1. Good Afternoon & Namaste !

2. Country Paper, Nepal UNESCAP
Regional Conference on Strengthening Transport Connectivity and Trade Facilitation in South and South-West Asia
Country Paper, Nepal
Lahore, Pakistan
9-10 December, 2013

3. Cross- Border and Transit Transport by Land

4. Background
Nepal is surrounded by India in south, east and west and Tibet, the Autonomous region of People's Republic of China in the North and lacks the access of seaport.
The absence of seaport deprives the competitive global business.
The sea freight is almost same to all countries. However, the extra transit cost, sometimes, is exorbitantly high up to 40% in Nepal’s case that inflates the price of both imports and export.
But, It has Opportunity to be-
Land Linked Country between India and China –Transport
Hydro power provider to the region- Trade
A regional hub for tourists- Again Transportation facility

5. Background
Fundamental Transit Police Issues of Land Locked Countries in South Asia
South Asia’s three LLDCs—Afghanistan, Bhutan and Nepal—are also least-developed countries (LDCs).
Afghanistan depends on the ports Pakistan and Iran for its overseas freight traffic.
Both Nepal and Bhutan solely use Indian ports for their overseas trade: Nepal uses Kolkata port and Haldiya port and Bhutan uses Kolkata port.
SSWA is probably the region having poorest intra- regional transport connectivity in the globe.

6. Nepal's Trade Balance with Some South and South- West Asian Countries in 2011/12
(Rs. in thousand)
Country
Export
Import
Trade Balance
Afghanistan
97,883.9
299.5
97,584.4
Bangladesh
2,578,079.8
1,502,817.4
1,075,262.4
Bhutan
543,836.2
249,411.5
294,424.6
India
50,933,222.3
321,346,418.6
-270,413,196.3
Pakistan
225,906.6
266,286.4
-40,379.8
Turkey
548,770.3
420,301.3
128,469.0
* Estimated
Sources: Nepal Rastra bank

7. Existing Legal basis for Cross- Border and Transit Transport by Road
Multilateral and Bilateral Trading Arrangements
Bilateral Trade Agreement with 17 trading partners
Nepal – India Transit Treaty, 2006
Trade and Transit Treaty between Nepal and China-
Nepal Bangladesh Transit Treaty, 1976
Transit right of LDC related UN conventions 1980, 1991 and 2001,
Trade and Transit right as managed in Law of Sea 1958, 1982
WTO, BIMSTEC,SAFTA (Nepal's bilateral Trade Agreement between 17 countries and Nepal's accession to the WTO, April, 2004)
BIPPA agreement concluded with 10 countries including India
Double Taxation Avoidance Agreement (TAA) with India
SAARC Agreement on Mutual Administrative Assistance in Customs Matters
GSP schemes for export to Belarus, Canada, EU, Japan, New Zealand, Norway, Russian Federation, Switzerland, Turkey, and the United States

8. Main Corridors for Cross-Border Transport by Road

9. Existing Legal Basis for Cross- Border and Transit Transport by Road
Agreed Routes for Mutual Trade
India-Nepal: 27 Bilateral trading points (Treaty of Trade)
China-Nepal: 3 international and 3 bilateral trade point
Transit Route India and Bangladesh
Kolkota/Haldia Sea Port for 3rd country trade connecting with 15 Nepal-India Routes
Phulbari-Banglabandh Transit to Bangladesh

10. Cross-Border Trading Points
Roads along South to North sides-
Raxaul(India)- Birgunj (Nepal)- Hetaunda- Narayanghat- Kathmandu- Tatopani (China Border) AH42
Kathmandu- Galchhi- Rasuwagadhi- Kerung (Track Opened)
China
NEPAL
Bhutan
India
Mahendra highway-
1027 km from Kakarbhitta border to Mahendranagar border (AH2)
Missing link at the west Mahendranagar (Nepal)- Banabasa (India),
Poor conditioned road in East side Phoolbari
Bangladesh
27 Trade & Transport Links along the border of Nepal and India
3 trade & Transport Links along the border of Nepal and China

11. Major Challenges in Cross Border and Transit Transport by Road
Nepalese trade is mostly inclined with India and China;
Dependence on transit providing country's; infrastructure, political relations, peace and stability, administrative practices;
Restricted choice of ports and routes ;
Cumbersome transit processes including procedural controls;
Hassles in the from of multiple checking agencies ;
Actual documentary requirements higher than those specified in transit treaty ;
High insurance cost due to lack of competition ;
Transshipment;
Because the import and export trade is imbalanced, there is significant empty back-haul that creates inefficiency

12. Major Challenges in Cross Border and Transit Transport by Road
The Banglabandha port was formally inaugurated in May 2004 but has not been fully functional owing to the absence of a transit agreement for the use of Indian territory as a transport route for Bangladeshi, Nepalese and Bhutanese trade cargoes.
Nepali transport trucks are not allowed entry into Bangladesh and must exchange their cargo at the "zero point" of the Indo-Bangladesh border.
Strikes
High cost
Need to cross different checking and time consuming

13. Current Status of Cross-Border Operations for Freight and Passengers by Rail
SAARC Rail Routes (Bangladesh)
Railway transit route from Nepal to Kolkata
Jayangar in India to Janakpur 42 km old narrow gauge rail line which basically carries the passenger traffic.
The Raxaul of India and Birgunj ICD in Nepal, a stretch of 5.4 km for goods traffic.

14. Current Status of Cross-Border Operations for Freight and Passengers by Rail
Half the third-country imports transit in containers by rail from Kolkata to Birgunj.
The low tonne/TEU ratio suggests these goods are high-value goods. The remaining 50% of third-county goods travel to Nepal by road in containers or as break-bulk.
Approximately 5% of third-county containers arriving by rail at Raxaul originate from Chittagong. While there is a rail link from Chittagong to Dhaka ICD, it is not possible to transit completely by rail to Nepal (West, though Bangladesh and India) as the Jamuna Bridge (near Saidabad, Bangladesh) cannot support rail freight loading.

15. Current Status of Cross-Border Operations for Freight and Passengers by Rail
The defined corridor for bilateral rail movement is between Nepal and India is-
Single broad gauge line from Birgunj to Muzaffarpur (137km);
Double track between that point and Varanasi (103km); and thereafter;
Electrified double line to Kolkata or other Indian destination
The distance from Kolkata to Birgunj is 704 km and between Haldia and Birgunj, 832km.
The train path is controlled by Indian Railways and the container haulage operation is Concor.
20, 000 TEU per annum arrive in Nepal and represents about 250 train movements to Nepal each year.
Indian Railways is required by agreement to unload the containers on the rake in 8 to 12 hours and this is achieved using modern reach stackers (there are no rail mounted gantry cranes)

16. Legal Arrangements for Cross Border Rail Operations
Nepal India Railway Service agreement in May 2004
Need to review in every 5 year
The existing railway agreement signed in 2004 allows limited movement of rail Cargo between Birgunj ICD and Kolkata and Haldiya ports of India.

17. Major Challenges in Cross-border rail Transport
There are a number of time hindrances to the rail transit of goods that include:
the need for aggregation of goods at the port of departure or the de-stuffing and aggregation of containers at the port of arrival;
the need to fill each train rake before it can depart; and
the need to agree train paths between existing train services.
as the shipping lines only conventionally provide 14 days free time for the use of containers from ship discharge to return to port, the extended transit times can result in significant demurrage charges that add significantly to overall cost.
the consequence of these hindrances is that for cost reasons, or because cargo is time-critical cargo, goods are transferred from the port by road.
Lack of timely amendment of Rail treaty with India
Need to extend railway link in Kakrabitta, Biratnagar, Nepalganj and Bhairawa Customs
Infrastructure development for railway connectivity

18. Transport Facilitation Measures

19. Transport Facilitation Measures
The ability of existing transport and logistics infrastructure within Nepal and the key transit corridors to efficiently and effectively handle the varied types and volumes of products also needs to be taken into account. This extends-
across the strategic and local road network within Nepal,
in-country warehousing and parking needs,
airports, and border post facilities.
External infrastructure includes road and rail transit corridors, together with their integration with gateway port systems in India and Bangladesh.
Onward shipping or air freight services providing the extended connectivity from the gateway ports and airport to international transit hubs.

20. Transport Facilitation Measures
Facilities at the Border
At the border there are two distinct border facilities, these being 27 traditional border post located on the historic crossing points between India and Nepal, and five Inland Clearance Depots (ICDs) at:
Birgunj (rail only facility, India);
Biratnagar (road, India);
Bhairahawa (road, India);
Kakadbhitta (road, India); and
Tatopani (road, China).
Feasibility study has been done for the construction of dry port in Sharalahi, Rajbiraj, Gaur and Maheshpur Customs .
Integrated check post construction in Birantagar, Birgunj, Nepalgunj and Bhairawa customs under process.

21. Transport Facilitation Measures
Proposed ICD

22. Transport Facilitation Measures
Warehousing
The TIA customs has a modern cargo complex of adequate area. But laging well managed.
Birgunj ICD has all facilities of handling all types of traffics including containers, bulk and break cargo.
Birgunj customs has three warehouses; one for exports and two for imports. Of these three warehouses, one belongs to National Trading Limited, a state owned trading company and two belong to NTWCL.
The Biratnagar ,Bhairahwa warehouse is handled by the terminal operator.
The Kakarvitta is handled by NTWCL.

23. Transport Facilitation Measures
Custom Offices
Offices
North
South
Total
Main Customs 9
20 + Airport+ PCA =22 31
Sub Customs 6
136+ Post office = 137
143
Total Customs 15
159
174

24. Acts, Policies and Major Initiatives Taken
Custom Acts and Regulations amended and new provisions are incorporated in line with Revised Kyoto Convention and WTO Valuation system
Trade Policy 2009 and Industrial Policy 2010
EIF Steering Committee under the chairmanship of Chief Secretary which is apex body for all trade and trade facilitation related issues
Trade and Transport Facilitation Committee under Commerce Secretary to steer trade facilitation
Trade Facilitation committee formed in Department of Customs under chairmanship of DG.
Customs opening days and hours harmonized with the bordering countries’ India and China’s opening days and hours
Tariff rates streamlined as per WTO commitments
100 percent performance based incentives to the customs employees
Emphasis on good moral conduct and transparency on operation

25. Acts, Policies and Major Initiatives Taken
Trade Facilitation by Customs Reform & Modernization Strategy
CRM Action Plan (Completed)
CRM Action Plan (Completed)
CRM Action Plan (Completed)
CRM Action Plan ( Proposed/ Ongoing )

26. Key Challenges of Trade Facilitation in Nepal
Concluding A framework agreement in south Asia which would include elements such as;
Harmonization of rules, procedures and documents
Mutual recognition of certificates, licenses and polices,
Effictive dispute settlement and risk management systems,
Special rules for certain products , Infrastructure up gradation, particularly in LDCs (Adhikary)
Facilitating transportation of goods in transit for intra – regional as well as extra-regional trade in keeping with the spirit of Article V of the General Agreement on Tarrffs and Trade (GATT) relating to "Freedom of Transit"
Supporting the implementation of the SAFTA and deepening regional economic integration

27. Key Challenges of Trade Facilitation in Nepal
Provision of multimodal transport facility
Adoption of the TIR (Transports International Routers) system or a similar regionally based equivalent customs transit system.
Investment in infrastructure hardware as well as software
Quality of roads and railways infrastructure and survice
Gauge compatibility for railways
Border facilities including customs, infrastructure
Use of ICT in trade administration)
Issues on third country passage via India
Quality control/quarantine related issue
Illegal trade regulation

28. Key Challenges of Trade Facilitation in Nepal
Working modalities
Weakly harmonized working hours between Bilateral trade with India and Bangladesh
More steps, Documents requirements and time to clear Kolkata Bound import and export cargo
Lack of cooperation and integrated approach among border agencies
Excessive physical intervention at the border points
Others
Domestic Supply side Constraints (Inadequate infrastructure, transportation, meeting the certification requirement)
Barring of Nepalese transporters heading from Kolkata
Lack of Comprehensive Transport Agreement

29. Procedures and Documents at Kolkata Port
Key Challenges of Trade Facilitation in Nepal
Procedures and Documents at Kolkata Port
37 Steps
Nine Documents required at Kolkata Customs by Rail or Road.

30. Way Forward in TF in Future Days
Short term (within one year)
CTD automation of Kolkata Bound Transit Cargo
Accession to Revised Kyoto Convention
(with IFC support)
Trade Facilitation Framework Master Plan
(with WB support)
Single Window Master Plan
Logistics Master Plan
E-Customs Master Plan
(with ADB support)

31. Way Forward in TF in Future Days
Medium term (within three year)
Trade Corridors Development
(with ADB support)
Process and Procedures simplification for E- Customs
Implementation of E-Customs Master Plan
Readiness to implement Single Window
Operation of additional four ICPs and one ICD
Transshipment through BL for transit cargo

32. Way Forward in TF in Future Days
Long term (within five year)
National Single Window
Cross Border Harmonization and Exchange
Activities in Pipeline
Web Based System Development for Customs
(with Korean support)
Strategic Action Plan Development
(with IMF and USAID support)

33. Let us have Joint Effort from the respective Governments, People and Entrepreneurs of this region as well as the development partners working in this region to build Better SSWA.
THANK YOU