January 13: Nepal’s historic Transit and Transportation Agreement with China has come into force with the implementation of the bilateral agreement since the start of the New Year. This had opened the door for Nepal to use four sea ports of China and three other dry ports of the northern neighbor for overseas trade.
The Ministry of Industry, Commerce and Supplies informed during a press meet at the ministry on Sunday (January 12) that the agreement has come into effect since the start of January.
As per the agreement, Nepal has been granted permission to use Tianjin, Lianyungang, Shenzhen, and Zhanjiang sea ports of China for third-country trade. Likewise, the dry ports that Nepal is entitled to use include Lanzhou, Lhasa and Shigatse.
Speaking at the press conference, Commerce Secretary Baikuntha Aaryal said the agreement has come into force since January 1.
Prime Minister KP Sharma Oli had signed the agreement in his China visit during his first stint as the head of government in 2016. However, the two countries signed the protocol of the Nepal-China Transit and Transportation Agreement only last year during President Bidya Devi Bhandari’s state visit to China.
Prior to this, Nepal had signed such agreements with only India and Bangladesh.
However, the agreement with China is considered strategically important for Nepal due to the country’s land-locked nature and in the wake of the economic blockade imposed by India in 2015.
This agreement not only allows Nepal to use Chinese ports but has also effectively ended Nepal’s dependency on India for foreign trade. Nepal had initiated the process to sign trade and transit agreement with China after India imposed the blockade allegedly due to its dissatisfaction toward the constitution promulgated by the Constituent Assembly of Nepal.
With this agreement, trade and transport companies registered in Nepal can now transport goods up to Shigatse. Until now, Nepali companies were allowed to transport goods only up to the border points at Rasuwagadhi and Tatopani.
The agreement gives Nepalese traders access to Chinese territories from six checkpoints including Yari Pass of Humla, Korala Pass of Mustang, Kimthang Pass of Sankhuwasabha, and Olangchungola Pass of Taplejung besides Tatopani and Rasuwagadhi.
Although the agreement has come into effect, Nepal still needs to upgrade infrastructure at the customs points for proper utilization of this facility.
The government has given high priority to upgrade Kathmandu-Rasuwagadhi road which has become a vital link between the two countries after the Tatopani customs point was destroyed by the 2015 earthquakes.
Distance is an issue for Nepali traders as the nearest seaport is 3000 to 4000 kilometers away.
According to former commerce secretary Ravi Shankar Sainju, although the cost factor would be much more from this route than through India, bringing goods from Japan and Korea would be more effective through China.