WORLD TRADE ORGANIZATION  
ORGANISATION MONDIALE DU COMMERCE  
ORGANIZACIÓN MUNDIAL DEL COMERCIO 
WT/TPR/M/257/Add.1 
2 May 2012 
 (12-2307) 
Trade Policy Review Body 
13 and 15 March 2012 Original: English/ 
 anglais/  inglés 
 
 
TRADE POLICY REVIEW 
NEPAL 
Record of the Meeting 
Addendum 
Chairperson:  H.E. Mr. Eduardo Muñoz Gómez (Colombia) 
 This document contains the advance writte n questions, and replies provided by Nepal.1 
 
__________________________________________________________________________________  
 
Organe d'examen des politiques commerciales 
13 et 15 mars 2012  
EXAMEN DES POLITIQUES COMMERCIALES 
NEPAL 
Compte rendu de la réunion 
Addendum 
Président:  S.E. M. Eduardo Muñoz Gómez (Colombia) 
 
 Le présent document contient les questions écrites communiquées à l'avance et les réponses 
fournies par Nepal.1 
 
__________________________________________________________________________________  
Órgano de Examen de la s Políticas Comerciales 
13 y 15 de marzo de 2012  
EXAMEN DE LAS POLÍTICAS COMERCIALES 
NEPAL 
Acta de la reunión 
Addendum 
Presidente:  Excmo. Sr. Eduar do Muñoz Gómez (Colombia) 
 
 En el presente documento figuran las pre guntas presentadas anticipadamente por escrito, 
junto con las respuestas facilitadas por Nepal.1 
                                                      
1 In English only./En anglais seulement./En inglés solamente.   WT/TPR/M/257/Add.1 
 Page 3 
 
 
 REPLIES PROVIDED BY NEPAL 
ARGENTINA 
 
Report by the Secretariat (WT/TPR/S/257) 
 
SUMMARY  
 Paragraph 12 refers to Nepal's Aid-for-Trade age nda.  Nepal's efforts to mainstream trade into 
its national process, improve donor coordination, an d implement the NTIS priorities are supported by 
the Enhanced Integrated Framework, in partic ular through a multi-year project for enhancing 
institutional capacity. 
 
1. Could Nepal please provide more details of th e aspects on which Aid for Trade should focus? 
 Response:  
 Nepal emphasizes Aid for Trade in addressing supply- side capacities (technical and standard related 
issues, human resources, increasing absorptive capac ities of government agencies, among others) and 
infrastructure development.   In addition, the Government would like the Ai d for Trade to focus on production and export of 
priority products listed in NTIS 2010 and to align projects as outlined in the Action Matrices.  
 
I. ECONOMIC ENVIRONMENT (ii) Trade performance 
  Paragraph 8 explains that one of the main char acteristics of Nepal's exports is that they have 
been rather unstable and weak.  Nepal's export basket is narrow, and its export markets are 
concentrated in a few countries, making exports  susceptible to global economic volatility. 
 
2. What are the characteristics of exporting co mpanies?  What type of company exports the 
most? 
 
Response:  
 
Most of the exporting companies are privately owned.  They are either private firms or companies or 
joint-ventures. These are registered in concerned g overnment authorities and have been involved in 
this sector for a long time. They are mostly concentrated in and around major cities and nearby the 
southern border of Nepal.   The type of companies exporting the most to th e third countries are related to woolen carpet, 
agriculture products such as pulses, pashmina, pape r and paper products and handicrafts (metal and 
wooden).  
 
Meanwhile, the major companies exporting to Indi a are mainly related to jute goods, zinc sheet, 
textiles, thread, polyster yarn, juice, cardamom, a nd MS and GI pipes, among others.  These are not 
large scale exporting companies.  For instance, the total export to third countries of woolen carpet in 
fiscal year 2010/11 was just around NRs 5 billion out of  a total of NRs 64.6 billion and total export of 
jute goods was NRs 4 billion. 
 WT/TPR/M/257/Add.1 
Page 4  
 
 (a) Composition of trade 
  Paragraph 11 explains that Nepal's export basket has changed in the past decade. 
 
3. Does Nepal feel that its accession to the WTO had an effect on this indicator? 
 
Response:  
 The accession to the WTO did have an impact on ch anging the composition of Nepal's export basket.  
For instance, the end of Agreement on Textiles & Clothing in 2005 had a severe impact on Nepal's 
garment export because of the preference erosion in the U.S.  
 Meanwhile, due to the duty free quota free market  access under the WTO or relatively lower tariff 
enjoyed by Nepal in some markets for some produc ts, the total exports have increased.  However, 
Nepal has not been able to utilize many con cessions provided by the developed and developing 
countries under WTO provisions due to its supply side constraints.  
 
(iii) Supply-side constraints as reflected in sectoral performance 
  
Paragraph 22 explains that the energy crisis is a major challenge for the economy and that 
Nepal has been unable to use its abundant hydropower resources.  It also explains that the 
Government's current priority is to produce and supply enough electricity to meet demand, by 
increasing the level of investment in this  area and rapidly developing hydropower. 
 
4. Could Nepal please explain what measures are considered a priority for boosting energy 
production?  What measures has it taken to increase investment in this sector? 
 
Response:  
 
 In order to boost energy production, emphasi s has been given to harness abundant water 
resources and favourable geo-physical featur es of Nepal for hydro-power generation.  
Tapping the hydropower potentiality is the government priority for increasing energy 
production.  In order to minimize the imba lances of power gene ration and demand during 
rainy and drought season, implementation of th e big reservoir based projects has been given 
priority.   
 For the purpose of increasing investment in the hydropower sector, a 'power emergency' has 
been declared recently and new facilities and incen tives have been offered to private investors 
who produce hydropower within 2071 B.S. (Mid April, 2015 A.D.).  
 
 The Government expects that after the provisi ons of the above incentives, at least a dozen 
projects producing up to 70 Mega Watt would be co mpleted within a year.  It is also expected 
that at least 300 MW power will be produced by the private sector within the next three years. 
 
 In addition, a Hydropower Development and Investment Company  has been registered with a 
view to set up an effective mechanism for scaling up investment in energy sector by 
mobilizing domestic and external resources. 
 
 Similarly, the Government is also consid ering the implementation of the "People's 
Hydropower" programme with the direct i nvolvement of local bodies and other public 
institutions, such as the cooperatives, in the hydro-power generation and distribution. In 
addition to this, the Government of Nepal is al so providing grants and other facilities to the  WT/TPR/M/257/Add.1 
 Page 5 
 
 
 micro-hydropower producers generating up to 1 Megawatt of power.  Moreover, banks and 
financial institutions have to pr ovide certain percentage of thei r total lending to the deprived 
sector which includes the lending of up to 10 million Nepalese Rupees for micro-hydropower projects generating up to 500 Kilowatt of power.  
 In addition to the above, the Government is also  exploring the possibility of generating energy 
from solar power, wind power and thermal plants.  The Government is currently working to 
formulate a wind energy and bio-fuel policy in  order to make explicit guideline for wind 
energy and bio-fuel programme.   
 Arrangements have been made to exempt, machinery imported by the private sector to 
generate solar and other alternative energy, fro m customs duties. To this, guidelines are being 
prepared and implemented. 
 
II. TRADE AND INVESTMENT REGIMES  
 Paragraph 9 explains that one of the NT IS 2010 objectives is to strengthen trade 
negotiations (especially bilateral) to ensure pr oper market access for 19 priority economic activities 
with export potential. 
 
5. Could Nepal please explain how bilatera l negotiations have developed since it joined 
the WTO, bearing in mind that it has no t entered into any bilateral agreements 
since 1995 (paragraph 23)? 
 
Response:  
 
After the accession to WTO, Nepal has entered into negotiations with many countries to improve the 
existing bilateral trade agreements, as well as to enter into new ones.  These improved agreements 
have certainly enhanced the market accessibility an d smoothened trade and transit procedure that have 
helped to strengthen the comp etitiveness of Nepali products. 
 Several periodic revisions of exis ting bilateral trade treaties with I ndia, China, Bangladesh and others 
have certainly helped increase our trade with othe r countries.  Lately, Nepal has initiated FTA with 
neighboring countries.  The bilateral trade treaty with India was revised in 2009, the trade treaty with 
China was revised recently, the bila teral trade agreement with Bhutan is in final stage and a proposal 
regarding FTA with Thailand has been made.  Nepal has also signed a Trade and Investment Fram ework Agreement with the U.S.  Nepal is willing 
to sign FTA with any WTO member countries in the days ahead.  
 IV. TRADE POLICIES BY SECTOR (1) A
GRICULTURE AND RELATED ACTIVITIES  
(ii) Agricultural policy 
  Paragraph 11 explains the main objectives of Nepal's food and nutrition security plan. 
 
6. Could Nepal please describe this plan? 
 Response:  
 
The National Food and Nutrition Security Plan of Action (FNSP) has been proposed with following 
objectives;  WT/TPR/M/257/Add.1 
Page 6  
 
 (i) Food availability through production and international trade,  
(ii) Access to foods through programs to fight hunger such as own productions, market 
mechanisms, social safety-nets,  
(iii) Utilizations of foods for better nutritiona l outcomes, diversified and micronutrient 
rich diets, food quality, standards, safety,  
(iv) Stability in food markets through price stab ilizations, disaster managements, coping 
mechanisms to changes in climates, etc.  
(v) Cross-cutting aspects related to development of policies, legislations, institutions, 
human resources, information systems, etc. 
 
 
AUSTRALIA 
 Report by Nepal (WT/TPR/G/257) 
 
2. Macroeconomic Services 
2.2.3 Water Resources 
 
Page 9, paras 13-15  
 
Nepal's report notes the enormous potential of th e hydro-sector.  Nepal has 80,000MW potential, with 
only 850 MW currently installed.  Less than 10 MW of electricity is connected to the grid every year, 
while demand for energy goes up more than 100 MW each year.  Nepal needs about 2500 MW 
additional electricity in the next five years to meet demand.     
 Can the Government of Nepal provide further information regarding any plans to encourage 
Foreign Direct Investment in the hydro-electric sector? 
 
Response:  
 
 In order to encourage foreign investment in hydro-electric sector in Nepal, the Government 
has made strong commitment to build envir onment conducive to reliable security measures, 
industrial peace, simple and preferential tax system, and repatriation of the investment.  
 
 Similarly, to bring effectiveness in the coordination among the governmental agencies and 
minimize the existing cumbersome processes and to facilitate the implementation process in 
hydropower and other large projects, the Gove rnment of Nepal has recently constituted a 
high level Investment Board under the chairmanship of the Prime Minister as a one window unit.  The objectives of Board are to mobilize th e investment of public-private partnership, 
co-operative and national, as well as foreign pr ivate sector for economic development, to 
accelerate the process of industrialization in systematic manner, and to develop strong, 
dynamic and competitive economy by constructing infrastructures.  The Board has the power to approve the investment to be made in hydro power project having the capacity of five hundred or more than five hundred megawatt on fast track basis. 
 
 In order to simplify the licensing procedures fo r hydropower generation projects and also to 
make them scientific, the Ministry of Energy  has issued new Directives on the procedures for 
licensing of hydropower generation projects on 29 January 2012 by exercising the power conferred to it by Rule 94A of the Electricity  Rules 1993.  The said Directives have been 
amended on 29 February 2012 in or der to further simplify the procedures for licensing so that 
private sector and foreign power producers are enc ouraged to make investment in this sector. 
  WT/TPR/M/257/Add.1 
 Page 7 
 
 
  Moreover, a foreign national visiting Nepal in  connection with undertaking any study or 
carrying out any research with the objective of making investment in Nepal is provided a non-tourist visa for up to six months.  A foreign investor or dependent family or authorized 
representative of such a foreign investor and dependent family of such authorized representative is, for the purpose of stay in Nepal, provided with a business visa until such 
foreign investment is retained in Nepal.  Fu rthermore, a foreign investor who, at a time, 
makes investment in an amount no less than one hundred thousand USD or in convertible 
foreign currency equivalent thereto, and his/he r dependent family, is granted a residential 
visa for the duration of such investment.  
 In order to promote and protect foreign investment and to provide additional incentives to 
foreign investors in general, the Government  of Nepal has taken the policy of concluding 
bilateral investment promotion and prot ection agreements as well as double taxation 
avoidance agreements with other countries. 
 
Report by the Secretariat (WT-TPR-S-275-05)  
II. TRADE AND INVESTMENT REGIMES 
(4) T
RADE AGREEMENTS  
(i) Participation in the WTO  Page 15, Para 14 
 
Australia notes the commitments Nepal made in acceding to the WTO and welcomes the GoN requesting the assistance of the Secretariat to a ddress its outstanding notifications, including to the 
Committee on Agriculture.  
 When, with assistance from the Secretariat, does Nepal plan to provide these notifications? 
 Response:  
 
The Government of Nepal is committed to provide  these notifications as soon as it receives technical 
assistance from the Secretariat. In this regard, th e Government of Nepal requests WTO to provide 
necessary assistance at the earliest. 
 
IV. TRADE POLICIES BY SECTOR (1) AGRICULTURE AND RELATED SERVICES (ii) Agricultural Policy 
 
Page 59, para 9  
 
The Secretariat's report underlines the problem of fo od insecurity, noting that rice, which accounts for 
20% of Nepal's agricultural GDP and nearly 50% of to tal food grains, lags far behind rates in other 
rice producing countries.  Nepal's report (page 6, para 4) notes that "Agriculture in Nepal, despite six 
decades of development efforts, has remained undeveloped. 
 
 Is the Government of Nepal planning any chang es to its agricultural policy regime to enhance 
food security?  
 WT/TPR/M/257/Add.1 
Page 8  
 
 Response:  
 
The interim constitution of Nepal,  2007 has recognized food soverei gnty as one of the fundamental 
human rights which was consequently reflected in the Three Years Interim Plan (2007-2010) as food 
security for all citizens.  The Government of Nepal has established the National Food Security 
Steering Committee under the National Planning Commission and a Food Security Working Group 
(FSWG) in the Ministry of Agriculture and Coopera tives.  Furthermore, the Government of Nepal has 
implemented the National Agricultural Policy in 2004.  This is an umbrella policy on agriculture that 
has enhanced food security.  
 
Nepal adopted the 20-year Agriculture Perspective Plan (APP) as a guiding strategy for the overall 
agricultural development of the country. The A PP (1995—2015) emphasizes a few priority inputs, 
outputs and outcomes. The 'Green Revolution' package for the Terai Region and high value 
commodities for the Hill Region are the strategi es for achieving catch-up growth, agribusiness 
development, poverty reduction a nd environmental improvement. Re gional interaction between the 
Hill and Terai Regions based on their specific compar ative advantages are central to the APP and are 
premised basically on the propositio n of rural growth linkages.  
In recent years, the Government of Nepal has fo cused on specific policies and strategies which are 
geared towards promoting the domestic market  base and commercialization of agricultural 
production.  The private sector and NGOs' roles are recognized and the role of the state has been 
increasingly oriented to facilitation rather than im plementation, unlike in the past. Meanwhile, the 
National Food and Nutrition Security Plan of Action (FNSP) has been proposed with following objectives;  
(i) Food availability through production and international trade,  
(ii) Access to foods through programs to fight hunger such as own productions, market 
mechanisms, social safety-nets,  
(iii) Utilizations of foods for better nutritiona l outcomes, diversified and micronutrient 
rich diets, food quality, standards, safety,  
(iv) Stability in food markets through price stab ilizations, disaster managements, coping 
mechanisms to changes in climates, etc  
(v) Cross-cutting aspects related to development of policies, legislations, institutions, 
human resources, information systems, etc. 
 Likewise, the Government's food safety net has been taken care by the Nepal Food Corporation (NFC), which is responsible for the supply of food grains to the food deficit districts.  Its main 
objectives are to provide food to consumers at fair prices;  to intervene the food grain market to 
stabilize prices;  manage food aid from donor agencies and hold food for emergencies.  It has also adequately maintained SAARC Food Security Stor age and National Food Security Storage.  As a 
result of these programs, the number of food-shorta ge districts that NFC was supplying food grains 
with, is reduced to 23.   
 What role does trade and trade liberalization pl ay in Nepal's food security framework? 
 Response:  
 
Over the years due to trade liberalization, imports of varieties and quantities of food items have increased, which has enhanced the acces s to food in competitive price.   However, the current Global 
Food Crisis has posed risk of hunger among the poor people.      Nepal started liberalizing on both domestic and international fronts from early 1980s.  Nepal has the 
lowest tariffs in South Asia.  It has taken several steps to downsize its public distribution system and 
removed almost all agricultural subsidies.  Severa l aggregate level indicators of food sufficiency and  WT/TPR/M/257/Add.1 
 Page 9 
 
 
 security (per capita food availability, extent of ma lnourishment) show improvement in this context. 
The caveats are that many other indicators that are equally relevant for food security, such as 
agricultural productivity, have shown little or no im provement.  When compared with other South 
Asian countries' profiles, food production index, pr oduction, and food price index show that Nepal 
presents a mixed picture vis-à-vis other South Asian countries.  In particular, since the 1990s the per 
capita nutrient availability has improved in Nepal.  
 
Page 60, Para 12 
 
Australia welcomes Nepal's frank assessment of its  development priorities and its commitment to the 
role the WTO can play in assisting economic developm ent.  Australia would be grateful for advice on 
the long term linkages between the Nepal Trade In tegration Strategy (NTIS) and the Agricultural 
Perspective Plan (APP).  
 Under the context of these frameworks we seek advice as to what priority Nepal places on 
seeking new agricultural market access to achieve its development priorities? 
 
Response:  
 Due to perishable nature of many agricultural products, inadequate agro processing enterprises and 
basic infrastructure (SPS, other technical standards,  ware house, refer containers etc), Nepal has to 
confine most of its agricultural exports to ne ighboring countries.  However, if the required 
infrastructure is developed with the technical and financial assistance of development partners, Nepal 
can export its agricultural products to many deve loped and developing countries under duty free, 
quota free market access provision of WTO.   CHINA 
 
QUESTIONS REGARDING THE SECRETARIAT REPORT  
 
II. TRADE AND INVESTMENT REGIMES 
 
Page 13, Para 7 
 
The 2009 Trade Policy, which is being implemente d through the Nepal Trade Integration Strategy 
(NTIS) 2010 adopted on 24 June 2010, recognizes the effective role of trade in achieving sustainable 
and inclusive economic growth, and in transformi ng a traditional agrarian economy into a modern 
economy.  
 
Question: 
 
1. Could Nepal share with the rest of the memb ership the progress of the implementation of the 
NTIS so far and what challenges it still faces, if any ? 
 Response: 
 
Nepal has been actively working on implementing th e recommendations of NTIS 2010.  Within just 
over a year, product specific strategies for export prom otion have been designed in consultation with 
relevant stakeholders.  The MoCS has been ac tively working on harmonizing and implementing all 
trade promotion measures listed in NTIS 2010.  
 WT/TPR/M/257/Add.1 
Page 10  
 
 For the implementation of NTIS, the MoCS is, u nder National Implementation Arrangement, working 
on Tier 1 activities with several stakeholders and othe r line ministries.  In this process, six technical 
committees have been constituted and they shall be shortly submitting Tier 2 Project Proposals. 
Moreover, support has been received from the local de velopment partners (USAID, GIZ, EU etc.) in 
the areas identified by NTIS 2010. 
 
Harmonization of development partners' policies on trade, low level of commitment of development 
partners at local level and insufficient resource are so me of the major challenges that relate to the full 
implementation of the recommendation outlined in NTIS 2010. 
 
Page 26, Para 68 
 
In the 2010/11 OECD/WTO Aid for Trade Questionnai re, the Government of Nepal assesses that, so 
far, aid for trade has shown only limited contribut ion to its overall goal – increased economic growth 
and poverty reduction – and to its aim of increasing and diversifying exports.    
 Question:  2. In Nepal's view, what has prevented Aid for Trade from achieving its full potential? 
 
Response:  
 
There are several reasons that have prevented Aid for Trade from achieving its full potential.  Firstly, 
the concept of Aid for Trade needs clarity at global  level.  Secondly, many development partners in 
the recipient countries seem to be unaware about the pr ovisions of Aid for Trade.  Thirdly, sometimes, 
the clear cut instructions have not  been passed to the local developm ent partners from their respective 
governments.  Lastly, the amount allocated throu gh this mechanism is also very insufficient. 
 
The other main hurdles include lack of alignment of Aid for Trade with government priorities, gap 
between disbursement and commitment, more focus given to software than hardware and lack of 
appropriate apparatus to track Aid for Trade funding at the national level.  
 
III. TRADE POLICIES AND PRACTICES BY MEASURE  
 
Page 44, Para 68 
 
Nepal does not have special economic zones (SEZs).   The Government is preparing a bill on SEZs, 
with the intention of attracting investment and promoting exports.  Question:  3. Could Nepal kindly indicate the progress of  the draft bill on SEZs? What are the main 
contents in this bill? 
 
Response: 
 
 The Bill on SEZs has already been finalized and approved by the Council of Ministers of the 
Government of Nepal, and it has also been subm itted with the Legislature-Parliament for its 
approval. The Government hopes that the Bill woul d be passed into an Act in near future.  
The proposed Bill has ten different chapters and 54 Sections.  It includes provisions such as 
the establishment of special economic zones in a location specified by the Government of 
Nepal by publishing a notification in Nepal Gazette;  the licensing procedures for the  WT/TPR/M/257/Add.1 
 Page 11 
 
 
 enterprises to be established in the SEZs a nd the terms and responsibilities of the license-
holders;  the establishment and powers, duties and functions of the Special Economic Zone 
Authority;  the formation and other managerial  provisions of the Board of Directors of the 
SEZ Authority;  the special incentives and con cessions to be enjoyed by the enterprises 
established in the SEZs;  the provisions rela ting to the workers and employees in the 
enterprises established in the SEZs a nd other miscellaneous provisions.  
 
Question: 
 
4. Will there be any specific requirements for forei gn-invested firms if they are to be established 
in SEZs? 
 
Response: 
 
 Under the proposed SEZ Bill, the requirements for the establishment of enterprises in the 
SEZs are the same for both the foreign-inv ested and domestic firms.  So, no additional 
requirement is prescribed in the said Bill for fo reign-invested firms.  Moreover, because of 
their nature as foreign-invested firms, they will are entitled to additional facilities, such as 
repatriation of their investment in foreign convertible currencies. 
 
 
EUROPEAN UNION 
 REPORT BY THE WTO SECRETARIAT  
 
SUMMARY  WTO Secretariat's report, page x, para. 32 
 
The Secretariat's report states that "/…/Further libera lization of services should improve the efficiency 
of the economy as a whole and the competitiveness of Nepalese exports, /…/." 
 
1. In this regard, could Nepal provide information on its intentions to further open up its services 
market to attract foreign direct investment?  
 Response:  
 
Nepal considers itself as the most liberal country in South Asia for FDI in services.  It has already 
opened up 11 sectors and 70 sub-sectors for service tr ade under the WTO norms.  As a result FDI in 
tourism, banking, insurance, ICT, education and health sectors has increased significantly.  
In addition, Nepal is examining the possib ilities of further liberalizing the service sector.  
 WTO Secretariat's report, page x, para. 32  
The Secretariat report describes Nepal's export ta xes applied on some produc ts, including on wood:  
"/…/For example, levying export tax on wood tends to discourage the export of wood.  When demand 
for wood from other countries increases, the expor t tax on wood tends to encourage illegal wood 
exports." 
 
2. Could Nepal inform whether it is consid ering phasing out the export tax on wood?  
 WT/TPR/M/257/Add.1 
Page 12  
 
 Response:  
 
For the protection of environment, Nepal still requi res high export tariff on wood.  In addition, Nepal 
does not have sufficient quantity of wood to export.    II. TRADE AND INVESTMENT REGIMES (5) I
NVESTMENT FRAMEWORK  
 WTO Secretariat's report, pages 18-20 
 
3. Can Nepal confirm that economic activity undertaken  in relation to a new or existing investment 
must respect Nepal's national labour law, the fundame ntal rights at work as embodied by the ILO's 
2008 Declaration on Social Justice for a Fair Global isation and the 8 core ILO Conventions (nos. 
29, 87, 98, 100, 105, 111, 138 and 182)?  How does Nepal ensure that these are in fact respected? 
 
Response:  
 
 The Interim Constitution of Nepal, 2007 guarantees labour related rights by stipulating that every 
worker and employee shall have the right to appropriate labour exercise and that every worker and employee shall have the right to form and join trade unions and to engage in collective 
bargaining for the protection of their respective interests, as provided in law. 
 
 Similarly, Nepal has already ratified all the core  ILO Conventions referred  to in the question, 
except the Convention No.87. The principles and the rights embodied in these Conventions have 
been incorporated into various labour related Acts and Rules, including the Labour Act, 1991, 
Labour Rules, 1993, the Trade Union Act, 1992, Child Labour (Prohibition and Regulation) Act, 
2000 and Bonded Labour (Prohibiti on) Act, 2002. These Acts guarantee all the fundamental 
labour rights and standards enshrined in the core  ILO Conventions ratified by Nepal.  Even in 
cases where the provisions of national labour laws  are inconsistent with the provisions of the 
ILO Conventions ratified by Nepal, the provisi ons of the ILO Conventions prevail over the 
provisions of national labour laws, pursuant to  Section 9.1 of the Nepal Treaty Act, 1990. 
 
 Different institutional and enforcement mech anisms have been put in place under the 
above-mentioned labour rela ted laws in order to ensure that  the labour rights and standards 
provided in the Constitution and th e above-mentioned Acts and Rules are respected in practice.  
The institutional mechanisms include the provisi ons of Central Labour Advisory Board at the 
central level;  the Labour Relations Committee in each enterprise;  the establishment of Labour 
Offices and the appointment of Labour Offi cers; the provision of Labour Court;  and the 
registration of different trade unions, among others.  Similarly, the enforcement mechanism 
includes the provisions of compensation for victims and the punishment for those who violate 
the labour rights and standards enshrined in the national labour laws.   
 
III. TRADE POLICIES AND PRACTICES BY MEASURE (1) M
EASURES DIRECTLY AFFECTING IMPORTS  
(i) Customs procedures, valuation, and rules of origin (c) Rules of origin 
 
WTO Secretariat's report, page 28, table III.1 and page 29, para. 10 
 In the Secretariat's report, in table III.1, it is stated that imports from third countries need to be 
accompanied by a certificate of origin. Paragraph 10 informs that Nepal does not apply non preferential origin rules.   WT/TPR/M/257/Add.1 
 Page 13 
 
 
  
4. Could Nepal confirm that an origin certificate is not required in case of non-preferential 
imports?   Response:  
 
Nepal requires Certificate of origin for non-preferential import. 
 
5. However, if such certificate is required, could Nepal explain its purpose?  
 
Response:  
 
Origin certificate is required to control the c ounterfeit goods and for the supporting documents to 
verify the value of goods to be determined unde r the WTO Agreement on Customs Valuation.  Until 
finalisation of the Harmonisation Work Program in the WTO, Members can apply their own 
non-preferential origin.  As the rules applied by th e exporting countries may, therefore, be different, 
the same good undergoing the same manufacturing pr ocess in one exporting country will obtain the 
origin of that country, while maintaining its pr evious origin if exported from another country. 
 
6. What is the value of a certificate issued on the basis of the rules applied by the exporting 
countries, which may be different pending the outc ome of the WTO Harmonisation Work Program for 
non-preferential origin?  
 Response:  
 Origin certificate is required to control the c ounterfeit goods and for the supporting documents to 
verify the value of a goods to be determined  under the WTO Agreement on Customs Valuation. 
 
(iii) Tariffs 
(b) Applied MFN tariffs 
 
WTO Secretariat's report, page 32, para. 22 
 
The Secretariat's report states that  "Between 2002/03 and 2011/12, despite the overall reduction in the 
simple average MFN tariff rate, the applied MFN tariff rates increased on dairy products, coffee and 
tea, cotton, and other agricultural products n.e.s. In  addition, the applied MFN tariff rate for petroleum 
is above Nepal's final bound level." 
 
7. Could Nepal confirm this information and elab orate further on the reasons for the increase? 
 Response:  
 Applied MFN tariff rates increased in tea for slab  adjustment after abolition of 25% slab. But the 
changes are within the bound rate. 
 
(2) M
EASURES DIRECTLY AFFECTING EXPORTS  
 
WTO Secretariat's report, pages 38 – 41  
 8. What measures – if any – does Nepal take to ensure that goods destined for export are 
produced in full respect of the fundamental rights at  work as embodied by the ILO's 2008 Declaration 
on Social Justice for a Fair Globalisation and the 8 core ILO Conventions (nos. 29, 87, 98, 100, 105, 
111, 138 and 182)?   WT/TPR/M/257/Add.1 
Page 14  
 
 Response:  
 
 All the enterprises have to follow the legal provi sions relating to labour rights and standards, 
notwithstanding whether they produce goods destin ed for export or for internal consumption. 
So, it is always expected that the goods destined  for export are produced in full respect of the 
fundamental rights at work as embodied by the core ILO Conventions ratified by Nepal.  
Besides, Section 3 of the Export and Import (Control) Act, 1957 gives the Government of 
Nepal the power to prohibit or control export and import if it considers that this is necessary 
to prohibit or control exportation or importation of any goods for the attainment of the objective, inter alia, of implementing the Charter of th e United Nations and any multilateral 
international convention or bila teral agreement to which Nepa l is a party and fulfilling the 
obligations arising therefrom. In such a situati on, the Government of Nepal may, by a notified 
order, prohibit, or apply full or quantitative restriction on, the exportation or importation of 
such goods, with or without specifying any specific condition or period. 
 
(3) Measures Affecting Production and Trade 
 
WTO Secretariat's report, pages 41–56   9. Would Nepal explain what it is doing to  help its producers produce goods which are 
environmental and socially sustainable?  
Response: 
 
 Nepal has already enacted the Environment Pr otection Act, and necessary Rules under it have 
already been framed.  A separate Ministry of Environment has been formed.  Nepal has also 
ratified almost all of the major internati onal treaties and conventions concerning the 
protection of environment.  All producers need to follow the environmental standards 
prescribed by the competent authorities under the said Act and Rules. 
 
 Provisions have also been made to provide di fferent facilities including tax rebates to the 
producers who produce environmentally and soci ally sustainable goods and services.  The 
Government also plans to formulate envir onmental and quality standards for cement and 
crusher industries as well as industrial br oiler and generator in the year 2012. 
 (ii) Special economic zones  WTO Secretariat's report, page 44, para-s 68 – 70   10. Can Nepal confirm that national labour laws and the fundamental rights at work as 
embodied by the ILO's 2008 Declaration on Social Ju stice for a Fair Globalisation and the 8 core 
ILO Conventions will also apply in special economic zones?  Response: 
 
 The Interim Constitution of Nepal, 2007 guarant ees labour related rights by stipulating that 
every worker and employee shall have the right to appropriate labour exercise and that every 
worker and employee shall have the right to fo rm and join trade unions and to engage in 
collective bargaining for the protection of thei r respective interests, as provided in law. 
 
 Similarly, Nepal has already ratified all core ILO Conventions referred to in the question, 
except the Convention No. 87.  In cases where the provisions of national labour laws are  WT/TPR/M/257/Add.1 
 Page 15 
 
 
 inconsistent with the provisions of the ILO C onventions ratified by Nepal, the provisions of 
the ILO Conventions prevail over the provisi ons of national labour laws, pursuant to 
Section 9.1 of the Nepal Treaty Act, 1990. 
 
 The SEZ Bill registered in the Legislature-Pa rliament of Nepal h as a separate Chapter on 
provisions relating to workers and employees working in the Zone.  According to the 
proposed legal provisions, the workers and em ployees working in the enterprises established 
in the SEZs enjoy the labour rights and standa rds to the extent provided in the contract 
between such a worker or employee and the con cerned enterprise.  In order to handle the 
grievances of the workers and employees working in the SEZs, the provision of grievances handling committee consisting of the representa tives from the concerned government office, 
the investors and the labour organizations w ithin the concerned SEZ has been proposed.  Any 
party who is not satisfied with the decision made  by this committee may file an appeal to the 
Labour Court. 
 
(v) Standards and other technical requirements 
 
WTO Secretariat's report, page 48, para. 81  
 
The Secretariat's report informs that "/…/It is difficult for Nepalese exports to compete in global 
markets due to its weak standardization and conf ormity assessment infrastructure.  Nepal lacks an 
accreditation system and sufficient testing facilities. /…/". 
 
11. Could Nepal explain how it is addressing this situat ion and how, in its view, could the EU 
support Nepal further in overcoming these shortcomings?   Response:  
 The Government of Nepal has Central Food Labo ratory under the Department of Food Technology 
and Quality Control.  This is the competent national authority for management of food safety 
programs in the country.   As regard to addressing the accreditation system and testing facilities, Nepal has adopted 3 measures 
to address this situation.  First, it is strengthening capacity of domestic laboratories.  Second, it has 
formulated a draft accreditation bill, which after the approval of the Parliament will be implemented, 
thereby leading to the establishment of National A ccreditation Board.  Third, the government has 
initiated the process of getting recognition from the international standard institutions, including 
National Accreditation Laboratory Li mited India.  In this regard, initial assessment has been 
completed and few companies have already been accredited. 
 In addition, the Government has formally requested the EU to pr ovide assistance to improve SPS and 
technical standards infrastructure.  The Government  of Nepal appreciates EU's support in this area 
received so far and expects greater support in the days ahead. 
 
(vi) Government procurement 
 WTO Secretariat's report, page 48, para. 81  
 
According to the Secretariat's report "/…/.  However, a strategic study in 2010 found that public 
procurement is inadequately monitored because of underfunding and insufficient and inadequately 
motivated staff in PPMO.  In addition, procurem ent process and methods have not been defined, a 
procurement reporting system has not been establishe d, an e-procurement system does not exist, and WT/TPR/M/257/Add.1 
Page 16  
 
 IT application has not been introduced.  These and other problems lead to poor compliance with to the 
public procurement legislation and unfair competition." 
 
12. Could Nepal provide information on what it is doing to improve the implementation and 
monitoring of its public procurement legislation?  
 
Response: 
 
 It is important to note here that Nepal is not a party to the WTO Agreement on Government 
Procurement.  Nevertheless, the Government of Nepal has made serious efforts to systematize 
the procedures for public procurements and their reporting and monitoring mechanism.  A 
comprehensive and detailed Public Procurem ent Act and Public Procurement Rules are 
already in place.  The Act and Rules provide for detailed and clear process and methods for 
procurement including e-procurement.  In order to streamline the process even further, a bill 
amending the Public Procurement Act has alre ady been registered in the Legislature-
Parliament. 
 
 Similarly, some significant changes in the P ublic Procurement Rules have been made to 
remove any ambiguities that might appear in the procurement process. 
 
(viii) Intellectual property rights 
(d) Enforcement 
 
WTO Secretariat's report, page 56, para. 127  
The Secretariat's report stat es that "Enforcement of IPR protection at the border is the responsibility of 
Customs./…/".  Furthermore, it is stated that customs can act following a complaint only (i.e. not ex-
officio ). 
 
13. Could Nepal explain when Customs can act to protect IPR at borders? 
 Response: 
 
 According to Section 68 of the Customs Act, 2007,  if any person is going to export or import 
any goods in violation of intellectual property  rights such as patent, design, trademark, and 
copy right acquired by any one  pursuant to the prevailing laws, the concerned person may 
submit an  application, accompanied by evidence,  to the concerned Customs Officer  for 
withholding such export or import.  If such an  application is made, the concerned Customs 
Officer has to withhold such goods in the Customs Office and make a request to the 
concerned body or authority for necessary action in that respect.  Upon being requested, such 
body or authority has to take action in that respect, settle the matter in accordance with the 
prevailing laws and give information thereof to  the Customs Office.  If, upon taking action in 
accordance with the prevailing laws, such body or  authority determines that such goods are 
liable to be forfeited, the Customs Officer has to hand over such goods to such body or 
authority.  
 
 Similarly, according to Section 34 of the Copyright Act, 2002, in cases where any person 
suspects that any other person is importing copyrighted materials into Nepal in an unauthorized manner, such a person may make an  application, accompanied by the evidence, 
to the Custom Officer to prevent the importati on of such material; and in cases where, in 
conducting necessary investigation upon receipt of  such an application, the demand of the 
applicant appears reasonable, the Customs Offi cer may prevent the materials to be imported  WT/TPR/M/257/Add.1 
 Page 17 
 
 
 for a maximum of twenty working days, ten working days at a time.  However, in cases where 
the Customs Officer learns or suspects that an y one is importing copyright reserved materials 
into in an unauthorized manner, he/she may pr event such materials for a maximum of twenty 
working days, ten working days at a time, even without any application therefor.  
 
 Likewise, according to Rule 13 of the Copyright Rules, 2004, if the customs officer has any 
reason to believe that any counte rfeit goods of unauthorized copy is likely to be imported into 
Nepal or he/she has such suspicion, he/she  has to take action under Section 34 of the 
Copyright Act and information thereof is requi red to be given to the person importing such 
goods, to the Director General of the Department  of Customs and also to the concerned police 
office.  
 IV. TRADE POLICIES BY SECTOR (2) M
ANUFACTURING  
(ii) Manufacturing policy 
 
WTO Secretariat's report, page 64-65, para-s 32-33 
 
The Secretariat's report describes the main obj ectives of the new Industrial Policy 2010.  
 
14. Could Nepal provide information on the implementation of its Industrial Policy 2010?  
 
Response:  
 In the successive fiscal budgets since the IP 2010 was introduced, the Government has rolled out 
incentives to boost industrial production (including  guarantee of industrial security, health care 
facility, and infrastructure) in various locations acr oss the country. Focus has been given to enacting 
laws and acts to implement the provisions outlined  in Industrial Policy 2 010.  Progress is ongoing to 
enact SEZ Bill, new Industrial Enterprises Act and update the Labor Act.    
INDIA 
 PART III:  OTHER QUESTIONS 
 
Question  
1. What steps are being taken by Government of Nepal to mitigate its energy crisis? 
 
Response: 
 
In order to mitigate the energy crisis in the count ry, the Government of Nepal has taken the following 
measures: 
 
 Hydropower projects, especially the implementation of the big reservoir based projects, have 
been given priority in order to minimize the imbalances of power generation and demand 
during rainy and drought season.  
 
 For the purpose of increasing investment in the hydropower sector, a 'power emergency' has 
been declared recently and new incentives have b een offered to private investors who produce 
hydropower within 2071 B.S. (Mid April, 2015 A.D.).  
 WT/TPR/M/257/Add.1 
Page 18  
 
  The Government expects that after the provisi ons of the above incentives, at least a dozen 
projects producing up to 70 Mega Watt would be co mpleted within a year.  It is also expected 
that at least 300 MW power will be produced by the private sector. 
 
 In addition, a Hydropower Development and Investment Company  has been registered with a 
view to set up an effective mechanism for the e nhancement of investment in energy sector by 
mobilizing domestic and external resources. 
 
 Similarly, the Government is also consid ering the implementation of the "People's 
Hydropower" programme with the direct i nvolvement of local bodies and other public 
institutions, such as the cooperatives, in the h ydro-power generation and distribution.  In 
addition to this, the Government of Nepal is al so providing grants and other facilities to the 
micro-hydropower producers generating up to 1 Megawatt of power.  Moreover, banks and 
financial institutions have to pr ovide certain percentage of thei r total lending to the deprived 
sector which includes the lending of up to 10 million Nepalese Rupees for micro-hydropower projects generating up to 500 Kilowatt of power. 
 
 In addition to the above, the Government is also  exploring the possibility of generating energy 
from solar power, wind power and thermal plants.  The Government is currently working to 
formulate a wind energy and bio-fuel policy in  order to make explicit guideline for wind 
energy and bio-fuel programme.  
 
 Arrangements have been made to exempt m achinery imported by the private sector to 
generate solar and other alternative energy fro m customs duties. To this, guidelines are being 
prepared and implemented. 
 
Question: 
 
2. Which sectors are identified as pr iority areas for investment? 
 
Response: 
 
 The identified priority areas for investment are the development of water resources, in 
particular hydropower generation and transmission;  tourism;  infrastructure development, 
such as roads, airports and railways;  agricultu re;  education and health sectors;  as well as the 
industries in which Nepal has comparative and competitive advantage.  Employment 
generating and export promoting industries are also the other priority areas for investment. 
 
Question: 
 
3. What are the trade & investment liberalization measures Nepal is planning to take to make its 
trade sustainable? 
 Response: 
 
 The Government of Nepal has, through periodi c national development plans, adopted the 
policy of achieving high economic growth c onsidering trade as the engine of economic 
growth.  The Government of Nepal also conti nues its pace of liberalization process towards a 
sustainable trading regime.  As a result, new trade and industrial policies have been 
formulated and put into effect in the past two years.  
  WT/TPR/M/257/Add.1 
 Page 19 
 
 
  Recognizing the role of sustainable trade in the economy, new trade policy, 2009 has come 
into effect aiming at making trade more sustaina ble through inclusive growth.  However, it is 
also realized that sustainable trade requires better harmonization between trade and industrial 
policies, which helps promote sustainable trade sector development by linking it to different 
sectors of the economy.  In this context, new I ndustrial Policy, 2010 has stressed the need for 
a better industrialization process through creating an investment friendly climate in the 
country.  Both the Industrial and Trade Polici es are moving towards developing backward and 
forward linkages in the economy.  This helps create employment in the rural economy as well 
as enlarge economic activities and enhance comp etitiveness of Nepalese products at the end 
development of sustainable trade.  
 
 In the external front, Nepal is showing inter est in signing agreements on the promotion and 
protection of investments as well as double taxa tion avoidance agreements.  Moving forward 
to various free trade and regional trading a rrangements are the further initiatives of the 
Government of Nepal towards sustainable trade. 
 
Question: 
 
4. What are the steps Government of Nepal  is taking to tackle its labour issues? 
 
Response: 
 
 The Government of Nepal has been playing an effe ctive role as a facilitator to tackle various 
labour issues pending among the business entrep reneurs and the workers and employees.  As 
a result of its efforts, a comprehensive agreem ent has been signed recently between the trade 
union federations and the employers.  This Agreement has resolved several outstanding 
labour issues including the minimum wage and indu strial peace.  The Government of Nepal is 
also planning to conduct trade union education program in order to develop a healthy and 
peaceful industrial relationship. 
 
Question:  
5. What measures are being taken to pr ovide security to foreign investors? 
 
Response : 
 
 Providing security to the foreign investors has always been a priority of the Government of 
Nepal.  Prompt response has been made as and when the security is demanded by the foreign 
investors.  Programmes are being carried out in order to further enhance the capacity of all the 
security agencies.  The Government of Nepal is also planning to make reliable security 
arrangements for all investors by declaring industrial estate as a zone of peace. 
 
Question: 
 
6. What steps are being taken by the Government of Nepal for promoting transparency in 
investment in the hydropower sector?  Response : 
 
In order to promote transparency in investment in the hydropower sector, the Government of Nepal 
has taken the following steps:  WT/TPR/M/257/Add.1 
Page 20  
 
  Initiatives have been taken to establish the Nepa l Electricity Regulatory Commission in order 
to make the generation, transmission, distributi on and trade of electricity simple, systematic, 
organized and transparent.  A legislative bill to provide for such a commission has already 
been registered in the Legislature-Parliame nt.  Once the said bill is passed and the said 
Commission is established, necessary legal and institutional frameworks will be in place to 
make the electricity market competitive, reliable, qualitative and accessible.  It is also 
expected that the Commission will work towa rds safeguarding the rights and interests of 
energy consumers and fix power tariff scientifically. 
 
 New directives on licensing procedures for private power producers issued recently by the 
Ministry of Energy also emphasize on maintain ing transparency in the hydro-power sector.  
The licensing process has been made more transparent.  
 
 A transparent and competitive bidding pro cess if followed while awarding survey and 
generation licenses for projects generating more th an 10 Megawatts of power.  Similarly, in 
order to discourage the tendency of holding licenses for long without generating power, the 
provisions of charging delay fee and even the cancellation of licenses have been implemented.  The process has already been initiated to enact a new Electricity Act, a 
legislative bill for which is currently under consideration of the Legislature Parliament.  Once 
the bill is passed, the investment in the hydr opower sector will be more transparent. 
  
JAPAN 
 The Secretariat Report (WT/TPR/S/257) 
 
II. TRADE AND INVESTMENT REGIMES 
(5) I
NVESTMENT FRAMEWORK  
 
(Question 1: Page 18, para 29, 30) 
 
Could Nepal elaborate on the measures planned to be taken by the newly established Board of 
Investment to attract foreign investment, particularly  in terms of promoting a transparent business 
environment? 
 Response:  
 
 Investment Board is a high-level board establis hed by the Government of Nepal with the aim 
to create investor friendly environment for both dom estic and foreign investors.  To do this, it 
plans to offer one-window service where, an invest or who enters into its office should be able 
to get all his/her issues resolved from the same place, including registration, licensing, 
immigration issues, and bill clearance.  
 
 The Investment Board is planning to start projects that complement each other like 
hydro-power and tourism.  The Investment Board is also responsible for making the 
Investment Year 2012/13 successful and the plan is to come up with at least 10 projects in the 
next 2 years. 
 
 The Board intends to be transparent by foll owing a regularly monitored mechanism.  The 
Investment Board would offer facilities to pr ojects – from land acquisition to tax incentive 
within a framework.  For this purpose, detaile d Rules are currently being framed under the 
Investment Board Act after consultation with  stakeholders and de velopment partners.  WT/TPR/M/257/Add.1 
 Page 21 
 
 
  
PAKISTAN 
 Question No. 1 
 
To what extent Aid for Trade initiative has been  useful in addressing capacity constraints and the 
challenge of increasing productivity.  
Response:  
 
As Aid for Trade has not been implemented in full sw ing, there has not been significant visible impact 
in addressing capacity constraints and boosting productiv ity.  But, it has, to some extent, started to 
improve capacity of certain departments and sectors.  
 
Question No. 2  
 
Nepal is the first LDC which acceded WTO in 2004 a fter its creation in 1995.  On the basis of its 
experience of accession process what recommendati ons would Nepal like to make to reform the 
accession process, especially for LDCs. 
 
Response:  
 
Nepal would like to make following recommendations  to reform the accession process, especially for 
LDCs: 
 
- Development needs and capacities of LDCs  should be considered during accession, 
- Flexibility to utilize the provisions for LDCs as provided by various WTO agreements, - Sufficient Policy space to be given to acceding LDCs, - Demands from the WTO Members during the accession process should be rational, 
- LDCs Accession Guidelines 2002 have to  be followed and further strengthened, 
- Fast-track accession process should be adopted, 
- Sufficient financial and technical support should be provided during the accession process. 
 
Question No. 3 
 
Being a landlocked country, Nepal is requested to i ndicate priority areas for trade facilitation to 
reduce cost of doing business.  Response:  
 Major Areas of trade facilitation are the trade related infrastruct ures developments, logistic 
improvement in transit corridor and domestic move ments, automation of trade related agencies and 
seamless movement of documents, border mana gement, customs procedure improvements. 
 
Question No. 4 
 
Page 59, paragraph 9 of the report mentions that 38 of 75 districts are food deficit and 10 more are 
considered as vulnerable and it states that Nepal 's key objective for agriculture is food security? 
Nepal is requested to indicate the future plans  regarding food security po licy and its linkage with 
trade.   WT/TPR/M/257/Add.1 
Page 22  
 
 Response:  
 
The Government of Nepal has established Na tional Food Security Steering Committee under the 
National Planning Commission and a Food Security Working Group (FSWG) in the Ministry of 
Agriculture and Cooperatives.  Nepal adopted the 20-years Agriculture Perspective Plan (APP) as a 
guiding strategy for the overall agricultural de velopment of the country.  The APP (1995—2015) 
emphasizes a few priority inputs, outputs and outco mes.  The 'Green Revol ution' package for the 
Terai Region and high value commodities for the Hill Region are the strategies for achieving catch-up 
growth, agribusiness development,  poverty reduction an d environmental improvement.  Regional 
interaction between the Hill and Terai Regions based on their respective specific comparative 
advantages are central to the APP and are premis ed basically on the proposition of rural growth 
linkages.   In recent years, the Government of Nepal has fo cused on Specific policies and strategies, which are 
geared towards promoting a domestic market base and commercialization of agricultural production.  
The private sector and NGOs' roles are recognized a nd the role of the state has been increasingly 
oriented to facilitation rather than implementation,  unlike in the past.  Meanwhile, the National Food 
and Nutrition Security Plan of Action (FNSP) has been proposed.  On the other hand, Government's food safety net has been taken care by the Nepal Food Corporation 
(NFC) which is responsible for the supply of food grains to the food deficit districts.  Its main 
objectives are to provide food to consumers at fair  prices, to intervene the food grain market to 
stabilize prices, manage food aid from donor agenci es and hold food stock for emergencies.  It has 
also adequately maintained SAARC food stock and na tional food stock. As a result of these programs, 
the number of food-shortage districts that NFC was supplying food grains with, is reduced to 23.  
 
In addition to these, the Government of Nepal has launches Karnali zone special Agriculture program, 
special Agriculture program and school feeding prog ram for disadvantage people of remote districts 
and have prioritized road connectivity to all 75 distri cts headquarter within 3 years.  In addition, the 
Government has been providing subsidy to tran sport food grains and launching Food for Work 
program in vulnerable remote districts. 
 
Question No. 5 
 
While acceding to the WTO, Nepal liberalized its tr ade in services.  What are the impediments faced 
by Nepal to attract investment in services sectors,  in spite of relatively a liberal trade regime. 
 
Response:  
 
Over the period, the share of services sector has in creased and currently stands at 50% of the GDP.  
Main impediments in attracting investment in ser vices sector are weak labor relations, inadequate 
human resources and infrastructure such as power, road  network and ICT.  However, investment in 
tourism, banking, airlines, insurance, educa tion and health sectors has significantly increased. 
 
Nepal is currently in political transition and is exp ected to take normal course after the promulgation 
of new constitution.  This will help further improving  the investment climate and attract more foreign 
investment in the services sector in the country.  
 
  WT/TPR/M/257/Add.1 
 Page 23 
 
 
 PARAGUAY 
 
The Secretariat Report (WT/TPR/S/257) 
 
II. TRADE AND INVESTMENT REGIMES 
 
Question 1:  Investment regime, pages 18-20: 
 
The report of the Secretariat states that Nepal has ratified the International Convention on the 
Settlement of Investment Disputes (ICSID).  However, Nepal has not been involved in any ICSID 
proceedings.  According to the report, the Departm ent of Industries is perceived as very helpful in 
settling dispute amicably.  Does the Department of Industries have a special unit or department to 
solve these differences?  Response:  
 
 The Department of Industries does not have an y special unit to solve the differences between 
the Government and the foreign investors.  The Department of Industries has the Foreign 
Investment and Technology Transfer Section a nd Facilities Section which are related to the 
approval and facilitation of foreign investment .  The Department has also prepared a 
comprehensive and transparent Procedural Manua l for Foreign Investment in Nepal because 
of which the likelihood of disputes between the government and the foreign investors is very 
minimal.  If any difference arises, the Director General of the Department of Industries uses 
his or her good office to solve any difference quickly and amicably. 
 
 Similarly, under the Foreign Investment and Technology Transfer Act, 1992, if any dispute 
arises between a foreign investor and nationa l investor or the concerned industry, the 
concerned parties are required to settle the disput e by mutual consultations in the presence of 
the Department of Industries.  If the dispute c ould not be settled in such a manner, then it will 
be settled by arbitration in accordance with th e prevailing arbitration Rules of the United 
Nations Commission on International Trade Law (UNCITRAL). 
 
Question 2: Aid for trade, pages 21-27: 
 The section of the report related to aid for trade mentions the International Trade Center (page 24, 
paragraph 58) as an implementing partner of Nepal.  Does Nepal have other projects with the ITC? 
 
Response:  
 
There are no other projects with the ITC. 
  
THAILAND 
 
PART I:  QUESTIONS REGARDING THE SECRETARIAT REPORT  II. TRADE AND INVESTMENT REGIMES  Pages 13-14 (paragraphs 7-10)  
"Poverty alleviation and improvement in the living  standard of its people have remained the key 
policy objectives in Nepal's national development plan s since they were first launched in 1956.  The WT/TPR/M/257/Add.1 
Page 24  
 
 2009 Trade Policy, which is being implemented throu gh the Nepal Trade Integration Strategy (NTIS) 
2010 adopted on 24 June 2010, recognizes the effective role of trade in achieving sustainable and 
inclusive economic growth, and in transforming a traditional agrarian economy into a modern 
economy.  Trade is to be supported by various mean s, including transit and transport infrastructure, a 
development-friendly investment climate, R&D,  introduction of new technology in production, 
enhancement of productive capacities, and effe ctive mobilization of overseas development 
assistance.
2…" 
 
Question:  
1. What is the timeframe for the implementation of the Nepal Trade Integration Strategy (NTIS) 
2010?  Could Nepal provide details about the outcome  of the implementation of the Strategy so far 
and/or reviews of the scheme, if any?  Response: 
 
The implementation of recommendations outlined in NTIS 2010 is for short to medium term, mainly 
up to five years from the date of its launch.   Nepal has been actively working on implementing th e recommendations of NTIS 2010.  Within just 
over a year, product specific strategies for export prom otion have been designed in consultation with 
relevant stakeholders.  The MoCS has been ac tively working on harmonizing and implementing all 
trade promotion measures listed in NTIS 2010.   In this regard, for the implementation of NT IS, the MoCS is, under National Implementation 
Arrangement, working on Tier 1 activities with several st akeholders and other line ministries.  In this 
process, six technical committees have been constitu ted and they shall be shortly submitting Tier 2 
Project Proposals.  Moreover, Nepal has received support from local development partners (USAID, 
GIZ, EU etc) in the areas identified by NTIS 2010.  Harmonization of development partners' policies on trade, low level of commitment of development 
partners at local level and insufficient resource ar e some of the major challenges relate to the full 
implementation of the recommendations outlined in NTIS 2010.  
 As for the outcome, a periodic internal review is being conducted and th e initial details on the 
outcome will be known after the review is accomplished.  Pages 15-16 (paragraph 17)  
"Nepal is member of two overlapping regional tr ade agreements:  the South Asian Free Trade Area 
(SAFTA) Agreement, and the Bay of Bengal Initia tive for Multi-Sectoral Technical and Economic 
Cooperation (BIMSTEC).  It has signed 17 bilatera l agreements, some of which are no longer in 
force;  has a trade cooperation agreement with the EU;  and is eligible under the Generalized System 
of Preferences (GSP) schemes of various countries." 
 Question : 
 
2. Thailand considers that Nepal's 17 bilateral agreements indicate quite a high number of 
trading partners.  Are the pattern and nature of such free trade agreements  (bilateral agreements), 
whether already concluded or currently subject to ongoing negotiations, comprehensive; put another 
word, do they cover trade in goods, trade in servi ces, investment, and other issues such as 
                                                      
2 Ministry of Commerce and Supplies (2010).  WT/TPR/M/257/Add.1 
 Page 25 
 
 
 competition, government procurement,  labor, environment, and intellectual property?  We would also 
appreciate if Nepal could provide the progress of its FTAs negotiations and its policy for the future. 
 Response:  
 
 The bilateral trade agreements concluded by Nepal only covers some aspects of trade in 
goods.  However, Nepal has entered into sep arate bilateral investment promotion and 
protection agreement (BIPPA), double taxation avoidance agreement (DTAA) and trade and 
investment framework agreem ent with some countries.  
 
 The South Asian Free Trade Area Agreement and the SAARC Agreement on Trade in 
Services cover trade in goods and trade in services, but not the issues such as competition, 
government procurement, labour, enviro nment, and intellectual property. 
 
 Nepal is interested in concluding  bilateral free trade agreements in future with other countries, 
taking into account its position as a least developed country.  
 
III.  TRADE POLICIES AND PRACTICES BY MEASURE 
 
Page 35 (paragraph 27) 
 
"The authorities consider that tariff exemptions ma y be used to facilitate the importation of specific 
goods, and for social, educational, and welfare pu rposes.  Tariff exemptions are published in the 
Nepal Gazette ; and the list was  also published in the Customs Tariff Schedule.  The exemptions are 
valid for all suppliers (unless specified, i.e. fo r India).  The list varies annually (Table III.3)." 
 
Question: 
 3. According to Table III.3, Nepal exempts tar iffs for 15 products from the WTO Members; 
however, it exempts specific products only from certain co untries, such as Indi a.  Thailand would like 
to know the principle/reasons behind such selective exemptions.  Response:  
 
Crude petroleum oil and crude oil from bituminous  minerals and unprocessed minerals products are 
exempted from India.  This is under the provision of bilateral Treaty of Trade between India and 
Nepal.  
 
PART II:  OTHER QUESTIONS  
Question: 
 4. Could Nepal please provide details about its  policy on investment promotion and incentive for 
investment from abroad?  Thailand is particularly interested in the policy in the areas on which Nepal 
puts emphasis for development, for instance, wat er resource management, elec tric energy production, 
infrastructure construction, transportation and logistics, and information technology and 
telecommunication.  Response: 
 
 The Government of Nepal strongly encourages fo reign investment in all the areas referred to 
in the question.  The Foreign Investment and Technology Transfer Act, 1992 provides WT/TPR/M/257/Add.1 
Page 26  
 
 different incentives to the foreign investors i nvesting in Nepal.  For instance, a foreign 
investor making investment in foreign currency is entitled to repatriate the following amount 
outside Nepal:-  
(a) The amount received by the sale of the share of foreign investment as a whole or any 
part thereof. 
(b) The amount received as profit or dividend in lieu of the foreign investment. 
(c) The amount received as the payment of the principal of, and interest on, any foreign 
loan.  
 
 Moreover, a foreign national visiting Nepal in  connection with undertaking any study or 
carrying out any research with the objective of making investment in Nepal is provided a non-tourist visa for up to six months.  A foreign investor or dependent family or authorized 
representative of such a foreign investor and dependent family of such authorized representative is, for the purpose of stay in Nepal, provided a business visa until such foreign 
investment is retained in Nepal.  Furthermor e, a foreign investor who, at a time, makes 
investment in an amount no less than one hundred thousand United States dollar or in 
convertible foreign currency equivalent thereto,  and his/her dependent family is granted a 
residential visa for the duration of such investment. 
 
 In order to promote and protect foreign investment and to provide additional incentives to 
foreign investors in general, the Government  of Nepal has taken the policy of concluding 
bilateral investment promotion and protec tion and double taxation avoidance agreements 
with different countries. 
  
TURKEY 
 
REPORT BY THE SECRETARIAT (WT/TPR/S/257)   SUMMARY (4) S
ECTORAL POLICIES , pg. x, pr.30 
 
It is stated in the Secretariat Report that "D espite having abundant hydropow er resources, Nepal has 
not been able to generate enough electricity to match its demand.  Addressing its energy shortages, 
therefore, is crucial for Nepal to achieve rapid and sustained economic growth".  Against this background, we would like to learn if  the Government of Nepal has any plans to better 
take benefit of hydropower energy resources in a way boos ting electricity generati on in the country?  
 Response:  
 
 For boosting hydropower generation in the count ry, the Government of Nepal has taken the 
following measures: 
- A 'power emergency' has been declared  recently and new incentives have been 
offered to private investors, who produce hydropower within 2071 B.S. (Mid April, 2015 A.D.). 
- A Hydropower Development and Investment Company has been registered with a 
view to set up an effective mechanism for the enhancement of investment in energy 
sector by mobilizing domestic and external resources.  WT/TPR/M/257/Add.1 
 Page 27 
 
 
 - The implementation of "People's Hydr opower" programme with the direct 
involvement of local bodies and other public  institutions, such as the cooperatives, in 
the hydro-power generation and distribu tion is currently being considered. 
- Grants and other facilities have been pr ovided to the micro-hydropower producers 
generating up to 1 Megawatt of power.  Mo reover, banks and financial institutions 
have to provide certain percentage of thei r total lending to the deprived sector, which 
includes the lending of up to 10 million Nepalese Rupees for micro-hydropower 
projects generating up to 500 Kilowatt of power. 
- Arrangements, through Nepal Electricity Au thority, are being made to purchase 
additional electricity generated by the private sector. 
 I. ECONOMIC ENVIRONMENT (2) T
RADE AND ECONOMIC DEVELOPMENTS  
(ii) Trade Performance, pg. 6, pr. 14 
 
As stated in the Secretariat Report, "India is by far Nepal's biggest trade partner… In 2010, 65% of 
Nepalese exports went to India (up from 52.4% in 2003), and 57% of Nepalese imports were from 
India (up from 53%).  However, these shares underes timate the reality as there are large amounts of 
informal ("unrecorded") trade between Nepal and India (to, inter alia, avoid bureaucracy)". 
 Could the Delegation of Nepal explain steps have been taken or planned to be taken for market 
diversification?  If any, what is the strategy of  Nepalese Government in terms of exports market 
diversification?  Response: 
 
One of the major concerns of Ne palese government is export divers ification.  Regarding market 
diversification it has signed bilateral agreements wi th 17 countries. It has also become member of 
two regional groups – SAFTA and BIMSTEC and participating in Boa conference as an observer. 
Furthermore, it is also considering to be a memb er of AFTA.  It has signed trade and investment 
agreements with 6 countries including India and US.  The WTO membership is a significant 
achievement in this direction. 
 
The Government of Nepal has ou tlined several measures in Trade Policy 2009 to expand both exports 
basket and exports destination, which include:  
 Initiatives will be taken to enter into agreem ent on Free Trade Area with countries including 
United States of America and European Un ion that possess comparatively more trade 
prospects, and other regional trade organiza tions for expanding access to international 
markets for Nepal's exports.  
 
 Joint collaboration will be made with other c ountries having the similar trade interest for 
utilizing opportunities offered by bilateral, regi onal and multilateral trade treaties/agreements. 
 
 Initiatives will be taken for the optimum utilizatio n of the facilities provided by the bilateral, 
regional and multilateral trade trea ties agreements to the least developed specially land locked 
country. 
 
 A permanent 'Trade Policy Analytical Wing' will be established with the involvement of 
private and government sector representatives a nd experts with the objective to refine policy 
measures to be adopted by Nepal in the context of direction of international trade, current 
situation and future direction. WT/TPR/M/257/Add.1 
Page 28  
 
  
 Trade Promotion Institute will be developed as a resource center of international trade to 
generate flow of information relating to ch allenges and opportunities created by bilateral, 
regional and multilateral trade treaties/ag reements and to their provisions. 
 
II. TRADE AND INVESTMENT REGIMES 
(4) T
RADE AGREEMENTS  
(ii) Preferential Trade Agreements, pg. 15, pr. 17      
 
The Secretariat Report notes that “Nepal is member  of two overlapping regional trade agreements:  
the South Asian Free Trade Area (SAFTA) Agreeme nt, and the Bay of Bengal Initiative for Multi-
Sectoral Technical and Economic Cooperation (BIMS TEC).  It has signed 17 bilateral agreements, 
some of which are no longer in force;  has a trade cooperation agreement with the EU;  and is 
eligible under the Generalized System of P references (GSP) schemes of various countries”. 
 
Could the Government of Nepal inform us about the eff ects of these bilateral deals, particularly as to 
their potential export growth results?  Response: 
 Most of these bilateral agreements provided the status  of most favored nation (MFN).  Some of these 
agreements currently are not functional and few of them have been revised.  
 After the bilateral agreements, trade with India, China, Bangladesh, United States, UK, Republic of 
Korea and Russia has increased significantly but in mo st of the cases, imports are much higher than 
the exports.  The trade with other countries has not  grown substantially. Nepa l is examining existing 
bilateral agreements and will take necessary initia tion for new bilateral agreements with other 
countries as and when deemed necessary.  
III. TRADE PRACTICIES AND POLICIES BY MEASURE 
(1) M
EASURES DIRECTLY AFFECTING IMPORTS  
(iii) Tariffs, pg. 32, pr. 22 
 
The Report indicates that "…the applied MFN tariff rate for petroleum is above Nepal's final bound 
level".  Could the Government of Nepal kindly inform us on their approach to address this specific issue, 
which apparently runs counter to Nepal's WTO commitments? 
 Response:  
 
The tariff of petroleum products is unbound. 
 
(vi) Import prohibitions, restrictions, and licensing, pg. 37, Table III.5  
The Secretariat Report lists various import prohibition s in Table III.5, one of which refers to "items 
restricted in accordance w ith other prevailing laws". 
 
Could the Government of Nepal provide us the list of the items restricted in accordance with other 
prevailing laws referred in the Table III.5 ?   WT/TPR/M/257/Add.1 
 Page 29 
 
 
 Response:  
 
 The referred phrase "items restricted in accord ance with other prevailing laws" is just a 
safeguard provision to cover all the items that  may have been restricted by different 
authorities of the Government of Nepal under other prevailing laws of Nepal. 
 
 The list of the items set forth in the notification dated 2nd November, 2009 corresponding to 
2066-7-16 B.S. of the Ministry of Commerce and Supplies of the Government of Nepal 
provides all the items so far restricted in accordance with the prevailing laws of  Nepal. 
 
 
UNITED STATES 
 WT/TPR/G/257 
 
Page 12, Paragraph 19 and WT/TPR /S/257, Page 55, Paragraph 117 :  Paragraph 19 of the 
Government Report notes that Nepal has taken "s ome initiatives for framing a separate intellectual 
property policy in the future;" and,  paragraph 117 of the Secretariat Re port says that Ne pal "intends to 
promote copyright protection thro ugh more campaigns."  What types of initiatives and campaigns is 
Nepal planning and undertaking? 
 
Response:  
 
 The process has already been initiated for revi ewing the existing IPR protection mechanisms 
in place in Nepal, including national laws for IPR protection and their enforcement and institutional mechanisms.  Efforts have been ma de towards IPR promotion and development;  
identifying key national and international concer ns, issues and constraints in relation to IPR 
legislative frameworks and administration in Ne pal as well as preparing a draft IPR policy for 
Nepal, keeping in line with international prac tices.  The Government of Nepal appreciates the 
technical assistance provided by its development partners in this regard. 
 
 After receiving the draft IPR Policy, the Government of Nepal will have necessary 
consultations with all the stak eholders and then will formul ate and adopt the National IPR 
Policy.  
 Similarly, process has already been started to  establish an integrated organization, with 
professional staffs, in order to effectively pr otect, promote, develop and manage industrial 
and intellectual property rights.  
 In regard to the protection of copyright, the Ministry of Culture of the Government of Nepal 
has recently approved the working plan prepared  by the Copyright Registrar's Office for the 
full enforcement of the Copyright Act and the c ontrol of piracy.  Under this working plan, 
several programs have been undertaken, incl uding formation of a high-level Copyright 
Enforcement Advisory Committee under the chai rmanship of the Secretary, Ministry of 
Culture with the representations from all con cerned enforcement agencies, designating an 
inspector in each District as a copyright nodal officer, and preparing a code of conduct for the creators, performers, broadcasters and users of copyrightable works.  A monitoring committee 
with the participation of government authorities and private sector has also been planned to 
monitor the observance of such code of conduct. 
 WT/TPR/M/257/Add.1 
Page 30  
 
 Page 13, Paragraph 24 :  Paragraph 24 mentions the "proposed Intellectual Property Policy,” but the 
Report provides no details.  What are the details of  the government's "proposed Intellectual Property 
Policy"? (Page, 09, page 55, 213) 
 
Response:  
 
 The Government of Nepal has onl y initiated the process to formulate the Intellectual Property 
Policy and currently waiting for the draft IPR Policy to being prepared by a consultant.   
 It is expected that the proposed Intellectual Property Policy will include necessary legislative 
changes for an integrated intellectual property promotion and protection system and administrative reforms and streamlining, as well as will cover the following topics and area 
for Nepal:  
 (a) Patents, trademarks, industria l designs, geographical indications, copyrights and related 
rights, integrated circuits, trade secrets etc.,  
(b) Commitments to protect traditional knowledge, folklore and biodiversity, 
 (c) Harmonization of IP standards and pro cedures, ownership, licensing etc., 
 (d) Initiatives for promoting innovation and creativity. 
 
(e) Participation in international IP standards setting, 
 (f) Capacity building programmes, in particular physical infrastructure, human resources, 
database creation and establishm ent of proper institutions, 
 
(g) Awareness raising initiatives and mechanisms, 
 (h) Increased coordination between implementing agencies, stakeholders and enforcement 
authorities etc. 
 
Page 14, Paragraph 27:   When Nepal acceded to the WTO, it committed to improve its intellectual 
property rights regime, and is working to revise its  IPR laws as well as establish an IP cell.  Yet, 
enforcement of intellectual property rights appears to be lacking.  So far, the Department of Industry 
and Copyright Office have taken the lead in IP R policy development, but IPR protection is not 
effective without the active engagement of enfo rcement agencies, including the courts, customs 
authorities, police, and prosecutors.  What is the Government of Nepal doing to improve inter-agency 
coordination on IPR enforcement and strengthen the institutional capacity of the enforcement 
agencies? 
 
Response: 
 
 In order to improve inter-agency coordina tion on IPR enforcement and strengthen the 
institutional capacity of the enforcement agenci es, the Government of Nepal is considering 
taking some concrete measures.  For this purpose, stakeholder consultations are currently 
undergoing.  
 Similarly, process has already been started to  establish an integrated organization, with 
professional staffs, in order to effectively pr otect, promote, develop and manage industrial 
and intellectual property rights.  WT/TPR/M/257/Add.1 
 Page 31 
 
 
  
 In respect of copyright protection, the Ministry of Culture of the Government of Nepal has 
recently approved the working plan prepared by the Copyright Registrar's Office for the full 
enforcement of the Copyright Act and the control of piracy.  Under this Plan, a high-level Copyright Enforcement Advisory Committee unde r the chairmanship of the Secretary, 
Ministry of Culture with the representations  from all concerned enforcement agencies has 
been formed.  One of the main functions of this Committee is to coordinate among the different copyright enforcement agencies.  Moreover, an inspect or in each District has been 
designated as a copyright nodal officer to carry  out effective investigations on copyright 
infringement allegations.  
 Likewise, to strengthen the institutional capacity of the enforcement agencies, various training 
programmes have been carried out with the suppor t of international organizations, such as the 
WIPO, and bilateral devel opment partners, such as Japan Copyright Office.  
 
 The Government of Nepal also acknowledges that  Nepal still needs to improve its legal and 
institutional frameworks for the effective implem entation of intellectual property rights, for 
which it needs technical and financial assistance  from its development partners.  A needs 
assessment in this regard is being carri ed out by the UNCTAD/ICTSD, which will be 
submitted to the TRIPs Council of the WTO.  The Government may seek necessary technical 
and financial assistance to implement the recommendations.  The said assessment would also help the Government of Nepal in identifyi ng the areas for reforms and improvement in 
ensuring the full protection of intellectual property rights. 
 
Page 14, Paragraph 29:   The Report says that the Copyright Registrar's Office "is the authorized 
agency for registering copyrights and hearing compla ints."  What types of complaints does the Office 
hear?  Are the complaints limited to registration questions, or does the Office also handle infringement complaints? (Page 09)  Response:  
 Under Rule 15 of the Copyright Rules, 2004, the Copyright Registrar's Office has the power to hear the complaints regarding the royalty fixed by the royalty collecting bodies, such as Copyright 
Societies.  The infringement complaints are handled  by the police, public prosecutors and courts, not 
by the Copyright Registrar's Office. 
 
Page 23, Paragraph 69 :  What has been the Government of Nepa l’s experience so far in enforcing its 
Competition Promotion and Market Promotion Act of  2007, and what priorities has the Government 
set for itself under this new law? (S. page 54,207) 
 
Response: 
 
 The Government of Nepal is still preparing the groundwork and institutional frameworks for 
the full implementation of the Competition Promo tion and Market Protection Act, 2007.  For 
the full-fledged implementation of it, the Co mpetition Promotion and Market Protection 
Rules have been framed and with the gener ous technical and financial support of our 
development partners, such as the USAID, the Government of Nepal is preparing 
comprehensive Guidelines for implementing all the provisions of the Act in practice.  A 
consultative workshop in this regard has recently  been concluded. The Government of Nepal 
appreciates the technical assistance provided by its development partners in this regard.  
 WT/TPR/M/257/Add.1 
Page 32  
 
  Similarly, the Competition Promotion and Mark et Protection Board constituted by the Act 
under the chairmanship of the Secretary, Mi nistry of Commerce and Supplies has started 
meeting regularly and is currently taking stoc k of the current situation in the market.  
 
 Recently, the Government of Nepal has designated the Assistant Chief District Officer of 
30 Districts as the Market Protection Officer, who is the key investigating and enforcement 
officer under the Act in his or her district.  Some  of them have already initiated investigations 
against carteling.  The Department of Commerce has also initiated process to create specific civil service positions for consumer prot ection and competition promotion tasks. 
 
Page 23, Paragraph 72:   The Government advises that Nepal's energy crisis continues to undermine 
industrial growth and negatively aff ect its trade balance.  The Government also says it is committed to 
attracting investment in the energy sector and rapidly developing hydropower – yet no significant 
project has materialized and the energy crisis is  becoming more acute.  Given that weakness in the 
energy sector is such a significant impediment to Nepal's economic progress, what is the Government 
doing to ensure that the sector is transparent a nd accountable, so that capable and qualified private 
companies can actively participate in the development of Nepal's energy sector?  
 
Response:  
 
In order to make the energy sector transparent a nd accountable, the Government of Nepal has taken 
the following measures:  
 Initiatives have been taken to establish the Nepa l Electricity Regulatory Commission in order 
to make the generation, transmission, distributi on and trade of electricity simple, systematic, 
organized and transparent.  A legislative bill to provide for such a commission has already 
been submitted in the Legislature-Parliament .  Once the said bill is passed and the said 
Commission is established, necessary legal and institutional frameworks will be in place to make the electricity market more competitive, reliable, qualitative and accessible.  It is also 
expected that the Commission will work towa rds safeguarding the rights and interests of 
energy consumers and fix power tariff scientifically.  
 New directives on licensing procedures for private power producers issued recently by the 
Ministry of Energy also emphasize on maintaining transparency and accountability in the energy sector.  The licensing process has been made more transparent and measures have 
been adopted to make all involved in this sector accountable.  
 
 Transparent and competitive bidding process is followed in awarding survey and generation 
licenses for projects generating more than 10 me gawatts of power. Similarly, in order to 
discourage the tendency of holding licenses for long without generating power, the provisions 
of charging delay fee and even the cancella tion of licenses have been implemented. 
 II. TRADE AND INVESTMENT REGIMES  
(5) I
NVESTMENT FRAMEWORK  
 
Page 19, paragraph 31:   The Secretariat notes that Nepal's inve stment regime permits foreigners to 
invest up to 100% in all sectors of the economy, except for activities contained in the "negative list", 
which are reserved for national investors, including th e following sectors:  (a) travel agencies;  (b) 
trekking agencies;  (c) water rafting;  (d) pony tre kking;  (e) horse riding;  and (f) tourist lodging.  
However, we understand that these sectors have been opened through Gazette notification on 
21 November 2005.  Please clarify restrictions that may exist (or not) in these sectors? Please provide 
additional clarification with regard to those restrict ions that exist in the consultancy services sectors  WT/TPR/M/257/Add.1 
 Page 33 
 
 
 (e.g. management, accounting, engin eering, and legal services) specifically the kind of investment that 
may be possible, though restricted to a level lower than 100%?  
Response: 
 
 Under the Foreign Investment and Technology Tr ansfer Act, 1992, and the notification of the 
Government of Nepal referred to in the question, no restriction on foreign investment exists in 
the sectors identified in the question, except in rural tourism where no foreign investment is 
permitted.  However, the foreign investors need to obtain permission of investment in those 
sectors. 
 
 Under the Foreign Investment and Technology Transfer Act, 1992, in the consultancy 
services sectors (e.g. management, accounting,  engineering, and legal services), foreign 
investment up to 51 percent is permitted. 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) M EASURES DIRECTLY AFFECTING IMPORTS  
(i) Customs procedures, valuation, and rules of origin  
Page 28, paragraph 3:   Table III.1 of the Secretariat Report lists the documentation that must 
accompany the Customs declaration form.  Why do es Nepal require less documentation for imports 
from India as compared to imports from all other countries? 
 
Response:  
 
Nepal has a bilateral trade agreement and local trad e in place with India, which limits the documents 
required to support Customs clearance from Indi a to Nepal for the locally purchased goods on 
importation.  For the transited goods through India,  certain additional documents are mandatory due 
to the transit cargo.   Page 28, paragraph 4:   The Secretariat's Report states that "a customs officer may clear goods only 
upon collection of duty."  Has Nepal considered allo wing goods to be released prior to the collection 
of duties through a guarantee or surety system? 
 
Response:  
 Nepal is providing facility to clear the goods on guarantee of duty for import under bonded warehouse 
facility.  The provision of deferred payment is re lated to the Standard 3.41 of the WCO Revised 
Kyoto Convention.  Nepal is planning to accede to  Revised Kyoto Convention and this question will 
be considered after accession to  the Revised Kyoto Convention. 
 
Page 29, paragraph 6:   When will Nepal notify its custom s valuation legislation to the WTO 
Committee on Customs Valuation and submit responses to  the customs valuation checklist of issues?   
 
Response:  
 Nepal has incorporated the WTO provisions of Agreement on Customs Valuation.  Further, 
assessment of the legislation is being carried out  by international expert with the assistance of 
development partner and further necessary amendmen ts in the legislation will be considered.  
However, Nepal needs technical support for the notification process once these steps are completed.  
 WT/TPR/M/257/Add.1 
Page 34  
 
 (ii) Trade facilitation 
 
Page 30, paragraph 16:   Please provide further information regarding the Selectivity System and 
Wide Area Network. 
 Response:  
 
Nepal has implemented Selectivity Module at 6 major Customs offices covering around 80% of the 
total trade with the assistance of Development Pa rtners.  This method u ses the ASYCUDA++ to 
segregate the lane of the declara tion based on risk of the cargo.  This will allow the fast clearance of 
low risk cargo.  The WAN is expanded to 10 major Customs offices.  This facility connect online to all the 10 major 
customs offices, which enables the Customs o ffices to treat uniform classification and other 
procedures through the online verification of declaration from the centre.  
 (vi) Import prohibitions, restrictions, and licensing 
 
Page 37, paragraph 38:   The Secretariat Report indicates that non-automatic import licenses are 
required for imports of certain products.  When does Nepal intend to notify its import licensing 
procedures to the WTO Committee on Import Licensing Procedures? 
 
Response:  
 
Nepal is committed to implement its notification commitments;  however, due to its insufficient 
technical capacity to prepare notification and accord ingly notify WTO, it has not been able to do so.  
MoCS is considering requesting WTO to train its o fficials and also to provide some technical support 
so that all the pending notifications  could be submitted in timely manner. 
 (3) M
EASURES AFFECTING PRODUCTION AND TRADE  
 
Page 43, paragraphs 64 and 69; WT/TPR /S/257 -04, Page 44, paragraph 69:   The United States 
notes that Nepal has not submitted a notification to the Committee on Subsid ies and Countervailing 
Measures pursuant to Article 25.1 of the SCM Agreem ent.  However, according to the Secretariat's 
report, Nepal appears to maintain export and im port substitution subsidies which would meet the 
notification requirements set forth in Article 25 of th e SCM Agreement. In light  of Nepal's obligations 
under the Agreement, when will Ne pal provide the details of all its specific subsidy programmes, 
including subsidies contingent on export performan ce or the use of domestic over imported goods, by 
submitting the relevant notification pursuant to Ar ticle XVI:1 of the GATT 1994, and Article 25 of 
the SCM Agreement? 
 
Response:  
 
Nepal highly respects WTO commitments and also  aware of Art. XVI:1 of the GATT 1994 and 
Art. 25 of the SCM agreement.  However, due to Nepal's insufficient technical capacity to prepare 
notification and accordingly notify WTO, it has not been able to do so.  MoCS is considering 
requesting WTO to train its officials and also to pr ovide some technical support so that all the pending 
notifications could be submitted in timely manner. 
 
(ii) Special economic zones 
 
Page 44, paragraph 69:   The Secretariat's Report states th at "Nepal's 2010 NTIS suggested an 
amendment to the draft SEZ bill, to remove the 75% export requirement for enterprises based in the  WT/TPR/M/257/Add.1 
 Page 35 
 
 
 zone."  Does Nepal still plan to amend the existi ng export requirement in the draft SEZ bill? If so, 
what is Nepal’s estimated timeline for the amendment to be enacted? 
 
Response: 
 
The Government of Nepal has not taken any step to amend the export requirement, for enterprises 
based in the Special Economic Zone, of at least 75% of their products.  The Special Economic Zone Bill is currently under consideration of the Legislat ure-Parliament of Nepal.  The Government hopes 
that the Bill will be passed in to an Act in near future.  
 
IV. TRADE POLICIES BY SECTOR 
(2) M
ANUFACTURING  
(ii) Manufacturing policy 
 
Page 64, paragraph 33:   The Secretariat's Report states that features of the Industrial Policy 2010 
include "tax and income rebate incentives and easy  credit to export-oriented firms."  Could Nepal 
confirm whether any benefits have  been conferred under this sch eme to export-oriented firms? 
 
Response:  
 The fiscal budget has offered cash incentives to export oriented firms and accordingly, two firms have 
received such benefit totalling US$6,000 (NRs 482,000) and few more are in the pipeline.  There is a 
provision of providing refinance facility at a concessi onal interest rate but none of the export oriented 
firms has used this facility.   WT/TPR/M/257/Add.1 
Page 36  
 
 FOLLOW-UP QUESTIONS AND REPLIES PROVIDED BY NEPAL 
 
EUROPEAN UNION  
 
Follow-up to question 1 (WTO Secretariat's report, page x, para. 32) :  In its reply, Nepal informs 
that it is examining the possibilities of further liber alizing the services sector.  What avenues are being 
explored concretely?  Nepal considers that its service sector is comparatively more liberalized among other developing 
member countries.  It has already opened up 11 sectors and 70 sub-sectors.  It  is also examining the 
possibilities of further liberalizing service sector as identified by Trade Policy 2009 and Nepal Trade 
Integration Strategy (NTIS) 2010.   According to these policy documents, tourism, health, information 
technology and education sectors are prioritized for fu rther liberalization.  In order to proceed with 
this objective, Nepal has initiated the process of c onsultation with the concerned stakeholders.  In 
addition, it has already undertaken  study on the prospects of Tourism and ICT with the technical 
assistance of UNCTAD.  However, further reforms and liberalization largel y depend upon the needs 
of the country taking into consideration the fact that the country has not yet been able to take 
maximum benefits from the existing liberalization of service sector.  
 
EU's initial question 1:  The Secretariat's report states that "/…/Further liberalization of services 
should improve the efficiency of the economy as a whole and the competitive ness of Nepalese exports, 
/…/."  In this regard, could Nepal provide informatio n on its intentions to further open up its services 
market to attract foreign direct investment?   
Follow-up to question 2 (WTO Secret ariat's report, page x, para. 32) :  There are more efficient 
ways to protect the environment and natural res ources than by imposing export duties.  Has Nepal 
examined other ways that could better serve intended purpose? 
 The GON considers the higher export tariff as one of the effective measures to increase the cost, and as a result, to reduce the demand of any products including timber.  The reduction in the demand of timber products will contribute to conserve the fast  declining forest resources and as a consequence, 
to protect the environment.  However, the Govern ment of Nepal welcomes the suggestions of EU and 
will explore viable alternative arrangements that would better serve  intended purposes. 
 
EU's initial question 2:  The Secretariat report describes Nepal's export taxes applied on some 
products, including on wood: "/…/For example, levyi ng export tax on wood tends to discourage the 
export of wood.  When demand for wood from ot her countries increases, the export tax on wood tends 
to encourage illegal wood exports."  Could Nepal  inform whether it is considering phasing out the 
export tax on wood?   
Follow-up to question 3 (WTO Sec retariat's report, pages 18-20):  The EU is pleased to note that 
Nepal has ratified seven of the eight core ILO Conve ntions.  Could Nepal please indicate its intentions 
in relation to the ratification of the following prio rity ILO Convention which it has not yet ratified:  
Convention 87 on Freedom of Association and Prot ection of the Right to Organise Convention? 
 At present, Nepal is examining the pros and co ns of ratifying Conventi on 87 on Freedom of 
Association and Protection of the right to Organise Convention .  
 
EU's initial question 3:  Can Nepal confirm that economic activity  undertaken in relation to a new or 
existing investment must respect Nepal's national labour law, the fundamental rights at work as 
embodied by the ILO's 2008 Declaration on Social Ju stice for a Fair Globalisation and the 8 core 
ILO Conventions (nos. 29, 87, 98, 100, 105, 111, 138 and 182)?  How does Nepal ensure that these are in fact respected?  WT/TPR/M/257/Add.1 
 Page 37 
 
 
  
Follow-up to question 5 (WTO Secretariat's report,  page 28, table III.1 and page 29, para. 10):  
The determination of the origin of a good is not relevant for establishing the customs value nor does it 
give any indication whether a good is counterfeited.  Has Nepal considered the lift the requirement to 
present a certificate of origin for all imports?  
 
Nepal is still using Country of Origin Certificat e to determine the value of goods under Alternate 
Method pursuant to WTO Customs Valuation Agreement.   However, Nepal is planning to review its 
Customs Code to pave the way for the accession to Revised Kyoto Convention.  The requirement of 
Country of Origin for non-preferential import w ould be examined at the time of review.  
 
EU's initial question 5:  In the Secretariat's report, in Table III.1, it is st ated that imports from 
third countries need to be accompanied by a certific ate of origin.  Paragraph 10 informs that Nepal 
does not apply non preferential origin rules.  Ho wever, if such certificate is required, could Nepal 
explain its purpose?  
 
Follow-up to question 7  (WTO Secretariat's report, page 32, para. 22):  question 7 has not been 
fully replied – could Nepal please respond to the question why the applied tariff for petroleum 
exceeds the bound level?  What steps does Nepal envisag e to bring its tariff on petroleum in line with 
its WTO commitments?  
 
All the Petroleum products are unbound except HS 2709.00.00 (Petroleum oils and oils obtained from 
bituminous minerals, crude).  Even in the case of  HS 2709.00.00 the applied tariff rate which is 10% 
is significantly less than its bound rate of 15%.     
EU's initial question 7:  The Secretariat's report states that "Between 2002/03 and 2011/12, despite 
the overall reduction in the simple average MFN tar iff rate, the applied MFN tariff rates increased on 
dairy products, coffee and tea, cotton, and other agricu ltural products n.e.s.  In addition, the applied 
MFN tariff rate for petroleum is above Nepal's fi nal bound level."  Could Nepal confirm this 
information and elaborate furth er on the reasons for the increase? 
 
 
__________