Nepal has proposed that Bangladesh rationalise high tariffs and eliminate other duties and charges (ODCs) levied on Nepalese export products to Bangladesh.
The Embassy of Nepal in a recent letter to the Ministry of Foreign Affairs made the proposal, in order to further promote the economic ties between the two countries.
The foreign ministry then forwarded the letter to the National Board of Revenue (NBR) for its consideration.
Recently, the NBR allowed import of all types of Nepalese yarn through Banglabandha port.
The trade related matters came to the fore during previous meetings among Foreign Minister Dr AK Abdul Momen, Foreign Secretary Masud Bin Momen and Ambassador of Nepal Ghanshyam Bhandari.
Earlier, only import of acrylic yarn by the export oriented industries having a bonded warehouse licence was allowed from Nepal.
The foreign ministry in another letter to the NBR said the Nepalese side, in various bilateral meetings, has repeatedly been requesting Bangladesh to provide them with trade benefits.
"…only notified customs station for Nepal via India is Fulbari-Banglabandha and the only route they can use is Kakarvitta-Panitanki-Fulbari, Banglabandha to export Nepalese products to Bangladesh," said the letter, sent by Nusrat Jahan, senior assistant secretary (South Asia II) of the foreign ministry.
In the South Asian region, Bangladesh enjoys a favourable trade balance only with Nepal. In 2021-22, Bangladesh's export to Nepal was around US$105.50 million, while the import from Nepal was about $5.6 million - and the trade balance was $ 99.90 million.
The increase of yearly export to Nepal is now more than 52 per cent.
A senior NBR official, however, said country-specific reduction of import duties without any bilateral treaties is not possible as per customs rules.
He said the South Asia Association for Regional Cooperation (SAARC) countries are getting concessionary duty benefits under the South Asian Free Trade Area (SAFTA).
Under the SAFTA, more than 4,000 products enjoy reduced tax benefits on export and import of goods.
In October 2022, the Nepalese Ambassador to Bangladesh said Nepal was working on signing the Preferential Trade Agreement (PTA) with Bangladesh.
However, officials of the Ministry of Commerce said the move to sign the PTA with Nepal has not proceeded further after signing PTA with Bhutan.
Dr Muhammad Abdur Razzaque, economist specialised in international trade, said rationalisation of duties on other products is feasible under PTA.
If the supply capacity of Nepal is not large, it should not be a major problem, said Mr Razzaque, who is the chairman of the Research and Policy Integration for Development (RAPID).
If such preferences to Nepal are to be granted, Bangladesh must ensure that rules of origin requirements are being fulfilled by Nepal, he said.
Since Nepal is not a big supplier of yarn, there is a scope for exchange of trade preferences on selected items under PTA, Mr Razzaque added.
