How and Why DPs Should Support Implementation of NTIS 2010? Chandra Ghimire Joint Secretary Ministry of Commerce & Supplies Presented to GoN-Donor Consultation Meeting on EIF/NTIS Implementation Kathmandu, Nepal 2010 Nov 1

Outline of the Presentation Objectives of today's Meeting Why Trade is a Must? Briefing on EIF & Nepal NTIS 2010 in Nepal Mainstreaming of Trade in Nepal Implementation Approach uphold Implementation Mechanism Placed Commitment expected from DPs to implement NTIS

Objectives of Today’s Meeting Briefing DPs about EIF and NTIS 2010 Briefing DPs about implementation status of EIF & NTIS in Nepal Make sure DPs mainstream trade by including trade in their Nepal assistance strategy Obtaining DPs’ support commitments for NTIS implementation Selection of Donor Facilitator for new phase

Why TRADE is a must ? "Inclusive Growth" is a pre-requisite for alleviating poverty, Trade is an engine of "Inclusive Growth", Export is a triggering factor for Trade, since: – Nepal has comparative & competitive advantages in certain goods & services, – Nepal's own internal market small but huge markets available in its two giant neighbors with miracle growth – Value addition seems in certain goods to be very high – Market access available through multilateral, regional and bilateral arrangements – Being a LDC special privilege i.e. DF (zero-tariff in EC, Australia, Canada, HK, India, China, Japan, USA etc.)

Growing Trend of Trade Deficits

What Approach the Best Serving? By increasing supply side capacity of the country By promoting the goods & services with high value addition By focusing on 'inclusive growth', i.e. employment & income, supporting marginalized areas & groups NTIS 2010 in effect to serve these approaches

Poor capacity to capitalize the opportunity of WTO accession and various RTAs/FTAs; Poor mainstreaming of trade; Steadily growing trade deficit over last FYs; Poor implementation of DTIS 2004 and needs of updating it as per changed contexts; Challenge of 'Inclusive Growth‘ as TYP for poverty alleviation & peace dividend; Economic agenda in shadow in the current transition; Backdrop of NTIS 2010

National trade strategy to enhance 'supply side capacity' for Nepal's space in global market; Prioritized strategy launched by PM himself on 24 June 2010 An outcome of analysis & consultation with:  National stakeholders i.e. Government agencies, business organizations FNCCI, CNI, CoC, product associations, national  International experts, DPs  But led by GoN What is NTIS?

Field surveys, National and ITC data based analysis and consultation undertaken China and India visited by experts; 19 goods & services identified as priority items; 10 potential destination markets identified; Plus 5 other goods suggested; 3-5 years period for implementation; Engaging of multiple agencies, i.e., GoN's 17 ministries/agencies as well as business organizations Salient Features of NTIS 2010

Having 4 strategies: Strengthening trade negotiation Strengthening NTB related domestic capacity Strengthening supply capacity of "inclusive exports" Strengthening capacity for managing AfT & TRTAs Having 87 cross cutting actions and 171 product/service specific & total 268 actions to be implemented Continued consultation process National stakeholders: Government agencies and departments, private sector organizations etc. Development partners (GTZ, DFID, USAID, Japan, ADB, World Bank, Finland etc.) Salient Features of NTIS 2010

19 Priority Export Potentials Agro-Food 1Cardamom 2Ginger 3Honey 4Lentils 5Tea 6Noodles 7Medicinal & Essential Oils Craft and Industrial Goods 8Handmade Paper 9Silver Jewelry 10Iron and Steel 11Pashmina 12Wool Products What the Goods & Services to Export?

Services 13Tourism 14Labor Services 15IT & BPO Services 16Health Services 17Education 18Engineering 19Hydro-electricity Others Potential Exports 20 Transit Trade Services 21Sugar 22Cement 23Dairy Products 24Transformers What the Goods & Services to Export?

Export Potential and Socio-Economic Impact of 19 Products and Services #Sector Nepali exports, 2008 (US$ 1,000) Index 1: Export performance Index 2: World market conditions Index 3: Domestic supply conditions Overall export potential Socio-economic impact Agro-Food 1Large cardamom21,329highlowhigh medium 2Ginger8,130mediumlowmedium 3Honey500lowmedium 4Lentils22,258mediumhigh medium 5Tea16,805highlowmedium high 6Instant noodles10,390highmediumhigh low 7Medicinal herbs / oils11,000lowmediumhighmedium high Craft and Industrial Goods 8Handmade paper4,000low highlow high 9Silver jewelry9,519lowhighmedium 10Iron & steel products149,394 high medium 11Pashmina products22,074medium highmedium 12Wool products16,450mediumhighmedium high Services 13Tourism352,000high 14Labor services2,448,000high mediumhigh 15IT & BPO services10,000medium 16Health servicesn/alowmediumlow 17Education services10,000mediumlow 18Engineering servicesn/alowmedium low 19Hydro-electricity0low high medium

EIF Global Implementation Mechanism – At Global Level: EIF Secretariat at WTO Geneva Nepal represents LDCs in the EIF Board since 2010 – At National Level: National Steering Committee (NSC) Focal Point (FP) National Implementation Unit (NIU) TWGs as Extended NIUs in 5 ministries Donor facilitator (DF)

EIF Implementation Arrangement in Nepal NSC Focal PointTechnical Committees (TCs) Technical Committees (TC) 1.Agriculture, agro-industry, NTFP, and SPS 2.Private Sector Development (Manufacturing, SMEs, SEZ/EPZ and TBT) 3.Legislation and Intellectual Property Rights (IPRs) 4.Services and taxation 5.Cross-Cutting Issues and Trade-related Infrastructure Development Technical Sub-Committees (TSC) To be constituted by TC as required. NIU Donor Facilitator TSCs NECTRADE 2010

Implementation Approach of NTIS NSC: as the APEX BODY for overall guidance & inter agency coordination Focal Point: as LEADING the initiatives of MoCS NIU at MoCS: as NTIS EXECUTING, RESOURCE MOBILIZING & FACILITATING 5 Extended NIUs (TWGs): as FORMULATING & IMPLEMENTING projects Sectoral ministries/agencies: As IMPLEMENTING PARTNERS Business associations: as STAKEHOLDERS involved in the NSC & various implementation activities M&E mechanism: – Via existing national M&E system – Objective based M&E indicators yet to develop

Implementation Status Tier 1 Project placed in to address capacity issue of MoCS and relevant ministries/agencies Developing of project proposals underway for Tier 2 TORs for NIU/Extended NIUs & their staffing done (govt officials appointed for NIU/Extended NIUs) Consultation workshops/meeting held with concerned stakeholders

Additional Strength Acquired Matching budget from MoF National driven: GoN at steering seat NIU rich with vibrant staff team Inter agency coordination through NSC & NPC M&E as per national M&E mechanism Accountability as per its national system Implementing role of concerned ministries well respected

Mainstreaming of Trade in Nepal 2 nd TYP has included TRADE as one of its 6 pillars One of the focuses in the coming budget: addressing trade deficit A clear budget line for NTIS implementation being considered Mainstreaming of trade in sectoral plans, e.g., underway the process of Agriculture To intensify the mainstreaming, senior officials of concerned ministries are being re-orientated Q is What about mainstreaming of trade in DPs' priority?

What Commitments from DPs required? 1. DPs' e ngagement in Nepal’s trade development A.Those who already involved in the formulation: – Urged strong & continued commitments for the NTIS implementation B. Those who not yet: – Urged to include trade in their Nepal Assistance Strategy and support the NTIS implementation

What Commitments from DPs required? 2. What we need? – TRTAs – Aid for Trade – Ideas & experiences sharing – Coordinated delivery of the inputs from DPs 3. Why we need that supports? – DCs are committed in global forums to provide LDCs with AfT & TRTAs – Nepal in its politico-socio-economic transformation

What Commitments from DPs required? 4.DPs support to meet resource gap, since: a)Nepal already mainstreamed trade into its national development agenda b)The NTIS is in place and GoN highly committed priority-wise and resource-wise to implement it c)But resource-wise Nepal alone is unable to afford to implement it 5.Selection of DF to support the process of the NTIS implementation

Functions of the DF 1.To Assist GoN/MoCs and coordinate donor responses to the NTIS Action Matrix, 2.To harmonize required interventions, including exploring out funding for NTIS implementation, 3.To support the NIU and the FP, including formulation and appraisal of Tier 2 projects, 4.To facilitate GoN in linking with DPs,

Functions of the DF 5.To provide DPs with regular updates on the progress on the EIF and NTIS implementation, 6.To assist NIU in creating knowledge and understanding on the EIF & NTIS process, 7.To support GoN in strengthening institutional mechanism arranged for EIF/NTIS implementation, i.e. NSC, FP, NIU and TWGs, 8.To assist NIU in managing ODA as for effective implementation of the EIF/NTIS,

Suggested Criteria for DF The DF should be actively engaged in the field of TRADE, The DF should sufficiently allocate financial resources & HRs to undertake the role, The DF should be resident in the country, As the functions grow, a LEAD DF and additional DFs (e.g. strategy wise) may be required, Such additional DFs could be arranged upon joint consultation with GoN and local DPs,

Who Says Nepal can’t set an example?

Thanks for Your Kind Attention!