line and classification.  The Working Party took 
note of these commitments. 
Notifications  
145. The representative of Nepal said that, unless othe rwise provided for in this Report, within 12 
months [at the latest] upon entry into force of th e Protocol of Accession and in accordance with the 
commitments set out in the Legislative Action Pl an in Annex II, Nepal would submit all initial 
notifications required by any Agreement constituting part of the WTO Agreement.  Any regulations 
subsequently enacted by Nepal which gave effect to the laws enacted to implement any Agreement 
constituting part of the WTO Agreement would also conform to the requirements of that Agreement. 
Trade Agreements  
146. The representative of Nepal said that Nepal ha d signed bilateral trade agreements with the 
following 17 countries.  More recently a trade c ooperation agreement had been signed with the 
European Union.   
Table 11:  Trade Agreements  
 Country Year 
1. Republic of Bangladesh 1976 
2. Republic of Bulgaria 1980 
3. People's Republic of China 1981 
4. Czechoslovak Socialist Republic 1992 
5. Arab Republic of Egypt 1975 
6. Republic of India  
 (a) Treaty of Transit 1991 
 (b) Treaty of Trade 1991 
 (c) Agreement of Co-operation 1991 
7. Democratic People's Republic of Korea 1970 
8. Republic of Korea 1971 
9. Mongolia 1992 
10. Islamic Republic of Pakistan 1982 
11. Republic of Poland 1992 
12. Republic of Romania 1984 
13. Democratic Socialist Republic of Sri-Lanka 1979 
14. United Kingdom of Great Britain and Northern Ireland 1965 
15. United States of America 1947 WT/ACC/SPEC/NPL/5/Rev.2 
Page 64  
 
  Country Year 
16. Union of Soviet Socialist Republics 1970 
17. Socialist Federal Republic of Yugoslavia 1965 
 
147. [The representative of Nepal said that th ese agreements provided most-favoured-nation 
treatment.  They basically relate to trade in goods.  As a landlocked country, Nepal was interested in 
maintaining good neighbourliness for transit and trade relations with India.  Nepal considers that the 
treaties of transit and trade as well as the agreem ent of cooperation to control unauthorised trade 
signed in 1991 (as amended) provide a good basis for the development and diversification of trade.  
The two countries had signed these treaties with th e aim of promoting trade, facilitating transit and 
controlling unauthorised trade.  They accord each other unconditional most-favoured-nation 
treatment.  They also exempt imports of certain  primary products from duties or any form of 
quantitative restrictions on a reciprocal basis in the context of their trade.  [These products are the raw 
materials produced usually for the traditional neighbour ing market destinations in each others' area.]  
The treaty of trade also provides that India grants specially favourable (preferential) treatment to 
industrial products manufactured in Nepal on the b asis of non-reciprocity in order to promote the 
industrial development of Nepal.  With reference to Article IV of the Treaty of Trade between Nepal 
and India, following primary products  would be eligible on a recipro cal basis to exempt from basic 
customs duty as well as from quantitative restrictions: 
- Agriculture, horticulture and forest produce and minerals which have not undergone any 
processing 
- Rice, pulses and flour 
- Timber 
- Jaggery(Gur and Shakhar) 
- Animals, birds and Fish 
- Bees, bees-wax and honey 
- Raw wool, goat hair,and bones as are used in the manufacture of bone- meal 
- Milk, home made products of milk and eggs 
- Ghani- produced oil and oil cakes 
- Ayurvedic and herbal medicines 
- Articles produced by village artisan s as are mainly use in villages 
- Akara 
- Yak tail 
- Any other primary products which may be mutually agreed upon 
With reference to Article V of the Treaty of Tr ade between Nepal and India, Government of India 
provided access to the Indian market free of custom duties and the quantitative restrictions for all 
articles with some restrictions on four produc ts such as Vegetable Fats, Acrylic Yarn, Copper 
Products under Chapter 74 and heading 8544 of HS Code, Zinc Oxide, manufactured in Nepal on the  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 65 
 
 
 basis of Certificate of Origin i ssued by the agency designated by His Majesty’s Government of Nepal 
except the following articles: 
- Alcoholic liquors/Beverages and their concentrates except Industrial spirits 
-  Perfumes and Cosmetics with non Nepalese/ non Indian brand names 
- Cigarettes and Tobacco. 
Nepal was a member of the South Asian Preferential Trade Arrangements (SAPTA).  SAARC (South 
Asian Association for Regional Co-operation) had decided in principle to move from SAPTA to 
SAFTA (South Asian Free Trade Area).  Nepal was a member of SAARC which comprises seven 
countries of South Asia that are Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.  
It is an association based on the consciousness that , in an increasingly interdependent world, the 
objectives of peace, freedom, social justice and economic  prosperity are best achieved in the region by 
fostering mutual understanding and meaningful co-ope ration among its member states.  At their first 
SAARC summit held in Dhaka on 7-8 December 1985, the heads of state or government adopted the 
charter formerly establishing the SAARC.  Th e Agreement on SAARC Preferential Trading 
Arrangements (SAPTA) was signed on 11 April 1993, and entered into force on 7 December 1995.  
Nepal was the first country to ratify SAPTA in 1993.  So far four rounds of trade negotiations have 
been completed.  Each round contributed to in creased product coverage and deepening of tariff 
concessions.  [There are approximately 5,218 produc ts at HS 8-digit level offered for preferential 
trade within SAPTA.]  Nepal has granted con cessions on approximately 500 products under SAPTA.  
The percentage range of concessions granted by Nepal under SAPTA is 10-15 per cent.  The tenth 
SAARC Summit decided to set up a Committee of Expe rts to draft a comprehensive treaty design to 
create a free-trade area within the region.  The Comm ittee has since been in the process of preparing a 
draft treaty for the consideration of SAARC.  The Schedules of Nepal's commitments in SAARC 
under SAPTA Agreement were communicated to WTO in document WT/ACC/NPL/3/Add.1.   A 
consolidated national schedule of concessions grante d by Nepal under first, second, and third rounds 
of trade negotiations under SAPTA can be access ed on web site http//www.saarc-sec.org. Nepal 
confirms that at present Nepal is not a member of any Free Trade Area and Customs Union. ] 
148. The representative of Nepal confirmed that Nepal would observe the provisions of the WTO 
Agreement [, and the 1979 GATT Decision on Di fferential and More Favourable Treatment, 
Reciprocity and Fuller Participation of Developi ng Countries” (Enabling Clause), including Article 
XXIV of the GATT 1994 and Article V of the GATS in  trade agreements to which it belongs, and 
would ensure that the provisions of these WTO Agr eements] for notification, consultation, and other 
requirements concerning free trade areas and custom s unions of which Nepal [was, or] may become a 
member [were met from the date of accession].  The Working Party took note of these commitments. WT/ACC/SPEC/NPL/5/Rev.2 
Page 66  
 
 Technical Assistance
 
149. The representative of Nepal said that as a l east developed country with limited resources, 
infrastructure and institutional and technical cap abilities, Nepal would face serious difficulties to 
implement the WTO Agreements expeditiously by its own means.  In the Legislative Action Plan and 
in the various action plans reproduced in Tables 3, 5,  7 and 10, Nepal had identified the specific areas 
and projects where technical assistance would be welc ome, and asked that specific offers of assistance 
in these areas would be forthcoming.  In the view  of Nepal it was of the utmost importance, that 
individual WTO Members, bilateral donors, international agencies and the WTO Secretariat coordinate their responses to the technical assist ance requested as soon as possible. From Nepal’s 
perspective, WTO Members clearly had an interest in  working with Nepal to ensure that action plan 
timetables were met.  He noted that a Member ha d offered to assist in the implementation of some 
aspects of the TRIPS Agreement.  Another Member had offered to assist in the development of 
institutional capabilities concerning transparency, notif ications and judicial review.  Nepal believed 
that  additional technical assistance would be re quired with respect to these and other areas of WTO 
implementation as noted in the action plans. 
Conclusions
 
150. The Working Party took note of the explanati ons and statements of Nepal concerning its 
foreign trade regime, as reflected in this Report.  The Working Party took note of the commitments 
given by Nepal in relation to certain specific matt ers which are reproduced in paragraphs 20, 31, 36, 
41, 43, 49, 52, 56, 63, 67, 70, 74, 78, 87, 88, 97, 106, 108, 110, 111, 117, 136, 144 and 148 of this 
Report.  The Working Party took note that these co mmitments had been incorporated in paragraph 2 
of the Protocol of Accession of Nepal to the WTO.   
151. Having carried out the examination of the foreign trade regime of Nepal and in the light of the 
explanations, commitments and concessions made by the representative of Nepal, the Working Party 
reached the conclusion that Nepal be invited to accede to the Marrakesh Agreement Establishing the 
WTO under the provisions of Article XII.  For this purpose, the Working Party has prepared the draft 
Decision and Protocol of Accession reproduced in the Appendix to this Re port, and takes note of 
Nepal's Schedule of Concessions and Commitme nts on Goods (document WT/ACC/NPL/…./Add.1) 
and its Schedule of Specific Commitments on Se rvices (document WT/ACC/NPL/…./Add.2) that are 
annexed to the draft Protocol.  It is proposed that  these texts be adopted by the General Council when 
it adopts the Report.  When the Decision is adopted , the Protocol of Accession would be open for 
acceptance by Nepal which would become a Member thirty days after it accepts the said Protocol.   WT/ACC/SPEC/NPL/5/Rev.2 
 Page 67 
 
 
 The Working Party agreed, therefore, that it had co mpleted its work concerning the negotiations for 
the accession of Nepal to the Marrakesh Agreement Establishing the WTO.   
152. Having regard to the Decision of 10 December 2002 on the accession of the LDCs, the 
Working Party agreed to propose that the Genera l Council entrust the Sub-Committee on LDCs with 
the task of monitoring the implementation of the commitments subject to transitional arrangements. 
 
 [TO BE COMPLETED] WT/ACC/SPEC/NPL/5/Rev.2 
Page 68  
 
 ANNEX I 
LIST OF LAWS AND LEGAL ACTS
 
1. Foreign Investment and Technology Transfer Act (1992) 
2. Industrial Enterprises Act (1992) 
3. Customs Act (1962) 
4. Customs Regulation (1970) 
5. Nepal Seeds Act, 2045 (1988) 
6. The Seeds Regulation, 2054 (1997) 
7. Company Act (1997) 
8. Plant Protection Act, 2029 
9. The Food Act (1966) 
10. Export and Import Control Act (1957) 
11. Export and Import Rules (1978) 
12. Patent, Design and Trade-Mark Act (1965) 
13. Food Regulation (1970) 
14. Plants Protection Rules 2031 (1975) 
15. Customs Act (1962) (amended 1997) 
16. Summary Procedure Act (1972) 
17. Customs Tariff (electronic format) 
18. Treaty of Transit, Treaty of Trade and Agreem ent of Co-operation to Control Unauthorised 
Trade between His Majesty's Government of Nepal and the Government of India 1991 (as 
amended and updated 1999) 
19. Schedules to Nepalese commitments  in SAARC under SAPTA Agreement 
20. Feed Act (Animal Concentrate) (1996) 
21. Copyright Act (First Amendment) (1997) 
22. Customs Tariff (electronic format) 
23. First Amendment 2002 to the Nepal Chartered Accountant Act (1998) 
24. Copyright Act (2002) 
  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 69 
 
 
 ANNEX II 
LEGISLATIVE ACTION PLAN  
The document is divided into three sections.  The first section provides the synoptic picture of the 
progress in adoption of legislation.  The second sect ion provides revised agenda for enacting laws 
and/or adopting regulations/decrees for WTO confor mity.  The third section provides a calendar plan 
indicating priorities. 
Section I:  Progress in Adoption of Legislation  
 Since the submission of the Legislative Action Plan to the Working Party on the Accession of 
the Kingdom of Nepal on 21 May 2002, the following progress has taken place in adoption of legislation. 
 The following acts approved by the Parliament , have received royal seal and are in force: 
- Copyright Act 2002; 
- Special Court Act 2002; 
- Nepal Chartered Accountant Act (First Amendment) 2002; 
- Foreign Exchange (Regulation) Act 2002; 
- Several Acts relating to Amending Court Ma nagement and Judicial Administration Act 
2002; and 
- Income Tax Act 2002. 
The Department/Ministry has co mpleted the following activities: 
- Preparation of a preliminary draft of Law on Anti-dumping Measures; 
- Preparation of a preliminary draft of Customs Act (Amendment) and Customs Regulation 
(Amendment); 
- Preparation of a preliminary draft of Expor t Import Act and Export Import Regulations; 
and 
- Preliminary draft of Industrial Policy Law. 
The following bills/instruments were e ndorsed by the Councils of Ministers: 
- Health Service (Regulation and Standard) Act 2002; 
- Plant Resources Act 2002; 
- Seeds (First Amendment) Act 2002; and 
- Instruments of International Plant Protection Convention (IPPC). 
  
 WT/ACC/SPEC/NPL/5/Rev.2 
Page 70 Section II:  Revised Legislative Action Plan  
(Present Status of and Agenda for Nepal's Law-Making Process for WTO Conformity)  
No. Laws/Regulations/ 
Administrative Decisions WTO Agreement Status of Draft/Intend ed Actions Expected Approval Date 
1. Instrument of Ratification of 
WTO Agreement  Marrakech Agreement 
Establishing WTO 1994 Council of Ministers will consider submitting to the Parliament 
for ratification/accession of/to th e WTO Agreement as soon as 
WTO approves membership to Nepal  
2. Income Tax Act 2002 General Approved by the Parliament, April 2002 In force 
3. Bankruptcy/Insolvency Act  General Preparation of draft of the new Act by Ministry of Finance by 
December 2004 
 Endorsement by Council of Ministers by July 2005 September 2005 
4. Foreign Exchange 
(Regulating) Act 2002 
(Amendment) General Approved by the Parliament, April 2002  In force 
5. Competition Act  General Preparation of draft of the new Act by Ministry of Industry, 
Commerce and Supplies by November 2003  
Endorsement by Council of Ministers by February 2004 July 2004 
6. Export Import (Control) Act 
1957 (Amendment)  General Agreement on 
Tariffs and Trade 1994 
 
Agreement on Agriculture 
  
Agreement on Import 
Licensing Procedures. Initial draft being prepared by Department of Commerce by 
August 2003 
 
Submission by Ministry of Industry Commerce and Supplies to 
Council of Ministers by September 2003  
Endorsement by Council of Ministers by October 2003 December 2003 
 
7. Export Import (Control) 
Regulations 1978 (Amendment) General Agreement on 
Tariffs and Trade 1994  
Agreement on Agriculture 
 
Agreement on Import  
Licensing Procedures. Initial draft prepared by Depart ment of Commerce in December 
2002  
Submission by Ministry of Industry Commerce and Supplies to 
Council of Ministers by October 2003 
 
Adoption by Council of Ministers by December 2003 December 2003  
  WT/ACC/SPEC/NPL/5/Rev.2
 Page 71No. Laws/Regulations/ 
Administrative Decisions WTO Agreement Status of Draft/Intend ed Actions Expected Approval Date 
8. Customs Act, 1962 
(Amendment) Agreement on 
Implementation of Article 
VII of GATT 1994 (Customs Valuation) 
 
 Agreement on Rules of 
Origin. Initial draft prepared by Depart ment of Customs in December 
2002 
 Submission by Ministry of Finance to the Council of Ministers 
by June 2003  
 Endorsement by Council of Ministers by September 2003  December 2003 
 
9. Customs Regulation, 1969 
(Amendment) Agreement on 
Implementation of Article VII of GATT 1994 (Customs 
Valuation) 
  
Agreement on Rules of 
Origin. Initial draft prepared by Depart ment of Commerce in December 
2002  
Adoption by Ministry of Finance and submission to Council of 
Ministers by August 2003  
Adoption by Council of Ministers by December 2003 December 2003 
10. Instruments of Ratification 
For United Nations 
Convention on Contracts for 
the International Sale of Goods (Vienna, 1980)  General Endorsement by Council of Mini sters by March 2004  December 2005 
11. Law on Anti-dumping 
Measures Agreement of 
Implementation of Article VI 
of the GATT 1994 (Anti-dumping) Preparation of draft legislation by December 2003 
 
Endorsement by Council of Ministers by March 2004  July 2004 
12. Nepal Standards 
(Certification Mark) Act, 
1980 (Amendment) Agreement on Technical 
Barriers to Trade Preparation of draft amendment by June 2004  
 
Endorsement by Council of Ministers by January 2005  April 2005 
13. Nepal Standards 
(Certification Mark) Regulations, 1982 
(Amendment) Agreement on Technical 
Barriers to Trade Preparation of draft amendment by September 2005  
Adoption by Council of Ministers by December 2005  December 2005 
14. Decision on the 
establishment of Inquiry Points Agreement on Technical 
Barriers to Trade Submission of proposal by WTO Division, Ministry of Industry, 
Commerce and Supplies by April 2003  
Adoption by Ministry of Industry, Commerce and Supplies by 
June 2003 June 2003 
15. Plant Protection Act 1972 
(Amendment) Agreement on the 
Application of Sanitary and 
Phyto-Sanitary Measures Preparation of draft amendment by June 2004  
 
Endorsement by Council of Ministers by January 2005 April 2005  
 WT/ACC/SPEC/NPL/5/Rev.2 
Page 72 No. Laws/Regulations/ 
Administrative Decisions WTO Agreement Status of Draft/Intend ed Actions Expected Approval Date 
16. Plant Protection Regulation 
1975 (Amendment)  Agreement on the 
Application of Sanitary and 
Phyto-Sanitary Measures Preparation of draft amendment by September 2005  
 
Adoption by Council of Ministers by December 2005 December 2005 
17. Instrument of International 
Plant Protection Convention 
(IPPC) Agreement on the 
Application of Sanitary and 
Phyto-Sanitary Measures Endorsed by Council of Minister s in August 2002  December 2005 
18. Seed Act 1998 (First 
Amendment) Agreement on the 
Application of Sanitary and 
Phyto-Sanitary Measures Endorsed by Council of Ministers in August 2002 
 August 2004 
19. Decision on the 
establishment of Inquiry 
Points Agreement on Sanitary and 
Phyto-Sanitary Measures 
 
General Agreement on Tariffs and Trade 1994 Submission of proposal by WTO Division, Ministry of Industry, 
Commerce and Supplies by April 2003 
 
Adoption by Ministry of Industry, Commerce and Supplies by June 2003 June 2003 
20. Environment Act, 1997 
(Amendment) General Preparation of draft amendment by Ministry of Population and 
Environment by December 2004 
 Endorsement by Council of Ministers by July 2005  September 2005 
21. Industrial Property 
(Protection) Act 
 Agreement on Trade-Related 
Aspects of Intellectual 
Property Preparation of new draft legislation by the Department of 
Industry by December 2003 
 Adoption by Ministry of Industry, Commerce and Supplies by 
December  2004 
 Endorsement by Council of Ministers by July 2005 December 2005 
22. Copyright Act 2002 
(Amendment) Agreement on Trade-Related 
Aspects of Intellectual 
Property Rights Approved by the Parliament in August 2002 
  
 In force 
23. Instrument of Ratification of 
Bern Convention for the Protection of Literary and 
Artistic Works 1971 Agreement on Trade-Related 
Aspects of Intellectual Property Rights Endorsement by Council of Ministers by December 2003 
 December 2005 
24. Plant Resources Act Agreement on Trade-Related 
Aspects of Intellectual Property Rights Endorsed by Council of Mi nisters in 2002 December 2003 
25. Access to Genetic 
Resources Act Agreement on Trade-Related 
Aspects of Intellectual 
Property Rights Preparation of draft of the new legislation by Ministry of 
Forestry and Soil Conservation by June 2003 
 
Endorsement by Council of Ministers by December 2003  April 2004  
  WT/ACC/SPEC/NPL/5/Rev.2
 Page 73No. Laws/Regulations/ 
Administrative Decisions WTO Agreement Status of Draft/Intend ed Actions Expected Approval Date 
26. Pharmaceutical Act, 1978 
(Amendment) 
 General Preparation of draft amendment by Ministry of Health by 
December 2004 
Endorsement by Council of Minister by April 2005 September 2005 
27. Cyber Act General Preparation of draft amendment by Ministry of Science and 
Technology by December 2004 
Endorsement by Council of Ministers by April 2005  September 2005 
28. Foreign Investment and 
Technology Transfer Act, 
1992.  (Amendment) General Agreement on Trade 
in Services (GATS) 
 
Agreement on Trade Related 
Investment Measures. Preparation of draft bill by Department of Industry by August 
2003 
 
Submission by Ministry of Industry, Commerce and Supplies to 
Council of Ministers by October 2003  
Endorsement by Council of Ministers by December 2003 February 2004 
29. Foreign Investment and 
Technology Transfer 
Regulations General Agreement on Trade 
in Services (GATS) 
 Agreement on Trade Related 
Investment Measures. Preparation of draft regulation by Department of Industry by 
March 2004 
 Submission by Ministry of Industry, Commerce and Supplies to 
Council of Ministers by April 2004 
 
Endorsement by Council of Ministers by May 2004 May 2004 
30. Industrial Enterprises Act, 
1992 (Amendment) General Agreement on Trade 
in Services (GATS); 
Agreement on Trade Related Investment Measures; and 
Agreement on Subsidies. Preparation of draft bill by Department of Industry by June 
2003 
 Submission by Ministry of Industry, Commerce and Supplies to 
Council of Ministers by October 2003 
 Endorsement by Council of Ministers December 2003  February 2004 
31. Industrial Enterprises 
Regulations General Agreement on Trade 
in Services (GATS) 
 Agreement on Trade Related 
Investment Measures 
 Agreement on Subsidies. Preparation of draft regulations by Department of Industry by 
March 2004 
 Submission by Ministry of Industry, Commerce and Supplies to 
Council of Ministers by April 2004 
 Adoption by Council of Ministers by May 2004 May 2004  
 WT/ACC/SPEC/NPL/5/Rev.2 
Page 74 No. Laws/Regulations/ 
Administrative Decisions WTO Agreement Status of Draft/Intend ed Actions Expected Approval Date 
32. Industrial Policy, 1992 
(Amendment) 
 General Agreement on Trade 
in Services (GATS) 
 Agreement on Trade Related 
Investment Measures 
 Agreement on Subsidies. Preparation of draft policy by Department of Industry by August 
2003 
 Adoption by Ministry of Industry Commerce and Supplies by 
September 2003 September 2003 
33. Foreign Investment and One 
Window Policy, 1992 
(Amendments) General Agreement on Trade 
in Services (GATS) 
 Agreement on Trade Related 
Investment Measures. Preparation of draft Policy by Department of Industry by 
August 2003 
 Adoption by Ministry of Industry, Commerce and Supplies by 
September 2003 September 2003 
34. Labour Act, 1991 
(Amendment) General Agreement on Trade 
in Services (GATS) Preparation of draft amendment by Department of Labour by 
August 2003  
Submission by Ministry of Labour by October 2003 
Endorsement by Council of Ministers by December 2003 February 2004 
35. Company Act, 1997 
(Amendment) General Agreement on Trade 
in Services (GATS) Preparation of draft amendmen t by the Office of Company 
Registrar by August 2003 
 
Adoption by Ministry of Industry, Commerce and Supplies by October 2003 
 
Endorsement by Council of Ministers by December 2003 February 2004 
36. Nepal Bar Council Act, 
1992 (Amendment) General Agreement on Trade 
in Services (GATS) Preparation of draft amendment by Ministry of Law and Justice 
by October 2003  
Endorsement by Council of Ministers by December 2003 February 2004 
37. Nepal Chartered 
Accountants (First Amendment) Act, 2002 General Agreement on Trade 
in Services (GATS) Approved by the Parliament in July 2002 In force 
38. Insurance Act, 1992 
(Amendment) General Agreement on Trade 
in Services (GATS) Preparation of draft amendment by Ministry of Finance by 
October 2003 
 Endorsement by Council of Ministers by December 2003 February 2004 
39. Securities Exchange Act, 
1982 (Amendment) General Agreement on Trade 
in Services (GATS) Preparation of draft bill by Ministry of Finance by October 2003 
 
Endorsement by Council of Ministers by December 2003  February 2004  
  WT/ACC/SPEC/NPL/5/Rev.2
 Page 75No. Laws/Regulations/ 
Administrative Decisions WTO Agreement Status of Draft/Intend ed Actions Expected Approval Date 
40. Bank and Finance 
Institution Act General Agreement on Trade 
in Services (GATS) 
 Draft already submitted by Central Bank of Nepal to the 
Ministry of Finance  
 Adoption by Ministry of Finance by October 2003 
 
Endorsement by Council of Ministers by December 2003 February 2004 
41. Health Institutions 
Operating Act General Agreement on Trade 
in Services (GATS) Endorsed by the Council of Ministers in August 2002 September 2003 
42. Decision on the 
establishment of Inquiry 
Points General Agreement on Trade 
in Services (GATS) Submission of proposal by WTO Division, Ministry of Industry 
Commerce and Supplies by April 2003 
 Adoption by Ministry of Industry, Commerce and Supplies by 
June 2003 June 2003 WT/ACC/SPEC/NPL/5/Rev.2 
Page 76  
 
 Section III:  Calendar Plan
 
 2003 – Expected approval date: 
- Decision on the Establishment of Inquiry Point on TBT, June; 
- Decision on the Establishment of Inquiry Point on SPS, June; 
- Decision on the Establishment of Inquiry Point on Services, June; 
- Industrial Policy, 1992 (Amendment), September; 
- Foreign Investment and One Window Po licy, 1992 (Amendment), September; 
- Health Institutions Operating Act, September; 
- Export Import (Control) Act, 1957 (Amendment), December; 
- Export Import  (Control) Regulations, 1978 (Amendment), December; 
- Customs Act, 1962 (Amendment), December; 
- Customs Regulations, 1969 (Amendment), December; and 
- Plant Resources Act, December. 
  2004 – Expected approval date: 
- Industrial Enterprises Act, 1992 (Amendment), February; 
- Labour Act, 1991 (Amendment), February; 
- Company Act, 1997 (Amendment), February; 
- Nepal Bar Council Act, 19 92 (Amendment), February; 
- Insurance Act, 1992 (Amendment), February; 
- Securities Exchange Act, 1982 (Amendment), February; 
- Bank and Finance Institution Act, February; 
- Foreign Investment and Technology Transfer Act, February; 
- Access to Genetic Resources Act, April; 
- Foreign Investment and Technolog y Transfer Regulations, May; 
- Industrial Enterprises Regulations, May; 
- Law on Anti-Dumping Practices, July; 
- Competition Act, July; and 
- Seed Act, 1998 (First Amendment), August. 
 2005 – Expected approval date: 
- Plant Protection Act, April; 
- Nepal Standards (Certification Mark) Act, 1980, April; 
- Bankruptcy/Insolvency Act, September; 
- Environment Act, September; 
- Pharmaceutical Act, 1978 (Amendment), September; 
- Cyber Act, September; 
- Nepal Standards (Certification Ma rk) Regulations, 1982, December; 
- Plant Protection Regulation, 1975 (Amendment), December; 
- Industrial Property (Protection) Act, December; 
- Instrument of Ratification of Bern Convention, December; 
- Instrument of International Plant Protection Convention (IPPC), December; and 
- Instrument of Ratification for the UN Conven tion on Contracts for the International Sale 
of Good, December. 
  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 77 
 
 
 ANNEX III 
VAT Exemptions  
Exempted from VAT: 
1. Basic Agricultural Products 
 
(a) Paddy rice, wheat, maize, millet, pulses, flour, and similar unprocessed food 
materials. 
(b) Green and fresh vegetables, fresh fruits, fresh eggs and similar products. 
(c) Unprocessed cereals, oil seeds (tobacco, sugar, cotton, cardamom, jute, 
soybean, ground nuts, linseed rape seed, sun flower and similar basic 
agricultural products to be used to make edible oil). 
 
2. Goods of Basic Needs 
 
(a) Edible oil (produced through local oils mills). (b) Piped water, including water supplied by tankers. 
(c) Fuel wood and coal. (d) Kerosene. 
 
3. Live Animals and Animal Products  
(a) He goat, sheep, yak, he buffalo, bore, pigs, rabbit, and similar other animals; 
their fresh milk, and uncooked/unprocessed varieties. 
(b) Cows, she buffalo and she goat. 
(c) Ducks, hens, cocks, turkey and simila r other birds, and their fresh meat, eggs, 
and similar uncooked varieties. 
 
4. Agricultural Inputs  
(a) Seeds of any plants listed in Group 2. 
(b) Manure, fertilizer and soil conditioners. (c) Agricultural hand implements.  
5. Pesticides, made mainly for use on crops 
 
 Medicine, Medical and Similar Health Services 
(a) Services provided by any hospital, cl inics or other institutions approved by 
the Government in order to provide medical or surgical treatment. 
(b) Professional services provided by medical practitioners (doctor, nurse, health 
assistance, etc.) individually or institutionally. 
(c) Goods provided to the recipients in  connection with the supply of services 
listed in group (a) and (b) above. 
(d) Human blood and products derived from human blood. (e) Human or animal organs or tissue for medical research. (f) The supply of services by persons on the registry of veterinary surgeons and 
veterinary doctors. 
(g) Medicine for the treatment of human being and animals. (h) The supply of goods made for, and suitable only for the use of, disabled 
persons. WT/ACC/SPEC/NPL/5/Rev.2 
Page 78  
 
  
6.   Education  
a) The provision of research in a school or university. b) The provision, otherwise than for prof it, of professional or vocational training 
or refresher training. 
c) The provision of education in a school or university and supply of goods 
made in connection with such services. 
 
7.   Books, Newspapers etc. 
 
(a) Books, brochures and pamphlets. (b) Newspapers, newsletters and periodicals. (c) Maps, and charts. (d) Covers, cases and other articles supplie d with items (a) to (c) above if not 
separately charged. 
(e) Radio and television transmissions.  
8.   Artistic and Cultural Goods and Services, Carving Services  
(a) Cultural and artistic services (pai nting, carving and related services). 
(b) Cultural programme. 
(c) Admission to libraries, archaeology, museums, zoos and botanical gardens.  
9.   Passenger Transportation Services  
- The provision of services for the trans port of person from one point in the 
Kingdom of Nepal to another point in the Kingdom of Nepal (except sightseeing trips). 
 
10.   Personal or Professional Service  
- Personal services rendered by lawyers, auditors, engineers, artists, actors, 
singers, dancers, sportsmen, authors, writers, designers, professional sportsmen, insurers, booksellers, translat ors and interpreters institutionally or 
individually. 
 
11.   Other Goods or Services 
 
(a)  Postal services (provided by Nepal only)  
(i) The service of conveyance of letters, money and postal packets by 
the Post Office. 
(ii) The supply by the Post Office of any service in connection with the 
conveyance of letters, money and postal packets. 
(iii) Postage stamps.  
(b)  Financial and insurance services 
 
- Bank notes, and cheque books  (i) The printing and issue of bank notes.  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 79 
 
 
 (ii) The supply of bank notes from outside the Kingdom of Nepal to the 
Kingdom of Nepal. 
(iii) Cheque book.  
(c)  Gold and silver 
 
(i) Gold and gold coins (other than ornaments and goods made of gold). (ii) Silver and silver coins (other than ornaments and goods made of 
silver). 
 
12.   Land and Building 
 
Purchase and rent of land and buildings 
 13.   Betting, Casinos, Lotteries 
 
(a) The provision of any facilities for the placing of bets or the playing of games 
of chance. 
(b) Lottery.    
The following goods or services attract  zero rate  of value added tax: 
 
1. Goods or services purchased or imported by His Majesty the King, Her Majesty the 
Queen, His Majesty the Crown Prince, and other members of the Royal Family. 
 2. Export of goods 
 
(a) Goods exported outside the Kingdom of Nepal; or 
(b) Goods shipped for use as stores on a flight to an eventual destination outside 
the Kingdom of Nepal; or 
(c) Goods loaded for use as stores on ai rcraft to a destination outside the 
Kingdom of Nepal or as merchandise for sale by retail or supplied to persons 
in the course of such a flight. 
 3.   Export of services 
 
(a) A supply of services by a person r esident in the Kingdom of Nepal to a 
person outside the Kingdom of Nepal and having no business establishment, 
agent, or legal representative acting on his behalf in the Kingdom of Nepal. 
(b) Where goods are supplied on a hire or loan basis by a registered person 
resident in Nepal to a person resident outside the Kingdom of Nepal. 
 
4.   Imports of goods and services by accredited diplomats. 
 
In accordance with Section 5 of the Value Added Tax Act, 1996, the exemptions to the VAT were 
equally available to impor ts and domestic products.  WT/ACC/SPEC/NPL/5/Rev.2 
Page 80  
 
 ANNEX IV 
Excise Taxes
 
S.No. HS Code Items Excise duty 
1. 1703.10 Can molasses Rs.  25 per quintal 
2.  Raw sugar in solid form Rs.  55 per quintal 
3. 2106.90.20 Betel/A reca (Pan Parag) nuts mixed with catechu and 
lime with or without nicotine  Rs.  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 
content Rs.  70 per litre 
6. 2306.00 Cider Rs.  70 per litre 
7. 2203.00 Beer Rs.  36 per litre 
8. 2206.00 Chhyang Rs.  15 per litre 
9. 2207.20 Denatured spirits Rs.  6 per litre 
10. 2207.20 Thinner Rs.  25 per litre 
11. 2208.00 Industrial spirits with 57.38 to 80 per cent alcohol 
content by volume, to be used as raw material for 
spirituous drink Rs.  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 volume Rs.  25 per litre 
13.  
2208.20.90 
2208.30.90 2208.50.90 All alcoholic products
 
Up to strength of 40 UP 
Strength of 40 to 60 UP  Strength 60 UP and higher  
(25 UP is equivalent to 43.04% 
40 UP is equivalent to 34.43% 65 UP is equivalent to 20.08%)  
Rs.  260 per LPL 
Rs.  150 per LPL Rs.  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 M Rs.  675 per M 
15. 2402.10 All kinds of cigar Rs.  2.25 per stick 
16. 2403.10.10 Pipe tobacco  Rs.  350 per kg 
17. 2403.99 Tobacco extracts an d essences including chewing 
tobacco  Rs.  165 per kg 
18. 2403.99 Raw chewing tobacco  Rs.  100 per kg 
19. 2523 All kinds of cement Rs.  100 per M.T. 
20. 6901-5 All kinds of bricks Rs.  500 per thousand  
(Equalizing duty) 
21. 8702,  
8703,  
8704 Motor Vehicles  
 
Car, jeep, vans 
Microbuses (11 to 14 seats) Double Cab Pick Up 
Three Wheeler Vehicles (Auto Rickshaw) 
Single Cab Pick Up Delivery Van 
Minibuses  
 
32% 
32% 32% 
32% 
15% 15% 
4% 
22. 3501 All kind of polythene bags Rs.  15 per kg 
  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 81 
 
 
 ANNEX V 
Certification Chart  
Certification Chart 
No. of Quality Certification Mark issued 
for products  
Name of Product No. of Industries 
High Density Polythene Pipe 12 
Biscuits   2 
Ordinary Portland Cement   3 
Mineral Water   3 
Writing and Printing Paper   2 
Toothpaste   1 
Bitumen Emulsion   1 
GI Wire   3 
Deformed Steel Bar and Wires for Concrete Reinforcement 13 
Paints 5 Types   2 
Gun Metal Gate Valve   1 
Soybean Oil and Vegetable Ghee – 2 types   8 
Galvanized Mild Steel Pipe for Water Supply    3 
PVC Cable   6 
Instant Noodles   3 
Hand Made Woollen Carpet   2 
PVC Pipe for Drinking Water Supply   3 
Dry Cell Battery   2 
Beer   4 
LPG Cylinder   1 
Polythene Water Storage Tank   1 
Textile   1 
Tiles 1 
Total 78 
 
 WT/ACC/SPEC/NPL/5/Rev.2 
Page 82  
 
 ANNEX VI 
Export Duties as of July 2002
 
Heading 
No. Sub 
heading 
No. Description of Article Current 
Applied 
Rate (in %)
1 2 3 4 
15.07  Soyabean oil and its fractions, whether or not refined, but not chemically 
modified.  
 1507.10.00 -Crude oil, whether or not degummed 5 
 1507.90.00 -Other 5 
15.11  Palm oil and its fractions, whether or not refined, but not chemically 
modified.  
 1511.10.00 -Crude oil 5 
 1511.90.00 -Other 5 
15.13  Coconut (copra), palm kernel or babassu oil and fractions thereof, whether or not 
refined, but not chemically modified. 
  -Coconut (copra) oil and its fractions:  
 1513.11.00 --Crude oil 2 
 1513.19.00 --Other 2 
  -Palm kernel or babassu oil and fractions thereof:  
 1513.21.00 --Crude oil 5 
 1513.29.00 --Other 5 
15.16  Animal or vegetable fats and oils and their fractions, partly or wholly hydrogenated, 
inter-esterified, reesterified or elaidinised, whether or not refined, but not further 
prepared. 
 1516.10.00  -Animal fats and oils and their fractions 5 
 1516.20.00 -Vegetable fats and oils and their fractions 5 
15.17  Margarine; edible mixtures or preparations of animal or vegetable fats or oils or o f 
fractions of different fats or o ils of this Chapter, other than edible fats or oils or their 
fractions of Heading 15.16. 
 1517.90.00 -Other 5 
17.03  Molasses resulting from the extraction or refining of sugar.    
 1703.10.00 -Cane molasses 5 
 1703.90.00 -Other 5 
25.05  Natural sands of all kinds, whether or not coloured, other than metal- bearing sands o f 
Chapter 26. 
 2505.10.00 -Silica sand and quartz sands Rs.  100 
per cubic 
meter 
 2505.90.00 -Other Rs.  100 
per cubic 
meter 
25.16  Granite, porphyry, basalt, sandstone an d other monumental or building stone, whether 
or not roughly trimmed or merely cut, by sawing or otherwise, into blocks or slabs of a 
rectangular (including square) shape. 
  -Granite:  
   --Crude or roughly trimmed   
 2516.21.10 -- Crushed stones and stone chips upto the size 2 inches for road building Rs.  50 per 
cubic meter  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 83 
 
 
 Heading 
No. Sub 
heading 
No. Description of Article Current 
Applied 
Rate (in %)
1 2 3 4 
 2516.21.20 -- Crushed stones and stone chips of a size more than 2 inches for road 
building Rs.  100 
per cubic 
meter 
 2516.21.30 -- Boulders and uncrushed stones for road building Rs.  300 
per cubic 
meter 
 2516.21.90 -- Mixture of sand and pebbles (chhary) Rs.  100 
per cubic 
meter 
   --Merely cut, by sawing or otherwise, into blocks or slabs of a rectangular 
(including square) shape:   
 2516.22.10 -- Crushed stones and stone chips upto the size 2 inches for road building Rs.  50 per 
cubic 
meter 
 2516.22.20 -- Crushed stones and stone chips of a size more than 2 inches for road 
building Rs.  100 
per cubic meter 
 2516.22.90 -- Boulders and uncrushed stones for road building Rs.  300 
per cubic 
meter 
25.17  Pebbles, gravel, broken or crushed stone, of a kind commonly used for concrete 
aggregates, for road metalling or for railway or other ballast, shingle and flint, whether or not heat-treated; macadam of slag, dross or  similar industrial wa ste, whether or not 
incorporating the materials cited in the fi rst part of the heading tarred macadam; 
granules, chippings and powder, of stones of Heading 25.15 or 25.16,  whether or not heat-treated 
  -Pebbles, gravel, broken or crushed stone, of a kind commonly used for 
concrete aggregates, for road metalling or for railway or other ballast, 
shingle and flint, whether or not heat-treated :   
 2517.10.10 -- Crushed stones and stone chips upto the size 2 inches for road building Rs.  50 per 
cubic meter 
 2517.10.20 -- Crushed stones and stone chips of a size more than 2 inches for road 
building Rs.  100 
per cubic 
meter 
 2517.10.90 -- Boulders and uncrushed stones for road building Rs.  300 
per cubic 
meter 
  -Macadam of slag, dross or simila r Industrial waste,  whether or not 
incorporating the materials cited in Sub-heading 2517.10 :   
 2517.20.10 -- Crushed stones and stone chips upto the size 2 inches for road building Rs.  50 per 
cubic 
meter 
 2517.20.90 -- Crushed stones and stone chips of a size more than 2 inches for road 
building Rs.  100 
per cubic 
meter 
 2517.30.00 -Tarred macadam Rs.  50 per 
cubic 
meter 
  -Granules, chippings and powder, of stones of Heading 25.15 or 25.16, whether or not 
heat-treated: WT/ACC/SPEC/NPL/5/Rev.2 
Page 84  
 
 Heading 
No. Sub 
heading 
No. Description of Article Current 
Applied 
Rate (in %)
1 2 3 4 
 2517.41.00 --Of marble 6 
 2517.49.00  --Other 6 
25.19  Natural magnesium carbonate (magnesite); fused magnesia; dead- burned (sintered) 
magnesia, whether or not containing small quantities of other oxides added before 
sintering; other magnesium oxide, whether or not pure. 
 2519.10.00 -Natural magnesium carbonate (magnesite) Rs.  200 
per cubic 
meter 
 2519.90.00 -Other Rs.  200 
per cubic 
meter 
28.17 2817.00.00 Zinc oxide; zinc peroxide. 3 
32.03   Colouring matter of vegetable or animal origin (including dyeing extracts 
but excluding animal black), whether or not chemically defined; 
preparations based on colouring matter of vegetable or animal origin as 
specified in note 3 to this Chapter:   
  3203.00.10 -- Cutch of acacia (Kachha) Per Kg Rs. 
2/- 
  3203.00.20 -- Catechu of acacia (Kathas) Per Kg Rs. 
5/- 
39.15  Waste, parings and scrap, of plastics.  
 3915.10.00 -Of polymers of ethylene 4 
 3915.20.00 -Of polymers of styrene 4 
 3915.30.00 -Of polymers of vinyl chloride 4 
 3915.90.00 -Of other plastics 4 
39.16  Monofilament of which any cross-sec tional dimension exceeds 1mm, rods, sticks and 
profile shapes, whether or not  surface-worked but not othe rwise worked, of plastics. 
 3916.10.00 -Of polymers of ethylene 4 
 3916.20.00 -Of polymers of vinyl chloride 4 
 3916.90.00 -Of other plastics 4 
39.17  Tubes, pipes and hoses, and fittings ther efor (for example, joints, elbows, flanges), o f 
plastics. 
 3917.10.00 -Artificial guts (sausage casi ngs) of hardened rotein or of cellulosic 
materials 4 
  -Tubes, pipes and hoses, rigid:  
 3917.21.00 --Of polymers of ethylene 4 
 3917.22.00 --Of polymers of propylene 4 
 3917.23.00 --Of polymers of vinyl chloride 4 
 3917.29.00 --Of other plastics 4 
  Other tubes, pipes and hoses:  
 3917.31.00 --Flexible tubes, pipes and hoses, having a minimum burst pressure of 27.6 
Mpa. 4 
 3917.32.00 --Other, not reinforced or otherwise combined with other materials, 
without fittings. 4 
 3917.33.00 --Other, not reinforced or otherwise combined with other materials, with 
fittings. 4 
 3917.39.00 --Other 4  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 85 
 
 
 Heading 
No. Sub 
heading 
No. Description of Article Current 
Applied 
Rate (in %)
1 2 3 4 
 3917.40.00 -Fittings 4 
39.18  Floor coverings of plastics, whether or not self-adhesive, in rolls or in the form of tiles; 
wall or ceiling coverings of plastics, as defined in Note 9 to this Chapter. 
 3918.10.00 -Of polymers of vinyl chloride 4 
 3918.90.00 -Of other plastics 4 
39.19  Self-adhesive plates, sheets, film, foil, tape, strip and other flat shapes, of plastics, 
whether or not in rolls. 
 3919.10.00 -In rolls of a width not exceeding 20 cm 4 
 3919.90.00 -Other 4 
39.20  Other plates, sheets, film, foil and strip, of plastics, non-cellular and not reinforced, 
laminated, supported or similarly combined with other materials. 
 3920.10.00 -Of polymers of ethylene 4 
   3920.20.00 -Of polymers of propylene 4 
 3920.30.00 -Of polymers of styrene 4 
  -Of polymers of vinyl chloride:  
 3920.43.00 - Containing by weight not less than 6% of plasticiser 4 
 3920.49.00 -- Other 4 
  -Of acrylic polymers:  
 3920.51.00 --Of polymethyl methacrylate 4 
 3920.59.00 --Other 4 
  -Of polycarbonates, alkyd resins, polyallylesters or other polyesters:  
 3920.61.00 --Of polycarbonates 4 
 3920.62.00 --Of polyethylene terephthalate 4 
 3920.63.00 --Of unsaturated polyesters 4 
 3920.69.00 --Of other polyesters 4 
  -Of cellulose or its chemical derivatives:  
 3920.71.00 --Of regenerated cellulose 4 
 3920.72.00 --Of vulcanised fibre 4 
 3920.73.00 --Of cellulose acetate 4 
 3920.79.00 --Of other cellulose derivatives 4 
  -Of other plastics:  
 3920.91.00 --Of polyvinyl butyral 4 
 3920.92.00 --Of polyamides 4 
 3920.93.00 --Of amino-resins 4 
 3920.94.00 --Of phenolic resins 4 
 3920.99.00 --Of other plastics 4 
39.21  Other plates, sheets, film, foil and strip, of plastics.  
  -Cellular:  
 3921.11.00 --Of polymers of styrene 4 
 3921.12.00 --Of polymers of vinyl chloride 4 
 3921.13.00 --Of polyurethanes 4 
 3921.14.00 --Of regenerated cellulose 4 
 3921.19.00 --Of other plastics 4 
 3921.90.00 -Other 4 
39.22  Baths, shower-baths, wash- basins, bidets, lavatory pans, seats and covers, flushing 
cisterns and similar sanitary ware, of plastics. 
 3922.10.00 -Baths, shower-b\aths and wash-basins 4 WT/ACC/SPEC/NPL/5/Rev.2 
Page 86  
 
 Heading 
No. Sub 
heading 
No. Description of Article Current 
Applied 
Rate (in %)
1 2 3 4 
 3922.20.00 -Lavatory seats and covers 4 
 3922.90.00 -Other 4 
39.23  Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and 
other closures, of plastics. 
 3923.10.00 -Boxes, cases, cr ates and similar articles 4 
  -Sacks and bags (including cones):  
 3923.21.00 --Of polymers of ethylene 4 
 3923.29.00 --Of other plastics 4 
 3923.30.00 -Carboys, bottles, flasks and similar articles 4 
  -Spools, cops, bobbins and similar supports:  
 3923.40.10 -- Video and audio cassettes without magnetic tape 4 
 3923.40.90 -Other 4 
 3923.50.00 -Stoppers, lids, caps and other closures 4 
 3923.90.00 -Other 4 
39.24  Tableware, kitchenware, other household articles and toilet articles, of 
plastics.  
  -Tableware and kitchenware:       
 3924.10.10 --Infant feeding bottles 4 
 3924.10.90 --Other 4 
 3924.90.00 -Other 4 
39.25  Builders' wares of plastics, no t elsewhere specified or included.  
 3925.10.00 -Reservoirs, tanks, vats and sim ilar containers, of a capacity exceeding 300 
L. 4 
 3925.20.00 -Doors, windows and their frames and thresholds for doors 4 
 3925.30.00 -Shutters, blinds (including venetian blinds) and similar articles and parts 
thereof 4 
 3925.90.00 -Other 4 
39.26  Other articles of plastics and articles of other materials or Headings 39.01 
to 39.14.  
 3926.10.00 -Office or school supplies 4 
 3926.20.00 -Articles of apparel and clothing accessories (i ncluding gloves) 4 
 3926.30.00 -Fittings for furniture, coachwork or the like 4 
 3926.40.00 -Statuettes and other ornamental articles 4 
  - O t h e r :   
 3926.90.10 --Bangles, tika, tikuli and beads 4 
 3926.90.20 -- Plastic dye for shoe making 4 
 3926.90.30 -- Plastic for laboratory equipment 4 
 3926.90.40 -- Pet bottle (raw material for bottle) 4 
 3926.90.90 --Other 4 
44.01  Fuel wood, in logs, in b illets, in twigs, in faggots or in  similar forms; wood in chips or 
particles; sawdust and wood waste and scrap,  whether or not agglomerated in logs 
briquettes, pellets or similar forms. 
 4401.10.00 -Fuel wood, in logs, in billets, in twigs, in faggots or in similar forms; 
wood in chips or particles; sawdust and wood waste and scrap, whether or 
not agglomerated in logs briquettes, pellets or similar forms. 200 
  -Wood in chips or particles:  
 4401.21.00 --Coniferous 200  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 87 
 
 
 Heading 
No. Sub 
heading 
No. Description of Article Current 
Applied 
Rate (in %)
1 2 3 4 
 4401.22.00 --Non-coniferous 200 
 4401.30.00 -Sawdust and wood waste and scrap, whether or not agglomerated in logs, 
briquettes, pellets or similar forms 200 
44.03  Wood in the rough, whether or not stripped of bark or sapwood, or roughly 
squared.  
 4403.10.00 -Treated with paint, stai ns, creosote or other preservatives 200 
 4403.20.00 -Other coniferous 200 
  -Other, of tropical w oodspecified In subheading Note 1 to this Chapter.  
 4403.41.00 -- Dark red meranti, light red meranti and meranti bakau 200 
 4403.49.00 --  Other 200 
  - O t h e r :   
 4403.91.00 --Of oak (Quercus spp.) 200 
 4403.92.00 --Of beech (Fagus spp.) 200 
 4403.99.00 --Other 200 
44.04  Hoopwood; split poles; piles, pickets and stakes of wood, pointed but not sawn 
lengthwise; wooden sticks, roughly trimmed but not turned, bent or otherwise worked, 
suitable for the manufacture of walking-sticks , umbrellas, tool handles or the like; 
chipwood. 
 4404.10.00 -Coniferous 200 
 4404.20.00 -Non-coniferous 200 
44.05 4405.00.00 Wood wool; wood flour. 200 
44.06  Railway or tramway sleep ers (cross-ties) of wood.  
 4406.10.00 -Not impregnated 200 
 4406.90.00 -Other 200 
44.07  Wood sawn or chipped lengthwise, sliced or peeled, whether or not planed, sanded or 
finger-jointed, of a thickness exceeding 6 mm. 
 4407.10.00 -Coniferous 200 
  -Of tropical wood specified In subheading Note 1 to this Chapter:  
 4407.24.00 -- Virola, mahogany (swietenia spp.), imbuia and balsa 200 
 4407.25.00 -- Dark red meranti, right red meranti and meranti bakau 200 
 4407.26.00 -- White lauan, white meranti, white seraya, yellow meranti and alan 200 
 4407.29.00 -- Other 200 
  - O t h e r :   
 4407.91.00 --Of oak 200 
 4407.92.00 --Of beech 200 
 4407.99.00 --Other 200 
44.08  Veneer sheets and sheets for plywood (whether or not spliced) and other wood sawn 
lengthwise, sliced or peeled , whether or not planed, sanded or finger-jointed, of a 
thickness not exceeding 6 mm. 
 4408.10.00 -Coniferous 70 
  - Of tropical wood specified In su bheading Note 1 to this Chapter:  
 4408.31.00 -- Dark red meranti, light red meranti and meranti bakau 70 
 4408.39.00 -- Other 70 
 4408.90.00 -Other 70 
54.02  Synthetic filament yarn (other than sewing thread), not put up for retail sale, including 
synthetic monofilament of less than 67 decitex. 
  -Other yarn, single, with a tw ist exceeding 50 turns per metre  WT/ACC/SPEC/NPL/5/Rev.2 
Page 88  
 
 Heading 
No. Sub 
heading 
No. Description of Article Current 
Applied 
Rate (in %)
1 2 3 4 
   --Of nylon or other polyamides :   
 5402.51.10 -- Texturised yarn made by POY 2 
 5402.51.90 -- Other 0.5 
  --Of polyesters :   
 5402.52.10 -- Texturised yarn made by POY 2 
 5402.52.90 -- Other 0.5 
  --Other :   
 5402.59.10 -- Texturised yarn made by POY 2 
 5402.59.90 -- Other 0.5 
  -Other yarn, multiple (folded) or cabled:  
  --Of nylon or other polymides :   
 5402.61.10 -- Texturised yarn made by POY 2 
 5402.61.90 -- Other 0.5 
  --Of polyesters :   
 5402.62.10 -- Texturised yarn made by POY 2 
 5402.62.90 -- Other 0.5 
   -Other :   
 5402.69.10 -- Texturised yarn made by POY 2 
 5402.69.90 -- Other 0.5 
73.04  Tubes, pipes and hollow profiles, seamless or iron (other than cast iron) or 
steel.  
 7304.10.00 - Line pipe of a kind used for oil or gas pipelines 2 
  - Casing, tubing and drill pipe, of a kind used in drilling for oil or gas:  
 7304.21.00 -- Drill pipe 2 
 7304.29.00 -- Other 2 
  - Other, of circular cross-section, or iron or non-alloy steel:  
 7304.31.00 -- Cold-drawn or cold-rolled (cold-reduced) 2 
 7304.39.00 -- Other 2 
  - Other, of circular cross-section, or iron or non-alloy of stainless steel:  
 7304.41.00 -- Cold-drawn or cold-rolled (cold-reduced) 2 
 7304.49.00 -- Other 2 
  - Other, of circular cross-section, of other alloy steel:  
 7304.51.00 -- Cold-drawn or cold-rolled (cold-reduced) 2 
 7304.59.00 -- Other 2 
 7304.90.00 - Other 2 
73.05  Other tubes and pipes (for example, welded, riveted or similarly closed), having 
circular cross-sections, the external diam eter of which exceeds 406.4 mm, or iron or 
steel. 
  - Line pipe of a kind used for oil or gas pipelines:  
 7305.11.00 -- Longitudinally submerged arc welded 2 
 7305.12.00 -- Other, longitudinally welded 2 
 7305.19.00 -- Other 2 
 7305.20.00 - Casing of a kind used in the drilling for oil or gas 2 
  -Other, welded:  
 7305.31.00 -- Longitudinally welded 2 
 7305.39.00 -- Other 2 
 7305.90.00 - Other 2  WT/ACC/SPEC/NPL/5/Rev.2 
 Page 89 
 
 
 Heading 
No. Sub 
heading 
No. Description of Article Current 
Applied 
Rate (in %)
1 2 3 4 
73.06  Other tubes, pipes and hollow profiles (for example, open seam or welded, riveted or 
similarly closed), or iron or steel. 
 7306.10.00 - Line pipe of a kind used for oil or gas pipelines 2 
 7306.20.00 - Casing and tubing of a kind used in drilling for oil or gas 2 
 7306.30.00 - Other, welded, of circular cross-section of iron or non-alloy steel 2 
 7306.40.00 - Other, welded, of circular cross-section of stainless steel 2 
 7306.50.00 - Other, welded, of circular cross-section of other alloy steel 2 
 7306.60.00 - Other, welded, of non-circular cross-section 2 
 7306.90.00 - Other 2 
73.07  Tube or pipe fittings  (for example, couplings, el bows, sleeves), of iron or 
steel.  
  -Cast fittings:  
 7307.11.00 -- Of non-malleable cast iron 2 
 7307.19.00 -- Other 2 
  - Other of stainless steel:  
 7307.21.00 -- Flanges 2 
 7307.22.00 -- Threaded elbows, bends and sleeves 2 
 7307.23.00 -- Butt welding fittings 2 
 7307.29.00 -- Other 2 
  - Other:  
 7307.91.00 -- Flanges 2 
 7307.92.00 -- Threaded elbows, bends and sleeves 2 
 7307.93.00 -- Butt welding fittings 2 
 7307.99.00 -- Other 2 
74.08  Copper wire.  
  -Of refined copper:  
 7408.11.00 -- Of which the maximum cross-sectional dimesnion exceeds 6 mm 3 
 7408.19.00 --Other 3 
  - Of copper alloys:  
 7408.21.00 -- Of copper-zinc base alloys (brass) 3 
 7408.22.00 -- Of copper-nickel base alloys (cupro-nickel) or copp er-nickel-zinc base 
alloys (nickel silver) 3 
 7408.29.00 -- Other 3 
94.03  Other furniture and parts thereof.  
 9403.70.00 - Furniture of plastics 4 WT/ACC/SPEC/NPL/5/Rev.2 
Page 90  
 
  
[ DRAFT DECISION 
 
ACCESSION OF THE KINGDOM OF NEPAL 
 
Decision of […]  
 
 
 The Ministerial Conference,  
 Having regard to  paragraph 2 of Article XII and paragr aph 1 of Article IX of the Marrakesh 
Agreement Establishing the World Trade Organizati on (the "WTO Agreement"), and the Decision-
Making Procedures under Articles IX and XII of the WTO Agreement agreed by the General Council 
(WT/L/93),  
 Conducting  the functions of the Ministerial Confer ence in the interval between meetings 
pursuant to paragraph 2 of Article IV of the WTO Agreement,   Taking note of the application of the Kingdom of Nepal for accession to WTO Agreement 
dated [date], 
 
 Noting  the results of the negotiations directed toward the establishment of the terms of 
accession of the Kingdom of Nepal to the WTO Agre ement and having prepared a Protocol on the 
Accession of the Kingdom of Nepal,   Decides  as follows: 
 
1. The Kingdom of Nepal may accede to the WT O Agreement on the terms and conditions set 
out in the Protocol annexed to this Decision. 
  
_______________ 
 
   WT/ACC/SPEC/NPL/5/Rev.2 
 Page 91 
 
 
 DRAFT PROTOCOL  
 
ON THE ACCESSION OF THE KINGDOM OF NEPAL 
 
Preamble  
 
 The World Trade Organization (hereinafter referred to as the "WTO"), pursuant to the approval 
of the General Council of the WTO accorded under Article XII of the Marrakesh Agreement Establishing the World Trade Organi zation (hereinafter referred to as the "WTO Agreement"), and the 
Kingdom of Nepal,  
 
 Taking note
 of the Report of the Working Party on the Accession of the Kingdom of Nepal to 
the WTO Agreement reproduced in document WT/ACC/N PL/[…], dated […] (hereinafter referred to as 
the "Working Party Report"),  
 Having regard
 to the results of the negotiations on the accession of the Kingdom of Nepal to the 
WTO Agreement,    Agree
 as follows: 
 
PART I -  GENERAL 
 
1. Upon entry into force of this Prot ocol pursuant to paragraph 8, the Ki ngdom of Ne pal accedes 
to the WTO Agreement pursuant to  Article XII of that Agreement and thereby becomes a Member of 
the WTO.    
2. The WTO Agreement to which the Kingdom of Nepal accedes shall be the WTO Agreement, 
including the Explanatory Notes to that Agreement, as  rectified, amended or ot herwise modified by such 
legal instruments as may have entered into force before the date of entry into force of this Protocol.  This 
Protocol, which shall include the commitments referr ed to in paragraph [150] of the Working Party 
Report, shall be an integral part of the WTO Agreement. 
 
3. Except as otherwise provided for in para graph [150] of the Working Party Report, those 
obligations in the Multilateral Trade Agreements annexed to the WTO Agreement that are to be 
implemented over a period of time starting with the entry into force of that Agreement shall be 
implemented by the Kingdom of Nepal as if it had accepted that Agreement on the date of its entry into force. 
 
4. The Kingdom of Nepal may maintain a measure inconsistent with paragraph 1 of Article II of the GATS provided that such a measure was recorded in  the list of Article II Exemptions annexed to this 
Protocol and meets the conditions of the A nnex to the GATS on Article II Exemptions. 
 
PART II - SCHEDULES 
 
5. The Schedules reproduced in Annex I to th is Protocol shall become the Schedule of 
Concessions and Commitm ents annexed to the General Agr eement on Tariffs and Trade 1994 
(hereinafter referred to as the "GATT 1994") and the Schedule of Specific Co mmitments annexed to the 
General Agreement on Trade in Services (hereinafter referred to as "GATS") relating to the Kingdom of 
Nepal.  The staging of the concessi ons and commitments listed in the Schedules shall be implemented as 
specified in the relevant parts of the respective Schedules.  WT/ACC/SPEC/NPL/5/Rev.2 
Page 92  
 
 6. For the purpose of the reference in paragraph 6(a)  of Article II of the GATT 1994 to the date of 
that Agreement, the applicable date in respect of the Schedules of Conc essions and Commitments 
annexed to this Protocol shall be the date  of entry into force of this Protocol. 
 
PART III - FINAL PROVISIONS 
 
7. This Protocol shall be open for acceptance, by  signature or otherwise, by the Kingdom of Nepal 
until […].  8. This Protocol shall enter into force on the thirtieth day following the day upon which it shall 
have been accepted by the Kingdom of Nepal.   
 9. This Protocol shall be deposited with the Director-General of the WTO.  The Director-General of the WTO shall promptly furnish a certified copy of this Protocol and a notification of acceptance by 
the Kingdom of Nepal thereto pursuant to paragraph 7 to each Member of the WTO and to the 
Kingdom of Nepal.   
  This Protocol shall be registered in accordance with the provisions of Ar ticle 102 of the Charter 
of the United Nations.     Done at [place] this [....  date ] of [............mont h] two thousand and three, in a single copy in the 
English, French and Spanish languages, each te xt being authentic, except that a Schedule 
annexed hereto may specify that it is au thentic in only one of these languages. 
 
_______________ 
   WT/ACC/SPEC/NPL/5/Rev.2 
 Page 93 
 
 
 ANNEX I 
    
 
  
  
SCHEDULE […] – THE KINGDOM OF NEPAL 
 
 
Authentic only in the … language. 
 
(Circulated in document WT/ACC/NPL/…/Add.1) 
 
  
_______________ 
  
  
SCHEDULE OF SPECIFIC COMMITMENTS ON SERVICES 
LIST OF ARTICLE II EXEMPTIONS 
 
 
Authentic only in the … language. 
 
(Circulated in document WT/ACC/NPL/…/Add.2)  ] 
 
 
  
__________