KATHMANDU, July 30: After a nine-year break, on May 1, 2023, the Chinese authorities reopened the Tatopani-Khasa border point for bidirectional commerce. In accordance with the outcome of the first meeting of the Nepal-China Coordination Mechanism on Border Trade and Cooperation, held on March 29 in Lhasa, Tibet, the Tatopani-Khasa route will once again be open for business as of April 1, and the Rasuwagadhi/Kerung checkpoint will be fully operational for two-way trade and people-to-people movement.
Many people were relieved to hear that China will once again allow free movement of goods and services into Nepal through the two transit routes that had been closed because of the COVID-19 epidemic. The border restriction not only caused problems for Nepalese businesspeople, but it also reduced Nepal’s annual exports to China to below Rs 1 billion.
Nepal’s exports to China fell sharply to Rs 1 billion in 2020/21 from Rs 1.19 billion in 2019/2020, according to statistics from the Department of Customs. Shipments in the fiscal year 2018-19 reached Rs 2.10 billion, therefore this number is roughly half of that.
Both imports and exports fell significantly in the just-completed fiscal year 2022/23, indicating a significant decline in the nation’s international commerce. There was a decrease of Rs 350 billion in overall exports, as reported by the Department of Customs. The value of the country’s exports fell from Rs 2.12 trillion in the previous fiscal year (FY 2021/22) to Rs 1.77 trillion in the current fiscal year (FY 2021/23), a decrease of 16.58 percent.
There was a significant decline in commerce between Nepal and China following the 2015 earthquake, says Hom Bahadur Basnet, head of the Sindhupalchok Chambers of Commerce and Industry. Before the earthquake, the Tatopani-Khasa road saw between fifty and one hundred fifty cars carrying products every day. However, “only about five to ten vehicles use the route at any given time,” he claimed.
After China restricted travel via the Tatopani transit, notably during the spread of the Covid-19 epidemic, Basnet said that economic activity had decreased. Since the COVID-19 epidemic broke out, China has severely restricted travel. These limitations are still, for the most part, in effect today. Because of this, he claimed, “importing goods has been difficult, and shipments have not arrived at their destinations on time.”
“Shipments from different Chinese cities used to take around 20 days to arrive in Kathmandu. Since most Nepalese merchants have no choice except to ship their wares to their customers, the delivery time has increased to between two and three months. If the package arrives on time, Basnet predicts that transportation costs will go down, customers will pay less, and locals will have more options to find work.
Dorjee Lama, a local trader, has also voiced his worry about the ongoing problem of seasonal products being delivered late. He said that by the time the products reach their ultimate destination, the season is often ended, which has a major effect on his company.
When our items finally make it here, it will be far beyond their prime selling time since they were delayed for so long. Lama complained that this had caused significant harm to their company.
In FY 2022/23, revenue collection at Tatopani, the northern border with China, fell short of the objective. Until the earthquake of 2015, the Tatopani Customs Office brought in up to Rs 5 billion annually, which was a major boon to the national economy. The Customs Office reports that only Rs 3.27 billion (70.84 percent of the objective) was collected in duties and taxes during the last year, despite a target of Rs 4.62 billion.
As Basnet also noted, the number of cars provided by China is rather modest, but the nature of summer commodities like clothing means that a lot may be transported in a single truck. He continued, “Meeting the demands for seasonal goods in winter might be doubtful if China maintains the same transportation ratio in the future.” “However, traders and business people may encounter difficulties during the Dashain festival and upcoming winter as the goods for these seasons will be thicker, occupying more space in the vehicles.”
The Chinese government blames natural disasters like landslides and pandemic preparedness and control efforts for disrupting commerce between China and Nepal’s dry ports, while Nepali merchants and businesspeople say the opposite is true. During an interview, a former Chinese ambassador stressed China’s commitment to addressing the challenges that have prevented Nepal’s dry ports from remaining open despite the country’s pressing need to do so.
In a similar vein, in April of 2016, then-Prime Minister KP Sharma Oli traveled to China for an official visit, during which time an agreement was signed providing Nepal with access to seven Chinese ports: four seaports (Tianjin, Shenzhen, Lianyungang, and Zhanjiang), and three landports (Lanzhou, Lhasa, and Shigatse) to facilitate imports from third countries. The deal also established six transit points between Nepal and China that may be used for exports.
After the signing of the Agreement on Transit Transport, both parties expressed their pleasure and instructed their respective authorities to begin talks on a protocol as soon as possible so that it could be included in the final document. The date of the signing of this agreement is April 23, 2016, in Beijing.
The Transit and Transport Protocol was subsequently signed in April 2019 during the official visit of then President Bidya Devi Bhandari to China. This happened after President Bhandari and her Chinese counterpart, Xi Jinping, met as a delegation.
Despite the fact that Nepal has had access to seven Chinese ports for third-country commerce ever since the commerce and Transit Agreement was signed with China, not a single cargo has moved in that time, as reported by the Ministry of Industry, Commerce, and Supplies.
South Asia Watch on Trade, Economics, and Environment (SAWTEE) executive director Dr. Paras Kharel suggests that the COVID-19 epidemic may be a role in the sluggish implementation of the Trade and Transit Agreement. Since the pandemic had a major influence on bilateral commerce, he said, it stands to reason that transit-related trade would be damaged as well.
Dr. Kharel that a trial run of the Trade and Transit Agreement be conducted in Nepal to ensure its seamless functioning. “Nepal should focus on conducting a trial run where a study regarding what kinds of goods can be brought from which country can be cost effective,” he recommended.
According to a World Bank research, Nepal has a “missing” export potential of almost US$9.2 billion, which is twelve times more than its present annual goods exports. Dr. Kharel stressed the importance of China to the overall significance of the lost exports.
Nepal has a lot of potential for exporting many types of commodities to China, but thus yet they have only exported roughly two billion rupees’ worth of goods.
It has also been claimed that activity has picked up in Rasuwagadhi, the northernmost point of the Nepal-China border near Rasuwa. The 1st of April marked the resumption of operations, and since then, business and tourism have increased.
The Rasuwagadhi Department of Immigration claims to have awarded travel permits to 150 residents in order to facilitate travel along the Rasuwa-Kerung point. The number of Chinese visitors entering Nepal via the airport is rising steadily. People are flocking back to Rasuwagadhi in hopes of reviving the city’s commerce and tourist industries and forging closer relationships amongst those who live in border regions.
Locals and business owners still have faith that commerce can go well despite the obstacles they confront. Lama, a local merchant, expressed hope, saying he is certain business would pick back up again shortly. There are Chinese delegations in Nepal at the moment, and our officials are holding productive talks with them. According to Lama, “I am confident that these efforts will produce beneficial outcomes for both Nepali and Chinese traders, paving the way for us to conduct our business smoothly.”
President Basnet also said that although commercial activity has been slow, the fact that these channels have reopened after an extended hiatus is encouraging. We expect the trade routes to run well and the Trade and Transit Agreement to be put into action efficiently now that operations have begun. To properly use the existing resources, however, we encourage the administration to engage in serious conversation with the Chinese side.
This year marks 68 years of diplomatic relations between Nepal and China, and in light of that anniversary, experts have stressed the need of boosting commercial cooperation between the two countries. To improve commercial operations between China and Nepal, it is necessary to strengthen trade infrastructure, streamline customs processes, improve communication channels, and provide vital assistance and information to merchants.
They also emphasized the importance of ongoing communication and collaboration in resolving the issues that have prevented commerce from flowing smoothly. Cooperation between the two countries may pave the way for new possibilities and boost economic progress in both countries.