Questions by the following delegations had been submitted in writing at least two weeks in advance and had been transmitted to the delegation of Nepal: the United States, Australia, Japan, the European Union, China, Pakistan, and Paraguay.

The Chairperson observed that the reports prepared for this meeting by Nepal and the Secretariat noted that Nepal was transforming its economy to rely more on services and industry, by unilaterally liberalizing its trade and investment regimes.
Opening statement by the Representative of Nepal
My presentation this morning will mainly focus on three principal aspects: Nepal's trade and investment environment; major policy, legal and institutional reforms Nepal has made after accession to WTO; and our constraints, challenges and opportunities.
Exchange rate of the Nepalese currency with convertible currencies has been left to market forces with the exception of the Indian rupee, for which the central bank of Nepal fixes the exchange rate.
For this, it plans to offer one-window solution - an investor should be able to receive all services from the same place including registration, licensing, immigration issues and bill clearance.

Private sector is an important player of trade and the Government's role is to regulate and facilitate trade as well as help expand trade in international markets by securing market access through effective bilateral and multilateral trade negotiations.
In order to overcome these challenges, the strategy has set four major objectives: strengthening trade negotiations (especially bilateral); strengthening the technical capacity of domestic non-tariff barriers and other business environment supporting institutions; strengthen the export capacity of "inclusive" export potential goods and services, and strengthening the Government's capacity to coordinate and manage Trade-Related Technical Assistance (TRTA) and Aid for Trade to implement the NTIS.

Nepal considers rules based and non-discriminatory multilateral trading system as the bedrock of trade regime and reiterates its commitment to it as an article of faith.

That the services sector is the most important driver of growth in Nepal may also be explained by the fact that it is not as much dependent on transport infrastructure as the manufacturing and the agricultural sector.
When Nepal acceded to the WTO it bound almost 100% of its tariff lines, made extensive commitments under the GATS and signed the Reference Paper on Basic Telecommunications.
Nepal bound all but 54 tariff lines, leaving unbound mainly the lines for arms, cement, some parts and components of automobiles and petroleum oil.
In order to attract more foreign direct investment, Nepal may wish to indicate whether it plans a further liberalisation of its investment policies, for example by granting non discriminatory access and providing a transparent business environment.
A further important element of the economic environment is the heavy reliance on remittances from abroad: when looking on remittances as a share of GDP, Nepal was in 2009 the fifth largest recipient worldwide, according to the World Bank's Migration and Remittances Factbook.
While the country does not provide direct payments to any manufacturing industry, it grants incentives in the form of income tax, VAT, excise duty and customs duty exemptions or deductions for certain manufacturing industries.
Nepal's extensive commitments under the GATS - including on financial services, telecommunications, transport, tourism and professional services – shows, that the government is well aware of this fact and that it highly values this sector.
This includes binding virtually all of its tariff lines; expanding market access for imports, including for agricultural products; and scheduling meaningful services commitments, including in financial services, telecommunications, and professional services that make it clear that Nepal welcomes foreign service suppliers that can help improve its business infrastructure.
Nepal has made significant progress on these steps, including the use of valuation methods prescribed by the Customs Valuation Agreement, the adoption of laws designed to base SPS measures on international standards, and the preparation of standards legislation with a view to implementing the TBT Agreement.
Whether in regards to public procurement practices, the investment climate, GSP, standards and conformity assessment, or IPR protection and enforcement – or, indeed, any other area of trade and investment policy – the United States stands ready and committed to work with Nepal, bilaterally and with other Members through the WTO, to address those challenges.
The promotion of FDI is essential for the sustainable development of the GDP, the creation of job opportunities and the introduction of the latest technologies.
In addition, the EU has new and relaxed preferential rules of GSP rules of origin in force since the beginning of 2011, which contain special provisions for LDCs.

In conclusion, let me state that since joining the WTO Nepal was the first LDC to accede WTO through the full Working Party accession process and has without doubt made important strides towards becoming a relatively open and liberalized economy based on multilateral principles.
In the 13th century, the talented Nepalese artisan Anigo helped build Buddhist towers in both Lhasa and Beijing of China, which are still kept intact and have since witnessed the continuation of our friendship.
Having said that, we bear in mind that Nepal remains one of the poorest countries in South Asia with enormous challenges, particularly supply-side constraints such as limited export basket, inadequate economic infrastructure and insufficient skilled human resources.
investment, banking, infrastructure development, human resource development and growth through regional trade development.
Nepal has come up with sound policies to make a turnaround; the donor community can help them to execute those policies through effective use of trade related assistance under aid for trade and EIF initiatives.
Nepal's effort to enhance trade is also shown through customs procedures simplification, elimination of a number of other duties and charges on imports, and its implementation of the Trade Integration Strategy, aiming at efficiently and effectively enhancing trade-related technical assistance and aid for trade and at promoting 19 priority export potential activities.

Nepal faces many structural problems like narrow export base, difficulties in reaching to export markets, lack of testing facilities, insufficient energy resources, increase in trade deficit, Nepal has maintained an open and liberal trade regime with almost fully bound tariff lines, low levels of tariffs and extensive commitments in more than 70 services sectors.
We congratulate the Government of Nepal for taking the necessary steps to promote and diversify its trade with a view to correcting the imbalances, through a new Trade Policy released in 2009, and to mainstream trade into its development plans and programmes through the Nepal Trade Integration Strategy (NTIS) of 2010.
Approximately 150 Indian ventures are operating in Nepal in the areas of manufacturing, power sector and services such as banking, insurance, dry ports, education, tourism and telecom, providing direct employment to over 30,000 people, and contributing significantly in terms of revenue and exports of Nepal.
SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND MATSU

As this is
Nepal
's first Trade Policy Review, it is a unique opportunity for us to gain a
better understand
ing of its economic policies and development
,
as well as the
challenges
that Nepal can expect to face in the
years to come
.
While the Government is striving to implement its commitments and accelerate legal reform in compliance with WTO provisions, we support the call by the Government of Nepal for development partners and Members to continue and scale support in this trying period as it embarks on the journey of socioeconomic transformation.
However it is our view that WTO Members should realize the vulnerability of Nepal's economy and assist them in complying with WTO obligations where they badly lack expertise.
The major initiatives undertaken in the process of liberalizing our economy include abolition of the import licensing, removal of quantitative restrictions, simplification of export and import procedures, significant reduction on tariff rates and rationalization of tariff structure by reducing tariff slabs, liberalization of the foreign currency regime including the full convertibility of current account, and major legal and institutional reforms.
These measures are expected to
help channelize domestic and foreign investment toward productive sector, help potential investors identify and select their preferred investment sector, reduce the cost of business and encourage the completion of large scale projects on time through foreign direct investment.
On public procurement, though Nepal is not a party to the WTO Agreement on Government Procurement, the Government of Nepal has made serious efforts to systematize the procedures for public procurements and their reporting and monitoring mechanism.
The process of the integration of the agreed number of the Maoist combatants into the Nepal Army is being mainly finalized and hopefully some issues which are under discussion will be decided soon.
We, therefore, call upon our valued development and trading partners to support our endeavours in promoting export by providing greater market access supported by simplified and facilitating rules of origin and enhanced financial and technical assistance in line with the Istanbul Program of Action for the LDCs.
Many Members highlighted the trade facilitation measures Nepal has already taken, like, inter alia, streamlining customs procedures and tariff structures, limiting the number of products subject to import licensing and the adoption of a new customs act.
If Nepal continues to improve its legal as well as its factual framework for trade - for example by implementing the 19 priority areas for diversifying its export basket - there is a good chance that Nepal can benefit from this potential in the near future.
where we would appreciate more detailed information on the possibilities Nepal is currently examining to further liberalise its services sector; export duties on wood, where we are interested to learn whether Nepal has examined also other ways (other than export tax) to protect the environment and its natural resources; rules of origin, where Nepal is invited to elaborate on whether it has considered to lift the requirement to present a certificate of origin for all imports; applied tariff for petroleum, where we would appreciate receiving more information on why Nepal's applied tariff for petroleum exceeds the bound level and Nepal's intentions in this regard; and we have also asked for Nepal's intentions as regards ratifying remaining ILO core convention (87).
I note from Nepal's concluding statement that action is already being taken in several of these areas:
• Investment and business framework: Because of the high cost of doing business and the fact that certain sectors are still reserved for national investors, Members urged Nepal to further liberalize its investment framework and address issues of weak institutional capacity.
• Government procurement: While recognizing steps taken in this area such as the law on government procurement adopted in 2007, Nepal was asked to elaborate on its plans to further improve the implementation and monitoring of its public procurement legislation.