Nepal’s trading partners changing, says WTO report

KATHMANDU, NOV 07 –

Nepal is witnessing a “gradual diversification” when it comes to its trading partners as well as products in the last few years, according to the World Trade Organisation’s (WTO) International Trade Statistics-2011.

The export/import trend of the last three years shows that except India, there has been a change when it comes to trading destinations for both exports and imports, the WTO’s latest report said.

The report has brought to light some interesting facts. The European Union (EU) is now the country’s second largest export destination with a share of 11.1 percent of the total exports. However, the US that was the second largest destination in 2008 has slipped to the third position. Likewise, Bhutan has entered the list of Nepal’s top five export destinations.

Trade analysts say the changes in the export destinations is actually a market shift as Nepal has not done anything in connection with product diversification.

Chairman of SAWTEE, Posh Raj Pandey, said these changes are due to the market shift in some of the products. This holds true in case of the EU, he said. “Nepali readymade garments that used to be a major export item to the US lost its competitiveness after the quota system was phased out in the US,” Pandey said. “However, garment export shifted to the EU, after it gave preferential market excess to all the Least Developed Countries (LDC),” he added.

The reason behind Bhutan being the country’s fifth largest export destination is the impressive rise in exports of iron and steel products. In fact, Bhutan has become the leading country importing iron and steel products from Nepal over the past two years because of the increased demand of electricity poles for rural electrification and hydropower projects.

Government officials said Nepal Trade Integration Strategy (NTIS) 2010 has played a vital role when it comes to diversifying export items and destinations. “For instance, NTIS 2010 identified lentils as one of the products with export potential,” Chandra Ghimire, the joint secretary at the Ministry of Commerce and Supplies, said. “We found Bangladesh as one of the major export destinations for lentils.” The “heavy export” of lentils brought Bangladesh in Nepal’s top five export destination list. In 2010, export to Bangladesh accounted to 5.5 percent of the country’s total exports.

Not only in exports, there have been changes in the country’s import destination list also. India and China are still top two import destinations for Nepal, but the United Arab Emirates (UAE) has entered the top-five list in 2010 as the third largest destination. The UAE accounted for 8.9 percent of the total imports in 2010, mainly due to the huge import of gold. Nepal’s bullion traders that used to import gold from Australia, are now importing gold from the UAE.

Pandey said Nepal must make structural changes in the export basket by identifying additional exportable commodities and then negotiate with the international community for preferential market access. “Nepal’s export has increased in those destinations which are providing preferential market access to Nepali goods,” he said. “That is why India and the EU are Nepal’s major export destinations.”
source: Kathmandu Post

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