RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/NPL/3
8 June 1999
(99-2291)
Working Party on the
Accession of NepalOriginal:  English
ACCESSION OF THE KINGDOM OF NEPAL
Questions and Replies
to the Memorandum on the Foreign Trade Régime
(Document WT/ACC/NPL/2)
In a communication, dated 26 February 1990 (WT/ACC/NPL/1), the Government of the
Kingdom of Nepal applied for accession under Article XII of the Marrakesh Agreement Establishingthe World Trade Organization (WTO).  Having regard to the Decision adopted by the GeneralCouncil on 31 January 1995, the existing Working Party on the Accession of the Kingdom of Nepal tothe GATT 1947 continued as a WTO Working Party with the following terms of reference:  "Toexamine the application of the Government of the Kingdom of Nepal to accede to the WTOAgreement under Article XII, and to submit to the General Council recommendations which mayinclude a draft Protocol of Accession."  The membership is open to all WTO Members indicatingtheir wish to serve on the Working Party.
In document WT/ACC/NPL/2, Members had been invited to submit questions in writing
concerning the foreign trade régime of Nepal.  The questions submitted by Members and the repliesthereto provided by the au thorities of Nepal are re produced hereunder.  The attachments mentioned in
this document submitted to the Working Party are listed in documents WT/ACC/NPL/3/Add.1 andAdd.2 and are available in the Secretariat (A ccessions Division, Room 1126) for consultation.
Delegations wishing to raise additional questions  concerning the foreign trade régime of Nepal
might inform the authorities of Nepa l (with a copy to the Secretariat) of such questions in advance of
the next meeting of the Working Party, so that considered replies can be made available by Nepal toMembers at the time of the Working Party meeting.WT/ACC/NPL/3
Page i
TABLE OF CONTENTS
Page No. Question
No.
II. ECONOMY, ECONOMIC POLICIES AND FOREIGN
TRADE
1. Economy
(b) Current economic situation 1 1
2. Economic Policies
(a) Main directions of the ongoing economic policies, tactical and
strategic goals of the economic policies, pricing policy,economic development plans, privatization plans, sectoralpriorities, regional development plans etc.12 - 7
(b) Monetary and fiscal policy 3 8
(c) Foreign exchange, payments system and relations with the IMF,
application of foreign exchange control, if any49 - 1 2
(d) Foreign and domestic investment policy 5 13-18
(e) Competition policy 6 19-20(f) Privatization policy 7 21-24
III. FRAMEWORK FOR MAKING AND ENFORCING
POLICIES AFFECTING FOREIGN TRADE IN GOODS ANDTRADE IN SERVICES
2. Government En tities Responsible  for Making and Implementing
Policies Affecting Foreign Trade8 25-26
3. Division of Authority Between Central and Sub-Central  Form of
Government92 7
4. Any Legislative Programmes or Plans to Change the Regulatory
Régime92 8
6. Description of Judicial, Arbitral or Administrative Tribunals or
Procedures, If Any9 29-31
IV. POLICIES AFFECTING TRADE IN GOODS
1. Import Regulation
(a) Registration requirements for engaging in importing 10 32-34(b) Characteristics of national tariff 11 35-39(c) Tariff quotas, tariff exemptions 13 40(d) Other duties and charges, specifying any charges for services
rendered14 41-49
(e) Quantitative import restric tions, including pr ohibitions, quotas
and licensing systems15 50-53
(f) Licensing procedure 17 54-64
(h) Customs valuation 20 65-72WT/ACC/NPL/3
Page ii
Page No. Question
No.
(j) Pre-shipment inspection 22 73
(k) Application of internal taxes on imports 22 74-82(l) Rules of origin 27 83-87(m-o) Anti-dumping, Countervailing and safeguard régimes 28 88-90
2. Export Regulation
(b) Customs tariff nomenclature, types of duties, duty rates,
weighted averages of duty rates29 91-95
(c) Quantitative export restric tions, including pr ohibitions, quotas
and licensing systems31 96-99
(d) Export licensing procedure 32 100-102
(e) Other measures, e.g. minimum export prices, voluntary export
restrictions, orderly marketing arrangements34 103-108
(f) Export financing, subsidy and promotion policies 43 109-1123. Internal Policy Affecting Foreign Trade in Goods
(a) Industrial policy, including subsidy policies 46 113-122(b) Technical regulations and standards, including measures taken at
the border with respect  to imports50 123-140
(c) Sanitary and phytosanitary measures, including measures taken
with respect to  imports55 141-148
(e) State-trading practices 60 149-154
(f) Free zones 63 155(g) Free economic zones 63 156(h) Trade-related environmental policies 64 157(k) Trade agreements leading to country-specific quotas allocation 64 158-159(l) Government procurement practices, including general legal
regime and procedures for tendering, dealing with tenders andaward of contracts65 160-175
4. Policies Affecting Foreign Trade in Agricultural Products
(a) Imports 68 176-178(c) Export prohibitions a nd restrictions 69 179-181
(d) Export credits, export credit guarantees etc. 70 182-183(e) Internal policies 70 184-200
5. Policies Affecting Foreign Trade in other Sectors
(b) Policies affecting foreign trade in other major sectors 75 201-202
V. TRADE-RELATED INTELLECTUAL PROPERTY RÉGIME1. General Introduction
(a) Intellectual property policy 75 203-207(b) Responsible agencies for policy formulation and implementation 76 208(c) Membership in international intellectual property conventions
and regional or bilateral agreements77 209-210
(d) Application of national and m.f.n. treatment to foreign nationals 77 211
(e) Fees and taxes 78 212WT/ACC/NPL/3
Page iii
Page No. Question
No.
2. Substantive standards of protection, including procedures for the
acquisition and maintenance of intellectual property rights
(a) Copyright and related rights, including rights of performers,
producers  of  phonograms and broadcasting organizations78 213-231
(b) Trademarks, including service marks 82 232-244
(c) Geographical indications, including appellations of origin 85 245-247(d) Industrial design 86 248-254(e) Patents 88 255-282(f) Plant variety protection 94 283-286(g) Layout designs of integrated circuits 95 287-290(h) Requirements for undisclosed information, including trade
secrets and test data95 291-294
4. Enforcement 96 295-296
(a) Civil judicial procedures and remedies 97 297-310(b) Provisional measures 100 311-313(d) Any special border measures 101 314-315(e) Criminal procedures 101 316
VI. TRADE-RELATED SERVICES RÉGIME1. General Introduction 102 317-3192. I.  Policies Affecting Trade in Services
1. Professional Services
(a) Legal services 103 320-321(b) Accounting, auditing and bookkeeping
services103 322-325
(c) Engineering services 104 326-327
3. Real Estate Services 105 3284. Other Business Services
(a)  Management consulting services 105 329(b) Placement and supply services of 
personnel105 330
5. Communication Services
(b) Courier Services 106 331(c) Telecommunications services 106 332-336
7. Distribution Services 108 337-3388. Financial Services
(a) Insurance 108 339-345(b) Banking and other financial services 110 346-354
10. Tourism and Travel-Related Services 112 355
3. Market Access and National Treatment 112 356WT/ACC/NPL/3
Page iv
Page No. Question
No.
VII. INSTITUTIONAL BASIS FOR TRADE AND ECONOMIC
RELATIONS WITH THIRD COUNTRIES
1. Bilateral or Plurilateral Agreements Relating to Foreign Trade in
Goods and Trade in Services113 357-361
2. Economic Integration:  Customs Union and Free Trade Area
Agreements115 362-364WT/ACC/NPL/3
Page 1
WORKING PARTY ON THE ACCESSION OF NEPAL
CONSOLIDATED LIST OF QUESTIONS
II. ECONOMY, ECONOMIC POLICIES AND FOREIGN TRADE
1. Economy(b) Current economic situationQuestion 1.The Government of the Kingdom of Nepal had committed itself to increased revenue
mobilization by lowering tax rates while widening the tax net. Apparently these measures havenot been successful. How do the Nepalese authorities intend to improve revenue collection?
Answer:
Nepal is committed to mobilise internal resources through income and property as well as
consumption taxes such as VAT. In order to improve revenue collection, Nepal has seriously taken
steps to both expanding tax net as well as lowering tax rates. Together, to make these taxes more
transparent, efficient and effective reformation in revenue administration is underway.
2. Economic Policies
(a) Main directions of ongoing economic policiesQuestion 2.
Could you provide details of the privatization plan?
Answer:
The privatization programme was launched in order to utilize the resources currently  invested
in public enterprises in a more efficient and effective manner. The long term objective of the
privatization programme is to set the economy on a dynamic growth path by transferring public
enterprises to the private sector and enhancing private sector participation, particularly in
manufacturing and services. However, government shall take all necessary measures to ensure that the
private sector shall not use market power to obstruct market mechanisms. Nepal intends to
concentrate government activities to provide basic infrastructure, health and education services to the
population and to deal with the shortcomings of the market mechanism rather than in the productionand distribution of commercial products and services.
Question 3.
Are there any restrictions to foreign participatio n in the privatization programme (e.g. specific
sectors excluded, ceiling level of participation)? If so, do these restrictions also apply to potential
domestic investment?WT/ACC/NPL/3
Page 2
Answer:
The Privatization Act 1992, in general, does not discriminate between national and foreign
investors. However, while evaluating proposals, if the proposals of two or more investors are found to
be identical, priority shall be given to the national investor or the group of national investors.
Question 4.
The strategy for achieving the objectives of the Nepal Agricultural Perspective Plan (APP)
includes "concentration of efforts to facilitate intensification of agriculture: livestock, cereals
(paddy, wheat), citrus, apple, off-season vege tables, vegetable and flower seed, bee keeping
products, silk and forest products".  Please describe the policy measures that are available
under the APP to concentrate efforts to facilitate intensification of agriculture.
Answer:
The Agricultural Perspective Plan (APP), formulated in 1996, is being implemented by Nepal
since the Fiscal year 1998/99. The APP has prioritized four policy areas in which work will beundertaken to attain increases in productivity of cereal and cash crops in the tarai, and high value
crops, livestock and forestry products in the hills. These policy areas are:
Fertilizer  : The contribution of fertilizer to crop productivity growth is estimated at 40 per
cent. Under the prevailing policy regime the required annual fertilizer use targets for the agriculturalsector could not be supplied. Therefore the APP proposed the phasing out of subsidies in fertilizers
and the participation of the private sector in the supply. Nepal has initiated the reform of its fertilizer
policy, and fertilizer trade is planned to be deregulated by the end of FY 1998/99. The subsidies on
phosphatic and potassic fertilizers have already been fully withdrawn, and a substantial reduction of
the subsidy for urea has been affected. Now the priv ate sector participates in fertilizer imports, and
distribution, on equal footing with the Agricultural Inputs Corporation (AIC), the public undertaking
which monopolized fertilizer imports and distribution in the past.
Research and Extension : Quality seeds and improved farming methods are key elements of
the APP. The APP emphasizes: (i) increased investment in agricultural research; (ii) adoption of farmproblem-based research; (iii) increase in the production of quality foundation seeds; and (iv)
participatory extension on key output. The Agricult ural Research and Extension Project, to be
founded by the World Bank, will be instrumental for these purposes. A new pocket-package strategy
has also been developed for this purpose.
Irrigation : The APP calls for well-controlled year-round irrigation. For this purpose shallow
tube wells in the tarai and improved and participatory management of surface systems in the hills andalso in the tarai have been emphasized. Donor sup port on irrigation has begun to be mobilized in this
direction.
Rural Transport : Rural transport has been given due recognition in the APP in order to
facilitate the flow of inputs and output to and from the market. The basic components of the APP inthis area are: (i) rural roads for product and input flow in targeted production pockets, (ii) extension of
electric grids for energizing agricultural operations. Nepal has already established the Department of
Local Infrastructure and Agricultural Roads for achieving these objectives.  This effort is also being
complemented by the World Bank in the form of a proposed Rural Infrastructure Project (RIP).
In order to monitor and act upon the unfolding policy and operational problems  during the
implementation of the APP the Independent Analytic al Unit (IAU), proposed by the APP, has already
been instituted within the National Planning Commission.WT/ACC/NPL/3
Page 3
Question 5.
Agricultural Perspective Plan: Cost-recovery of ce rtain agricultural inputs (e.g. fertilizers) is of
paramount importance in order to ensuring long-term agricultural sustainability and
productivity. Is the Government of Nepal prepared to progressively apply such a cost-recovery
approach?
Answer:
Yes, through private sector participation
Question 6.
Nepal states that its current industry policy allows for development of almost all industrial
ventures without licence.  Can Nepal detail which industrial ventures require a licence, what the
licence requirements are, and where the re quirements are detailed?  Are there any
manufacturing or service sectors where foreign in vestors are required to obtain a licence and
local investors are not?  Are there restrictions on  foreign investment that are imposed under the
Foreign Investment and Technology Transfer Act?
Answer:
As per the Foreign Investment and Technology Transfer Act of 1992, Article 3, permission
from the Department of Industries is required for all foreign investment. As provided by the Industrial
Enterprises Act of 1992, permission for domestic investment is only required only for industries
producing explosives, including arms, ammunition and gun powder, security printing, bank notes and
coin industries; cigarette, bidi, cigar, chewing tobacco, khaini industries and industries producing
goods of a similar nature utilizing tobacco as the basic raw material and alcohol or beer producingindustries. The specific requirements to get the permission are not detailed in either of these Acts.
Question 7.
Are there goods subject to a regulatory price cont rol? If so, please give details of these goods
(HS coding, description of goods, minimum and maximum prices).
Answer:
As per the Foreign Investment and One Window Policy 1992, the Government does not
intervene in fixing the prices of industrial products either by the private sector industries or SOE's.
(b) Monetary and fiscal policy
Question 8.In the Nepal-Aid group meeting of April 1996 in Paris, the Government of Nepal announced
reforms on taxation through the introduction of  value added tax (VAT). What is the present
situation on that reform?
Answer:
The Value-Added Tax (VAT) has been fully implemented.WT/ACC/NPL/3
Page 4
(c) Foreign exchange, payments system and relations with the IMF, application of foreign
exchange control, if any
Question 9.Could Nepal explain, in detail, the current regi me on international payments and on capital
movements and give, where applicable, the reference to your legislation?
Answer:
The current international payment regime consists of different provisions for payments made
through convertible currency and non-convertible I ndian Rupees.  For countries other than India,
payment is made through convertible currency - mainly US Dollar. However, some selectedcommodities could be imported from India through US Dollar payments as well. There is no payment
restriction on current account transactions.
Nepal is also a member of the Asian Clearing Union (ACU). The trade transactions among
ACU members are cleared through the Asian Currency Unit Dollar which is equivalent to the USDollar.
As far as capital transaction  is concerned,  the  Ban on Investments in Foreign Countries Act
of 1964  prohibits any form of investment  including purchase of  property, bank deposit, investment
in share and bonds by Nepalese citizens in foreign countries. The repatriation of capital movementsby foreigners is free, as per the Foreign Investment and Technology Transfer Act 1992.
Question 10.
Please give details of restrictive measures the Government of Nepal could resort to in case of the
emergence of balance of payments.
Answer:
As Nepal has accepted Article VIII of IMF, it shall avoid restrictions on current payments and
discriminatory currency practices. However, Nepal may restrict the quantity or value of imports as
well as capital movement in order to safeguard its external financial position and its balance of
payments.
Question 11.
What is the present situation of the Nepalese request to enter into an enhanced structural
adjustment facility with the International Monetary Fund?
Answer:
Mid-term Reviews of the Enhanced Structural Ad justment Facility (ESAF) were held in 1995
and 1996, but could not be concluded due to political instability in the country. Nepal raised the issue
of re-entering into ESAF during the visit of an IMF Mission in November 1998.
Question 12.
The Enhanced Structural Adjustment Facility (ESAF) with the International Monetary Fund
was discontinued in FY 1994/1995 due to some political changes.  Has the Government of Nepal
been successful in its efforts to re-enter ESAF?WT/ACC/NPL/3
Page 5
Answer:
See Answer 11.
(d) Foreign and domestic investment policy
Question 13.
What policy mechanisms does the Government of Nepal use to encourage technology transfer in
all public enterprises of industries?
Answer:
There are no specific mechanisms in effect. It is expected that technology transfer will be
enhanced through privatization.
Question 14.
Are the conditions set down in the Industrial Enterprises Act 1992 and the Foreign Investment
and Technology Transfer Act 1992 identical for domestic and foreign enterprises?  If not, would
Nepal provide details on the differences?
Answer:
There are no substantive differences with regard to the treatment of domestic and foreign
enterprises in Industrial Enterprise Act 1992 and Foreign Investment and Technology Transfer Act,
except that described in answer to Question 6.
Question 15.
Nepal states that "foreign investors will be granted a business visa until their investment is
retained".  Would Nepal explain what this means in practice?
Answer:
The visa will end when a foreign investor withdraws investment from Nepal, and claims for
the repatriation of the realized amount by the sale of investment in the country.
Question 16.
Could you provide exhaustive information about the sectors not open to foreign investment, and
the reasoning for these sector restrictions, as  well as information about the conditions and
procedure of the authorization procedure for foreign investment?
Answer:
Sectors listed infra  are not open for foreign investment. Most of these sectors are reserved for
nationals, mainly in order to promote the activities of small entrepreneurs who generally use
indigenous skills, resources and technology.  Some sectors are restricted for national security reasons.
- Cottage industry;
- Personal service business (business such as hair cutting, beauty parlour, tailoring,
driving training, etc.);
- Arms and ammunitions industries;WT/ACC/NPL/3
Page 6
- Explosives, gunpowder;
- Industries related to radioactive materials;
- Real estate (excluding construction industries);
- Motion picture industries (produced in national languages and the language of the
nation);
- Security printing;
- Currency and coinage business;
- Retail business;
- Travel agency;
- Trekking agency;
- Water rafting;
- Pony trekking;
- Horse riding;
- Cigarette, bidi, alcohol (excluding those exporting for more than 90 per cent);
- Internal courier services;
- Atomic energy;
- Tourist lodging;
- Poultry farming;
- Fisheries;
- Bee keeping;
- Consultancy services such as management, accounting, engineering and legal services
etc.
Approval from the Government is required for foreign investment in these areas. Interested
foreign investors should apply in writing, in the prescribed format, to the Department of Industry or
Department of Small and Cottage Industry or any ot her office as prescribed by the Government. The
decision on the application shall be communicated to the applicant within 30 days from filing of the
application.
Question 17.
Are the conditions to grant an approval from the Department of Industry laid down in the
FITTA or subject to the discretion of the Industrial Promotion Board?
Answer:
The conditions to grant an approval from the Department of Industry are not laid down in the
FITTA.
Question 18.
Does the Foreign Investment and Technology Tran sfer Act provide an appeal procedure against
non-successful application?
Answer:
No.
(e) Competition policy
Question 19.
Nepal indicates there is a need to introduce le gislation to guarantee free and fair competition.
Can Nepal please elaborate on plans to introduce legislation on competition?WT/ACC/NPL/3
Page 7
Answer:
Nepal does feel the need for legislation to guarantee free and fair competition.  However,
Nepal has not yet outlined the plan to introduce such legislation.
Question 20.
Nepal does not have a competition policy. Are there any plans to introduce one and what could
be the timetable?
Answer:
 See Answer to Question 19.
(f) Privatization policy
Question 21.
According to information provided in Section II .(2)(a) “Main directions”  of the Foreign Trade
Memorandum, Nepal was analyzing the privatization of six public enterprises, which would
possibly be privatized in FY 1997/1998.
Were these enterprises privatized as planned?  Pl ease identify the enterp rises.  What are the
Government of Nepal’s plans for continuing its privatization efforts.  Please identify any
enterprises that are slated for pr ivatization in the coming year.
Answer:
Yes, all public enterprises have been privatized as planned. The following enterprises have
been privatized after the implementation of the privatization programme:
1. Bhrikuti Pulp and Paper Factory;
2. Leatherge Bansbari Tannery and Shoe Factory;3. Harisiddhi Bricks and Tiles Factory;
4. Nepal Film Development Company;
5. Nepal Lube Oil Limited;
6. Bitumen and Barrel Industries Ltd.;
7. Balaju Textile Industry Ltd.;
8. Raw Hide Collection and Development Company;
9. Tobacco Development Company;10. Nepal Jute Development and Trading Company;
11. Nepal Foundry Industry;
12. Raghupati Jute Mills;
13. Biratnagar Jute Mills;
14. Nepal Bank Ltd.;15. Agriculture Tools Factory Ltd.;
16. Bhaktapur Brick Factory.
The following enterprises are nearly completed or in the final stage of privatization.
1. Nepal Tea Development Corporation;
2. Himal Cement Company;
3. Butwal Power Company;
4. Rastriya Banijya Bank.WT/ACC/NPL/3
Page 8
Necessary work is under way in the Nepal Telecommunication Corporation (NTC) and the
Royal Nepal Airlines Corporation (RNAC), Nepal Oriend Magensite Company and Janakpur
Cigarette Factory (JCF) to develop appropriate privati zation strategies.  It is expected that NTC's work
should be completed before year 2000. However, telecommunication value-added services will be
open to competition very shortly. All restrictions on services like e-mail, data communication, videoconference and VSAT will be lifted.
With regard to the privatization plan please see answer to Question 2.
Question 22.
Is the purchase of enterprises undergoing pr ivatization open to foreign investors?
Answer:
See Answer to Question 3.
Question 23.
Are there any restrictions on the extent to whic h foreign enterprises can participate in Nepal's
privatization process?
Answer:
See Answer to Question 3.
Question 24.
Does any differentiation exist between foreign and domestic investors in privatization
programmes and, if so, what is the justification?
Answer:
See Answer to Question 3.
III. FRAMEWORK FOR MAKI NG AND ENFORCING POLICIES AFFECTING
FOREIGN TRADE IN GOODS AND TRADE IN SERVICES
2. Government entities responsible for making and implementing policies affecting foreign
trade
Question 25.We note in part III, paragraph 2(b) that the Ministry of Finance is responsible, inter alia , for the
general pricing policies of state-owned enterprises.  Can Nepal please provide more informationon the pricing policies applied to these SOE'S?  Can Nepal provide the Working Party with an
undertaking that all Nepal's SOE's will opera te solely in accordance with commercial
considerations, and in a manner that is consistent with Article XVII of GATT 1994?
Answer:
SOE’s are autonomous. The Ministry of Finan ce does not intervene in the SOE’s pricing
policies.  Prices are fixed by the market. Electricity and telephone rates are determined by the Utility
Commission in consultation with the private sector  which affects ongoing market prices. The NepalWT/ACC/NPL/3
Page 9
Oil Corporation is the only state trading enterprise in Nepal as defined in paragraph 1 of the
Understanding on the Interpretation of Article XVII of the GATT 1994. When becoming a WTO
Member, Nepal will fulfil its obligations as derived from Article XVII of GATT 1994, and the
Understanding on the Interpretation of Article XVII.
Question 26.
Also, we note that the Ministry of Agriculture is responsible for marketing and price regulation
of basic agricultural products.  Can Nepal please provide more information on these marketing
and price policies and their operation?
Answer:
Support indicative prices are established for sugar cane, tobacco and cotton. These prices are
determined by the respective commodity associations. There is a price subsidy on urea that is planned
to be eliminated by the end of 1999.
3. Division of Authority Between Central and Sub-Central Form of Government
Question 27."The laws of the country provide for Delegation  of authority to the local authorities as and
when required."  Does this delegation of authority concern trade policy or fiscal policies?  If so,please specify.
Answer:
 In matters of trade policy or fiscal policies, the law does not provide for delegation to local
authorities.
4.  Any Legislative Programmes or Plans to Change the Regulatory Régime
Question 28.Does Nepal intend to submit to the WTO Working Party members, for comment, the revised
legislation related to customs and excise whilst it is still in a draft form?
Answer:
The Custom Act 1962 was amended in 1997. The Custom Act, as amended, is enclosed
herewith (WT/ACC/NPL/3/Add.1).
6. Description of Judicial, Arbitral or Administrative Tribunals or Procedures,  if any
Question 29.According to the Memorandum on Foreign Trad e Regime, there are no special courts or
tribunals so far to adjudicate trade disputes in  Nepal.  There is, however, the Arbitration Act of
1981, under which disputes of a commercial nature arising out of an agreement may be settled
through arbitration as provided for in such an agreement.  Do commercial trade disputes have
to go through arbitration or can they be taken directly to Nepalese Courts for resolution?  Can
arbitrated decisions be appealed to the Nepalese Courts?WT/ACC/NPL/3
Page 10
Answer:
The scope of the Arbitration Act covers only those disputes which are indicated in the
contract concerned. Thus, any other commercial dispute may fall under the jurisdiction of courts of
law. They may be reviewed by the Appellate Cour t pursuant to Section 21 of the Arbitration Act
1991. Parliament has recently adopted a new Arbitration Act which is based on the ModelCommercial Law adopted by UNCITRAL in 1985.
Question 30.
There is a special permanent tribunal to adjudi cate and resolve revenue disputes (Revenue
Tribunals).
Are decisions relating to customs duties appealable directly to the Revenue Tribunals?  Please
describe fully the procedures for appealing de terminations made by the Customs authorities.
We would appreciate a report from Nepal on it s current arrangements for dealing with judicial
appeals from administrative rulings on customs matters, as provided for in Article X of the
GATT, or as necessary, its intentions for establis hing such institutions in the context of its
accession to the WTO.
Answer:
        There is a permanent Revenue Tribunal to adjudicate and resolve revenue disputes, including
custom duty assessment. There are four District Tribunals that see cases arising under their
jurisdiction. With regard to decisions related to custom duties, the Custom Act of 1962 as amended,
also provides for appeal against orders of custom duty assessment or punishment issued by customs tothe Revenue Tribunal.  Nepal will examine the compatibility of its current procedures with Article
X:3(b) and (c) of GATT 1994.
Question 31.
Can Nepal explain the existing arrangements that are available to enforce private contracts,
including loan agreements?  What steps do Ne pal have in place to improve compliance with
such contracts?
Answer:
The infringements of private contracts have to be taken by the concerned party to the dispute
resolution mechanism as incorporated in the contract concerned. In other cases, a dispute under the
contract falls under the jurisdiction of the courts of law.
IV. POLICIES AFFECTING TRADE IN GOODS
1. Import Regulation
(a) Registration requirements for engaging in importing
Question 32.In the Memorandum on Foreign Trade Regime, Ne pal states that “Foreign-owned companies,
or joint companies with foreign participation, ... are required to make an application to theWT/ACC/NPL/3
Page 11
Ministry of Industry for obtaining permission to engage in industrial business in Nepal”.  Please
further define “industrial business”.  Does th is include the right to import or export?
Answer:
All companies, national or foreign, have to be  registered with the competent authority to
engage in business in Nepal. This includes export  and import activities. Limited liability companies,
including joint venture agencies, sole proprietor and partnerships, business undertakings for industrial
ventures, register at the Ministry of Industry. But agencies, sole proprietor undertakings and
partnership businesses for trading are required to register at the Department of Commerce.
Question 33.
Please confirm that foreign or domestic individuals or firms may import for industrial,
wholesale or retail purposes into Nepal, and th at the proper registration requirements for such
activities do not differ from those for the conduct of purely domestic business.
Answer:
All registered companies can import goods for business purposes. Individuals can import for
business as long as they are registered as sole proprietor undertakings. Retail businesses are reserved
for Nepalese nationals (refer to the answer to Question 16). Registration requirements are the same for
those companies that conduct purely domestic activities than for companies engaged in import andexport activities.
Question 34.
Are the registration requirements and fees for forei gn individuals or firms identical to those for
Nepalese individuals or firms?  If not, how do they differ?  What is the amount of the fee?
Answer:
Registration requirements are the same for both national and foreign firms.  The amount of
registration fees range from NRs 125.00 to NRs 7,800.00 depending upon the capital of the firm.
(b) Characteristics of national tariff
Question 35.Nepal states that imports “ … are subjected to an  equalizing duty equal to the excise tax that is
applied on the national goods.  The objective of this measure is to provide the same treatment to
national and imported goods.  Excise taxes range from 15 to 40 per cent for some specified
goods.”  Please provide a list of all imported  products, including HS numbers, subject to
equalizing duty rates.  For each item, please provide the applied equalizing duty rate, the
applied tariff rate, and the applicable excise tax rate for the same domestically-producedproduct.  Are imports of these products from preferential trading partners subject to the
equalizing duties?
Answer:
All imports of goods, whatever the origin, are subject to excise taxes and are charged in the
form of equalizing duty as follows:WT/ACC/NPL/3
Page 12
S.No. HS Code Items Tariff Rate
1. 1703.10 Can molasses 20
2. Raw sugar in solid form 20
3. 2106.90.20 Betel/Areca (Pan Parag) nuts mixed with catechu
and lime with or without nicotine20
4. 2204.29 Wine  or fresh fruits not exceeding 17 per cent
alcoholic content
5. 2306.00 Cider NRs 275 per ltr
6. 2203.00 Beer 2203.00
7. 2206.00 Country Beer (chhyang) 2206.00
8. 2207.20 Denatured spirits 40%
9. 2207.20 Thinner 40%
10. 2208.00 Industrial spirits with 57.38 to 80 per cent alcohol
content by volume, to be used as raw material for
spirituous drink40
11. 2207.10 Rectified spirit, silent spirit (ENA) used as raw
material for alcoholic products with an alcoholic
strength of 80 per cent or higher by volume40
12.
2208.20.90
2208.30.90
2208.50.90All alcoholic products
a) Up to strength of 40 up
b) Strength of 30 to 40 up
c) Strength 40 % higherPer Lit. 275/-
13. 24.02.20 All kinds of cigarette
i. Cigarettes up to 70 mm in length
a) Without filter
b) With filter
ii. 70 mm to 75 mm (with filter)
iii. 76 mm to 85 mm (with filter)
iv. More than 85 mm (with filter)Per thousand
sticks NRs
675/-
14. 2402.10 All kinds of cigar Per thousand
sticks NRs
675/-
15. 2403.10.10 Pipe tobacco 80%
16. 2403.99 Tobacco extracts and essences including chewing
tobacco40%
17. 2403.99 Raw chewing tobacco 40%
18. 2710.74, 75
& 79Lubricating oils, engine oils and mobil 20 to 30%
19. 2710.75 Greases 20%
20. 8702, 3, 4 Vehicle fuelled by petrol or diesel
a) Motor vehicle for transport (single cab pick up)
b) Light vehicles, jeep and car (up to 14 seats)30 to 80%
Question 36.
Nepal's tariff rates for most items are levied at 10 to 20 per cent, which are relatively low tariff
rates.  However certain items, such as cars and jeeps, are currently levied at 80 per cent, which
is a high standard (cf. The Evolution of th e Customs Tariff Regulation, page 17).  Why does
Nepal rely on such high tariff rates for cars and jeeps?  We would like to know the percentageWT/ACC/NPL/3
Page 13
of the tariff income perceived from the tariffs levi ed on cars and jeeps in  relation to the total
tariff income.
Answer:
Vehicles of personal use are the ones charged with the 80 per cent custom duty. Vehicles for
the transport of persons or goods are subject to lower custom duties of 30 to 40 per cent. The tariff
income is 4.57 per cent of the total tariff income.
Question 37.
We would like to know when Nepal can submit its initial offer on goods for market access
negotiations.
Answer:
Nepal is currently analyzing different alternatives and is conducting the necessary studies and
evaluations for the elaboration of its initial offer on market access on goods. It will be submitted to theWorking Party as soon as it is ready.
Question 38.
The Memorandum explains that domestic goods are subject to excise tax while like imported
goods are subject to an equalizing duty that is equa l to the excise tax.  Given that these taxes are
collected on an  ad valorem  basis, it is important that domestic goods and imported goods are
valued in the same way.  Can Nepal advise whether the basis for valuation of imported and
domestic goods is identical, and whether this will continue to be the case when Nepal fully
implements the WTO Customs Valuation Agreement in relation to imported goods?
Answer:
Excise tax is applied on domestic goods on the basis of ex-factory price. Imported goods are
valued on the basis of C.I.F price.
Question 39.
Please provide copies of applied rates of customs duty on diskette together with import statistics
on a tariff line basis.
Answer:
The diskette of customs tariff will be submitted to the Secretariat.
(c) Tariff quotas, tariff exemptions
Question 40.
Can Nepal confirm that it does not intend in the future to introduce import quotas?
Answer:
When becoming a WTO Member, Nepal will apply import quotas only as provided by the
Multilateral Agreements on Trade in Goods.WT/ACC/NPL/3
Page 14
(d) Other duties and charges, specifying any charges for services rendered
Question 41.Is the imposition of seasonal taxes limited to certain product sectors?
Answer:
There are no seasonal taxes in effect in Nepal.
Question 42.
Please list all the tariff headings, which are subject to seasonal duties?
Answer:
There are no seasonal duties in effect in Nepal. Applied duties are those established in the
Nepalese Custom Tariff 1998/1999.
Question 43.
When are seasonal duties applied?
Answer:
Refer to answer to previous question.
Question 44.
Is a distinction made between imported and domestic products?
Answer:
Refer to answer to question 42.
Question 45.
According to the Foreign Trade Memorandum, the Customs Office charges 1 per cent of the
value of the import for an import licence.  Is the 1 per cent charge for an import licence
calculated on the invoice value of the import ed product?  When is the charge assessed?
Answer:
The licence fee is calculated on the invoice value. The fee has to be paid prior to the release
of goods by customs.
Question 46.
Does the 1 per cent import licence charge apply to goods entering from India under the Treaties
of Trade and Transit?WT/ACC/NPL/3
Page 15
Answer:
The licence fee applies to the import of restricted products originating and coming from all
countries; including, be the case, those entering from India under the Treaty of Trade.
Question 47.
Is the import licence charge assessed for fiscal reasons?  If for other reasons, please describe.
For what service rendered is this charge levied?  Why does the Government of Nepal also
impose an application fee of 10-60 Nepalese Rupees (NRs)?  Is the application fee for a different
service?
Answer:
The application fee is nominal.  It only amounts, at the current exchange rate, to between
US$0.14 and US$0.85. The one per cent fee is a service charge for the evaluation that has to be
undertaken by different agencies of the request to import restricted products into Nepal. The import
licence charge is not assessed for fiscal reasons.
Question 48.
Article VIII of the WTO states that all fees and charges of whatever character (other than
import and export duties ... ), shall be limited in amount to the approximate cost of servicesrendered and shall not represent an indirect protection to domestic products or a taxation of
imports or exports for fiscal purposes.  Please describe how Nepal intends to change the import
licence charge to approximate the cost of servic es rendered, in accordance with GATT Article
VIII.
Answer:
Refer to answer to Question 46.
Question 49.
We note that Nepal charges a fee of 1 per cent of the value of the goods imported for an import
licence.  What plans does Nepal have to bring this fee into conformity with Article VIII of
GATT 1994 which requires that fees and charges (except import taxes and other taxes within
the purview of Article III) connected with importation or exportation shall be limited in amount
to the approximate cost of providing the service?
Answer:
Refer to answer to question 46
(e) Quantitative import restrictions, including prohibitions, quotas and licensing systems
Question 50.Under a current trade agreement with India, Nepa l imports some goods on a quota basis.  What
products are covered, what are the limits, what tariffs are applied,  and how does this systemwork?WT/ACC/NPL/3
Page 16
Answer:
The product list and the quantity under the quota system is decided on a yearly basis as
provided by Article II.4 of the Protocol to the Treaty of Trade between Nepal and the Government of
India. The quota system operates only for those goods that are restricted for exports, or subjected to
price controls, in one of the Parties to the Trade Agreement. The list of products that Nepal importsfrom India on a quota basis varies significantly de pending on the agreement reached every year. For
the years 1998 and 1999 the following products were allocated:
1998 1999 Tariff Rate (%)
Milk powder 1,500 MT 1,500 MT 10
Baby food 500 MT 500 MT 5
Waste cotton 1,500 MT 1,500 MT 0
Cotton 500 MT 500 MT 0
Cotton yarn (cone) 500 MT 500 MT 5
Cotton yarn (hank) 500 MT 500 MT 5
Rutile 1,500 MT 5
Sugar 40,000 MT 10
Question 51.
Why does Nepal ban imports of logs and timber? (Annex 3.1)
Answer:
Nepal does not ban or restrict imports of log and timber. Annex 3.1 presents the list of
products banned or restricted for export.
Question 52.
Can Nepal provide further details on the import restrictions that apply to communications
equipment, specifically what goods are covered by the phrase "other audio communication
equipment"?  Does this restriction apply to  goods such as TVs, VCRs and computers?  Would
Nepal please advise how an import licence can be obtained for restricted goods detailed in
Annex 3.2 OF WT/ACC/NPL/2/ADD.I?
Answer:
An import licence is not required to import TV’s, VCR’s or computers.  A licence only
applies for the kind of communications equipment that has to be controlled because of security
reasons. To import restricted communication equipment, authorization has to be obtained first from
the Ministry of Communications and then the respective import licence must be obtained from the
Department of Commerce. Also refer to answer to Question 56.
Question 53.
Does Nepal produce or manufacture some of the products mentioned in Annex 3.2?
Answer:
Nepal does not manufacture the banned or restricted products of Annex 3.2, other than
jewellery and some home-made liquor.WT/ACC/NPL/3
Page 17
(f) Licensing procedure
Question 54.
Please state the contribution to Government revenue that is provided by import
licensing fees?
Answer:
During FY 1996/1997, the total revenue generated by the Department of Commerce was
NRs7 million, that is US$116,000. Of this revenue the import licence fee amounted to NRs200,000,
that is around US$3,300 at the average exchange rate for the FY. The value of imports subjected to
licence fee were therefore around US$330,000, out of US$1.523 billion of total imports.
Question 55.
According to the information provided in th is paragraph of the Foreign Trade Memorandum,
automatic licensing is applied for information pur poses both for the import and export of goods.
In the paragraph on import restrictions, it is noted that all items except a few under banned and
quantitative restriction, as shown in Annex 3.2 of the Memorandum, are free for import and
there are no import quotas at present applied.  Does the 1 per cent import licence charge apply
to the items subject to automatic licensing?  Do es the import licence charge apply to the items
shown in Annex 3.2?  What is the pur pose of the import licence charge?
Answer:
An import licence is only required for the import of banned or restricted goods into Nepal,
that is only those goods listed in Annex 3.2 of the Memorandum. Import licence is not required for theimport of any other goods. For all goods, except those listed in Annex 3.2, the system has been
relaxed and the requirement of a licence has been replaced by the presentation of the letter of credit
opened for import, and no fee has to be paid in these cases. Only if the importer fails to present a letter
of credit, then he is required an import licence and the 1 per cent fee has to be paid. For the purpose of
the licence charge, refer to answer to Question 46.
Question 56.
Please identify, including HS numbers, all commu nication equipment, such as wireless, walkie
talkie and similar other audio communication equipment, that is subject to an import ban or
restrictions.  Please describe the import restriction and the applicable GATT justification.
Answer:
To import restricted audio communication equipment, authorization has to be obtained first
from the Ministry of Communications and then the importer has to apply for an import licence from
the Department of Commerce. This restriction is justified under Article XXI of GATT 1994. The
import of the following equipment requires an import licence:
HS Code Description
85.28 All types of radio communication system with the frequency range of 30 khz to
300 khz
85.28 Radio transmitter and transceiver
85.29 Television transmitter, FM radio transmitter
85.25 Wireless transceiverWT/ACC/NPL/3
Page 18
HS Code Description
85.25 Walkie talkies
85.17 Cordless telephone
85.29 Video sender
85.28 Amateur radio
85.17 Inmarsat terminal (portable satellite hand set)
85.17 Satellite communications equipment
85.17 Radio paging system- paging transmitter, pager
85.17 Communication equipment- cellular telecommunication base station, cellular
hand set
85.28 Satellite broadcast receivers
85.28 Satellite receiver  (other than broadcast)
85.17 Radio repeater station
85.17 Radio navigation, transmitter/transceiver
85.17 Radio determination transceiver, receivers
Question 57.
Please explain why valuable metals and jewellery are subject to import prohibitions or
restrictions.
Answer:
This restriction is justified under Article XX (c) of GATT 1994. It is applied to avert illegal
trade. Nevertheless, according to the Baggage Rules any resident staying more than 30 days outside
Nepal can bring up to 10 kilogrammes of gold into the country; no import licence is required in thiscase.
Question 58.
According to the information provided in Annex 3 of WT/ACC/NPL/2/Add.1, the licensing
system is automatic in the cases where there are no  quotas or bans on imports.  At present, all
items except a few under prohibition or quantitative restrictions are free for export or import
and there are no quotas.  Presumably all such items are included in the lists in Annex 3.1 and
Annex 3.2.
Is the Government of Nepal requiring automatic import licensing for all import and export
items other than those listed in Annex 3.1 and 3.2?  If not, please identify the products,
including HS number, that are subject to  automatic import and export licensing.
Answer:
Refer to answer to Question 54.
Question 59.
May applications for licenses be submitted on any working day prior to the customs clearance
of the goods?
Answer:
Yes, applications can be submitted on any working day.WT/ACC/NPL/3
Page 19
Question 60.
Are all import licenses approved immediately on re ceipt, to the extent administratively feasible,
but within a maximum of ten working days?
Answer:
If documentation is in order licenses are approved immediately by the Department of
Commerce.
Question 61.
According to the information provided in A nnex 3 of WT/ACC/NPL/2/Add.1, import licenses
are only issued for certain purposes in accordan ce with Rule 6(b) of the Export-Import Rules,
1978. Among the purposes are licenses issued in th e name of commercial firms, companies and
corporations for commercial purposes.  Are impo rt licenses issued to individuals for commercial
purposes?  If not, why not?
Answer:
Import licenses are not issued to individuals for commercial purposes as import licenses are
currently only required for the import of banned or restricted products and an effective control of the
use and destination of these goods is necessary. Furthermore, according to current legislation only
individuals registered as sole proprietor undertakings can engage in import activities for business
purposes. Refer to answer to Question 33.
Question 62.
According to the information provided in Part VI “Conditions of Licensing,” a licence is not
transferable between importers, because they are issued to particular persons and for specific
purposes.”  However, Article 2.1 of the WTO Agreement on Import Licensing provides thatautomatic import licensing is defined as import  licensing where approval of the application is
granted in all cases. Please identify any person s or purposes that are not eligible to obtain an
import licence.  Is the decision to issue an im port licence discretionary?  Please explain how
licenses can be automatic, if they are only issued  to particular persons and for specific purposes.
Answer:
Import licenses, as explained supra  are only required for the import of banned or restricted
products into Nepal. Anybody that fulfils the legal requirements for engaging in import activities
related to those products is eligible to apply and to obtain an import licence. What is not allowed is for
those who obtain a licence to transfer it to another importer.
Question 63.
According to the information provided in A nnex 3 of WT/ACC/NPL/2/Add.1, the Export and
Import (Control) Act 1957 gives the right to the Go vernment to introduce import controls in the
case of BOP problems and in specific cases of Governmental assistance to economicdevelopment.  Please describe the specific cases of Governmental assistance to economic
development which would allow the Government to impose import controls.WT/ACC/NPL/3
Page 20
Answer:
The specific cases of Governmental assistance to economic development which would allow
Nepal to impose import controls under the mentioned Act are basically the same as those recognized
in Articles XVIII, and Article XIX of GATT 1994.
Question 64.
Can Nepal confirm that, to obtain a licence to ac t as an agent for the delivery of imported goods,
the only condition is the payment of the licence fee to the customs office?  If there are other
criteria for the granting of a licence, would Nepa l confirm that there is no difference between
domestic and foreign eligibility?
Answer:
Any person, firm, or company desiring to work as agent for delivery of goods has to obtain a
licence from Customs and pay the prescribed fee. Nepal may prescribe other conditions regarding the
issuance of licenses. Preference may be given to nationals  However, the granting of this  preferencedoes not infringe any of the obligations under GATT 1994, to be assumed once Nepal becomes a
Member of the WTO.
(h) Customs valuation
Question 65.
What are the "existing criteria" used by the cu stom office to reject the declared value? Do
minimum prices exist?
Answer:
There are no minimum prices in effect. Customs refer to international prices, local market
price, suggested price lists of manufacturers, recorded prices of previous imports of identical or
similar goods, a list of reference prices and other available information when there is reasonable doubtthat the invoice price is not the actual transaction price.
Question 66.
We are pleased to note that Nepal is moving to wards customs valuation rules that are consistent
with the GATT 1994.  We would be grateful if Ne pal could explain areas in which more work is
needed to achieve full conformity with the WT O Customs Valuation Agreement, and provide a
timetable for implementing this?
Answer:
As per the Custom Act, as amended in 1997, goods are valued for custom duties assessment
on the basis of the invoice price shown in the document provided by the importer. If customs have
reasonable doubt that the invoice price does not correspond to the price actually paid for the goods,
that is the transaction value, then customs will refer to the value of similar, or identical goods
imported into Nepal. If this information is not available, then customs will refer to the other
alternatives mentioned in answer to Question 65. Cu stoms are not applying provisions of Article 5
and 6 of the Agreement on Implementation of Article VII of GATT 1994. Furthermore, there are no
provisions in current legislation referred to in the case when the buyer and seller are related and how
customs should act in those cases; and a reference price list is still used for comparison purposes with
the invoice price. Nepal is examining the modificati ons that would have to be introduced in currentWT/ACC/NPL/3
Page 21
legislation and practice to fully implement WTO Custom Valuation Rules. To attain this objective it
will be necessary to train personnel, to prepare implementation measures and upgrade the institutional
capabilities and material infrastructure of Customs Administration. The timetable for complete
implementation will depend on the progress that can be achieved on those issues. Nepal will welcome
technical assistance that facilitates earlier compliance with its future obligations as a WTO Member.
Question 67.
Nepal indicates that it is moving toward GATT 1994 valuation rules.  Also please provide a
translated copy of the Gazette Notification for Customs Valuation 1997 (Marga 30, 2053) to the
WTO Secretariat (WT/ACC/NPL/3/Add.1) for review by members of the Working Party.
Answer:
The Gazette Notification for Custom Valuation 1997 (Marga 30, 2053) has been amended by
the Custom Act 1997. The Custom Act is enclosed herewith.
Question 68.
What is Nepal’s timetable for the implementation of the WTO Agreement on Customs
Valuation no later than the date of accession?
Answer:
Refer to answer to question 66.
Question 69.
According to the information provided in th e Memorandum on Foreign Trade Regime, Nepal
has adopted the transaction value method of cust oms valuation.  However, the transaction value
declared by the owner is compared to “existing criteria” of valuation.  Please describe these
“existing criteria.”
Answer:
Refer to answer to question 65.
Question 70.
According to the information pr ovided in the paragraph “Other customs formalities,” in the
Foreign Trade Memorandum, importers must prov ide several documents.  Does the owner of
goods need to produce any other documentation to substantiate the good’s declared value?  If
yes, please identify and describe the other documents that are required.
Answer:
If the invoice value is not questioned by Customs the importer does not have to present any
other documentation.
Question 71.
What type of documents/evidence does Custom s require to “prove the authenticity of the
invoice?”WT/ACC/NPL/3
Page 22
Answer:
Customs basically require documentation on third party evidence.
Question 72.
Is Nepal currently introducing the minimum refe rence price system for customs purposes?  If
Nepal is to temporarily introduce it in the context of the transitional stage towards the GATT
1994 valuation rules indicated in VI.1(h), page 19 of WT/ACC/NPL/2, a comprehensive list
indicating all the items and the minimum preferen ce prices should be notified to the Working
Party (Annex 4).
Answer:
Custom Administration elaborates a reference price list, for those more sensitive products, for
internal use of custom officials when evaluating an invoice price presented by the importer. Due to the
need to maintain an adequate balance between revenue protection and trade facilitation, Nepal will
use a reference price list until it is in the condition to fully implement the provisions of the Agreementon Implementation of Article VII.
(j) Pre-shipment inspection
Question 73.Nepal currently has no system of pre-shipment inspection.  Does the Government of Nepal
intend to introduce a pre-shipment inspec tion system in the foreseeable future?
Answer:
At the moment Nepal is not considering the introduction of a pre-shipment inspection system
in the foreseeable future.
(k) Application of internal taxes on imports
Question 74.The Memorandum mentions Nepal’s policy on nati onal treatment on internal taxation but not
on regulatory aspects of sale, offering for sale, purchase, transportation and distribution. Please
explain how the policy in this area complies with Article III.4 of GATT 1994?
Answer:
There are no laws, regulations or requirements in effect in Nepal that is discriminatory against
imported goods with respect to the mentioned activities. Imported goods are accorded no less
favourable treatment than the one accorded to goods of national origin in a manner consistent withArticle III.4 of GATT 1994.
Question 75.
We would be grateful if Nepal could advise th e Working Party on the status of implementation
of the VAT and compliance by the business sector.  In practice, is VAT being collected
uniformly across all sectors (other than those that are exempt)?WT/ACC/NPL/3
Page 23
Answer:
VAT has been fully implemented as per the Value-Added Tax Act 1995 and the rules and
regulations thereof. The compliance by the business sector is quite satisfactory. During the current
fiscal year around 6,000 persons have registered with the tax officer, which is more than 90 per cent
of anticipated VAT taxpayers.
VAT is being collected uniformly across all sectors, other than those that are exempt.
Question 76.
Exemptions from VAT apply to commodities deemed essential, such as food items, kerosene,
sugar, cotton textiles, medicine, pencils, and utensils made of copper, brass and aluminum.Please provide a comprehensive list of all commodities and products exempt from VAT.
Answer:
The following goods are exempted from Value Added Tax (VAT):
1. Basic Agricultural Products(a) Paddy rice, wheat, maize, millet, pulses, flour, and similar unprocessed food
materials.
(b) Green and fresh vegetables, fresh fruits, fresh eggs and similar products.
(c) Unprocessed cereals, oil seeds (tobacco, sugar, cotton, cardamom, jute, soybean,
ground nuts, linseed rape seed, sun flower and similar basic agricultural products to
be used to make edible oil).
2. Goods of Basic Needs
(a) Edible oil (produced through local oils mills).
(b) Piped water, including water supplied by tankers.
(c) Fuel wood and coal.(d) Kerosene.
3. Live Animals and Animal Products(a) He goat, sheep, yak, he buffalo, bore, pigs, rabbit, and similar other animals; their
fresh milk, and uncooked/unprocessed varieties.
(b) Cows, she buffalo and she goat.(c) Ducks, hens, cocks, turkey and similar other birds, and their fresh meat, eggs, and
similar uncooked varieties.
4. Agricultural Inputs
(a) Seeds of any plants listed in Group 2.
(b) Manure, fertilizer and soil conditioners.
(c) Agricultural hand implements.
5. Pesticides, made mainly for use on crops
Medicine, Medical and Similar Health Services
(a) Services provided by any hospital, clinics or other institutions approved by the
Government in order to provide medical or surgical treatment.WT/ACC/NPL/3
Page 24
(b) Professional services provided by medical practitioners (doctor, nurse, health
assistance, etc.) individually or institutionally.
(c) Goods provided to the recipients in connection with the supply of services listed in
group (a) and (b) above.
(d) Human blood and products derived from human blood.
(e) Human or animal organs or tissue for medical research.(f) The supply of services by persons on the registry of veterinary surgeons and
veterinary doctors.
(g) Medicine for the treatment of human being and animals.
(h) The supply of goods made for, and suitable only for the use of, disabled persons.
6. Education
a) The provision of research in a school or university.
b) The provision, otherwise than for profit, of professional or vocational training or
refresher training.
c) The provision of education in a school or university and supply of goods made in
connection with such services.
7. Books, Newspapers etc.(a) Books, brochures and pamphlets.
(b) Newspapers, newsletters and periodicals.(c) Maps, and charts.
(d) Covers, cases and other articles supplied with items (a) to (c) above if not separately
charged.
(e) Radio and television transmissions.
8. Artistic and Cultural Goods and Services, Carving Services
(a) Cultural and artistic services (painting, carving and related services).
(b) Cultural programme.
(c) Admission to libraries, archaeology, museums, zoos and botanical gardens.
9. Passenger Transportation ServicesThe provision of services for the transport of person from one point in the Kingdom of Nepal
to another point in the Kingdom of Nepal (except sightseeing trips).
10. Personal or Professional ServicePersonal services rendered by lawyers, auditors, engineers, artists, actors, singers, dancers,
sportsmen, authors, writers, designers, professional sportsmen, insurers, booksellers,
translators and interpreters institutionally or individually.
11. Other Goods or Services
(a) Postal services (provided by Nepal only)
(i) The service of conveyance of letters, money and postal packets by the Post Office.
(ii) The supply by the Post Office of any service in connection with the conveyance of
letters, money and postal packets.
(iii) Postage stamps.WT/ACC/NPL/3
Page 25
(b) Financial and insurance services
Bank notes, and cheque books
(i) The printing and issue of bank notes.
(ii) The supply of bank notes from outside the Kingdom of Nepal to the Kingdom of
Nepal.
(iii) Cheque book.(c) Gold and silver
(i) Gold and gold coins (other than ornaments and goods made of gold).
(ii) Silver and silver coins (other than ornaments and goods made of silver).
12. Land and Building
Purchase and rent of land and buildings
13. Betting, Casinos, Lotteries
(a) The provision of any facilities for the placing of bets or the playing of games of
chance.
(b) Lottery.
The following goods or services attract  zero rate  of value added tax.
1. Goods or services purchased or imported by His Majesty the King, Her Majesty the
Queen, His Majesty the Crown Prince, and other members of the Royal Family.
2. Export of goods(a) Goods exported outside the Kingdom of Nepal; or
(b) Goods shipped for use as stores on a flight to an eventual destination outside the
Kingdom of Nepal; or
(c) Goods loaded for use as stores on aircraft to a destination outside the Kingdom of
Nepal or as merchandise for sale by retail or supplied to persons in the course of such
a flight.
3. Export of services
(a) A supply of services by a person resident in the Kingdom of Nepal to a person
outside the Kingdom of Nepal and having no business establishment, agent, or legal
representative acting on his behalf in the Kingdom of Nepal.
(b) Where goods are supplied on a hire or loan basis by a registered person resident in
Nepal to a person resident outside the Kingdom of Nepal.
4. Imports of goods and services by accredited diplomats.
Question 77.
The 10 per cent VAT rate is levied on taxpayers registered with the VAT office and a 20 per
cent VAT rate is levied on non-reporting taxpay ers.  What are the requirements for registration
in the VAT office?
Answer:
At the time when the Value Added Tax Act commenced, every person (defined in the Act as
any individual, firm, company, association, institution, partnership firm, cooperative, joint business,
religious endowment, or fund; or any Government body, any religious organisation, charitable trust orWT/ACC/NPL/3
Page 26
similar other bodies and branches or sub-branches there engaged, with or without profit, in Taxable
Transactions) engaged in any transaction is required  to apply for registration in a prescribed form to
the tax officer  within 90 days from the commencem ent of this Act. After the commencement of this
Act, every person desirous to be involved in any commercial transaction is required to register in the
tax office before beginning to engage in such transactions. While evaluating the application, tax
officer may ask the applicant for additional information and documents and it shall be the duty of anindividual to submit such information/document within seven days to the concerned authority. Upon
the verification of the application form, the tax aut hority shall issue the Registration Certificate to the
concerned individual within 30 days from the date of filing the application. The Certificate should be
displayed in a conspicuous place at his principal place of transaction. If there is more than one place
of transaction, he should display a copy of the registration certificate, attested by a tax officer,
conspicuously at each place. It shall be the duty of every registered person to use the registration
number for all transactions related to value added tax, excise duty and to other transactions asprescribed.
However, exemption registration is provided to a small vendor having a commercial
transaction less than NRs4.5 million during the last twelve months. Similarly, import by cottage
industries for their own consumption is also exempted from registration as well as VAT.
Question 78.
Are cottage industries, which are exempt from income and excise taxes, also exempt from the
VAT?  What defines a cottage industry in Nepal?
Answer:
Yes, but only to those cottage industries having transactions less than the annual taxable
transaction threshold level as provisioned in VAT regulations. However, cottage industry imports fortheir own consumption is exempted from VAT.
The Industrial Enterprises Act 1992 defines 'Cottage Industry' as industries utilizing specific
skills or local raw materials and resources, and labour intensive and related with national tradition, art
culture with the exception of cigarettes, bidi, cigar, chewing tobacco, khaini , industries producing
other goods of a similar nature utilizing tobacco as the basic raw material, alcohol and beer producing
industries, such as handloom; pedal-loom; semi-automatic loom; warping, dyeing and printing;
tailoring (other than ready made garments); knitting, hand knitted woollen mats and blankets ( radi,
pakhi ); woollen carpet; pasmina ; woollen garments; carpentry; wooden artistic product; cane and
bamboo works; natural fibre products; hand made paper and goods made up thereof; gold; filigree
products including silver, brass, copper, precious a nd semi precious stones; ornaments; sculpture and
pottery; honey, chauri , cardamom processing; clay or ceramic pottery; leather cutting and tanning;
rural tanning and leather goods producing works; jute, sabai  grass, babio , choya , cotton thread
products; artistic products made up of bones and horns; stone carving; ceramic fine arts; pauwa;
boutique; incense stick ( dhup );dolls and toys industries with the fixed assets of up to two hundred
thousand rupees.
Question 79.
How, where and when is the octroi, the municipal transit tax, collected?  Is it collected at the
port of importation for imported goods?
Answer:
The Local Autonomy Bill 1998, passed recently by Parliament, has abolished octroi.  The Bill
is in the process of receiving Royal Assent.WT/ACC/NPL/3
Page 27
Question 80.
Nepal has indicated that it is considering eliminating the octroi tax and providing alternative measures
to replace the revenue lost by municipalities.  Can Nepal advise whether the octroi tax applies equally
to domestic and imported goods?  What is the expected timetable for elimination of this tax?
Answer:
See answer to Question 79.
Question 81.
Please describe in greater detail the application of the Excise Tax to locally-produced and
imported goods?  At what point is the tax applied to locally produced goods and imported
goods?  For imports, what is the tax base?
Answer:
Excise tax applies to a list of products as specified in the Finance Act. This tax does not apply
to imported goods. Imported goods are subject to the equalising duty that is levied as per the rate of
the Excise Tax chargeable to those products listed  in the Financial Act. Also refer to answer to
Question 38.
Question 82.
Please provide a complete list of the goods and serv ices subject to the Excise Tax, as well as the
applicable tax rates.
Answer:
Refer to answer 35.
(l) Rules of origin
Question 83.Please clarify whether proof of origin is required for products originating from all countries or
only from those countries exporting to Nepal under a preferential scheme?
Answer:
Proof of origin is required for products originating in those countries exporting to Nepal
under preferential treatment.
Question 84.
Where proof of origin is required, what constitutes that proof?
Answer:
The Certificate of Origin issued by an authority designated by the Government of the
exporting country and notified in accordance with the Certification Procedure constitute the proof of
origin.WT/ACC/NPL/3
Page 28
Question 85.
Please provide a more detailed explanation of how the country of origin is ascertained.
Answer:
Products wholly produced or obtained in th e exporting country or products not wholly
produced or obtained but processed in the exporting country are considered to be originated in the
exporting country. Raw or mineral products extracted from its soil, its water or sea beds, agricultural
products harvested, animals born and raised and the product obtained from these animals, products
obtained by hunting or fishing, products of sea fish ing and other marine products taken from the high
seas by its vessels and processed and/or made on board its factory ship, used articles collected and therecovery of raw materials, waste and scrap resulting from manufacturing operations and goods
produced exclusively from these above products are considered products wholly produced or obtained
in the exporting country. Products worked on or processed as a result of which the total value of
materials, parts or produce originating in other countries or of undermined origin used, does not
exceed 50 per cent of the f.o.b. value of the products produced or obtained, and the final process ofmanufacture is performed within the territory of the exporting country, are eligible for preferential
concession. Similarly, products covered by the sectoral agreement between member countries are also
eligible for preferential treatment.
Question 86.
Under what circumstances might a "group of coun tries be considered as one country for origin
purposes?"  For example, does the European Union count as one country for origin purposes?
Answer:
Under the rules of origin, there is no provision regarding circumstances for group of countries
to be considered for origin purpose.
Question 87.
Is the Government of Nepal ready to implement the WTO Agreement on Rules of Origin?
Answer:
Currently Nepal only requires proof of origin to determine whether goods qualify for
preferential treatment under the trade agreements to which it is a Party or by national legislation.Nepal is ready to implement the WTO Agreement on rules of origin.
(m-o) Anti-dumping, countervailing duty and safeguard regimes
Question 88.Nepal does not currently have regimes for an tidumping or countervailing duties, nor for
safeguards measures.  Does the Government of Nepal intend to create any such regimes?  If yes,
what is the timetable for preparing the applicable WTO-consistent legislation?
Answer:
Nepal will introduce in the future those regime s in a manner compatible with the rights and
obligations under Article VI and the Agreement on Implementation of Article VI, of Article XIX ofWT/ACC/NPL/3
Page 29
GATT 1994, and the Agreement on Subsidies and Countervailing Measures. At this moment in time it
is difficult to envisage when the respective le gislation will be drafted and put into effect.
Question 89.
We are wondering whether Nepal has any intention to implement WTO consistent anti-
dumping, countervailing and safeguard legislation?  Can Nepal provide an assurance that it will
not implement anti-dumping, countervailing or safeguard measures until such WTO-consistent
legislation is in place?
Answer:
Refer to previous question. To date Nepal has never applied these types of measures.
However, it is difficult to give assurance that circumstances will not arise that will make unavoidable
the application of measures to remedy serious damage to national producers. If needed, before
national legislation is put into effect, Nepal will apply measures only in accordance with the
provisions of the WTO Agreements.
Question 90.
Could the Nepalese authorities confirm that if they do contemplate introducing such legislation
in the future, that it will be in accordance with the relevant GA TT Article (VI for anti-dumping,
VI, XVI and XXIII for countervailing duties and XIX for safeguards)?
Answer:
Refer to answer to question 88.
2. Export Regulation
(b) Customs tariff nomenclature, types of duties, duty rates, weighted averages of duty ratesQuestion 91.Please provide a list, including HS numbers, of all sixteen export products subject to export
duties and the applicable duty rates.
Answer:
The list of the 23 products subject to export tax, and the applicable duty rate, are listed in
Schedule II of Nepal’s Custom Tariff. These products are:
Schedule II
Export Customs duty on goods exported from the Kingdom of Nepal shall be levied as
follows:
HS Code Description of goods Ra te of Export Customs duty
1. 07.13 Pulses whole NRs.20 per kg
2. 07.13 Pulses split NRs .15 per kg
3. 23.08 Rice and wheat bran NRs500. per ton
4. 23.05 Oil cakes of oleaginous seeds NRs.40 per kgWT/ACC/NPL/3
Page 30
HS Code Description of goods Ra te of Export Customs duty
5. 25.17 Crushed or uncrushed stones and
stone chips up to the size of 2 inches
for road buildingNRs100. per cubic metre
6. 25.18 Boulders and uncrushed stones of a
size more than 2 inchesNRs200. per cubic metre
7. 25.05 Natural sand NRs70. per cubic metre
8. 25.17 Mixture of sand and pebbles
(chharry)NRs100. per cubic metre
9. 25.79 Magnesite (in raw form) NRs200. per cubic metre
10. 32.01 Cutch of acacia (Kachha) NRs200. per quintal
11. 32.03 Catechu of acaia (Kathas) NRs500. per quintal
12. 44.09 Wood logs, sawn timber, fuel woods
in logs, blocks, billets, twigs, chips
and saw dust included200% ad valorem
13. 44.08 Veneer sheets for plywood 70% ad valorem
14. 44.12 Plywood 10% ad valorem
15. 25.15 Marble chips and dust 6% ad valorem
16. 25.77 Dust resulting from breaking stones 6% ad valorem
17. 11.01 Flour Per kg 0.25
18. 10.06 Rice Per kg 0.50
19. 17.01 Sugar Per kg 0.50
20. 15.16 Vegetable ghee and oil 3%
21. 39.22-26 Plastic products 2%
22. 17.03 Molasses 5%
23. 05.02 Hair of domestic animals including
pigs bristle10%
Question 92.
According to the Foreign Trade Memorandum, exports of products, other than the 16 products
subject to export duties, are subject to a service charge of 0.5 per cent of the export value.  Is
this service charge, like the export duties, applied on the basis of f.o.b. price?  Does this service
charge apply to exports to other parties to the South Asian Preferential Trade Arrangements
(SAPTA) or to other parties to the South Asian Free Trade Area (SAFTA)?
For each of the export duties applied, does Nepal have any intention of reducing and eventually
eliminating the duty?  If so, what is the envisaged timeframe? If not, why not?
Answer:
The export service charge is applied on the basis of f.o.b. price, to all exports from Nepal.
Nepal has not considered reducing further the service charge. An important reduction has already
been implemented from 2 per cent to the current 0.5 per cent, which brings this service charge in
conformity with Article VIII of GATT 1994.  The cu rrent level the service charge does not represent a
tax on export for fiscal purposes.
Question 93.
How does the Government of Nepal intend to brin g this export service charge into conformity
with the requirements of GATT Article VIII?WT/ACC/NPL/3
Page 31
Answer:
Refer to answer to previous question.
Question 94.
The comprehensive product list based on HS numbers showing all 16 items (forestry and food)
where export duties are levied, should be notified  to the Working Party with  an indication of the
current rate and the reasons to levy them.
Answer:
Refer to answer to question 91.
Question 95.
Except for the items subject to export duties, Nepal levies a service charge of 0.5 per cent of the
export value.  We would like to request Nepal to explain in detail its nature and the reasons for
levying such a service charge on these items.
Answer:
The service charge is levied to cover the costs of services rendered to exporters by the custom
authorities and other related Governmental agencies. Refer to answer to question 92.
(c) Quantitative export restrictions, including prohibitions, quotas and licensing systems
Question 96.
According to Annex 3.1 of WT/ACC/NPL/2/Add.1, Nepal prohibits the export of the following
products: raw hides and skin (including dry salted) and raw wool.  There are also export
prohibitions for mamira and log and timber.  Plea se identify fully all raw hides and skins, raw
wool, mamira, and logs and timber, including HS number, that are subject to export
prohibition.  Please define “mamira.”  For each product, please provide the GATT justification
for maintaining the export prohibition.  If there is  no such justification, please describe Nepal’s
plan for removing the export prohibition.
Answer:
Restrictions imposed on exports of products in Annex 3.1 could be justified by the following
WTO provisions. Articles at archaeological or religious importance are covered by Article XX (f),
wild life and related articles by XX (b), drugs by XX (a)(b); explosive material and material used in
the production of arms and ammunition by Article XXI; mamira and log and timber by Article XX
(g); raw wool and raw hides by Article XI (a).
Mamira is a wild herbal medicinal plant. For a detailed list of commodities prohibited for
exports refer to Answer 101.
Question 97.
According to Annex 3.1 of WT/ACC/NPL/2/Add.1, Nepal prohibits the export of all imported
raw materials, parts and capital goods.  This export prohibition would appear to be inconsistentWT/ACC/NPL/3
Page 32
with the national treatment requirements of GATT Article III.  How does the Government of
Nepal intend to eliminate this export prohibition?
Answer:
Nepal will review this measure in the light of Article III of GATT 1994.
Question 98.
Given the provisions of Article XI of GATT 1994, can Nepal provide, for each of the products
listed in Annex 3.1, a WTO justification for its export restrictions?
Answer:
Refer to question to answer 96.
Question 99.
Can Nepal advise whether there are any restrictions applied on the re-export from Nepal of
goods that have been previously imported into Nepal from third countries?
Answer:
Currently all imported raw materials, parts and capital goods are restricted for exports. Refer
to answer to Question 97.
(d) Export licensing procedure
Question 100.
Please describe the fees and other requirements that must be satisfied in order to obtain a
certificate from the Nepal Handicrafts Association in order to export handicrafts.
Answer:
For the export of handicrafts made from the parts of domestic animals, exports present the
exporters declaration form, invoice and a sample of the goods to be exported to the Handicrafts
Association.  The Association issues a No Objection Letter if they are made from parts of domestic
animals.  The service fee charged by the Association for this purpose is:  NRs 50 for FOB value less
than NRs 10,000; and NRs 100 for FOB value NRs 10,00 0 and above.  The Association reviews the
price according to the criteria explained in answer  to Question 107, and if it is approved the certificate
is issued. In the case of archaeological goods the exporter has to produce the approval certificate from
the Department of Archaeology. The service fee ch arged by the Handicrafts Association is 0.5 per
cent of f.o.b. price of exported goods.
Question 101.
Please identify all forest-based and wild animal products, including HS numbers, for which a
clearance is required from the Ministry of Forest for export.  Please describe the process for
obtaining this clearance in the form of a res ponse to the Questionnaire on Import Licensing
Procedures.WT/ACC/NPL/3
Page 33
Answer:
Being a party of the Convention on International Trade in Endangered Species of Flora and
Fauna (CITES), Nepal honours the obligations stemming from the said Convention. The Forest Act
1992 does not award any export licence for the products prohibited by the Convention. The list of
protected wild animals  and forest based products banned for exports is as follows:
Wild Animal
HS Code Scientific Name English Name
01.06 Macaca assamensis Assamese monkey
01.06 Manis pentadactyla Indian pangolin
01.06 Caprolagus hispidus Hispid hare
01.06 Canis lupus Wolf
01.06 Usrus arctos Himalayan  bear
01.06 Ailurus fulgens Red panda
01.06 Prionodon pardicolor Spotted linsang
01.06 Felis bengalensia Leopard cate
01.06 Felis lynx Lynx
01.06 Neofelis nebulosa Clouded leopard
01.06 Panthera tigris Tiger
01.06 Panthere uncia Snow leopard
01.06 Elephas maximus Asiatic elephant
01.06 Rhiniceros unicornis Rhinoceros
01.06 Sus salvanius Pygmi hog
01.06 Moschus moschiferos Musk deer
01.06 Cervus duvauceli Swamp deer
01.06 Bos gaurus Gaur
01.06 Bos grunniens Wild yak
01.06 Bubalus bubalis Wild buffalo
01.06 Ovis ammon Great Tibetan sheep
01.06 Pantholops hodgsoni Tibetan antelope
01.06 Antilope cervicapra Black buck
01.06 Tetraceros quadricornis For horned antelope
01.06 Hyaena hyaena Striped hynae
01.06 Platanista gangetica Gangetic dolphin
HS Code Forest Based Products, Restricted for Exports
12.11 Cordyceps sinensis
12.11 Orchis incanata
12.11 Nardostachys grandiflora
12.11 Rauwolfia serpentina
12.11 Cinnamum glaucescens
12.11 Valeriana jatamansi
12.11 Lichen spp
12.11 Rock exudete (Silazit)
12.11 Abis spectabilis
12.11 Taxus baccata
12.11 Michelia chanpaca
12.11 Acacia ctechu
12.11 Shorea robustaWT/ACC/NPL/3
Page 34
Question 102.
For each product subject to export licensing, pl ease provide the WTO justification for requiring
such licensing.
Answer:
Please refer to answer to Question 96.
(e) Other measures, e.g. minimum export pric es, voluntary export restrictions, orderly
marketing arrangements
Question 103.
According to the Trade Memorandum, the Foreig n Exchange Regulation Act, 1962 and Rules,
1963, requires an exporter to realize the total p ayment for exported goods in terms of any
convertible currency within six months from th e date of shipment from Nepal?  Does this
provision require the repatriation to Nepal of proceeds received for exported goods?
Answer:
As per the prevailing system, all exporters, who export goods to countries other than India are
required to bring the export payment to Nepal within 6 months. However, such exporter can, if wish,
retain up to 100 per cent of export proceeds by themselves through opening foreign currency account
with the local commercial banks. There is no time limit for such retention.
Question 104.
Please describe the operation of the non-convertible currency arrangement with India.
Answer:
To import goods from India, the Letter of Credit can be opened in Indian Rupees in favour of
the exporter. The Nepalese bank can also, if requested by the importer, make direct payment to the
exporter, in Indian Rupees, through an Indian Ba nk. The importer can receive Indian Rupees from the
Nepalese bank to make direct payment to the Indian exporter.
Question 105.
What is the purpose of registering export contracts?
Answer:
There is no system of registering export contracts.
Question 106.
Is the registration of export contracts an automatic process, which does not affect the ability of
the exporter to proceed with exportation?
Answer:
Please refer to Answer 105.WT/ACC/NPL/3
Page 35
Question 107.
Please provide a full list of garment and handicraft products for which the valuation price is
fixed respectively by the garment and handicraft associations of Nepal.
Answer:
There are no fixed valuation prices for handicrafts, or an export minimum price list. The
exporter submits its export prices to the Handicrafts Association, who evaluates the proposed prices
on the basis of certain criteria, to recommend the exporter an export price. Criteria used by the
Handicrafts Association are:
- Measurement - height and weight;
- Cost of materials incorporated: domestic and from third country;
- Cost of labour incorporated in the products;
- Quality of the product.
The Handicrafts Association is a private entity, with no Governmental intervention. It
evaluates export prices as a service to producers to avoid them under-pricing their products for export.
The full list of garment products for which there is an indicative price is enclosed herewith.
Indicative Price for Readymade Garments
Cat.No. Description Item
CANADA
6 Tailored cotton shirt
M&BWVN
KT
7 L. blouses, shirts &
G. shirtsWVN
KT
5 Trousers, shorts, overall, coverall, MBW GC & I WVN
KT
4 Dresses, suits, skirts etc.
WGMB C & IWVN
KT
Jackets etc. MBWG C & I WVN
NORWAY
1 Jackets, blazers, waist coats, parkers & one piece suits etc. WVN
2 Trousers, jeans pants, overall etc.  other than swimwear & shorts WVN
3 & 4  T-shirts & blouses etc. & under garments MBWGC & I KT
5 Men, boys shirts WVN
6 Pullovers, sweaters, jumpers & jackets etc. KT
7 Women & girls blouses & shirts WVN
8-8 Ladies suits WVN
SWEDEN
5 Sweaters, pullovers, slipovers, jumpers & cardigans (including outerwear
T-shirts)KT
6 Jackets WVN
KT
8 Trousers, pants WVN
KTWT/ACC/NPL/3
Page 36
Cat.No. Description Item
9 Costumes, dresses, skirts WVN
KT
10 L. Blouses WVN
KT
AUSTRIA
Ladies blouses MM/PL
Gents shirts MM/PL
FINLAND
1.A Ladies blouses WVN
1.B Gents shirts WVN
2 Ankle socks KT/Pair
3 T-shirts KT
GERMANY
4 KT shirts, T-shirts and similar KT garments KT
5 Jerseys, pullovers, slipovers, waist coats, twinsets, cardigans, bed,
jackets and jumpers (other than jackets & blazers) anoraks,
windcheaters, waister jackets & the like, knitted or crochetedKT
6 Woven trousers for ladies & gents
Woven shorts for gentsWVN
WVN
7 L. blouses WVN
KT
8 G. shirts, woven WVN
15 L. jackets, woven WVN
26 L. dresses WVN
KT
27 L. skirts WVN
KT
29 L. suits and ensembles WV
FRANCE
4 KT shirts T-shirts and similar KT garments KT
5 Jerseys, pullovers, slipovers, waistcoats, twinsets, cardigans, bed jackets
and jumpers (other than jackets & blazers) anoraks, windcheaters,
waister jackets & the like, knitted or crochetedKT
6 Woven trousers for ladies & gents
Woven shorts for gentsWVN
WVN
7 L. blouses WVN
KT
8 G. shirts, woven WVN
15 L. jackets, woven WVN
26 L. dresses WVN
KT
27 L. skirts WVN
KT
29 L. suits & ensembles WVN
ITALY
4 KT shirts T-shirts and similar KT garments KT
5 Jerseys, pullovers slipovers, waistcoats, twinsets, cardigans, bed jackets
and jumpers (other than jackets & jackets & blazers) anoraks,
windcheaters, waister jackets & like, knitted or crochetedKTWT/ACC/NPL/3
Page 37
Cat.No. Description Item
6 Woven trousers for ladies & gents
Woven shorts for menWVN
WVN
7 L. blouses WVN
KT
8 G. shirts, woven WVN
15 L. jackets, woven WVN
26 L. dresses WVN
KT
27 L. skirts WVN
KT
BENELUX
4 KT shirts T-shirts and similar KT garments KT
5 Jerseys, pullovers slipovers, waistcoats, twinsets, cardigans, bed jackets
and jumpers (other than jackets & blazers) anoraks, windcheaters,
waister jackets and the like, knitted or crochetedKT
6 Woven trousers for ladies & gents
Woven shorts for gentsWVN
WVN
7 L. blouses WVN
KT
8 G. shirts, woven WVN
15 L. jackets, woven WVN
26 L. dresses WVN
KT
27 L. skirts WVN
KT
29 L. suits and ensembles WVN
DENMARK
4 KT shirts, T-shirts and similar KT garments KT
5 Jerseys, pullovers slipovers, waistcoats, twinsets, cardigans, bed jackets
and jumpers (other than jackets & blazers) anoraks, windcheaters,
waister jackets and the like, knitted or crochetedKT
6 Woven trousers for ladies & gents
Woven shorts for gentsWVN
WVN
7 L. blouses WVN
KT
8 G. shirts, woven WVN
15 L. jackets, woven WVN
26 L. dresses WVN
KT
27 L. skirts WVN
KT
29 L. suits and ensembles WVN
UNITED KINGDOM
4 KT shirts T-shirts and similar KT garments KT
5 Jerseys, pullovers slipovers, waistcoats, twinsets, cardigans, bed jackets
and jumpers (other than jackets & blazers) anoraks, windcheaters,
waister jackets and the like, knitted or crochetedKT
6 Woven trousers for ladies & gents
Woven shorts for gentsWVN
WVNWT/ACC/NPL/3
Page 38
Cat.No. Description Item
7 L. blouses WVN
KT
8 G. shirts, woven WVN
15 L. jackets, woven WVN
26 L. dresses WVN
KT
27 L. skirts WVN
KT
29 L. suits and ensembles WVN
IRELAND
4 KT shirts T-shirts and similar KT garments KT
5 Jerseys, pullovers slipovers, waistcoats, twinsets, cardigans, bed jackets
and jumpers (other than jackets & blazers) anoraks, windcheaters,waister jackets and the like, knitted or crochetedKT
 6 Woven trousers for ladies & gents
Woven shorts for gentsWVN
WVN
7 L. blouses WVN
KT
8 G. shirts, woven WVN
15 L. jackets, woven WVN
26 L. dresses WVN
KT
27 L. skirts WVN
KT
29 L. suits and ensembles WVN
GREECE
4 KT shirts T-shirts and similar KT garments KT
5 Jerseys, pullovers slipovers, waistcoats, twinsets, cardigans, bed jackets
and jumpers (other than jackets & blazers) anoraks, windcheaters,
waister jackets and the like, knitted or crochetedKT
6 Woven trousers for ladies & gents
Woven shorts for gentsWVN
WVN
7 L. blouses WVN
KT
8 G. shirts, woven WVN
15 L. jackets, woven WVN
26 L. dresses WVN
KT
27 L. skirts WVN
KT
29 L. suits and ensembles WVN
SPAIN
4 KT shirts, T-shirts and similar KT garments KT
5 Jerseys, pullovers slipovers, waistcoats, twinsets, cardigans, bed jackets
and jumpers (other than jackets & blazers) anoraks, windcheaters,
waister jackets and the like, knitted or crochetedKT
6 Woven trousers for ladies & gents
Woven shorts for gentsWVN
WVN
7 L. blouses WVN
KTWT/ACC/NPL/3
Page 39
Cat.No. Description Item
8 G. shirts, woven WVN
15 L. jackets, woven WVN
26 L. dresses WVN
KT
27 L. skirts WVN
KT
29 L. suits and ensembles WVN
PORTUGAL
4 KT shirts T-shirts and similar KT garments KT
5 Jerseys, pullovers slipovers, waistcoats, twinsets, cardigans, bed jackets
and jumpers (other than jackets & blazers) anoraks, windcheaters,waister jackets and the like, knitted or crochetedKT
 6 Woven trousers for ladies & gents
Woven shorts for gentsWVN
WVN
7 L. blouses WVN
KT
8 G. shirts, woven WVN
15 L. jackets, woven WVN
26 L. dresses WVN
KT
27 L. skirts WVN
KT
29 L. suits and ensembles WVN
Indicative Price of Cotton for USA
Cat No. Description Item
229 Patches
237 Playsuits, sunsuits KT
Rompers etc. WVN
Overalls (girls) (WVN) (R&C)
239 Infant wear of cotton
330 Handkerchiefs WVN
331 Gloves KT/Pair
332 Hosiery KT
333 Suit type coats MB KT/WVN
334 Other coats & jackets MB KT
WVN
335 Coats and jackets WG KT
WVN
336 Dresses incl. Uniform KT
WVN
338 KT shirts incl. T-shirts MB KT
339 KT shirts incl. T-shirts WG KT
340 Gents shirts WVN
341 Ladies blouses
Ladies tank top without sleeves & PocketWVN
WVNWT/ACC/NPL/3
Page 40
Cat No. Description Item
342 Skirts & divided skirts
Mini skirtsKT
WVN
WVN
345 Sweaters KT
347/48 Trousers, slacks MB/WG
Shorts (outer) MB/WGKT
WVN
KT
WVN
349 Brassieres etc. KT/WVN
350 Dressing gowns, bathrobes etc. KT/WVN
351 Pyjamas & nightwear (single) KT/WVN
352 Union suits
UnderwearKT/WVN
KT/WVN
359 Other apparels
Scarves
Apron
Embroidery shawl
Shawl
Caps
Table runner
Vest, waist coats
Ladies bandeauKT
WVN
Belt
Up to 50 Gram51 to 60 Gram
61 to 70 Gram
71 to 89 Gram
81 to 90 Gram
91 to 100 Gram101 to 110 Gram
111 to 120 Gram
121 to 130 Gram
131 to 140 Gram
141 to 150 Gram
Jumpsuits (women)ShortalBakhkhu
Overall (women)KT/WVN
WVN
362 Bed cover
363 Terry towelWT/ACC/NPL/3
Page 41
Cat No. Description Item
369 Miniflower boutique
Flower boutique
Cushion coverTable cloth
Floor mat
Place mat set of six
Napkin set of six
Pot holderThaili
Belt bags, money belt bags
Up to 100 Gram
101 to 250 Gram
251 to 500 Gram501 to 750 Gram
751 to 1000 Gram
1001 to 1250 Gram
1251 to 1500 Gram
1501 to 2000 Gram
369 Quilted blanket
Window shade
Cotton shop towel
Cushion up to 2 kg. of raw cottonRags
Rayon
Cat No. Description Item
237 Playsuits, rompers etc. KT/WVN
239 Infant wear of rayon
630 Handkerchiefs WVN
631 Gloves KT/PR
632 Hosiery KT
633 Suit type coats MB KT/WVN
634 Other Coats MB KT/WVN
635 Coats WG KT
WVN
638 Shirts, incl. T-shirts MB KT
639 Shirts, blouses, incl. T-shirts MB KT
640 Shirts MB WVN
641 Blouses WG
Tank top without sleeves and one pocketWVN
642 Skirts KT
WVN
643 Suits MB KT
WVN
644 Suits WG KT
WVN
645 Sweaters MB KT
646 Sweaters WG KTWT/ACC/NPL/3
Page 42
Cat No. Description Item
647/648 Trousers, slacks MB, WG
Shorts (outer) MB WGKT
WVN
KT
WVN
649 Brassieres KT/WVN
650 Dressing gowns incl. bathrobes etc. KT/WVN
651 Pyjamas, nightwear (single) KT/WVN
652 Underwear
Union suitsKT/WVN
KT/WVN
659 Other apparels
Synthetic belt
Short allKT/kg.
WVN/kg.
666 Wall hanging
670 Bags, hand bags.
Up to 100 Gram101 to 250 Gram
251 to 500 Gram
501 to 750 Gram
751 to 1000 Gram
1001 to 1250 Gram
1251 to 1500 Gram
1501 to 2000 Gram
Silk Blended and Other Vegetable Fabrics
Cat No. Description Item
831 Gloves KT
832 Hosiery KT
833 Suit type coats MB KT/WVN
834 Other coats MB KT/WVN
835 Coats WGI KT/WVN
836 Dresses KT/WVN
838 Shirts, blouses KT
840 Shirts, blouses WVN
842 Ladies shirts KT/WVN
843 Suits MB
Suits MBIKT
WVN
844 Suits WGI KT/WVN
845 Other vegetable fabrics and sweaters KT
846 Sweaters silk blended KT
847 Trousers shorts
Trousers shortsKT
WVN
850 Dressing gowns KT/WVN
851 Pyjamas, nightwear KT/WVN
852 Underwear KT/WVN
858 Neckties KT/WVN
859 Other apparels KT/WVNWT/ACC/NPL/3
Page 43
Abbreviations
AD = Adult doz. = Dozen
C h =C h i l d r e n k g .=K i l o g r a m
Cat. No. = Category Number PC = Piece
KT = Knitted R = RayonWVN = Woven C = Cotton
MB = Men & boys PR = Pair
WG = Women & girls
Question 108.
Please explain how these export prices were calc ulated and what is the reason for rejecting the
value of goods mentioned in the bill.
Answer:
Indicative export prices are calculated on the cost of production basis.
f) Export financing, subsidy and promotion policies
Question 109.
In the introduction to WT/ACC/NPL/2, page 1 of the English-language version, it is noted that
export promotion measures are included as on e of the major steps Nepal has taken towards
achieving its trade policy objectives.  Please describe the export promotion measures Nepal has
undertaken.  Specifically, what products are being promoted and how is the export promotion
achieved?
Answer:
In order to provide a macro-environment conducive for export promotion, the Government
has formulated trade policy, export policy, foreign exchange policy and domestic trade policy.Similarly, a Commercial Council with majority participation of the private sector has been formed to
coordinate activities of all agencies involved in the export activities. Foreign exchange for the purpose
of current account transaction of the balance of payments has been made convertible. Income from
export has been exempted for income tax purpose. The duty drawback system for the import of raw
materials for exportable commodities has been made more effective. Similarly, other export
promotion activities such as participation on international trade fairs, product development, product
diversification and quality improvement of exportable commodities have been encouraged.
The Government has, in broad terms, undertaken/plan to undertake export promotion
activities for the following commodities.
Agricultural Commodities
For agricultural commodities with external market and productive capacity such as lintels,
Niger seeds, tea and coffee, ginger, cardamom, vegetable seeds, flower, silk and silk products,
medicinal herbs, fruits etc.
Industrial Goods
Woollen carpet, readymade garments, leather and leather products, cotton products, woollen
sweaters, woollen mufflers etc.WT/ACC/NPL/3
Page 44
Traditional Handicraft Products
Products of Cottage and Small Industries
Other Products
Computer software.
Question 110.
Please describe the trade promotion activities that are carried out through the Trade Promotion
Centre, as identified on page 22 of the English-language version of WT/ACC/NPL/2.  For what
products are promotion activities available?  Does the Trade Promotion Centre provide any
type of financial assistance?
Answer:
The Trade Promotion Center (TPC) does not provide any type of financial assistance.  As to
activities of TPC, please refer to the answer to the next question.
Question 111.
Please give details of trade promotion activities carried out by the Trade Promotion Centre.
Answer:
The Trade Promotion Centre, established by Government in 1971, has been working as the
Secretariat of Nepal Trade Promotion Board, constituted under an order of Development Board Act
2013. The primary objective of the Centre is to promote Nepal's export trade in particular and foreigntrade in general. In 1995 amendments were made to the Nepal Trade Promotion Board (Organization
Order) and scope of the activities of the Centre was extended to import management. The Board is
chaired by the Secretary of the Ministry of Commerce and represented by the Ministries of Commerce
and Finance, business associations and communities. The objectives of the Board are:
(a) provide necessary services and exchange relevant information for export promotion and
import management;
(b) encourage private sector participation in international trade;
(c) to help follow proper international trading practices in export as well as import management;
(d) to help develop foreign trade of the country as an important sector and source of national
economy;
(e) to implement effective programmes for export growth and achieving a favourable balance of
trade;
(f) to maintain coordination and a cordial atmosphere amongst exporters, traders, entrepreneurs,
concerned organisations, etc. with a view to  help develop business skills and know-how;
(g) to contribute to the development of required  organisational mechanism, policy formulation
and implementation for the institutional development in foreign trade sector, and;
(h) to help formulate import management programmes with the best utilization of available
resources, including foreign reserves.
The Centre is involved in the following export promotion activities.
Man-power Development
- Organisation of seminars, conferences, training and workshops for the exporters,
importers, entrepreneurs, manufacturers, craftsmen, organizations, andWT/ACC/NPL/3
Page 45
- Arrangement coordination for participation of exporters, traders, manufacturers,
craftsmen, organizations, etc. in the seminars, conferences, training workshops, trade
delegation, trade fairs and exhibitions, world expositions, etc. in foreign countries.
Trade and Product Development
- Dissemination of up-dated information on export products and opportunities to
business communities, exporters, manufacturers, concerned organisations.
- Formulation of programmes for export potential studies, undertaking research and
development activities for export products.
- Identification and classification of new exportable products and suggesting
appropriate market measures for commodity-wise and country-wise export
diversification of new and existing products.
- Identification, development and execution of export oriented projects and
implementation of export promotion programmes in coordination with concerned
organisations.
- Mobilization of technical assistance from concerned international and regional
organisations for export development.
- Promotion of regional and international trade relations of Nepal.
Market Promotion and Research
- Regular organization of Nepal's participation in various international trade fairs,
exhibitions and expositions with essential support and coordination for the
participation of exporters at such programmes.
- Organization of Nepal's single country fair, exhibition in foreign markets.
- Endeavouring for availability of foreign assistance to exporters for their participation
in trade fairs and exhibitions.
- Assistance to exporters by providing letters of recommendation or issuance of
guarantee whenever required in the context of market promotion activities in foreign
countries, such as  participation in trade fairs, exhibitions and business promotion.
- Organisation and coordination of market prom otion missions and to assist exporter/s
in undertaking market promotion activities abroad.
- Assistance to diplomatic missions, foreig n agencies, trade promotion organisations
etc. and organising single country trade fair, exhibition in Nepal.
- Market research on particular products in target markets and to suggest appropriate
marketing promotion strategies on the basis of reports.
- Issuance of GSP form to exporters and facilitation with consultancy services in
respect of GSP scheme.
- Market research and consultancy services to exporters and business community to
promote Nepalese products, services in target market.
- To help test new products and to expand marketing activities in foreign markets
through availing of opportunities to exporters to participate in trade fairs, exhibitions.
- To launch and carry out various export promotional activities and target markets as
per requirement.
Trade Information and Consultancy Services- Collection, classification, compilation and documentation of general and international
trade information.
- Mutual understanding with international and regional organisations and import
promotion agencies for the exchange and collection of trade information and export
promotion documents.WT/ACC/NPL/3
Page 46
- Dissemination of general trade information to the Nepalese as well as foreign
business communities and organisations.
- Build up database on exporters / importers / producers of Nepalese export / import
products.
- Collection, compilation and publication of foreign trade statistics and other export
promotional documents, directories, etc.
- Analysis of Nepal's foreign trade situation, trends and growth, and undertake trade
research for various uses.
Publication Services- Preparation and publication of trade directories, trade bulletins, product brochures,
trade statistics, and other relevant materials.
- Distribution of Centre's publications.
Question 112.
It is stated that earnings from export transact ions are free from income tax. This appears to
constitute a prohibited export subsidy under the Article 3.1(a) of the SCM Agreement.  What is
the schedule for elimination of this income tax exclusion for export transactions?
Answer:
Nepal considers that income tax exclusion for export transactions is an important component
of its overall development programme. This measure aims to promote and diversify exports of value-
added goods in order to generate employment opportunities and raise income levels, thus contributing
to poverty alleviation. Nepal has not defined a schedule for the elimination of this measure. In this
regard Nepal expects due comprehension from WTO Member countries in line with the provisions ofArticle 27 of the SCM Agreement, in particular with the treatment accorded to least-developed
countries members by virtue of Article 27.2 (a).
3. Internal Policy Affecting Foreign Trade in Goods
(a) Industrial policy, including subsidy policies
Question 113.Could Nepal please state whether it plans to eliminate its export subsidies (and other prohibited
subsidies it might have in fo rce) upon accession to the WTO.
Answer:
Refer to answer to question 112.
Question 114.
Does Nepal wish to invoke Article 29 of the SCM Agreement in respect of any of its subsidies?
Answer:
As Nepal is not a centrally planned country, Nepal does not wish to invoke Article 29 of the
SCM Agreement. However, Nepal being a least developed country, intends to invoke the rights
conferred in Article 27 of the SCM Agreement.WT/ACC/NPL/3
Page 47
Question 115.
Does Nepal maintain any subsidy contingent on the use of locally produced inputs, within the
meaning of Article 3 of the SCM Agreement?
Answer:
Industries using eighty or more than eighty per cent indigenous raw materials in its products
and employing all its manpower from among Nepalese citizens are entitle to get a 10 per cent rebate
of the income tax. This rebate is not contingent upon export performance.
Question 116.
According to information provided in the Fo reign Trade Memorandum, one feature of the
current industrial policy is a “sound and lucrative incentive package.”  Please describe the
nature and amounts of the incentives that are provided and the criteria that must be satisfied in
order to receive incentives. Also please identify the recipient s of such incentives.
Answer:
Nepal does not provide direct payment of incentives to any industry. However, there are
certain exemptions in terms of income tax, sales tax, excise duty and customs duties to the industries
qualifying under the conditions stated in Industrial Enterprise Act 1992. For Custom duty treatmentrefer to Nepal’s Custom Tariff “Other Provisions relating to Import Duty”, page 392. The purpose of
such incentives is to ensure balanced industrial development both regionally and sector-wise.
Nepal has not yet compiled data on the revenue exempted on such incentives as well as on the
identification of recipients.  The following are some provisions, though not exhaustive, governingincentives provided to industries:
(a) cottage industries are exempted from sales tax, excise duty and income tax;
(b) income tax in excess of twenty per cent is not levied on the income derived from any
industries except industries utilizing tobacco as their basic raw material, and alcoholor beer producing industries;
(c) except for industries utilizing tobacco as their basic raw material, alcohol or beer
producing industries and saw-mill and catechu industries, any industry using 80 or
more than 80 per cent of indigenous raw material in its products and supplying all its
manpower from among Nepalese citizens are entitled to obtain a rebate at the rate of
10 per cent of the income tax;
(d) any national priority industry which constructs and operates road, bridge, tunnel, rope
way, flying bridge, and manufactures and operates trolley buses and trams are entitled
to a rebate of 50 per cent of the income tax on their income for ten years from the
date of operation. Other national priority industries such as agro and forest-based
industries, engineering industry (producing agricultural and industrial machinery),
industry manufacturing fuel saving or pollution control devices, solid wasteprocessing industry, hospital and nursing home (only outside the Kathmandu valley),
industries producing ayurvedic, homeopathic and other traditional medicine,
industries producing crutch, seat belt, wheel chair stretcher and stick and so on to be
used in aid of the disabled and orthopaedic, cold storage installed for the storage of
fruits and vegetables, are entitled to get a rebate of 50 per cent of the income tax ontheir income for seven years from the date of operation;
(e) any industries except industries utilizing tobacco as their basic raw material, and
alcohol or beer producing industries established in remote , underdeveloped  and
underdeveloped  areas are entitled to get a rebate of 30, 25, and 20 per cent of theWT/ACC/NPL/3
Page 48
income tax respectively and 35, 25 and 15 per cent of the excise duty respectively for
a period of ten years from the date of operation;
(f) Fruit-based fruit processing and cider and wine industries with assets up to NRs2.5
million, established in particular areas, are entitled to an excise duty and sales tax
exemption for a period of ten years, and fruit based alcohol are entitled to excise duty
and sales tax exemption for a period of five years. Such exemption could be extendedfor additional period of three years;
(g) if an industry diversifies itself through reinvestment, in the same or any other
industry, and expands its installed capacity by 25 per cent or more, modernizes its
technology or develops ancillary industries, it is entitled to a deduction of 40 per cent
of new additional fixed assets from its taxable income;
(h) any industry investing in process or equipment, which has the objective of controlling
pollution or which may have a minimum effect on the environment is entitled toreductions of up to 50 per cent from the taxable income for such investment;
(i) any industry is entitled to deduct 10 per cent of the gross profit from the taxable
income on account of expenses related to technology, product development and
efficiency improvement;
(j) no income tax is imposed on dividends earned out of the investment made in any
industry;
(k) up to 5 per cent of gross income spent for the advertisement of the products or
promotion services, hospitality and any other similar expenses is allowed to be
deducted while assessing the taxable income;
(l) If an industry provides direct employme nt to 600 hundred or more than 600 hundred
Nepalese citizens round the year, an additional income tax rebate at the rate of 10 per
cent for that year is granted in addition to other facilities;
(m) If any industry utilizes locally available raw materials, chemicals and packing
materials etc. on which excise duty or sales tax or both are already imposed, the
excise duty, sales tax or both shall be reimbursed to the industry utilizing such rawmaterials, chemicals and packing materials;
(n) No income tax is levied on the profits earned through export;
(o) An industry is entitled, for the purpose of the income tax, to deduct the amount of
expenses incurred by it for the long-term benefit provided its workers and employees
including housing, life insurance, health facilities, education and training.
Question 117.
Could Nepal provide additional information on the eligibility criteria that enterprises must meet
to qualify to receive a subsidy?
Answer:
See Answer to Question 116.
Question 118.
Are there any sectors where public sector ent erprises are entitled to  receive subsidies or
preferred credit arrangements which provide them  with advantages compa red with the private
sector?  If so, what are the arrangements and in which sectors does this occur?
Answer:
There is no such arrangement.WT/ACC/NPL/3
Page 49
Question 119.
According to the information provided on page 23 of the English-language version of
WT/ACC/NPL/2, Nepal provides subsidies in food, fertilizers, transport, irrigation, and credit.
Please describe the conditions that must be satisfied in order to receive these subsidies.  Are the
subsidies available for specific industries? If so, please identify the industries.  Is the subsidizedagricultural credit available to all types of agriculture, or is it only provided for the production
of specific agricultural products.  If the latter, please identify the specific agricultural products.
Similarly, are the transport subsidies for food  grains and fertilizer provided to any specific
industries or agricultural products.  If so, please identify the specific industries or agricultural
products.
Answer:
Subsidies are not directed to any specific industry or specific agricultural product. Transport
subsidy for fertilizer is provided only to the hills and mountain districts that are not connected by
road.
Question 120.
Explain the operation of the programmes providing subsidies for fertilizers, seeds and plants,
and irrigation pipe and pumping sets.  Are these subsidies intended to benefit the production of
these products or are they intended to benefit the industries which use these products as inputs?If the latter is the case, are any industries which use these inputs eligible for the subsidies?
Answer:
Subsidies in seeds, plants, irrigation pipes and pumping are provided by the respective line
agencies. These subsidies, though small in quantity, are provided directly to the producer-farmers who
use these products as inputs. Only farmers are eligible for these subsidies. A subsidy in urea is
provided on recommendation of a national level committee constituted for that purpose.
Question 121.
According to the Trade Memorandum, "the Govern ment holds a policy on gradual slashing of
subsidy on fertilizers to zero".  Please provide information on what the level of subsidy has been
in the past and the timetable for reducing the subsidy to zero.
Answer:
Price subsidies in DAP and MOP were full y withdrawn in 1993. Before 21 November 1997,
when fertilizer trade deregulation began, the subsidy was not a fixed percentage, the rate of subsidy
varied with the cost of procurement. In the case  of urea it reached up to 67 per cent. The subsidy to
urea is planned to be eliminated, after a two-year phase-out period, by December 1999.
Question 122.
What type of fertilizers are being subsidized?  Will controls be lifted on different types of
fertilizer and on different time frames?
Answer:
Now there is only price subsidy for urea. The subsidy is planned to be eliminated by
December 1999.WT/ACC/NPL/3
Page 50
(b) Technical regulations and standards, including measures taken at the border with
respect to imports
Question 123.
Could Nepal please provide an overview of regulations relating to different products/product
area?
Answer:
Currently technical regulations apply only to ir on bar, cement, mineral water, wool, and LPG
cylinders. These technical regulations are being translated and will be sent to the WTO Secretariat assoon as they are ready. With regard to standards, 577 product and testing methods have been
approved to date. Anther 200 are in the process of drafting. The number of formulated National
Standards by field is presented below:
Standards 1
Formulated National Standards for Items up to 2054
Field Formulated National Standards
Mechanical Engineering 41
Basic Chemicals 62
Non-metallic 91
Ores and Metal 22
Information 1
Agriculture and Foods 185
Building and Construction 49
Hygiene 1
Basic Subjects 28
Environment 15
Packing 10
Electro-technology 20
Others 49
Total 577
Question 124.
According to the Memorandum on Foreign Trade Regime,  Nepal relies more on standards than
technical regulations.  Are these standards voluntary or mandatory?
Answer:
Standards are voluntary, technical regulations are mandatory.
Question 125.
Are the standards used in Nepal voluntary or mandatory? If they are mandatory, could Nepal
please state the rationale behind this?WT/ACC/NPL/3
Page 51
Answer:
Refer to answer to Question 124.
Question 126.
Does Nepal have legislation or administrative procedures which require the advance publication
of draft technical regulations and standards for public comment?  Please describe in detail the
procedures that are followed for developing technical regulations and standards.
Answer:
The Nepal Bureau of Standards and Meteorological (NBSM) prepares a preliminary draft of
the standards or technical regulations. These drafts are submitted to the Technical Committees that are
composed by representatives of the concerned Governmental agencies, the private sector, specialist in
the area and universities. The Technical Committee reviews the draft and introduces amendments, if
necessary. The amendment draft is sent to concerned agencies for comment. These agencies have one
month to produce recommendations. With the agencies recommendations or suggestions a final draftis produced by the NBSM. The Final draft is sent to the National Council for Standards, who review it
and, if necessary introduce amendments, and then the Council approves it. Once approved, the
standards or technical regulations are sent for  publication. Technical regulations are published in the
Nepal Gazette.  Standards are published in booklet form.
Question 127.
Nepal will have to accede to the TBT Agreement from the first day of accession to the WTO.
What practical steps is Nepal planning to ta ke to prepare for the accession to the TBT
Agreement?
Answer:
Nepal is ready to comply with its futu re obligations under the TBT Agreement.
Question 128.
We note that, when possible, Nepal bases its standards and technical regulations on
international norms. Would Nepal advise the Work ing Party of its timetable/detailed work plan
to implement the obligations of the WTO TBT Agreement?
Answer:
In elaborating National Standards, the NBSM follows international standards. National
standards are based on ISO standards, standards of the British Standard Institute, of the International
Electrical Committee, on the Indian Standards, and if required on CODEX and ESTM Standards.
Question 129.
What percentage of standards and regulations are based on international standards and where
they are not, the reasons why?WT/ACC/NPL/3
Page 52
Answer:
Most Nepalese National Standards are based on international standards. If there are no
international standards then the NBSM will elabor ate the national standard according to the country's
requirements.  The ratio of standards based on international standards is 90 per cent.
Question 130.
What is the role of the Nepal Council of Standards?  What other organisations are members of
the Nepal Council of Standards?
Answer:
The Nepal Council of Standards is the enti ty empowered to approve all standards and
technical regulations. It is chaired by the Minister, Ministry of Industry and has 12 members including
the Chairman. Its members represent other Ministries and Governmental agencies, the private sector
through the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and the
Universities. The Council can invite specialists to its meetings.
Question 131.
Please describe in greater detail the functions of the Bureau of Standards and Metrology.  Is the
Bureau a part of the Ministry of Industry.  Is the Bureau responsible for developing all Nepalesestandards?  Is it also responsible for developing technical regulations, except for health and food
products?  Does the Bureau oversee or coordinate mandatory certification activities?  Are
foreign organisations able to participat e in mandatory certification activities?
Answer:
The NBSM is part of the Ministry of Industry. It  is responsible, through the process outlined
in answer to Question 126, to elaborate all standards and technical regulations, except for health and
food products. The NBSM oversee all mandatory certification activities. Foreign organisations do not
currently participate in mandatory certification activities.
Question 132.
According to Annex 5 of WT/ACC/NPL/2/Add.1, the Bureau of Standards and Metrology will
be appointed as the inquiry point foreseen in Articles 10.1 and 10.3 of the WTO Agreement on
Technical Barriers to Trade.  Is the Bureau of Standards and Metrology enquiry point
currently responding to questions on standards a nd technical regulations relating to specific
products?  Is it also responsible for notifyin g the WTO of proposed technical regulations and
standards?
Answer:
The NBSM will be appointed as the inquiry point foreseen in Articles 10.1 and 10.3 of the
TBT Agreement. The NBSM is ready to respond to any questions related to standards and technical
regulations. As Nepal is still not a WTO Member, proposed technical regulations and standards are
not being notified.
Question 133.
Nepal states that the Bureau of Standards is the only central Government standards body. Are
there any sub-national or private standards bodies?WT/ACC/NPL/3
Page 53
Answer:
There are no sub-national or private standards bodies in Nepal.
Question 134.
What Ministries or other bodies are responsible for health and food products?  Please describe
their procedures.
Answer:
The Ministry of Health, through its Department  of Drug Administration, is responsible for
health products.
The Ministry of Agriculture, through the Central Food Research Laboratory, is responsible
for food products.
These entities set standards based on international standards, when available, in order to
guarantee the protection of human health.
Question 135.
Draft standards and technical regulations are submitted for review to the relevant institutions.
Are there any mechanisms for consulting other countries and industry?
Answer:
Refer to answer to Question 126. Currently there are no mechanisms to consult with other
countries. When becoming a WTO Member, Nepal will comply with the provisions of the TBT
Agreement and consideration is being given for the acceptance of the Code of Good Practice for
Preparation, Adoption and Application of Standards by the NBSM. As provided by Article 11 of the
TBT Agreement, Nepal intends to seek technical assistance to upgrade the institutional infrastructureand technical capabilities of the NBSM.
Question 136.
Does Nepal accept, as equivalent, certificates from third country certification bodies?
Answer:
So far that has not been the practice. However, Nepal will give positive consideration to
accept, as equivalent, other countries technical regulations as provided by Article 2 (2.7) of the TBT
Agreement.
Question 137.
Could Nepal please provide further information on the quality certificate system currently in
use?
Answer:
The National Certification Mark (NCM) currently in use consists of the authorization granted
by the NBSM, upon request to any company producing goods for which technical regulations andWT/ACC/NPL/3
Page 54
standards exist in Nepal, to use a distinctive sign in their products which means that the product
complies with the required regulations or standards.
In order to grant authorization to use the distinctive mark in any product, the NBSM conduct
inspections, testing, and sets other requirements such as to have in-house laboratories, necessary skill
manpower and quality manuals, that the producer has to fulfil in order to receive the authorization.After authorization has been given the NBSM undertakes frequent inspections and testing in the
industries and in the market.
To date quality certification marks have been approved for 78 companies, covering 30
products. The products and number of companies that have received approval are listed below:
Certification Chart
No. of Quality Certification Mark issued
for products up to 2054 B.S.
Name of Product No. of Industries
High Density Polythene Pipe 12
Biscuits   2
Ordinary Portland Cement   3
Mineral Water   3
Writing and Printing Paper   2
Toothpaste   1
Bitumen Emulsion   1
GI Wire   3
Deformed Steel Bar and Wires for Concrete
Reinforcement13
Paints 5 Types   2
Gun Metal Gate Valve   1
Soybean Oil and Vegetable Ghee – 2 types   8
Galvanized Mild Steel Pipe for Water Supply    3
PVC Cable   6
Instant Noodles   3
Hand Made Woollen Carpet   2
PVC Pipe for Drinking Water Supply   3
Dry Cell Battery   2
Beer   4
LPG Cylinder   1
Polythene Water Storage Tank   1
Textile   1
Tiles 1
Total 78
Question 138.
Please describe the regulations applicable to  raw wool and how they assure the quality of
Nepalese carpet exports.
Answer:
The following is the technical regulation on raw wool:WT/ACC/NPL/3
Page 55
Mean fibre length (barbe) - not less than 100 mm (4 inches)
Fibre diameter - not more than 39 micron
V.M. content - not more than 0.5 per cent
Grease content - for DCM extraction nor more than
per cent for ethanol extraction
not more than 1.9 per cent
Y-Z value - not more than 4.5 per cent
Y value - not less than 50
Modulation - not more than 20 per cent
It is compulsory for the importers to produce a Test Certificate of the imported raw wool to
the Board before the consignment enters into the territory of the country. The Board is also
empowered to check the quality of the imported raw wool in its own laboratory or any other
designated laboratory.
Question 139.
Could Nepal please provide a copy of its technical regulations on raw wool?
Answer:
Refer to Question 138.
Question 140.
Technical regulations apply basically to raw wool, cement, iron bars, mineral water, and LPG
cylinders. In the case of raw wool, the regulati ons apply to “guarantee the quality of Nepalese
carpet exports; in other cases it functions on the basis of consumer safety.”  For each of the
other products, please describe the requirements of the technical regulation and the consumer
safety problem they are designed to protect.
Answer:
Translation of Technical Regulations is underway and will be sent to the WTO Secretariat
and will be available to all interested Members. For all the products, except wool, technical
regulations are required in order to guarantee the protection of human health (mineral water) or safety
(iron bar, cement, LPG cylinders).
(c) Sanitary and phytosanitary measures, including measures taken with respect to imports
Question 141.
It is important that Nepal puts in place a WTO-consistent regime for SPS measures.  Would
Nepal advise what plans it has to introduce the changes that would be required to meet its
obligations under the WTO SPS Agreement, and th e timetable for these?  Does Nepal envisage
problems in meeting these requirements and, if so, in what respect?
Answer:
Nepal is committed to put in place a WTO-consistent regime on SPS measures in the shortest
time possible. However, it faces severe constraints in terms of infrastructure, resources, both human
and financial. Nepal will require technical assistance, as provided by Article 9, to be able to fully
comply with the provisions of the SPS Agreement in a reasonable time-frame. Nevertheless, Nepal
has already started work in this area. Strengthening Plant Quarantine Services is a top priority in theWT/ACC/NPL/3
Page 56
Government’s agenda. Tentatively, NEPAL has form ulated the following plan of action to upgrade
the implementation of SPS measures:
Activity Planned Current Status Time Frame Remarks
1. Review of the existing
Plant Protection Act and
Regulations and Drafting
of an Amended version
of these.A task force is working in
this aspect and areas for
amendment have been
identified.By the end of
1999Technical and
financial
assistance
envisaged.
2. Revising the existing list
of quarantine pests
(Annex 1 of the Plant
Protection Regulations1975)The above task force will
continue to work on this.
The available pest
surveillance data are beingreviewed to revise the
present list.By the end of
1999Information on
international,
particularly of
Asia-Pacificregion, is
required.
3. Upgrading the laboratory
and post-quarantine
facilities.The present state of such
facilities is inadequate to
meet WTO requirements.By the end of
2001Substantial
technical and
financial
support is
needed.
4. Capacity and capability
enhancement of the
existing manpower with
specialization in PestRisk Analysis and
Laboratory Techniques.The present capacity and
capability is inadequate to
meet WTO obligations.By the end of
2001Substantial
technical and
financial
support isneeded.
5. Opening of new Plant
Quarantine Checkpoints
to cover the entire range
of land borders (two in
the Western Region, andsome on the Nepal-
China border) at least
one in this area.Presently, seven checkpoints
are established, included
one at the International
AirportBy the end of
2002Substantial
technical and
financial
support is
needed.
Further, Nepal has formulated the following plan of action to upgrade the quarantine and
sanitary measures in animal production.
Activity Planned Current Status Time Frame Problems
Formation of regulation to
implement above mentioned
ActsA task force is working in
this aspect and areasMid 1999
Upgrading of human
resources with special
emphasis to quarantine
management, meat
inspection, veterinaryinvestigation and animal
disease risk analysis.Presently available human
resources are inadequate to
implement the WTO sanitary
measures.By the end of
2001Financial and
technical
assistance is
needed.WT/ACC/NPL/3
Page 57
Activity Planned Current Status Time Frame Problems
Enhancement of
infrastructure of Meat
inspection, veterinaryinvestigation, quarantine
management and animal
disease risk analysis.Existing facilities are
inadequate to meet the WTO
sanitary requirements.Currently, the EU financed
Strengthening of Veterinary
Service for Livestock
Disease Control project is
involved in strengthening thecapabilities of laboratory and
quarantine check post.
However, the provisions
made in the project are not
enough to meet the WTOsanitary requirements.
(Requirement assessed and
proposal developed for
international funding)By the end of
2006Despite the
involvement
of EU, furthertechnical and
financial
support is
needed.
Opening of new quarantinecheck post and development
of pre and post-quarantine
facilities.Presently there are 21 border
ACPs, 3 internal ACPs, 1
international airport ACPs
but pre and post-quarantine
facilities and other newACPs will be established as
per the need realized by the
country in future.By the end of
2006Technical and
financial
support is
needed.
Question 142.
Does Nepal expect to be in position to respect the SPS Agreement in full upon accession?
Answer:
Refer to answer to Question 141.
Question 143.
Please provide translated copies of the Plant Quarantine Act 1972 and Plant Quarantine Rules
1975 (WT/ACC/NPL/3/Add.1) to the WTO Secretariat for review by the Working Party.  How
do the Plant quarantine rules relate to the Plant Protection Act, 2029, which is included in
Annex 2 of WT/ACC/NPL/2/Add.1?
Answer:
The translated copies of the Plant Protection Act 1972 and the Plant Protection Regulations
1975 are enclosed herewith (WT/ACC/NPL/3/Add.1) . The scope of the Act and Regulations covers
the essential legal framework to address all the requirements of enforcing phytosanitary measures for
import and export of agricultural commodities and their propagates. The Plant Protection Act 1972
and the Plant Protection Regulations 1975 are inter-related. According to Nepal's regulatory process,
an Act is the broad framework within which the detailed Regulations are formulated for enforcementof the provisions in the Act. The Plant Protection Regulations 1975 elaborates the Clauses and sub-
Clauses of the Plant Protection Act 1972 clarifying the essences of the Act. During implementation,WT/ACC/NPL/3
Page 58
both the Act and Regulations are equally effective. Both are complementary to each other. The Act is
endorsed by the highest legislative body i.e. Parliament and approved by the King, the Head of the
State. The Regulations are framed by the Council of Ministers (the Cabinet) such that they can be
implemented. The Regulations clearly define the duties and authorities of various executing agencies.
The existing Plant Protection Regulations have empowered the Plant Quarantine Checkpoints to
enforce the stated phytosanitary measures, both pre and post quarantine.
Question 144.
Please provide translated copies of the Food Act 2023 (1966) and Food Rules 2027 (1970) and
the Animal Concentrate Act, 1976 to the WTO Secretariat for review by the Working Party.
Answer:
These are enclosed herewi th (WT/ACC/NPL/3/Add.1).
Question 145.
Please provide a list of pesticides subject to an import or export prohibition pursuant to the
Pesticides Act, 1991, and Pesticides Rules, 1994.
Answer:
Considering the shared responsibility be tween the exporting and importing country in
protecting  health and the environment from harmfu l effects of prior informed consent procedure
(PIC) listed pesticide and industrial hazardous chemicals, Nepal bans all the PIC listed pesticides and
chemicals (22 pesticides and 25 industrial chemicals) except Methyl Parathion and Monocrotophos
because there are no alternatives for these products. However the importation of these products isunder active review. Nepal participated in the Pl enipotentiary Conference in Rotterdam (September
1998) for signing the PIC Convention.
PIC List – Pesticides and Industrial Chemicals
Pesticides Industrial Chemicals
2,4,5, - T Crocidolite
Aldrin Polybrominated biphenyl (PBB)
Captafol Polychlorinated biphenyl )PCB)
Chloroenzilate Polychlorinated trephines (PCT)
Chlordane Trist (2, 3 dibromopropy1) phosphate
Chlordimeform
DDT
Dieldrin
Dinsoeb
1, 2 – dibromoethane (EDB)
Fluoroacetamide
HCH
Heptachlor
Hexachlorobenzone
Lindane
Mercury compounds
Pentachlorophenol
Certain formulations of metlamidophos
Methyl-parathionWT/ACC/NPL/3
Page 59
Pesticides
Monocrotophos
Parathion
Phosphamidon
Question 146.
Please list all international sanitary and phytosanitary organisations, such as Codex
Alimentarius, in which Nepal is a member.
Answer:
Nepal adheres to the International Plan t Protection Convention (IPPC) executed and
administered by FAO. The Council of Ministers of Nepal has already approved this adherence to
IPPC, and this has gone to Parliament for endorsement. Nepal is the member of the Asia Pacific Plant
Protection Commission (APPPC) whose Secretariat is based in Bangkok. His Majesty's Governmentof Nepal adhered to the FAO "Plant Protection Agreement for the Asia and Pacific Region" on 5
August 1965, and also submitted the instrument of acceptance of amendments to Article 1(a) of the
Agreement on 4 June 1969. In 1998, the Government of Nepal submitted proposed amendments to the
APPPC Agreement for acceptance. APPPC is a regional organisation adhering to IPPC charters for
harmonizing the implementation of phytosanitary measures as per the Agreement on Sanitary andPhytosanitary measures in the context of WTO. Through APPPC, Nepal is trying to streamline and
scientifically build land border quarantine procedures considering it is geographically landlocked.
Nepal is fully committed to adopt all the sanitary  measures in relation to equity, transparency,
harmonization, adoption of regional conditions, risk assessment, and control inspection and approvalprocedures, and also for the administration and implementation with all the WTO member countries.
Even though there are several constraints in terms of technical expertise and resources to fulfill these
commitments, Nepal has now given priority for the strengthening of the animal quarantine service in
the country to meet the sanitary measures consistent with WTO.
The Animal Health and Livestock Service Act 1998, Slaughter House and Meat Inspection
Act 1998 and the Veterinary Council Act 1998 has been recently passed by the Parliament of Nepal.The officially translated copy of the Animal Health and Livestock Service Act 1998 is enclosed
herein, as requested. This Act has provided the basic legal framework to formulate Quarantine
Regulation.
Nepal is a member of the:- OIE since 12th March 1998;
- Codex Alimentarius for the last two decades;
- Asia Pacific Plant Protection Commission since 5 August 1965.
Question 147.
According to the Memorandum, the National Dr ug Policy 1995 "has put its emphasis upon the
maintenance, safeguarding and promotion of the health of people by making the country self-
reliant in drug production; ensuring the availability of sale of effective, standard and qualitydrugs at affordable prices in quantities sufficie nt to cover the need of every corner of the
country, and to cover effectively all the drug-related activities including production, import,
export, storage, safety, supply and distribution in the country".  Please describe the measures
used by the Department of Drug Administration, which presumably is the organisation
authorized to carry out the National Drug Poli cy, to make the country self-sufficient in drugWT/ACC/NPL/3
Page 60
production.  Also please describe in detail an y special or exclusive rights and privileges the
Administration has with respect to the importat ion, exportation, storage, safety, supply and
distribution in Nepal of pharmaceutical products.
Answer:
The measures Department of Drug Administration (DDA) has taken to achieve self-
sufficiency in drug production are as follows:
1. To provide technical inputs in drug production and quality assurance;
2. HMG has relaxed custom duty on the importation of raw materials, machinery and analytical
instruments at one per cent of the invoice;
3. HMG has also related income tax for five years;
4. HMG has provided foreign currency needed for purchasing of raw materials and machinery.
With these measures, presently there are 25 pharmaceutical company producing about 20 per
cent of drugs of the national demand.
For the purpose of protecting health, the ad ministration has formulated an implemented
different regulations with respect to importation, exportation, supply and distribution of
pharmaceutical products in Nepal.
Question 148.
Please describe the role, if any, of the Department of Drug Administration, in ensuring
protection of pharmaceutical patent rights.
Answer:
The enforcement of industrial property rights is the responsibility of the Department of
Industry (DOI) and of the Nepalese Courts. The De partment of Drug Administration does not have
any role in this regard.
(e) State-trading practices
Question 149.According to the information provided in Annex 6 of WT/ACC/NPL/2/Add.1, the Nepal Oil
Corporation is the only state trading enterp rise covered by the Understanding on the
Interpretation of Article XVII of GATT 1994.  How old is the Nepal Oil Corporation?  Has thiscorporation always benefited from the  exclusive right to import petroleum products, other than
lubricants?  Are there any plans to withdraw th is exclusive right or privatize the Nepal Oil
Corporation?  If no, why not?  If so, what is the time frame for doing so?
Answer:
The Nepal Oil Corporation was established in 1970. It has always benefited with the
exclusive right to import petroleum. First for pe troleum and other products, currently NOC only has
exclusive rights to import petroleum products, other than lubricants. At this time there are no concrete
plans to terminate with NOC exclusive rights.WT/ACC/NPL/3
Page 61
Question 150.
The Nepal Oil Corporation currently has a long-term  contract with the Indian Oil Corporation.
When does this long-term contract expire?  Do es the Nepal Oil Corporation import petroleum
products from any other suppliers?
Answer:
The NOC has a contract with the Indian Oil Corporation (IOC) up to the year 2000.
According to the current contract the NOC only import petroleum from the IOC.
Question 151.
According to WT/ACC/NPL/ACC/2/Add.1, the Nepal Food Corporation, the National Trading
Limited, the Salt Trading Corporation, the Agriculture Imports Corporation, the Cottage and
Handicraft Emporium, the Nepal Coal Company and the Nepal Transit and Warehouse, are not
state trading enterprises because they do not have any exclusive rights or privileges.  Do any of
these enterprises have spec ial rights or privileges?
Answer:
These enterprises do not have any exclusive rights or privileges.
Question 152.
We would be interested in more details on the operations of the Nepal Food Corporation, which
we understand "procures food grains to stabilise prices and supply of food grains in deficit
area".  Can Nepal explain further the operations of the Corporation?
Answer:
Created in 1974 under the Corporation Act 1964, the Nepal Food Corporation (NFC) is an
offshoot of the former Agricultural Supply Corpor ation (ASC) and is under the Ministry of Supplies.
NFC implements the food policies of the Government. It is responsible for supporting
farmgate prices of foodgrains (particularly in areas where food grain markets are not fully developed);
distribution of subsidised foodgrains to the remote hilly districts; stabilization of market prices of
foodgrains (only to control excessive price rises); maintenance of food stock in support of food
security policy; and handling of emergency and regular food aid. The food distribution operation of
NFC was of the order of 45,000 metric tons of rice in the fiscal year 1997-98, and it received NRs225million from the Government Budget in that year as subsidy including NRs180 million for subsidising
transportation of food to remote districts. NFC plans to procure 50,000 metric tons of rice and 18,000
metric tons of wheat in the current fiscal year.
Government provides interest subsidy to the loan borrowed by NFC. As the NFC operations
are mainly financed by the Government subsidy, NFC has not been effective in achieving its
objectives, which fall under the following five categories:
- providing a floor price for the farmers of less accessible areas;
- providing food for consumers at "fair" price;
- market intervention to stabilise prices;
- income generation;
- improvement to the food security situation by holding food stocks.WT/ACC/NPL/3
Page 62
As part of the effort to promote competitive agriculture produce markets, currently the
Government is undertaking a fundamental reorganisation of NFC with the assistance of the Asian
Development Bank. The Government has already discontinued the policy of the announcement of
support prices for food grains. NFC has now withdrawn the subsidised distribution of food grains in
the urban and accessible areas. The NFC's 38 remote districts are being reclassified with a view to
limit the delivery of subsidised food grains only to the inaccessible remote districts. As a policy,annual subsidy budget for NFC has been fixed at NRs225 million. In addition, NFC is implementing a
time-bound action plan for organisational reforms. All these reform measures are geared to make NFC
a more effective and specialised agency to implement the Government's food security policy.
Earlier, the Government maintained its co ntrol over import, storage, marketing and
distribution of fertilisers through the Agricult ural Input Corporation (AIC), a public sector
organisation. After deregulation of the fertiliser trade, the private sector can import, store and marketfertilisers and will also be eligible for subsidies in urea at the same level as obtained by the AIC.
Thus, the new fertiliser policy opens the door to the private sector to import fertilizer and agricultural
inputs essential to farmers.
Question 153.
We would also be interested in more details co ncerning the operations of National Trading
Limited and the Salt Trading Corporation.  We  note that National Trading Limited imports
sugar to stabilise prices, while the Salt Trading Corporation also imports sugar.  Can Nepal
provide more details concerning their respective roles in the importation of sugar?
Answer:
National Trading Limited (NTL), a leading trading organisation in the public domain and
fully owned by the Government of Nepal, has been serving the country since March 1962. NTL isoperating its functions under the Nepalese Company Act. During the initial stage of its operation,
NTL engaged in channelling aid products with a view to meet the local expenses of development
projects through the sale of aid goods in the domestic market. In order to better serve the growing
needs of the national economy and people at large, it started supplying essential goods at a reasonable
price. It has neither any exclusive or special right nor any special privileges. It has to work in full
competition with private enterprises in all tradin g activities. The major objectives of NTL are as
follows:
(i) To stabilise the price of construction materials and industrial raw materials needed for
the country both by local purchase and import;
(ii) To maintain stable prices through an increase in supply by importing the necessary
consumer goods of general public;
(iii) To supply bonded warehouse and duty free goods to diplomatic, other privileged
persons and tourists at the international airport;
(iv) To act as an agent of Nepal in the matter of import and distribution of the goods,
which the Nepal has, to import and distribute time to time and to handle the
commodity aid goods received for Nepal;
(v) To engage in agency business by getting the agent through producer for the products
in which NTL is dealing;
(vi) To earn reasonable profit in return of Nepal's investment.
The main products handled by NTL in order to maintain price stability and ensure regular
supply are cement and sugar.
The Salt Trading Corporation Limited (STC) on the other hand was established three decades
ago through the joint efforts of Nepal and the private sector to ensure proper supply and distributionWT/ACC/NPL/3
Page 63
of essential consumer items throughout the country. As trade in salt was disordered and unreliable, its
utmost priority was to make edible salt readily ava ilable. The irregularities in the distribution had to
be corrected through an efficient and effective supply and delivery system. Profits from trading
activities were invested in the production of basic necessities to boost self-sufficiency, accelerate
economic growth, and gain public and private support.
From its infancy as a trading house, STC has matured into a diversified conglomerate with an
unmatched distribution network all over the Kingdom . Its twenty branches scattered throughout the
country provide people easy access to imported and locally produced goods and act as major
procurement outlets for goods produced in various parts of the country. Though it has begun its
trading activities by dealing in salt, currently it imports, exports, produces and supplies goods of a
diversified nature. Industrial products, agricultural products, and industrial raw materials are the major
components of its trade.
Both of these enterprises are engaged in su gar import, however, they do not hold monopoly
power in the importation of sugar. Neither they have  got any special privilege from the Government to
import sugar. Other firms and individuals are free to import sugar.
Question 154.
We note that the Agricultural Input Corporation imports fertilisers and agricultural inputs
essential to farmers.  Could Nepal provide information on the new policy which it is claimed
opens the door to the private sector to import fertiliser and agricultural inputs essential tofarmers?
Answer:
Previously the Government maintained contro l over the import, storage, marketing and
distribution of fertilizers through the Agricultural  Input Corporation (AIC) which was a public sector
entity. After the deregulation of fertilizer trade the private sector now can import, store and market
fertilizers without any limitation and is eligible for subsidies in urea at the same level which is
obtained by the AIC. There are no limitations for the involvement of the private sector in the import,
and sales, of other agricultural inputs.
(f) Free zones
Question 155.Please confirm whether or not any free zones estab lished in the future will be fully subject to the
coverage of Nepal's commitments as a WTO member.
Answer:
As a Member of WTO, Nepal will fulfil all its obligations as derived from the different
Agreements. Currently there are no free zones established in Nepal. In case a decision is made in thefuture to establish free zones, Nepal will carefully examine the implications of the Multilateral
Agreements on Trade in Goods for free zone regimes.
(g) Free economic zones
Question 156.
Does the Government of Nepal intend to create export-processing zones?WT/ACC/NPL/3
Page 64
Answer:
No decision has been made whether export-processing zones will be created or not.
(h) Trade-related environmental policies
Question 157.
Please describe the export restrictions that have been put into effect for wildlife forest products
to protect wild life and forests.
Answer:
Some products, listed in Annex 3.1 of WT/ACC/NPL/2/Add.1, are banned for export because
of environmental concerns: wild animals, parts of wild animals, musk, snake and lizard skin, and log
and timber.
(k) Trade agreements leading to country-specific quotas allocation
Question 158.
Under the current trade agreem ent with India, Nepal imports some goods on a quota base
(cotton, baby food, milk and sugar, etc.).  Please explain how the quota base operates.  Does
Nepal maintain import quotas that guarantee certain minimum import levels of these items
from India?
Answer:
The product list and the quantity under the quota system is decided on a yearly basis as
provided by Article II.4 of the Protocol to the Treaty of Trade between Nepal and the Government of
India. The quota system operates only for those goods that are restricted for exports, or subjected toprice controls, in one of the Parties to the Trade Agreement. The list of products that Nepal imports
from India on a quota bases varies significantly depending on the agreement reached every year. For
the years 1998 and 1999 the following products were allocated:
1998 1999 Tariff Rate (%)
Milk power 1,500 MT 500 MT 10
Baby Food 500 MT 500 MT 5
Waste Cotton 1,500 MT 1,500 MT 0
Cotton 500 MT 500 MT 0
Cotton Yarn (Cone) 500 MT 500 MT 5
Cotton Yarn (Hank) 500 MT 500 MT 5
Rutile 1,500 MT 5
Sugar 40,000 MT 10
Question 159.
Nepal has a guaranteed supply of minimum viable quantities of some basic products from India,
including cotton, sugar and coal.  Please explai n how this guaranteed supply operates.  Does
Nepal have to purchase minimum quantities from India of these products before it may importWT/ACC/NPL/3
Page 65
the same products from other countries?  Is Nepal obliged to purchase any of these products
from India?  If so, in what amounts per year?
Answer:
Refer to answer to Question 158. Nepal does not have to purchase minimum quantities from
India. It can import from any other country even if the quota has not been completed. There is no
obligation to import from India.
(l) Government procurement practices, including general legal regime and procedures for
tendering, dealing with tenders and award of contracts
Question 160.Is the Government of Nepal ready to become an observer to the Committee on Government
Procurement? Does Nepal intend to join the WTO Government Procurement Agreement?  If
not, why not?
Answer:
Since joining this Plurilateral Agreement is not a requisite condition for accession to the
WTO, Nepal will give due consideration to the possibility of becoming an observer to the Committee.
Nepal is not ready to join the WTO Government Procurement Agreement.
Question 161.
Does Nepal intend to join the Government procurement agreement?
Answer:   
See Answer to Question 160.
Question 162.What is the overall value of public sector purchasing in Nepal?
Answer:
The estimated Government procurement as per the budget of FY 1997/98 was NRs16.2
billion (US$ 238 million at the current exchange rate).
Question 163.
Please provide a breakdown of the public procur ement market both by contracting entity and
product type?
Answer:
The requested information is not available
Question 164.
Is price the only criterion for evaluating bids or are contracts also evaluated by reference to an
"economically most advantageous offer" approach?WT/ACC/NPL/3
Page 66
Answer:   
In general, price is the only criteria for evaluating bids. However, quality, conditions of
supply, capability, experience and reliability of the supplier etc. are also taken into account while
evaluating the bids and awarding the contract.
Question 165.
When applying for a tender Nepalese citizens have to deposit up to five per cent of the tender
value and foreigners ten per cent.  Why are deposits from foreigners required to be twice as
large as from Nepalese citizens?
Answer:
To ensure commitments from the foreigners.
Question 166.
Is there a central agency, which controls the le gislation, relating to Government Procurement and
monitors possible infringements?
Answer:
No.
Question 167.
Do detailed rules exist on the requirement to publish tender and contract award notices?
Answer:
Yes.
Question 168.
Are tenders published in any English language publications?  If so, please identify the
publications.
Answer:
The rules on Government procurement requires publications of tender notices in national
dailies at least twice for procurements amounting more than NRs1 million, however, not necessarily
in an English paper. In case of global tender, tender notice is circulated to the foreign diplomatic
missions situated in Nepal.
Question 169.
Is there an offset policy and, if so, how often a re offset arrangements negotiated on a case-by-
case basis?WT/ACC/NPL/3
Page 67
Answer:
There is no offset policy as such.
Question 170.
Does Nepal's procurement law make provision for a system of domestic and price references?
Answer:
Yes.
Question 171.
Is the procurement of certain products reserved for local industry?
Answer:
No.  But priority shall be given to Nepalese products if the price difference with foreign
products is not above 7.5 per cent.
Question 172.
What are the procedures and the criteria to short-list candidates in the cases of limited
tendering?
Answer:
As per the Finance Rules 2042 (1985), as amended, the concerned Government officials are
authorized to purchase construction materials up to NRs150,000 and other commodities up to
NRs50,000 with the limited tendering.  It is mandatory for the concerned officials to collect
quotations at least from five firms involved in the transaction of required commodities, obtained from
the tax office. The authority shall purchase from the lowest bidder. But, if the quality of thecommodities and the supply conditions are not reasonable, he could make decisions otherwise.
However, the official can do so only upon the written permission of the higher authority.
Question 173.
Does Nepal have any trade agreements with other countries which cover public procurement? If
so, which countries?
Answer:
No.
Question 174.
Does the Government of Nepal intend to eliminate the requirement that Government
procurement contracts valued at less than US$793,500 be awarded solely to Nepalese citizens,
absent approval from the ministry?
Answer:
No.WT/ACC/NPL/3
Page 68
Question 175.
Normally, the number of suppliers for a certain product are limited, thus allowing for simplified
procedures to be granted.  What kind of produc ts are envisaged for the simplified procedures in
cases (i) and (ii) as indicated on page 27 of the Memorandum?
Answer:
Any commodities provided the conditions laid down in (i) and (ii) are satisfied.
4. Policies Affecting Foreign Trade in Agricultural Products
(a) Imports
Question 176.A comprehensive product list, based on HS numbers and indicating all 14 groups of agricultural
products under the preferential treatment for du ty-free entry on the basis of the agreement
between India and Nepal should be notified to the Working Party.
Answer:
The following is the group of agricultural products which have been listed under the
preferential treatment for duty free entry on a reciprocal basis as per the provision of the Treaty of
Trade with India.
HS Code Product Group
1. 7 to 14 Agriculture, horticulture and forest produce and minerals which have
not undergone any processing
2. 10.06, 07.13, 11.01 Rice, pulses and flour
3. 44.09 Timber
4. 17.01, 11.90 Jaggery (gur and shakhar)
5. 03.01 to 03.07,
01.01 to 01.06Animals, birds and fish
6. 04.09, 04.10 Bees, beeswax and honey
7. 521.01, 05.06 Raw wool, goat hair and bones as  are used in the manufacture of bone
meal
8. 04.01 to 04.07 Milk, home made products of milk and eggs
9. 23.05 Ghani-produced oil and oil cakes.
10. 30.04 Ayurvedic and herbal medicines
11. 44.20 Articles produced by village artisans as are mainly use in villages
12. 23.08 Akara
13. 05.11 Yak tail
14. Any other primary products which may be mutually agreed upon
The treaty also has provisions of preferential treatment for duty free entry for any other
primary products which may be mutually agreed upon.WT/ACC/NPL/3
Page 69
Question 177.
"Nepal imports significant quantities of high val ue agricultural products but only imports food
grains during drought years".  It is unclear from this whether Nepal is a net food-importing
country. Further clarification is required.
Answer:
 Total value of import (net) of agricultural commodities ( SITC 1, SITC 2 and SITC 4) was
NRs5,231.1 million, NRs5,916.1 million and NRs6,330.3 million in fiscal years 1994/1995,
1995/1996 and 1996/1997 respectively. Thus, Nepal is a net food-importing country.
Question 178.
Nepal notes in the Memorandum that the import of foodgrains is made only during drought
years.  Would Nepal confirm that this means that  at other times imports of foodgrains are not
banned or restricted?
Answer:
Nepal confirms that imports of foodgrains are not banned or restricted during the year.
(c) Export prohibitions and restrictions
Question 179.Nepal notes that raw wool is restricted for export in order to protect local wool processing
establishments. Could Nepal provide further details on the export restriction, and itsjustification under the WTO?
Answer:
Export of raw wool is currently restricted for export to prevent a shortage of raw material that
could affect local wool processing establishments, and to encourage the development of value added
exports. Wool carpets, and other wool products are the main exportables of Nepal with significant
impact on employment and overall welfare. Nepal co nsiders that this restriction could be justified
under Article XI.2.(a) of GATT 1994.
Question 180.
Can Nepal please provide a WTO justification for the export ban on wet blue skin?  Can Nepal
explain further the requirements being placed on leather exporters to meet export targets, and
the advantages these exporters will receive if these targets are met?
Answer:
There are no requirements placed on leather exporters to meet export targets or advantages
based on export targets.  This measure is put into effect to guarantee adequate supply to processing
establishments. Currently this restriction has been relaxed and some exports are allowed.
Question 181.
Could the Government of Nepal confirm whether th e ban on the export of wet blue skin would
finally be removed?WT/ACC/NPL/3
Page 70
Answer:
The Government has not envisaged completely removing ban on wet blue skin.
(d) Export credits, export credit guarantees etc.
Question 182.Please describe the mechanism used by the Government of Nepal to facilitate easy access to
foreign exchange for agricultural exporters.  How does the “technical facilities of opening
foreign currency accounts” operate?
Answer:
All exporters, including agricultural exporters, are eligible to open foreign currency accounts.
Also refer to Question 103.
Question 183.
Please explain why Nepal believes that the information-oriented services available for
agricultural exporters are not subsidy-type facilities.
Answer:
Information-oriented services available for agricultural exporters do not involve direct
payments to the producer or producer community and is available to all producers seeking such
information without any discrimination and prejudice. Moreover, Annex 2 of the Agreement onAgriculture exempts such services provided to the producers from the calculation of Aggregate
Measure of Support (AMS).
(e) Internal policies
Question 184.
Please provide the information requested in WT/ACC/4 on domestic support and export
subsidies.
Answer:
The new table is enclosed.
Question 185.
We also have some questions in relation to the agriculture domestic support and export
subsidies tables submitted in document WT/ACC/SPEC/NPL/1.  We would like to thank Nepal
for the early provision of information in the WT/ACC/4 format.
We note that the information provided is an av erage of the recent three-year period including
the budget allocation for the current fiscal year 1998-1999.  Could Nepal provide informationfor each year separately as well as the average for the three period?WT/ACC/NPL/3
Page 71
Answer:
Refer to answer to Question 184.
Question 186.
According to the information provided in Table ES:1 of WT/SPEC/ACC/1, Nepal does not
provide export subsidies.  Will Nepal commit to binding its agricultural export subsidies at
zero?
Answer:
Nepal shall act in accordance with Article 15.2 of the Agreement on Agriculture for export
subsidies on agricultural commodities.
Question 187.
We appreciate that Nepal does not currently use the export subsidies indicated in ES:1 in
WT/ACC/SPEC/NPL/1.  We hope that Nepal can confirm that it will not impose such export
subsidies as prohibited in the Agreement on Agriculture.
Answer:
See answer to Question 186.
Question 188.
We understand that commodity/management committees of the State-owned enterprises
concerned determine the support prices for sugar cane, tobacco and cotton, whereas the
Ministry of Supplies determines the support price for rice. Can the commodities (and their
derived products) referred to be imported by pr ivate companies without any restriction, apart
from ordinary customs duties?
Answer:
Yes, these commodities can be imported by private companies without any restrictions except
for the commodities imported as per the Treaty of Trade with India.
Question 189.
Are State-owned enterprises involved in import  of any other agricultural product than the
commodities referred above?
Answer:
No.
Question 190.
Nepal states that the Government has been fixing the minimum support price for rice, sugar
cane, tobacco and cotton.  Does the Government continue to fix minimum support prices for
these products?  How are these minimum support prices calculated and administered?WT/ACC/NPL/3
Page 72
Answer:
Nepal has discontinued fixing a support price for rice. Support prices for sugar cane, tobacco,
and cotton are fixed by the respective commodity committees. Support prices are calculated, in
principle, on the basis of cost of cultivation and are administered by the committees. Commodity
committees will continue to fix support prices until the farmers are able to bargain for the price oftheir produce. However, farmers are free to sell their products in the market at any price above the
support price.
Question 191.
Please describe the operation of the price subsidy on urea and the transportation subsidy on
fertilizers. Are these subsidies available to all fertilizer users?
Answer:
The transportation subsidy for fertilizers is provided only for 23 hill and mountain districts
that are not connected by road out of 75 districts in the country. The price subsidy on urea is availableto all users. This subsidy is planned to be eliminated by December 1999.
Question 192.
We appreciate Nepal’s submission on domestic support and export subsidies (ACC/4).  We
understand the difficulty in preparing these ta bles, and commend Nepal for its hard work.
As with all acceding countries’ WT/ACC/4 submissions, we would like to ask a few questions
and offer some technical comments.  We would remind Nepal that the WTO Secretariat is
available to provide technical assistance in the preparation of these tables.
First, why are data expressed in US Dollars, and not Nepal’s national currency?
Answer:
Refer to answer to Question 184.
Question 193.
Why were fiscal years 1998-1999 used for the reporting period?  Technical memo WT/ACC/4
stipulates that acceding countries should use th e three most recent years of data.  Moreover, the
values used in domestic support submissions always represent actual, not planned,expenditures.
Answer:
Refer to answer to Question 184.
Question 194.
Please re-submit all tables using actual expenditures (or revenue foregone) for the three most
recent years available, with separate entries for each year of data (1994, 1995, 1996, etc.) and athree-year average.  This format will make Nepal’s submission much easier to review.WT/ACC/NPL/3
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Answer:
Refer to answer to Question 184.
Question 195.
In supporting table DS:1, (which should read: “Measures exempt from the reduction
commitment–“Green Box”), we request furth er information on the following measures,
specifically how they operate and how they conform to Annex 2 criteria:
- Crop subsidies (listed under “payment for relief from natural disasters”)
- Irrigation and drainage (infrastructural services, which should also be part of
(a) General Services)
- Tea promotion and support for seeds and dairy development (others)
Answer:
Crop subsidies are applied on an ad-hoc basis in the case of the occurrence of a natural
disaster. In these cases, seeds will be distributed to affected farmers without cost. This relief is
provided by the Seeds Committees that exist at the district level under the Chairmanship of the
District Development Committee, which is composed  of representatives of the public and privates
sectors.
The Tea and Coffee Promotion Board, and the Dairy Promotion Board, which are composed
of representatives of the public and private sectors, have as its basic functions, to propose policies for
the development of these activities in Nepal and to conduct product-related research. Budget
allocations are to finance the activities of the Boards. No direct support is given to the farmers.
Nepal is undertaking a Seeds Sectors Project, which aims to improve seed quality. The
activities defined under this project are carried out by the Seeds Committee, which is composed of
representatives of the public and private sectors. Budget allocations are to finance the activities,
mainly seed research and improvements of the Seeds Committee. There is no direct support to the
farmers.
The above-mentioned measures comply with the provisions of paragraph 1 (a) and (b) of
Annex 2 of the Agreement on Agriculture, these are funded with budget allocations and they do not
have any price-support effect. The activities of the Boards for tea and coffee, dairy and seeds, are
general services to agriculture as provided by paragraph 2(a) (d) (f) of paragraphs 2 of Annex 2 to the
Agreement on Agriculture.
Crop subsidy, wherein applied in the case of a natural disaster, complies also with the
provisions of paragraph 8 of Annex 2 to the Agreement on Agriculture, and with the general
conditions of paragraph 1.
Question 196.
In table DS:1 we would be interested in further information on the programme under (b)
payment for relief from natural disasters, con cerning crops subsidies.  Could Nepal supply this
please?
Answer:
Refer to answer to Question 184.WT/ACC/NPL/3
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Question 197.
In supporting table DS:4, could Nepal also provide the total value of agricultural production?
Answer:
The total value of agricultural production, estimated by multiplying the quantity of production
of the major products by the respective market price, is around NRs349,064 million. The calculation
method, however, underestimates the value of agricultural production as not all products have been
considered.
Question 198.
In supporting table DS:9, please provide additional information on how the two measures listed
(“transportation subsidy for fertilizer” and “agr icultural credit subsidy”) operate.  Are these
subsidies calculated, or are they budgetary expenditures?  If they are calculated, please provide
calculation details as specified.
Answer:
Concessional credit with capital subsidy is granted through the Agricultural Development
Bank to all farmers, for the following purposes:
- Irrigation;
- Micro-hydro power installations;
- Bio-gas plants;
- Solar-electrification.
Credit is given at an interest rate that varies between 16 to16.5 per cent. The market interest
rate is 17 per cent.
For small farmer's cooperatives in remote areas, for the purpose of the installation of bio-gas
plants special credit is available  at a 13 per cent interest rate. These are budgetary expenditures as theADB is reimbursed the amount of subsidy by the Central Government.
For transportation subsidy for fertilizer a rebate is granted.
Question 199.
In table DS:9 could Nepal provide further details on the agriculture credit subsidy?
Answer:
Refer to answer to Question 184.
Question 200.
Could Nepal provide information on its total value of agricultural production to enable us to
ascertain whether or not the aggregate measurement of support (AMS) is de minimis?
Answer:
Refer to answer to Question 197.WT/ACC/NPL/3
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5. Policies Affecting Foreign Trade in other Sectors
(b) Policies affecting foreign trade in other major sectorsQuestion 201.
Please describe the function of the Carpets and Wool Development Council.  Does the Council
provide financial assistance to Carpet manufacturers?
Answer:
The principal function of the Carpet and Wool Development Board is to make the necessary
arrangements for the development of production and the quality of carpets in Nepal. The Board doesnot give any kind of financial assistance.
Question 202.
Please describe in detail the policies by which Nepal intends to progressively promote the export
of finished leather.  Is Nepal using or contemplating the use of export subsidies?
Answer:
No specific promotion measures have been yet defined for this sector. The general treatment
accorded to all exporters apply in this case. Refer to answer to Question 109.  For export promotion
activities refer to answer to Question 111.
V. TRADE-RELATED INTELLECTUAL PROPERTY RÉGIME
1. General
 (a) Intellectual property policyQuestion 203.According to the Foreign Trade Memorandum, “industrial property rights legislation has
already been drafted and is in the process of en actment.”  Please list and describe the other
provisions of IPR legislation Nepal intends to enact to meet the requirements of the TRIPS
Agreement.
Answer:
Nepal is preparing the draft of a new Industrial Property Law. The Law will incorporate all
the substantive provisions of the TRIPS Agreement guaranteeing therefore the conformity of the
Nepalese industrial property rights regime with its future obligations as a WTO Member. It will cover
all categories of industrial property rights under Sections 2  through 7 of Part II of the Agreement, andwill incorporate the basis for an adequate enforcemen t thereof. For the protection of copyright, Nepal
has the Copyright Act 1965 in place. Nepal intends to review it to make it fully compatible with the
TRIPS Agreement. This is a complex and difficult task. In this connection, Nepal has approached
WIPO for technical assistance in drafting new IPR legislations.
Question 204.
When does Nepal expect the draft industrial property rights legislation to be enacted?WT/ACC/NPL/3
Page 76
Answer:
At this point in time it is difficult to envisage when the new Industrial Property Law will be
enacted. The drafting has to be completed by the Ministry of Law and Justice in coordination with the
Department of Industry (DOI). When the draft is ready it will have to follow the normal legislativeprocess. The executive will send the draft to Parliament. The enactment of Laws is an act of
Parliament, therefore it will depend on this institution when the Law is finally enacted. Nepal
considers that because of severe economic, financial and administrative constraints, the lack of
technical expertise and the need to develop infrastructure and human capital it will require a time
period, even if the Law is enacted earlier, to be in condition to fully implement all the provisions of
the TRIPS Agreement. Nepal will seek technical cooperation in order to make this period as short as
possible.
Question 205.
Please confirm that this draft legislation does not include any revision of the Nepalese Copyright
Law.
Answer:
The new Industrial Property Law will not incorporate Copyrights and Related Rights. These
are governed by a different legal instrument in Nepal, the Copyright Act 2022 (1965) as amended.
Question 206.
We request copies of all the current statutes a nd regulations referenced in the afore-mentioned
Memorandum, in translation to a WTO language, including other Nepalese laws and bilateralagreements pertaining to intellectual property rights and enforcement.
Answer:
Patent Design and Trademark Act 1965 and Copyright Act 1965 as amended are enclosed
(WT/ACC/NPL/3/Add.1).
Question 207.
What is Nepal’s timetable for adoption of th e automatic recognition of patents and copyrights
awarded by other nations?
Answer:
Nepal is not considering the automatic recognition of patents awarded by other nations.
According to current legislation, the Department of Industry (DOI) may accept the examinations
conducted for the granting of the patent in another country. In the case of copyrights, Nepal will grantprotection to the full extent of its future obligations as a WTO Member.
(b) Responsible agencies for policy formulation and implementation
Question 208.The Nepal National Library is the authorized age ncy to register intellectual property other than
industrial property, but the Government has delegated its authority of administering copyrights
to the Youth, Sports and Culture Ministry [hereinafter the “Ministry”].  What are the separateWT/ACC/NPL/3
Page 77
roles of the National Library and the Ministry in administration of copyrights?  Which entity
accepts and maintains copyright registrations ?  What are the specific copyright-related
activities of each entity?  Which entity is re sponsible for formulating national copyright policy,
including initiating changes in copyright law?
Answer:
The Ministry is responsible for the formulation of copyright policy and initiating legislative
changes. The Nepal National Library is the authoriz ed agency for registering copyrights, record all
hearing of complaints and has dispute settlement functions.
(c) Membership in international intellectual property conventions and regional or bilateral
agreements
Question 209.Please outline Nepal’s plans to join the B erne Convention, or implement its provisions.
Answer:
Nepal is considering joining the Berne Convention.
Question 210.
Why has Nepal avoided membership in this and other international conventions on intellectual
property rights?  Please describe Nepal’s plans in this regard.
Answer:
In the past intellectual property issues have not been a priority in the national agenda to a
great extent because of a very limited use of existing legislation. For example, up to date less than one
hundred patents have been sought in Nepal and a significant number of right holders have not paid the
required fees to maintain their rights. Furthermore, there have not been many cases of demands forinfringement of IPR’s in general. Due to the growing importance of IPR’s in the country, at present
Nepal is considering joining the relevant international conventions.
(d) Application of national and m.f.n. treatment to foreign nationals
Question 211.
Nepal states in its Memorandum (section l(d) on page 35) that nationals of other countries are
accorded no less favorable treatment than that accorded Nepalese nationals.  How does Nepal
reconcile this with the fact that foreigners must pay twice as much as Nepalese to register and
renew patents, designs and trademarks, and make these payments in convertible foreign
currency (see bottom of table in section l(e) on page 35 of the Memorandum)?
Answer:
The new Industrial Property Law will be in full compliance with Article 3 of the TRIPS
Agreement, ensuring equal treatment for both foreigners and nationals in terms of industrial propertyfees.WT/ACC/NPL/3
Page 78
(e) Fees and taxes
Question 212."Foreigners have to pay double the rate indicated above except for penalty charges. Foreigners
are required to make payments in convertible fo reign currency". Does Nepal believe that this
different treatment between nationals and foreign ers is compatible with the Paris Convention
for the Protection of Industrial Property (1967)?
Answer:
Refer to answer to Question 211.
2. Substantive standards of protection, incl uding procedures for the acquisition and
maintenance of intellectual property rights
(a) Copyright and related rights, including rights of performers, producers  of  phonograms
and broadcasting organisations
Question 213.
In which respects will the existing copyright legislation need to be amended to comply with the
TRIPS Agreement, and what is the planned timetable for such amendment?
Answer:
Refer to answers to Questions 216 to 222, 227, 228, 230 and 231.
Question 214.
Please provide a copy of the current Copyright Law (WT/ACC/NPL/3/Add.1) to the WTO
Secretariat for review by the Members of the Working Party.
Answer:
Refer to answer Question 206.
Question 215.
Has the Nepalese Copyright Act been amended since 1965?  When was the law most recently
amended?
Answer:
The Copyright Act 1965 was amended once in 1997.
Question 216.
In section 2 (a) (on page 35) , Nepal states that, under the Copyright Act 2022 (1965), a person
shall acquire a copyright only on works registered  pursuant to that Act.  Can Nepal explain how
this is consistent with Article 5(2) of the Berne Convention (1971), which states that the
enjoyment and exercise of works protected under the Convention shall not be subject to any
formality?WT/ACC/NPL/3
Page 79
Answer:
According to the Copyright Act registration of work is required for protection. The legislation
will be amended to comply with the requirements of the said article.
Question 217.
According to the information in the Foreign Trade Memorandum, under the Nepalese
Copyright Act, "a person shall acquire a copyright only on the works registered pursuant to the
Act".  Does this mean that there is no copy right recognized in a work unless it has been
registered?  If so, please explain how this is  compatible with Article 5(2) of the Berne
Convention, applicable to WTO Member States pursuant to Article 9 of TRIPS?
Answer:
Refer to answer to Question 216.
Question 218.
Since registration appears to be required for copyright protection under the 1965 Copyright
Act, what plans are there to remove this requirement so as to comply with the TRIPS
Agreement (particularly Article 5(2) of the Berne Convention)?
Answer:
Refer to answer to Question 214.
Question 219.
Is the term of protection given under the 1965 Copyright Act for works registered in the names
of two of more persons considered to be consis tent with the TRIPS Agreement (particularly
Article 7 bis of the Berne Convention)?  If not, wh at timetable is envisaged for amendment?
Answer:
Refer to answer to Question 203.
Question 220.
According to the Memorandum, "[in  the case of a work registered in the name of two or more
persons, the copyright shall be valid only for a pe riod of fifty years after the death of the person
who ever dies first among them".  Please explain how this term of protection is compatible with
Berne Article 7 bis?
Answer:
Refer to answer to Question 203.
Question 221.
Precisely which acts require the authorization of the copyright holder under the current
legislation? Are all the acts set out in the TRIPS Agreement and the Berne Convention covered
(including commercial rental), and if not, what plans are there to amend the legislation?WT/ACC/NPL/3
Page 80
Answer:
The creator of the work has the right to register for copyright protection. No person without
his permission can produce, sell, or distribute a protected work. The right holder may authorize his
right to other persons as per the conditions laid down in the letter of authorization.
For compliance with TRIPS Agreement refer to answers to previous questions.
Question 222.
Please give details of the current exceptions and li mitations to exclusive rights provided in the
1965 Copyright Act, and indicate which of these are considered to require amendment in order
to comply with the provisions of the TRIPS Agreement.
Answer:
- If the copyright holder does not republish a work and the Registrar of copyright
deems to republish the work in the interest of the public, the Registrar may grant alicence to any other person subject to the payment of reasonable compensation to the
owner;
- If the copyright holder refuses to grant licence to publish or broadcast an essential
portion of a work for compilation of any text book, the Registrar may grant a licence
to publish or broadcast without any compensation;
- the Registrar may grant a licence, on certain grounds, for translation for public
performance and for the use of public libraries.
- for compliance with the TRIPS Agreement refer to answer to Question 203.
Question 223.
Please describe the registration fees, if any.
Answer:
The copyright registration fee is NRs50 for each piece of work registered. At the current
exchange rate it amounts to US$0.75.
Question 224.
The Nepalese Copyright Act protects "literary works such as article, essay, story, poem, novel,
epic, etc., and artistic works like drama, cine ma, drawing, map, photograph, musical notation,
sound record and any other work related to literature, art, and music".  Is this an exhaustive
list of the types of works specifically protected by the Nepalese Copyright Law?  Please identify
any other types of works that are protected by the Copyright Law.
Answer:
Works protected under the Copyright Act are:
- Any article, essay, story, poem, novel, epic, lyric, or any other kind of book,
pamphlet, descriptive writing as a whole or part thereof in prose or poetry, written,printed, lithographed, typed or issues or produces through any other mechanical
device or broadcast in original or translated form whether it be a complete set or a
part thereof;WT/ACC/NPL/3
Page 81
- Any drama or cinema or any dialogue, scenographic arrangement or techniques of
acting companies therein or any part thereof;
- Any drawing, map, photograph made, engraved, photographed in any manner or any
other kind of direct impression or work or part thereof;
- Any musical notations or sound records or part thereof;
- Any other kind of work relating to literature, music or art or part thereof;
- Computer software.
Question 225.
Does Nepalese Copyright Law protect the follow ing types of works [from Berne Article 2 unless
otherwise noted]:
(i) scientific works?
(ii) addresses, lectures and sermons?
(iii) choreographic works?
(iv) cinematographic works?
(v) works of architecture (including blueprints)?(vi) sculptures?
(vii) works of applied art?
(viii) collections of art or literary works which, by reason of their arrangement and
selection, constitute intellectual works?
(ix) three-dimensional  works relative to  geography, topography, architecture or
science?
(x) computer programs, in source and object code? [TRIPS Article 10(1)]
(xi) collections of data which, by reason of their arrangement and selection,
constitute intellectual works? [TRIPS Article 10(2)]
Answer:
Refer to answer to Question 224.
Question 226.
"The Copyright Act provides licence provisions fo r publication, translation, exhibition, and for
public library purposes."  Are these compulsory licence provisions?  Are they compatible with
Berne Convention Articles permitting and proh ibiting compulsory licence for different types of
works?  Are they compatible with Articles  8 and 9 of the Berne Convention?  Are they
compatible with TRIPS Article 12?
Answer:
The Copyright Act contains compulsory licensing provisions.  These provisions are consistent
with the relevant articles of the Berne Convention, as well as Article 13 of TRIPS. The copyright
holders exercise these powers in accordance with the Copyright Act. The Ministry of Youth, Sports
and Culture will see to it that the provisions relating to copyright are enforced.
Question 227.
What current provision is there for the copy right protection of computer programs and
databases, and how is it envisaged to provide fo r such protection in a ccordance with the TRIPS
Agreement?WT/ACC/NPL/3
Page 82
Answer:
The current legislation provides protection to computer software, both in its source code and
object code.  Databases are not currently protected.   The legislation will be amended to incorporate
the provisions of the TRIPS Agreement in this regard.
Question 228.
Please explain what protection is  given in Nepal for rights related to copyright such as those of
performers, phonogram producers and broadcasting organisations. What plans are there to
provide for such rights in acco rdance with the TRIPS Agreement?
Answer:
Refer to answer to Questions 224 and 220.
Question 229.
Could Nepal please provide details how it complies with or of steps taken to comply with
Article 3 of TRIPS ("national treatment") plus Article 13 ("limitations and exceptions")?
Answer:
Currently there are no provisions in the Copyright Act, or administrative procedures either
than the fee required, that discriminate against foreigners. For the current limitations and exceptions
refer to answer to Question 203.
Question 230.
Can Nepal please confirm that, in accordance with  Article 10 of TRIPS, compilation of data is
protected as intellectual creations and computer programs are protected as literary works?
Answer:
Refer to answer to Question 227.
Question 231.
Does Nepal’s law provide for rental rights in co mpliance with Article 11 of TRIPS in respect of
at least computer programs and cinematographic works?
Answer:
The current legislation does not have these provisions.  However, it will be amended to
incorporate them.
(b) Trademarks, including service marks
Question 232.
Which is the definition of trademark in the Act 2022 (1965)? Does Nepal protect three-
dimensional trademarks? Does the Government of Nepal consider that any changes will be
required to the Patent, Design and Trademark Act 2022 (1965) to comply with the TRIPS
Agreement?WT/ACC/NPL/3
Page 83
Answer:
Patent, Design and Trademark Act 1965 defines trad emark as words, symbols, or pictures or a
combination thereof to be used by any firm, compan y or individual in its products or services to
distinguish them from the products or services of others. Thus, such words, symbols or picture can bethree-dimensional.
As indicated earlier, the new Industrial Property Law will have provisions which comply with
the TRIPS agreement.
Question 233.
We understand that the Patent, Design and Trademark Act 2022 (1965) was amended in 1987,
to require compulsory home country registration of trademarks by foreigners.  If this
information is accurate, please indicate how the law will be amended to extend national
treatment to foreigners.
Answer:   
The current provision which requires home country registration for trademark registration
does not introduce discrimination against foreign nationals with regard to the protection of trademark
once they are registered in Nepal. The requirement of home country registration will be removedwhile introducing the new legislation.
Question 234.
The Nepalese law appears to require foreigners to pay double the rates indicated for
applications, application amendment, registration, transfer of ownership, endorsement and
recording other than transfer of ownership, deta ils of registration, opposition and case filing,
copies of registration certificates, and renewals.  Please explain how the fee and tax structure
will be amended to provide national treatm ent for foreigners, in accordance with the
requirements of Article 3 of the TRIPS Agreement.
Answer:
By the time of accession Nepal will be in full compliance with Article 3 of the TRIPS
Agreement.
Question 235.
Under current Nepalese law, what marks are eligible for registration as trademarks?
Answer:
Refer to answer to Question 232.
Question 236.
Does the Patent, Design and Trademark Act 2022 (1965), as amended, provide for registration
of certification marks?WT/ACC/NPL/3
Page 84
Answer:
There are no provisions for the registration of certification marks..
Question 237.
Does the Patent, Design and Trademark Act 2022 (1965), as amended, provide for registration
of collective marks?
Answer:
There are no provisions for the registration of collective marks.  For compliance with the
TRIPS Agreement, please refer to answer to Question 203.
Question 238.
Is colour, either alone or in combination, el igible subject matter for registration as a
trademark?
Answer:
A colour alone is not an eligible subject matter for registration as a trademark. However, if  a
combination of colours signifies any word, symbol or picture or combination thereof, and forms a
unique symbol, it shall be eligible for trademark.
Question 239.
Is registrability dependent on use?  May registered marks be cancelled on the basis of non-use?
Answer:
Registrability is not dependent on use. However, in case any registered trademark is not
brought into use within one year from the date of registration the Department of Industry shallconduct necessary inquiries and can cancel registration.  For compliance please refer to answer to
Question 203.
Question 240.
Please explain whether, under the Patent, Design and Trademark Act 2022 (1965), as amended,
the nature of goods or services can serve as an  obstacle to the registration of a trademark.  Ifso, please identify and explain the subject matter excluded under the authority and the
provisions of the Nepalese law which serve as the basis for exclusion.
Answer:
The provisions of Patent, Design and Trad emark Act on the classification of goods and
services do not hinder the registration process on the basis of the nature of goods and services. The
purpose of such classification is, basically, to streamline the registration process. A trademark shall
not be registered only in the following cases: if  it deems to affect the dignity of any individual or
institution; have an adverse effect in the well being or morale of the people in general or the nationalinterest; if it affects the goodwill of the trademark of another person; or if such trademark has already
been registered in the name of any other person.WT/ACC/NPL/3
Page 85
Question 241.
Please explain how unregistered well-known ma rks are protected in Nepal, as required by
TRIPS Article 16(2) and (3).
Answer:
There are no provisions for the protection of unregistered well-known marks in the current
legislation. The provisions of Article 16(2) and (3) will be incorporated in the new industrial property
law. However, as per the Act a trademark that affects the goodwill of any other person shall not be
registered, this provision has led to the protection of well-known marks in Nepal.
Question 242.
Are well-known trademarks, in the meaning of Article 6 bis of the Paris Convention, protected
in Nepal and, if so, what kind of protection is conferred?
Answer:
See Answer to Question 241.
Question 243.
Under TRIPS Article 16(1), the likelihood of conf usion is presumed where an identical sign is
used for identical goods or services.  Please ex plain whether the Patent , Design and Trademark
Act 2022 (1965), as amended, provides such a presumption.
Answer:
The Patent, Design and Trademark Act by the definition of trademark provides for such a
presumption specifying that a mark has to be distinct enough to differentiate identical goods or
services. Furthermore it prohibits the use of a registered trademark by any person other than the
right-holder without the written permission of the right-holder or imitating the registered trademark insuch a manner as to deceive the general public.
Question 244.
Please explain the relationship between registration as a trademark and registration as an
industrial design.
Answer:
Protection for the design is provided for any form or shape of any material manufactured in
any manner, whereas a title of trademark is provided for any words, symbols, or pictures or a
combination thereof to be used by any firm, compan y or individual in its products or services to
distinguish them from the products or services of others.
(c) Geographical indications, including appellations of origin
Question 245.Could Nepal confirm that it would comply with Articles 22 and 23 of TRIPS and provide
protection for geographical indications?WT/ACC/NPL/3
Page 86
Answer:
Nepal confirms that it would comply with Articles 22 and 23 of TRIPS and provide protection
for geographical indications. However, the time-frame for such compliance would be solely
determined by the possibilities of upgrading the institutional capabilities of the concerned public
entities.
Question 246.
According to the information pr ovided, the Patent, Design and Trademark Act 2022 (1965) does
not contain any provision for protection of geographical indications, including appellations of
origin.  Please explain how geographical indications will be protected, consistent with the
requirements of TRIPS Articles 22 – 24.
Answer:
Refer to answer to previous question
Question 247.
In section 2(c) (on page 36), Nepal states that  the Patent Trademark and Design Act 1965 does
not contain any provisions on geographical indica tions, including appellations of origin.  Given,
however, that the WTO Agreement on TRIPS pr ovides only that geographical indications must
be protected by legal means, does Nepal have in place other methods by which they could be
protected?  This may include, for example, unfair competition laws, a common law rule against
"passing off", or consumer protection laws.
Answer:
Currently there are no other methods that could grant protection to geographical indications
including appellations of origin.
(d) Industrial design
Question 248.Could Nepal clarify its compliance with Article 26(3) of TRIPS which provides that designs are
afforded a term of protection of at least 10 years?
Answer:
As per Patent, Design and Trademark Act 1965, the title of the person in whose name a
design has been registered under this Act shall remain valid for a period of five years from the date of
registration. However, such design could be renewed two further times for a period of five years at a
time. The total term of protection is therefore 15 years.
Question 249.
Is protection available for all industrial designs without discrimination as to industrial
applicability?  If not, identify excluded cate gories and explain the basis for each excluded
category.WT/ACC/NPL/3
Page 87
Answer:
There is no discrimination as such with regard to industrial applicability of a design.
However, if a design hurts the prestige of any individual or institution, or adversely affects the public
conduct of morality, or undermines the national interest, or in case such design has already been
registered in the name of any other person, such design shall not be registered. If it has already beenregistered, it may be cancelled.
Question 250.
Is protection for industrial designs available without discrimination, based on the nationality of
the applicant or the place of creation?
Answer:
Yes, protection for industrial designs is available without discrimination, based on the
nationality of the applicant or the place of creation. But, the title to any industrial design registered in
a foreign country shall not be valid unless such industrial design is registered in Nepal by theconcerned person.
Question 251.
Is independent creation a defense for infringe ment of a registered design in your country?
Answer:
No.
Question 252.
Please explain how textile designs are protected in your country, including the requirements for
securing protection, such as cost, examination, and publication.
Answer:   
There are no separate provisions for the protection of textile designs, the same rules for other
designs apply. Any person desirous of having design of textiles registered shall submit to the
Department of Industry an application according to a prescribed form together with four copies of
such design and maps, drawing and particulars thereof along with application fee of NRs100.00.  On
receipt of the application, the Department  of Industry registers the design as a patent in the name ofthe applicant and then issues a certificate. The registration fee is NRs700.00 and the renewal fee is
200.00. The Department of Industry publishes the designs registered as well as particulars of their
renewal or cancellation, for the information of the public.
Question 253.
Please describe in detail the rights conferred to  an owner of a protected industrial design.  Are
there any exceptions or limitations to the rights conferred to an owner of a protected industrial
design?  If so, please describe the basis for each limitation or exception.
Answer:
No person shall manufacture any article by using the design registered under the Patent,
Design and Trademark Act 1965 in the name of an y person without the latter's written permission, orWT/ACC/NPL/3
Page 88
by imitating such design so as to deceive the general public. In case any person whose design is
registered under the Patent, Design and Trademark Act 1965 suffers any losses as a result of any other
persons infringing his right, the Department of Industry may have the appropriate amount of such
losses recovered from such offender in the form of compensation.
Question 254.
Are there provisions for extending the term of design protection?  If so, please describe the
nature of any extension, as well as the basis for obtaining an extension.
Answer:
A design holder must renew his design within a period of 35 days from the date of expiry of
the term for which he is entitled to use the design, i.e. five years, by submitting in the prescribed form
and paying NRs200.00 as a renewal fee. Such design may be renewed not more than two times for a
period of five years at a time.
(e) Patents
Question 255.Does Nepal believe that the term of protection for patents, provided for in the Patent, Design
and Trademark Act 2022 (1965) is compatible with Article 33 of TRIPS which provides thatpatents are afforded a term of protection not less than 20 years from the date of filing?
Answer:
As per the Patent, Design and Trademark Act 1965, the title of the patentee to the patent
registered under this Act shall remain valid for a period of seven years from the date of registration.
However, such patent can be renewed for two times for a period of seven years at a time. That is, the
term of protection available under current legislation is 21 years from the date of registration. The
New Industrial Property Law will adjust the terms of protection to Article 33 of the TRIPS Agreement
also covering the period between application and registration.
Question 256.
The Patent Design and Trademarks Act 1965 does not, apparently, explicitly exclude any
invention from patentability.  Are there any subsidiary or related regulations that would limit
the scope of patentable technology?
Answer:
There is no other regulation that limits the scope of patentable inventions.
Question 257.
Are patents available for all products, processe s for making, and processes for using without
discrimination as to the technological field of invention?  If not, please identify fields of
invention that are excluded from protection, as well as the basis for each exclusion.
Answer:
Patents are available for all kinds of products and processes that fulfil the patentability
requirements without any discrimination as to the technological field or invention.WT/ACC/NPL/3
Page 89
Question 258.
Is it possible to obtain a patent and enjoy patent rights in Nepal without discrimination based
on the nationality of the inventor or place of invention?
Answer:
Yes.
Question 259.
Is it possible to obtain a patent and enjoy rights in Nepal without discrimination as to whether
products are imported and not produced in the country?
Answer:
Yes.
Question 260.
Are there provisions in Nepalese law with regard to the prohibition of the commercial use of a
patent to protect public order, morality, health and the life of persons or animals, to protectplants and/or to avoid serious environmental impairment?   If so, please explain how the
standard is to be applied, and to what subject matter.
Answer:
A patent cannot be registered in the following circumstances:
(a) In case the patent is already registered in the name of any other person;
(b) In case the applicant himself is not the inventor of the patent sought to be registered
by him, nor has he acquired rights over it from the original inventor;
(c) In case the patent sought to be registered is likely to adversely affect the public
health, conduct or morality or the national interest;
(d) In case (the registration of the patent) will constitute a contravention of existing
Nepal law.
In the above circumstances the Department of Industry may cancel the registration of any
patent which had been registered. But, the department, before cancelling the registration of any patent,provides opportunity to the patentee to show cause, if  any, why the registration of this patent should
not be cancelled.
Question 261.
Does Nepalese law contain any exclusions from patentability related to diagnostic, therapeutic
and/or surgical methods for treating persons or animals?
Answer:
The Patent Design and Trademarks Act 1965 is silent about it.WT/ACC/NPL/3
Page 90
Question 262.
Are plants and animals (with the exception of  micro-organisms) and essentially biological
procedures for the production of plants or animals (which cannot be characterized as non-
biological or non-microbiological procedures) excluded from eligibility for patents?
Answer:
The Patent Design and Trademarks Act 1965 does not exclude plants and animals and
essentially biological procedures for the production of plants or animal from  eligibility for patent.
Question 263.
Is patent protection available for the following categories or subject matter:
(i) micro-organisms;
(ii) plants or parts thereof;
(iii) animals or parts thereof;(iv) humans or parts thereof (including tissues and organs);
(v) genetic materials (DNA sequences);
(vi) pharmaceutical products;
(vii) agricultural products; and
(viii) computer-related inventions (including software).
Answer:
The Patent Design and Trademarks Act 1965 does not exclude patent protection for the items
(i)-(vii) listed above. With regard to computer software, the creator can register copyright title as perthe Copyright Act 1965.
Question 264.
Please identify and describe the rights conferred to the patent owner under Nepalese law.
Answer:
The patent registered in the name of any person under the Patent, Design and Trademark Act
confers all rights included in Act 28 (1) (a) (b) of the TRIPS Agreement.
Question 265.
When the subject matter of the patent is a proce ss, do the rights conferred include the right to
exclude others from using, offering for sale, se lling, or importing the product obtained directly
by that process?
Answer:
Yes.
Question 266.
Do the rights conferred to the patent owner diff er based on the technological field of invention?
If so, please identify the standard to be applied and to what subject matter.WT/ACC/NPL/3
Page 91
Answer:
No.
Question 267.
Do patent owners have the right to assign or transfer the patent?
Answer:
Yes.  The patent registered in the name of any person may be transferred in any manner to
any other person like movable property.
Question 268.
Do patent owners have the right to conclude licensing contracts?
Answer:
Yes.
Question 269.
Does the patent law provide that an application for a patent must disclose the invention in a
manner sufficiently clear and complete for the invention to be carried out by a skilled artisan?
If not, please describe what must be disclosed in a patent application.
Answer: 
Yes.
Question 270.
Please describe any limitation or exceptions to the rights conferred by the patent owner,
including the basis for each limitation or exception.
Answer:
Currently, limitation or exceptions are not included in the Patent, Design and Trademark Act.
Question 271.
Is there protection for prior user rights in Nepal?
Answer:   
Nepalese legislation does not include such provisions.
Question 272.
Is there protection for prior user rights?WT/ACC/NPL/3
Page 92
Answer:
See Answer to Question 271.
Question 273.
What are the grounds and procedures for ob taining compulsory licenses in Nepal?  Is
authorization to obtain a compulsory licence determined on a case-by-case basis?  Is
authorization to obtain a compulsory licence limit ed to satisfy the supply of the domestic market
of your country?  If not, please describe the circumstances in which a compulsory licence may
be issued.
Answer:
There are no provisions for compulsory licenses in the Patent, Design and Trademark Act.
Question 274.
Are competent authorities empowered to review and terminate an authorized use?  If so, please
identify the authorities empowere d to review such authorized use.   Also, please identify the
circumstances in which author ized use may be terminated.
Answer:
Refer to answer to Question 271.
Question 275.
Is it mandatory for interested parties to negot iate with the right holder on reasonable
commercial terms prior to obtaining a compulso ry licence?  If so, are there any exceptions to
this requirement?  If so, please state the ci rcumstances in which this requirement will be
waived.
Answer:
Refer to answer to Question 271.
Question 276.
Is the use authorized by a compulsory licence non-exclusive?  Is the use authorized by a
compulsory licence non-assignable?  If not, please  describe the assignment provisions.  Are right
holders entitled to remuneration when a compulsory  licence has been granted? If so, what is the
basis for determining the remuneration?
Answer:
Refer to answer to Question 271.
Question 277.
Are there provisions for review of decisions regarding the authorization of a compulsory
licence?  If so, please identify the judicial or other independent authorities that have the
authority to review such decisions.  Also, plea se describe the procedures for obtaining review of
such decisions.WT/ACC/NPL/3
Page 93
Answer:
Refer to answer to Question 271.
Question 278.
Are there provisions for review of decisions rela ting to remuneration when a compulsory licence
has been granted?  If so, please identify the judicial or other authorities that have the authority
to review such decisions.  Also, please describe the procedures for obtaining review of such
decisions.
Answer:
Refer to answer to Question 271.
Question 279.
Is there a “working requirement” in Nepal? If so, does importation satisfy the working
requirement?
Answer:
The Law is silent about it.
Question 280.
Are there provisions for judicial review of any decision to revoke or forfeit a patent?  If so,
please identify the judicial authorities, on a na tional or local level, th at have the authority to
review such decisions.  Also, please describe the procedures for obtaining judicial review of
patent revocation or forfeiture decisions.
Answer:
The decision made by the Department of Industries can be appealed in the Appellate Court for
judicial review.
Question 281.
Are there provisions for extending the term of a patent?  If so, please describe the nature of any
extension, as well as the basis for obtaining an extension.
Answer:
Initially a patent is granted for seven years. Upon the payment of the prescribed fee the term
of protection can be extended for a maximum of two more periods of seven years each.
Question 282.
When the claimed subject matter of the patent is a process, can the burden of proof be placed
on the defendant?WT/ACC/NPL/3
Page 94
Answer:
There are no specific provisions in this respect.
(f) Plant variety protection
Question 283.
Could Nepal confirm that it would comply with Article 27(3)(a) of TRIPS and provide either
patent protection or a sui generis  system for the protection of plant varieties?
Answer:
AS a WTO Member Nepal will comply with its obligations. Nepal is examining the
implications of different types of protection, i.e. patents, a sui generis  system, or a combination
thereof, on the country development process. No decisi on of how plants varieties will be protected has
yet been reached.
Question 284.
We understand current Nepalese IPR laws do not protect plant varieties:  Please describe how
plant varieties will be protected in Nepal, as required by Article 37 of the TRIPS Agreement.
Answer:
Refer to answer to Question 283.
Question 285.
Please describe steps taken to protect plant varieties.  When does Nepal expect to enact
legislation to protect plant varieties?
Answer:
Nepal is examining this issue.  However, at th is point it is difficult to envisage when the
legislation could be enacted.
Question 286.
It is stated in section 2(f) (on page 37) that the Patent Design and Trademarks Act 1965 does not
provide for protection of plant varieties.  Para 2(e) states, however, that the Act does not
explicitly exclude any invention from patentability.  Would there be any reason why newly
developed plant varieties, if fitting the relevant de finition of invention, could not be protected by
patent under the Patent Design and Trademarks Act 1965?
Answer:
IPR protection for plant varieties may have implications for bio-diversity.  Nepal will
consider this issue after making an assessment of these implications.WT/ACC/NPL/3
Page 95
(g) Layout designs of integrated circuits
Question 287.Could Nepal confirm that it would comply with Section 6 of TRIPS and provide for the
protection of layout-designs (topographies) of integrated circuits?
Answer:
The new Industrial Property Law will consider the protection of layout-designs of integrated
circuits.
Question 288.
We understand current Nepalese IPR laws do not protect IC layout designs:  Please describe
how layout-designs of integrated circuits will be protected in Nepal, as required by Articles 35
through 38 of the TRIPS Agreement.
Answer:
As the Washington Treaty of 26 May 1989 provides that the protection of the layout of
integrated circuits can be granted through a diversity of legal forms, leaving each country the freedom
to determine which form it will adopt, Nepal will carefully analyse the implications of differentalternatives.
Question 289.
Please identify whether substantial steps have been taken to protect layout-designs of integrated
circuits. Also, please identify when legislation to  protect layout-designs of  integrated circuits is
expected.
Answer:
Refer to answers to Questions 287 and 288.
Question 290.
How would Nepal propose to provide protection  for layout designs of integrated circuits,
consistent with the requirements in Articl es 35-38 of the WTO Agreement on TRIPS?
Answer:
Refer to answers to Questions 287 and 288.
(h) Requirements for undisclosed information, including trade secrets and test data
Question 291.Could Nepal confirm that it would comply with Section 7 of TRIPS and provide for the
protection of undisclosed data?
Answer:
Protection of undisclosed information will be provided in the new Industrial Property Law.WT/ACC/NPL/3
Page 96
Question 292.
Please describe how undisclosed information will be protected in Nepal, as required by Article
39 of the TRIPS Agreement.
Answer:
No decision has been made yet. However the provisions of Article 39 paragraphs 2 and 3 will be
taken into account in the new legislation.
Question 293.
Please identify whether substantial steps have been taken to protect undisclosed information.
Also, please identify when legislation to protect undisclosed information is expected.
Answer:
Refer to answer to previous question and to question 204.
Question 294.
Section 2(h) of the Memorandum (on page 37) states that the Patent Design and Trademarks
Act does not provide protection for undisclosed information, including trade secrets and test
data.  In the absence of this, does Nepal have laws relating to confidentiality, which could be
applied to provide such protection?  Please explain how the financial and other penalties
prescribed for infringement of various intellectual property rights are sufficient to provide a
deterrent.
Answer:
Penalties prescribed for infringement of IPR’s in the existing legislation seems to be
insufficient. The new Industrial Property Law will provide sufficient protection in this regard.
4. Enforcement
Question 295.What amendments are considered necessary to bring existing legislation and practice into
compliance with Part III of the TRIPS Agreement,  including Section 3 on provisional measures,
Section 4 on border measures and Section 5 on criminal procedures?
Answer:
A profound revision of existing IPR legislation and other laws, civil and criminal, will have to
be undertaken to bring them in compliance with Part III of the TRIPS Agreement. Nepal intends to
address to this issue by the enactment of the new Industrial Property Law, and by introducing the
required amendments in related legislation.
Question 296.
Could Nepal please provide more details of the "broader measures" which can be taken by its
Court by way of its compliance with Part III of Section 4 of TRIPS (special requirements
related to border measures)?WT/ACC/NPL/3
Page 97
Answer:
As copyright, patents, design and trademark cases do not currently fall under criminal
procedures, they are civil cases, the courts can only  rule with regard to the compensation due to the
right holder.
(a) Civil judicial procedures and remedies
Question 297.Please give more details of the procedure in a suit for copyright infringement, and give an
indication of the possible outcomes, including remedies available.
Answer:
Any complaint on copyright violation should be filed within six month of such violation. The
Registrar of Copyrights has the authority to make decisions on infringement, and remedies ofcopyright. Appeals can be filed with the Appellat e Court. The Court processes the case under the
Short Procedural Act 1971.  In cases of copyrigh t violation, remedies are available provided that
copyright has been registered.
Question 298.
It appears that the Department of Industry has civil administrative enforcement authority in
patent, design and trademark cases, although the scope of its authority and the procedures by
which it is executed are unclear.  Does the Depa rtment of Industry have the legal authority to
investigate complaints and/or make substantive de cisions of infringement in patent, design and
trademark cases? If yes, does the Patent, Design and Trademark Act, or other laws, provide for
administrative enforcement procedures which co mply with the provisions of TRIPS Article 41?
Answer:
The Department of Industries has the authority to investigate and decide on infringement in
patent, design and trademark cases. The procedure specified in the Short Procedural Act 1971 is
followed. Current procedures comply with Article 41 of the Agreement.
Question 299.
Do the administrative enforcement procedures provide for the following:
(i) a timely, written notice to the defendant containing the basis of the claims, as
required by TRIPS Article 42?
(ii) the parties with an opportunity to substantiate their claims and to present and
have made available any relevant evidence, as required by TRIPS Articles 42and 43(1)?
(iii) a means to identify and protect confidential information, as required by TRIPS
Article 42?
(iv) a reasoned, written decision on the merits of the case promptly made available to
the parties, as required by TRIPS Article 41(3)?
(v) compensation to a party wrongfully enjoined or restrained, as required by
TRIPS Article 48.WT/ACC/NPL/3
Page 98
Answer:
Current procedures provide for (i) and (ii). Nepal will review current procedures to comply
with (iii), (iv) and (v).
Question 300.
Please describe the time-frame for the Department of Industry’s enforcement procedures,
including the length of time it takes to investigate, review evidence, determine infringement, and
issue a decision to the parties.
Answer:
Depending upon the nature and scale of the infringement the Department of Industry is taking
decisions generally within three to four months.
Question 301.
It appears that the Department of Industry has the discretion to impose a “reasonable” fine on
infringers for violations of the Patent, Design and Trademark Act, 1965.  What criteria does the
Department of Industry use to determine the amount of the fines? Are the amounts the same as
those identified in your submission?  (Please re fer to page 38, paragraph(a), subsections (i), (ii)
and (iii) of your accession Memorandum.)
Answer:
The amount of the fines are those mentioned in the Memorandum. The level of the fines will
be reviewed at the time of the amendment of the legislation.
Question 302.
Does the Department of Industry have the legal authority to impose remedies other than fines in
patent, design and trademark cases?  Specifically, does it have the legal authority to order the
confiscation and destruction of infringi ng goods, as required by TRIPS Article 46?
Answer:
The Department of Industry (DOI) has legal authority to confiscate and dispose of goods
related to an infringement of IPR’s.
Question 303.
It appears that the local Appellate Courts have the legal authority to review the Department of
Industry’s decisions.  Do the Appellate Courts also review decisions of other administrative
agencies with enforcement authority in intellectual property cases.  If “yes”, please explain.
Answer:
In copyright cases, the decisions of the Registrar, can be appealed also to the Appellate Court.
Question 304.
Please describe the procedures by which local Appellate Courts exercise their authority and
specifically address each of the administrative enforce questions posed as (i) – (v) above.WT/ACC/NPL/3
Page 99
Answer:
Any of the parties in a dispute not satisfied with the decision of the DOI, can appeal to the
Appellate Court within 35 days of the receipt of notice from the DOI.  The procedures include:
(a) a timely written notice to the defendant containing the basis of the claims;
(b) opportunity for the parties to substantiate their claims and to present and have made
available any relevant evidence;
(c) a reasoned, written decision on the merits of the case promptly made available to the
parties.
The Act foresees compensation. However, legal instruments have yet to be developed in order
to implement it.
Question 305.
Under what circumstances will Appellate Courts  issue an order of mandamus or injunction?
Please describe the nature of the order of mandamus or injunction (i.e. whether it orders a
party to desist from infringing activity or proh ibits the entry of infringing goods, as required by
TRIPS Article 44).
Answer:
These circumstances are not defined in the Act.
Question 306.
Please describe the procedures by which the Supreme Court reviews local Appellate Court
decisions and specifically address the questions  posed under the administrative enforcement
procedures (i) – (v) above.
Answer:
The Supreme Court reviews the following:
- whether the Appellate Court has followed due procedures;
- whether the principle of natural justice has been violated;
- whether decisions have been made within the limits of its jurisdiction.
Question 307.
Are there other judicial authorities in Nepal with the legal authority to investigate complaints
and/or make substantive decisions of infringement in patent, design and trademark cases? If
“yes”, please list the courts and describe the scope of their authority. Can IP owners initiatecomplaints directly with those judicial authorities?
Answer:
No.WT/ACC/NPL/3
Page 100
Question 308.
Please describe the enforcement authority of the Government of Nepal (Ministry of Youth,
Sports and Culture) in copyright cases and the func tions of the Registrar.  Is the Government of
Nepal's enforcement authority limited to reviewing appeals of the Registrar’s decisions?  Please
describe the procedures by which the Government of Nepal exercises its enforcement authorityand specifically address the questions posed under the administrative enforcement procedures
(i) – (v) above.  What remedies does the Government of Nepal have the legal authority to
impose?
Answer:
The Ministry of Youth, Sports and Culture has no enforcement authority. As Registrar, the
National Library receives the complaints, undertake the investigation, and make decision on
infringement. Decisions made by the Registrar can be appealed to the Appellate Court.
Question 309.
Are there other entities (administrative or judici al) with enforcement authority for violations of
the Copyright Act, 1965?  If “yes”, please list those entities and describe the scope of their
authority.  What remedies do they have the legal authority to impose?
Answer:
Yes.  Refer to answers to Questions 314 and 315.
Question 310.
Please explain whether the fines imposed in intell ectual property cases are an effective deterrent
to further infringement, as required by TRIPS Article 41, and whether they vary if the infringer
is an individual versus an entity or organized group.
Answer:
There is no difference if the infringer is an individual, an entity or an organized group. The
fines will be revised when amending legislation for them to be an effective deterrent.
(b) Provisional measures
Question 311.It is stated in section 4(b) (on page 39) that there are no provisional measures provided for the
enforcement of provisions in the Patent Design and Trademarks Act.  Are provisional measures
consistent with Article 50 of the WTO TRIPS Agreement available under the general
jurisprudence and judicial procedures of the Kingdom of Nepal?
Answer:
Legal authority will be provided when enacting new legislation to the respective entities to
decide on, and apply, provisional measures to prevent an infringement of any intellectual propertyright from occurring.WT/ACC/NPL/3
Page 101
Question 312.
TRIPS Article 50 obligates Members to allow loca l judicial authorities to order provisional
measures to prevent an infringement from occurring.
Answer:
Refer to answer to Question 311.
Question 313.
Please indicate whether any existing laws will be amended or new legislation enacted to provide
for such measures.
Answer:
Refer to answer to Question 203.
(d) Any special border measures
Question 314.Under current Nepalese law, protection at th e border exists for unauthorized copyrighted
publications imported in commercial quantities.  Please describe the entity (administrative or
judicial) which exercises this authority and the pertinent procedures.
Answer:
The customs authority is the administrative entity to take such measures.
Question 315.
Describe the procedures under Nepalese law by which competent authorities suspend the
release of imported counterfeit trademark and pirated copyright goods, in accordance with the
provisions of TRIPS Section 4 (Articles 51 – 59).
Answer:
These are yet to be defined.
(e) Criminal procedures
Question 316.TRIPS Article 61 requires Members to provide criminal procedures and penalties in cases of
wilful trademark counterfeit and pirated copyrighted goods.  Please indicate whether any
existing laws will be amended or new legislation enacted to comply with this provision.
Answer:
Please refer to answer to Question 203.WT/ACC/NPL/3
Page 102
VI. TRADE-RELATED SERVICES RÉGIME
1. General IntroductionQuestion 317.
Would Nepal please provide comprehensive advice on visas and work permits, restrictions on
length of stay, fees, and arrangements for obtaining and renewing these?
Answer:
Tourist visas are available at a fee of  US$1 per day, up to five months stay per calendar year.
As per the FITTA Act 1992 a foreign national visiting the Kingdom of Nepal in connection withundertaking any study or carrying out any research with the objective of making an investment in
Nepal is provided with a non-tourist visa up to six months. A foreign investor, its dependent family or
the authorised representative of such investor and its dependent family are provided with a business
visa until the foreign investment is retained.
As per the Industrial Enterprises Act 1992, the manpower required for any industry, including
services, have to be recruited among Nepalese citizens. However, if any industry cannot be operated
without expatriate manpower, foreign nationals may be appointed in such industry with the prior
approval of the Department of Labour for a period of five years. If a person so appointed happens to
be a technician of a special category not available within Nepal, such person may, with the approvalof the Department of Labour, be granted an additional five-year period. In these cases the request for a
work permit has to be filed with the Department of Labour. Upon the concession of the work permit
the respective non-tourist visa will be granted to the person.
Question 318.
Does Nepal intend to cover other sectors (in addition to those mentioned in the Memorandum)
such as medical, paramedical, midwifery and ph armaceutical services, taxation advice services,
architectural services, tourism services, mountai n guide services, travel agency services and
urban planning services in its offer?
Answer:
Nepal, in the Memorandum on Foreign Trade Regime, supplied information on the overall
market structure and regulations in those service sectors. The fact that information was provided on
those sectors on the basis of the availability of information should not be interpreted that Nepal's
initial offer would necessarily incorporate the service sectors mentioned in the Memorandum.
Question 319.
Nepal is requested to provide the Working Party, as soon as possible, with a substantial initial
offer on services in the GATS framework, bindi ng liberal market access conditions and national
treatment guarantees on an MFN basis for foreign service suppliers.
Answer:
Nepal is undertaking the required analysis and evaluations to draft an initial offer on services.
Nepal is ready to adopt specific commitments on market access and national treatment taking into
consideration its economic situation and its trade, financial and development needs. Nepal is confident
that WTO Members will take into consideration the pr ovisions of Article IV.3 of the GATS during the
accession process.WT/ACC/NPL/3
Page 103
2. Policies Affecting Trade in Services
1. Professional services
(a) Legal services
Question 320.
The Memorandum states that "no permission is granted for making foreign investment in the
legal services", and that only Nepalese citizens may be registered with the Bar Council, of which
it is necessary to be a member in order to legally practice law in Nepal.  Would Nepal please
consider revising this policy by allowing foreign investment and participation in legal services?
Answer:
Refer to answer to Question 319.
Question 321.
The Memorandum states that only Nepalese citizens may practice legal services. How and with
which scope does Nepal intend to allow for the provision of Legal services by foreign legal
consultants?
Answer:
Refer to answer to Question 319.
(b) Accounting, auditing and bookkeeping services
Question 322.
The Memorandum states that no permission is granted for the establishment of foreign
enterprises in the accounting business and that a foreign auditor or accountant is not eligible to
obtain the membership of the "Institute of Chartered Accountants". Provision of the services in
question is exceptional and decided on an individual and case-by-case basis. How and with
which scope does Nepal intend to allow provision of these services by foreign professionals?
Answer:
Refer to answer to Question 319.
Question 323.
Nepal's accounting sector follows the same restrictive line as the legal sector.  "No permission is
granted for the establishment of foreign enterpri ses or for foreign investment, in the accounting
business." Foreigners cannot work as accountants in Nepal and the FITT Act makes no specific
mention of the work of foreign auditors in Nepal.  The Council is allowed to take help from
foreign "chartered accounts associations", foreign experts, universities or associations, for
conducting auditors' exams, and may recognize foreign auditors' licence, chartered institutesand auditors' exams with prior approval from th e Government of Nepal.  Can Nepal clarify
whether these foreign credentials are recognized  by Nepal for the purpose of seeking foreign
assistance, or for allowing foreigners to practice?WT/ACC/NPL/3
Page 104
Answer:
Foreign auditors can apply and obtain permission to work in Nepal if they fulfil the
requirements stated in the Labour Law, that is if the expertise required cannot be provided by a
national.
Question 324.
The Company Act, 2021 (1964, as amended in 1997) "provides that in case a company appoints
any foreign national as an auditor, it shall also appoint as co-auditor a Nepalese citizen
possessing the required qualifications." Would Nepal please clarify this point?
Answer:
If a company requires the specific knowledge of a foreign auditor, refer to previous answer,
then the company is required to appoint a Nepalese  licensed auditor to work with the foreign auditor.
Question 325.
We note the "Council may cancel the registration of membership or licence  issued to a person if
it is found to have been made by mistake.  It is difficult to understand how this can happen
when it appears that only Nepalese nationals may practice, and foreigners only at the invitation
of the Council.  This suggests that the issuing of licences is either done on an arbitrary basis orthat controls are not in place to monitor registr ation.  Would Nepal please clarify the laws and
processes relating to this sector, and also explain whether there are any generally accepted
accounting principles in Nepal?
Answer:
The membership and licence can be cancelled if it is found that the person did not fulfil the
requirements to obtain such a license, for exampl e if false information was provided to the Council.
There are generally accepted accounting principles in Nepal, following the guidelines of the
International Accounting Standards.
(c) Engineering services
Question 326.
Nepal states that "there is no restriction on the establishment of engineering related
manufacturing industries". Could Nepal clarify exactly what these industries are, what sort offoreign presence is permitted, and the laws an d regulations associated with this sector?
Answer:
There are no specific laws regulating separately  engineering services provided by companies.
Engineering companies operate under the Industrial Enterprises Act 1992, and under the Foreign
Investment and Technology Transfer Act 1992. As per the Foreign Investment Act permission shall
not be granted for making foreign investment in engineering services. As per the Industrial Enterprise
Act the manpower required for any industry, includin g engineering services, has to be recruited from
among Nepalese citizens. However foreign engineers can get a work permit on technical grounds.Permission can be obtained for the establishm ent of foreign construction companies in Nepal.WT/ACC/NPL/3
Page 105
Question 327.
The Memorandum states that no permission is granted for the establishment of foreign
enterprises or for foreign investment, in the engineering consultancy services. Does Nepal allow
for the access of individual engineering consul tants? What are in the case of temporary
movement of engineers, the conditions to comply with?
Answer:
As per the Labour Act 1991, a work permit can be obtained from the Ministry of Labour on
the ground that specific technical knowledge is required.
3. Real estate services
Question 328.
The Memorandum states that no permission can be granted for the establishment of a foreign
company or for foreign investment, in the real estate business. How and with which scope does Nepalintend to allow provision of these services by foreign professionals?
Answer:
Refer to answer to question 319.
4. Other Business services
(a) Management consulting services
Question 329.
No establishment of firms is permitted, but does Nepal allow for temporary entry of
consultants? Why is foreign investment not permitted in management consultancy?
Answer:
Refer to answer to Question 319.
(b) Placement and supply services of personnel
Question 330.
Nepal explains that there are no specific regulati ons on this activity ex cept for the regulations
concerning Nepalese workers abroad. Does it me an that foreign placement agencies are entitled
to establish freely in Nepal and offer their services for the supply of personnel in the domestic
market?
Answer:
The establishment of foreign placement services is regulated by the Overseas Employment
Act 1992 which bans such activities for foreigners.WT/ACC/NPL/3
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5. Communication services
(b) Courier services
Question 331.
We welcome the fact that private agencies are able to provide courier services in Nepal.
However, could Nepal please provide furth er information on licence requirements, any
restrictions on the number of operators, and wh ether or not a wholly foreign owned enterprise
may conduct business?
Answer:
As per the Foreign Investment and Technology Transfer Act, the establishment of a foreign
courier agency for providing external courier services in Nepal requires permission from the
Department of Industry, and the subsequent registra tion in that Department. There are no restrictions
on the number of operators or in the share of the equity to be held by foreigners. However, the
Foreign Investment and Technology Act reserves internal courier services for Nepalese citizens.
(c) Telecommunications services
Question 332.
We welcome Nepal's policy of encouraging the involvement of national and foreign sector
investors in the development and operations of telecommunication services within the country.
However we seek clarification on a number of points.
Answer:
Not applicable.
Question 333.
Would Nepal please provide further informatio n on the Nepal Telecommunication Authority
(NTA)?  When will it be established?  Are the future NTA duties currently being carried out by
separate bodies, or by a single entity?
Answer:
Nepal Telecommunication Authority, an autonomous body, is to be established with a view to
managing and regularizing the telecommunications service and making it reliable and easily available
to the public. The functions of Nepal Telecommunication Authority as listed in the
Telecommunication Act 1997 are, inter alia , to provide suggestions to the Government of Nepal on
the policy, plan and programme to be adopted by the Government of Nepal for the development of
telecommunication services, to make necessary arrangements to avail basic telecommunicationservices and facilities in all rural and urban areas throughout the Kingdom of Nepal, to ensure private
sector participation, both domestic and foreign, in the operation of telecommunication services, to
make arrangements for coordination and ensure healthy competition among the service suppliers, to
prescribe, fix and approve the standard and quality standard of the plant and equipment relating to the
telecommunication and telecommunication services, to regularize and systematize thetelecommunication service, to grant licence to operate telecommunication services in the private
sector, and to approve and regularize the fees to be collected by the licence-holder for providing
telecommunication services. The Authority may, in view of the policy and guidelines of Nepal, issueWT/ACC/NPL/3
Page 107
necessary orders or directives to the licensee and it shall be the duty of the concerned person to
comply with such orders and directives.
The law establishing the Nepal Telecommunication Authority has been enacted and the
process for the establishment has been already initiated. It is expected that it will be established in the
near future.
The Ministry of Information is currently carrying out the future NTA duties.
Question 334.
Would Nepal please codify and clarify the laws and regulations concerning ownership of all
telecommunications structures; buy-back of these structures; licence expiry and renewal (why is
the maximum term allowed for a licence to operate 25 years?); requirements for rural
communications (15 per cent of investment on all aspects of services paid into a fund each year
out of annual income); and equity participation?
Answer:
The land, building, plant, equipment and other structures related to the telecommunication
service developed with more than 50 per cent of its investment by foreign persons or a corporate body
shall be under the ownership of the Government of Nepal after the expiry of the period of the license.
However, such assets so owned by the Government of Nepal may be purchased by the previouslicensee upon payments to the Government of Nepal at a price fixed by the Committee and after
obtaining the licence once again, the telecommunication service may be operated.
In case of the telecommunication service operated with the investment of foreign persons or a
corporate body up to 50 per cent, the previous licensee may, after the expiry of the period of thelicense, operate the telecommunication service by obtaining the licence once again.
As per the Telecommunication Act 2053, the period of licence shall be of 25 years at the
maximum. The Foreign Investment and Technology Transfer (FITA) Act 1992  is applicable  with
regard to equity participation of the foreigners.  It does not put any limit on foreign participation inequity.
Question 335.
Would Nepal please clarify what is meant by "all the telecommunication services are to be
operated by the licensee and the existing mono poly operator NTA have to obtain the licence
within one year"?
Answer:
After the commencement of the Telecommunication Act 1997, no one may operate the
telecommunication service without obtaining a license. Those who have been operating the
telecommunication service since before the commencement of the Act, shall be required to submit an
application to the Authority for the licence setting out the particulars relating to the services having
been operated by them, within six months and shall have to receive the licence within one year from
the date of the commencement of  the Act.WT/ACC/NPL/3
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Question 336.
Could Nepal please provide information on the laws, regulations and processes on how the NTA
will "determine the type of services and nu mber of licenses to be issued by a public
notification"?
Answer:
The Authority, before issuing any Licence rela ting to any telecommunication service, invites
application to operate the telecommunication service through a public notification.  The type of
telecommunication service and the number of Licenses are specified by the Government of Nepal by a
notification published in the Nepal Gazette on the recommendation of the authority. No notification
has been published yet.
 Within the period of five years from the date of the issue of the Licence of any
telecommunication service, in general, no other licence shall be issued to operate the same
telecommunication service.
7. Distribution services
Question 337.We note that "there are no specific provisio ns regarding the involvement of foreigners in
wholesale trade" and that "no permission is granted for the establishment of foreign companies
or for foreign investment in retail trade".  Would Nepal reconsider these restrictions and make
a comprehensive offer in this sector?
Answer:
Refer to answer to Question 319.
Question 338.
It is explained that fixed establishments handle imported goods. How are domestic produced
goods being distributed? Is the understanding correct that foreigners are not permitted to
engage in retail distribution?
Answer:
Imported and domestic goods are distributed equally through the distribution chains. As per
the Foreign Investment and Technology Transfer Act no permission shall be granted for making
foreign investment in retail business.
8. Financial services
(a) Insurance
Question 339.
According to the 1992 Insurance Act, insurer licences need to be renewed every year: what is
the procedure to comply with for such renewal?  Is Nepal having a different regime for life and
non-life insurance companies? Is insurance in termediation such as brokerage and agency
allowed; is there a specific legal framework?WT/ACC/NPL/3
Page 109
Answer:
The insurer is required to apply for the renewa l of the registration certificate before April 13
(New Year's day in the Nepalese Calendar) in the pr escribed format along with the renewal fee to the
Insurance Committee formed as per the Insurance Act 1992. The renewal procedure is similar for both
life and non-life insurance companies.
Under Insurance Act 1997, one can have a licence to act as an agent or surveyor upon the
recommendation of the insurer.
Question 340.
There is a requirement that licenses to practice as insurance companies be renewed each year.
Would Nepal reconsider this requirement?
Answer:
No decision has been made in this respect.
Question 341.
Nepal has stated a number of grounds upon which the registration of an insurer may be
cancelled and we seek clarification on the regulations and guidelines governing these groundsfor cancellation.  Which Nepalese regulatory body will administer these guidelines?  Would
Nepal please clarify what is meant by a licen ce to practice will be cancelled "in case the
Nepalese insurer is not provided national treatmen t in the country of head office of an insurer
incorporated outside Nepal"?
Answer:
The National Insurance Committee administers the guidelines. The Committee may cancel
the insurer:
- if the insurer does not commence his business within six months of registration;
- if the Committee feels that total liabilities of the insurer is higher than his assets;
- if the insurer does not discharge his liability within three months in accordance with
the final verdict of the court;
- if the Committee feels that the Nepalese insurer is not provided national treatment in
the country of head office of an insurer incorporated outside Nepal;
- if the insurer does not open its office in the territory of the Kingdom of Nepal.
In the case that there is no reciprocal treatment granted to Nepalese insurance companies in
another country, the licence of companies from that country operating in Nepal may be cancelled.
Question 342.
Nepal has stated that an insurer is required to appoint an agent in his Nepal-based head office.
Would Nepal please provide details on the role an d responsibilities expected of such an agent?
Answer:
It has not been an envisaged special role for such  agent. It is expected that such agent would
be an instrument to establish links with potential customers.WT/ACC/NPL/3
Page 110
Question 343.
Can Nepal advise whether it is prepared to allow cross-border supply in the insurance services
sector?
Answer:
Refer to answer to Question 319.
Question 344.
What fees are required to regist er an insurance company in Nepa l?  Are the fees the same for
domestic and foreign firms?
Answer:
The fees are the same for foreign and domestic firms. The registration fee amounts to
NRs50,000 ( approximately US$735 ) .
Question 345.
Are foreign insurance companies required to make any additional deposits or other
commitments not required of domestic insurance companies?
Answer:
No.
(b) Banking and other financial services
Question 346.Could Nepal please confirm that it has submitted to the WTO Secretariat all regulations and
restrictions concerning foreign representative banks, branch offices and liaison offices?
Answer:
Regulations and restrictions concerning foreign representative banks and liaison offices are
provided in WT/ACC/NPL/2, Section VI.2.8.b. However, such representative banks and liaison
offices are forbidden to engage in cash transactions such as lending and deposits. No foreign bank isallowed to open a branch office in the country.
Question 347.
Could Nepal advise whether it has legislation in place which covers money laundering,
consumer credit, guarantee, indemnity and in sider trading?  If so, could Nepal provide
information on these measures?
Answer:
Existing banking laws and regulations do not cover money laundering, consumer credit,
indemnity and insider trading. However, with regard to guarantee Nepal follows international
convention, UCP 500.WT/ACC/NPL/3
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Question 348.
Are there any restrictions on the number of foreig n nationals working in a foreign bank?  If so,
would Nepal please consider removing these restrictions?
Answer:
There is no specific provision for the restriction on the number of foreign nationals working
in a foreign bank in legislation regulating banking and financial services. However, the provisions of
the Industrial Enterprises Act of 1992 apply to all service sectors.
Question 349.
We seek clarification of what is meant by the "approval for establishing a commercial bank is
granted if all the conditions set in the Act … are met, and on the basis of an economic needs
test".  Would Nepal please provide details of the approval requirements and information on the
economic needs test.
Answer:
To establish a commercial bank an application must be filled and submitted to the Central
Bank. The application includes, among other things, the feasibility study, credibility of the promoters,
and all documents related to establish a bank under the Company Act 1997 such as memorandum,prospectus, copy of agreement between promoters etc. and other documents specified by the Central
Bank such as a letter of intent of parent company in the case of joint venture. The application is
evaluated initially by a committee formed under the chairmanship of the Chief, Banking Operation
Division, Central Bank. The evaluation report is forwarded to the Licensing Recommendation
Committee headed by the Deputy Governor, Central Bank. The final approval shall be granted by theBoard of Governors of the Central Bank.
Question 350.
Have any foreign bank branches been licensed by Nepal’s Central Bank?  Have there been
applications to conduct banking in Nepal?
Answer:
No.
Question 351.
What criteria are considered with regard to th e "economic needs test" which is required before
a licence can be grated to a financial company or commercial bank?
Answer:
The Central Bank has not set out any criteria for economic needs test. The feasibility study
report is the basis for economic needs test.
Question 352.
Please outline what steps Nepal is ready to ta ke to provide commercial opportunities in the
financial services sector?  How does Nepal plan to expand foreign investment and economic
growth opportunities without the availability of  standard international financial services?WT/ACC/NPL/3
Page 112
Answer:
Refer to answer to Question 319.
Question 353.
What is the foreign equity participation permitte d in the joint equity ownership? Does it also
mean that Nepal does not permit establishment of branches? Can Nepal provide more
information on the economic needs test and criteria considered to obtain approval to establish a
bank or financial institution?
Answer:
The maximum level of foreign equity participation permitted in joint equity ownership is 50
per cent. However, it does not mean to permit establishment of branches by the parent company.
For economic needs test and criteria please refer to Question 351.
Question 354.
Provision of transfer of financial information: Nepal explains which information and how it can
be transferred. Does Nepal also allow for the establishment of financial information serviceproviders who are transmitting such information?
Answer:
The establishment of foreign financial inform ation service providers would be governed by
the Industrial Enterprises Act and by the Foreign Investment and Technology Transfer Act.
Permission can be given to a foreign company to engage in this business as the Foreign Investment
Act does not include this service among those reserved for nationals.
10. Tourism and trade-related services
Question 355.What are the investment and establishment condit ions for foreign hotels: equity participation?
Other criteria to comply with?
Answer:
All foreign investment in Nepal hotel investments require permission issued by the
Department of Industries, and subsequent registration. There are no equity participation requirements.
Only tourist lodging is reserved for nationals as  per the Foreign Investment and Technology Transfer
Act.
3. Market Access and National Treatment
Question 356.
We understand that foreign service suppliers are banned from providing legal, accounting,
engineering, or business consultancy services, as well as from trading in real estate or retail
trade. Please outline Nepal’s plans to ease rest rictions on foreign investment in the following
service sectors, in order to complement liberalization efforts in other areas:WT/ACC/NPL/3
Page 113
- legal services;
- accounting services;
- management consulting services;
- engineering services;
- real estate services;
- retail trade;
- tourism and travel related services.
Answer:
Refer to answer to Question 319.
VII. INSTITUTIONAL BASIS FOR TRADE AND ECONOMIC RELATIONS WITH
THIRD COUNTRIES
1. Bilateral or Plurilateral Agreements Relating to Foreign Trade in Goods  and Trade in
Services
Question 357.Does Nepal have any special customs arrangemen ts with any part of China, e.g., special tariff
rates or border formalities with Tibet?
Answer:
As per the Nepalese Custom Tariff products produced and imported from Tibet, the
autonomous region of the People's Republic of China are granted a rebate in the chargeable ad
valorem  rate of custom duty by 20 per cent up to the tariff rate of 40 per cent, and by 10 per cent on
rates above that.
Question 358.
According to Annex 8B of WT/ACC/NPL/2/A dd.1, Nepal provides preferential treatment to
certain imports from India, including agriculture, horticulture and forest produce and
minerals, which have not undergone any processing: rice, pulses and flour; timber; jaggery;
animals, birds and fish; bees, bees-wax and honey;  raw wool, goat hair and bones, as used in the
manufacture of bone-meal; milk, home made products of milk and eggs; ghani-produced oil and
oilcakes; ayurvedic and herbal medicines; articles produced by village artisans and mainly used
in villages; akara; yak tail; and any other primary products which may be mutually agreedupon.
Please list all products, including HS numbers , for which Nepal provides preferential treatment
for imports from India.  For each such produc t, please provide the preferential tariff rate.
Answer:
As per the Nepalese Custom Tariff all goods imported from India into the Kingdom of Nepal
are granted a rebate in the chargeable ad valorem  rate of custom duty by 20 per cent up to the tariff
rate of 40 per cent, and by 10 per cent on rates above that. The primary products eligible forpreferential treatment, on a reciprocal basis, as provided by Article IV of the Trade Agreement with
India, are those listed in A nnex B of WTA/ACC/NPL/ 2/Add 1. These products are exempted from
duties or any form of quantitative restriction on a reciprocal basis in the context of their border trade.WT/ACC/NPL/3
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S.No. HS Code Description of goods
1. 7-14 Agriculture, horticulture and forest produce and minerals which have
not undergone any processing
2. 10.06, 07.13 and
11.01Rice, pulses and flour
3. 44.09 Timber
4. 17.01, 11.90 Jaggery (gur and shakhar)
5. 03.01 to 03.07
and 01.01 to
01.06Animals, birds and fish
6. 04.09 & 04.10 Bees, bees-wax and honey
7. 51.01, 05.06 Raw wool, goat hair and bones as are used in the manufacture of bone-
meal
8. 04.01 - 04.07 Milk, home made products of milk and eggs
9. 23.05 Ghani-produced oil and oilcakes
10. 30.04 Ayurvedic and herbal medicines
11. 44.20 Articles produced by village artisans as are mainly use in villages
12. 23.08 Akara
13. 05.11 Yak tail
14. Any other primary products which may be mutually agreed upon
Question 359.
We hope that the Treaty of Trade Between Nepal and India signed on 6 December 1991 which
exempts customs duties and restrictions on certain mutually agreed items, is consistent with the
conditions provided in the said Article, whereby according to Article XXIV of the GATT 1994,
any free trade agreements which abolish tariffs in the regions shall be applied to "all the trade".
Answer:
Nepal considers that the current Agreement with India is consistent with GATT 1994 ; as
provided by the "Enabling Clause".
Question 360.
Under the South Asia Preferential Trade Arrangements (SAPTA), Nepal grants preferential
market access to certain imports from Banglade sh, Bhutan, India, Maldives, Pakistan and Sri
Lanka.  Please identify each product, including HS numbers, for which Nepal provides
preferential treatment for imports from SAPTA parties.  For each such product, please providethe applicable preferential tariff rate.
Answer:
Under the SAARC Preferential Trading Arra ngement (SAPTA), three rounds of trade
negotiation have been concluded. Nepal grants preferential market access to Bangladesh, Bhutan,
India, Maldives, Pakistan and Sri Lanka to 435 commodities. The list of commodities along with HS
number and applicable preferential tariff rate will be submitted on diskette to the Secretariat.WT/ACC/NPL/3
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Question 361.
Does Nepal provide better than MFN treatmen t to any SAPTA service providers pursuant to
the SAPTA Arrangements?  If yes, please iden tify the sector and applicable MFN exemption.
Answer:
SAARC Preferential Trading Arrangement (SAPTA) does not cover trade in services.
2. Economic Integration:  Customs Union and Free Trade Area Agreements
Question 362.
Has the South Asian Free Trade Area (SAFTA ) agreement been notified to the WTO as an
interim agreement to form a free trade area?  What countries are parties to the SAFTA
agreement?  Does this agreement cover both goods and services?
Answer:
The Tenth SAARC Summit, which took place in 1998, has decided to prepare a draft of a
comprehensive agreement of South Asian Free Trade Area (SAPTA) by 2001. As the agreement is in
the inception stage, it has not been notified to the WTO.
The SAPTA countries shall be the parties to the proposed SAFTA agreement. The coverage
of the agreement has not yet been concluded. However, it is expected that the agreement will cover
trade in goods and services as well as trade-related intellectual property rights.
Question 363.
Which trade agreements does Nepal consider will need to be notified under Article XXIV of the
GATT 1994 or Article V of the GATS?
Answer:
Nepal considers that none of its trade agreements has to be notified under Article XXIV of the
GATT 1994 or Article V of the GATS.
Question 364.
Please provide the Working Party with the texts of all Free Trade Agreement’s to which Nepal
is a Party.
Answer:
Nepal is not a party to any Free Trade Area Agreement.
__________