How and Why DPs Should Support Implementation of NTIS 2010?

Chandra GhimireJoint Secretary

Ministry of Commerce & Supplieschandrakg64@yahoo.com

Presented toGoN-Donor Consultation Meeting on EIF/NTIS Implementation

Kathmandu, Nepal2010 Nov 1

Outline of the Presentation

• Objectives of today's Meeting• Why Trade is a Must?• Briefing on EIF & Nepal• NTIS 2010 in Nepal• Mainstreaming of Trade in Nepal• Implementation Approach uphold• Implementation Mechanism Placed• Commitment expected from DPs to implement

NTIS

Objectives of Today’s Meeting

• Briefing DPs about EIF and NTIS 2010• Briefing DPs about implementation status of EIF &

NTIS in Nepal• Make sure DPs mainstream trade by including

trade in their Nepal assistance strategy• Obtaining DPs’ support commitments for NTIS

implementation• Selection of Donor Facilitator for new phase

Why TRADE is a must ? • "Inclusive Growth" is a pre-requisite for alleviating poverty, • Trade is an engine of "Inclusive Growth",• Export is a triggering factor for Trade, since:

– Nepal has comparative & competitive advantages in certain goods & services,

– Nepal's own internal market small but huge markets available in its two giant neighbors with miracle growth

– Value addition seems in certain goods to be very high– Market access available through multilateral, regional and bilateral

arrangements– Being a LDC special privilege i.e. DF (zero-tariff in EC, Australia, Canada,

HK, India, China, Japan, USA etc.)

Growing Trend of Trade DeficitsTrade Deficit of Nepal

-81.9 -136.9-178.5

-222.4

-315.5-400

-300

-200

-100

0

100

200

300

400

500

Fiscal Year

NR

s. i

n b

illio

n

Exports Import Trade Balance

Nepal became WTO Member

What Approach the Best Serving?

• By increasing supply side capacity of the country

• By promoting the goods & services with high value addition

• By focusing on 'inclusive growth', i.e. employment & income, supporting marginalized areas & groups

NTIS 2010 in effect to serve these approaches

• Poor capacity to capitalize the opportunity of WTO accession and various RTAs/FTAs;

• Poor mainstreaming of trade;• Steadily growing trade deficit over last FYs;• Poor implementation of DTIS 2004 and needs of

updating it as per changed contexts;• Challenge of 'Inclusive Growth‘ as TYP for poverty

alleviation & peace dividend;• Economic agenda in shadow in the current

transition;

Backdrop of NTIS 2010

• National trade strategy to enhance 'supply side capacity' for Nepal's space in global market;

• Prioritized strategy launched by PM himself on 24 June 2010

• An outcome of analysis & consultation with: National stakeholders i.e. Government agencies, business

organizations FNCCI, CNI, CoC, product associations, national International experts, DPs But led by GoN

What is NTIS?

• Field surveys, National and ITC data based analysis and consultation undertaken

• China and India visited by experts;• 19 goods & services identified as priority items;• 10 potential destination markets identified;• Plus 5 other goods suggested;• 3-5 years period for implementation;• Engaging of multiple agencies, i.e., GoN's 17

ministries/agencies as well as business organizations

Salient Features of NTIS 2010

• Having 4 strategies:

• Strengthening trade negotiation

• Strengthening NTB related domestic capacity

• Strengthening supply capacity of "inclusive exports"

• Strengthening capacity for managing AfT & TRTAs • Having 87 cross cutting actions and 171 product/service

specific & total 268 actions to be implemented

• Continued consultation process

• National stakeholders: Government agencies and departments, private sector organizations etc.

• Development partners (GTZ, DFID, USAID, Japan, ADB, World Bank, Finland etc.)

Salient Features of NTIS 2010

19 Priority Export Potentials

Agro-Food

1 Cardamom

2 Ginger

3 Honey

4 Lentils

5 Tea

6 Noodles7 Medicinal & Essential

Oils

Craft and Industrial Goods

8 Handmade Paper

9 Silver Jewelry

10 Iron and Steel

11 Pashmina

12 Wool Products

What the Goods & Services to Export?

Services

13 Tourism

14 Labor Services

15 IT & BPO Services

16 Health Services

17 Education

18 Engineering

19 Hydro-electricity

Others Potential Exports

20Transit Trade Services

21 Sugar

22 Cement

23 Dairy Products

24 Transformers

What the Goods & Services to Export?

Export Potential and Socio-Economic Impact of 19 Products and Services

# Sector

Nepali exports,

2008 (US$ 1,000)

Index 1: Export

performance

Index 2: World market

conditions

Index 3: Domestic

supply conditions

Overall export potential

Socio-economic

impact

Agro-Food

1 Large cardamom 21,329 high low high high medium2 Ginger 8,130 medium low medium medium medium3 Honey 500 low medium medium medium medium4 Lentils 22,258 medium high high high medium5 Tea 16,805 high low medium medium high6 Instant noodles 10,390 high medium high high low7 Medicinal herbs / oils 11,000 low medium high medium high Craft and Industrial Goods

8 Handmade paper 4,000 low low high low high9 Silver jewelry 9,519 low high medium medium medium

10 Iron & steel products 149,394 high high high high medium11 Pashmina products 22,074 medium medium high medium medium12 Wool products 16,450 medium high medium medium high

Services

13 Tourism 352,000 high high high high high14 Labor services 2,448,000 high high medium high high15 IT & BPO services 10,000 medium medium medium medium medium16 Health services n/a low medium low low low17 Education services 10,000 medium low low low low18 Engineering services n/a low medium medium medium low19 Hydro-electricity 0 low high medium medium medium

EIF Global Implementation Mechanism– At Global Level:

• EIF Secretariat at WTO Geneva• Nepal represents LDCs in the EIF Board since 2010

– At National Level:• National Steering Committee (NSC)• Focal Point (FP)• National Implementation Unit (NIU)• TWGs as Extended NIUs in 5 ministries • Donor facilitator (DF)

EIF Implementation Arrangement in Nepal

NSC

Focal Point Technical Committees (TCs)

Technical Committees (TC)

1. Agriculture, agro-industry, NTFP, and SPS 2. Private Sector Development (Manufacturing, SMEs, SEZ/EPZ and TBT) 3. Legislation and Intellectual Property Rights (IPRs)4. Services and taxation5. Cross-Cutting Issues and Trade-related Infrastructure Development Technical Sub-Committees (TSC)

To be constituted by TC as required.

NIU

Donor Facilitator

TSCs

NECTRADE 2010

Implementation Approach of NTIS• NSC: as the APEX BODY for overall guidance & inter agency

coordination• Focal Point: as LEADING the initiatives of MoCS• NIU at MoCS: as NTIS EXECUTING, RESOURCE MOBILIZING & FACILITATING

• 5 Extended NIUs (TWGs): as FORMULATING & IMPLEMENTING projects• Sectoral ministries/agencies: As IMPLEMENTING PARTNERS• Business associations: as STAKEHOLDERS involved in the NSC &

various implementation activities• M&E mechanism:

– Via existing national M&E system– Objective based M&E indicators yet to develop

Implementation Status• Tier 1 Project placed in to address capacity issue of

MoCS and relevant ministries/agencies

• Developing of project proposals underway for Tier 2

• TORs for NIU/Extended NIUs & their staffing done

(govt officials appointed for NIU/Extended NIUs)

• Consultation workshops/meeting held with

concerned stakeholders

Additional Strength Acquired

• Matching budget from MoF• National driven: GoN at steering seat • NIU rich with vibrant staff team• Inter agency coordination through NSC & NPC• M&E as per national M&E mechanism• Accountability as per its national system• Implementing role of concerned ministries well

respected

Mainstreaming of Trade in Nepal• 2nd TYP has included TRADE as one of its 6 pillars• One of the focuses in the coming budget: addressing

trade deficit • A clear budget line for NTIS implementation being

considered• Mainstreaming of trade in sectoral plans, e.g., underway

the process of Agriculture • To intensify the mainstreaming, senior officials of

concerned ministries are being re-orientated

Q is What about mainstreaming of trade in DPs' priority?

What Commitments from DPs required?

1. DPs' engagement in Nepal’s trade developmentA. Those who already involved in the formulation:

– Urged strong & continued commitments for the NTIS implementation

B. Those who not yet:– Urged to include trade in their Nepal Assistance

Strategy and support the NTIS implementation

What Commitments from DPs required?2. What we need?

– TRTAs– Aid for Trade– Ideas & experiences sharing– Coordinated delivery of the inputs from DPs

3. Why we need that supports?– DCs are committed in global forums to provide

LDCs with AfT & TRTAs– Nepal in its politico-socio-economic transformation

What Commitments from DPs required?4. DPs support to meet resource gap, since:

a) Nepal already mainstreamed trade into its national development agenda

b) The NTIS is in place and GoN highly committed priority-wise and resource-wise to implement it

c) But resource-wise Nepal alone is unable to afford to implement it

5. Selection of DF to support the process of the NTIS implementation

Functions of the DF

1. To Assist GoN/MoCs and coordinate donor responses to the NTIS Action Matrix,

2. To harmonize required interventions, including exploring out funding for NTIS implementation,

3. To support the NIU and the FP, including formulation and appraisal of Tier 2 projects,

4. To facilitate GoN in linking with DPs,

Functions of the DF5. To provide DPs with regular updates on the progress

on the EIF and NTIS implementation,

6. To assist NIU in creating knowledge and understanding on the EIF & NTIS process,

7. To support GoN in strengthening institutional mechanism arranged for EIF/NTIS implementation, i.e. NSC, FP, NIU and TWGs,

8. To assist NIU in managing ODA as for effective implementation of the EIF/NTIS,

Suggested Criteria for DF• The DF should be actively engaged in the field of

TRADE,

• The DF should sufficiently allocate financial resources & HRs to undertake the role,

• The DF should be resident in the country,

• As the functions grow, a LEAD DF and additional DFs (e.g. strategy wise) may be required,

• Such additional DFs could be arranged upon joint consultation with GoN and local DPs,

Who Says Nepal can’t set an example?

Thanks for Your Kind Attention!