China Opens Seven Ports for Nepal to Bypass India in International Trade

98 percent of Nepal's third country trade passes through India's Kolkata port. This would change after the implementation of the Protocol of Nepal-China Transit and Transportation, likely to take place in the next one month, giving Nepal access to seven major Chinese ports through which it can conduct trade with third countries.

Nepal and China have finalized the text of the much-awaited Protocol of Nepal-China Transit and Transportation in a major breakthrough during the third senior official-level meeting held in Kathmandu on September 4-6. The protocol agreement, which was first conceptualized in 2016 following India's alleged economic blockade, will give Nepal access to four of China's seaports and three dry ports for trade with third countries. It is a major step in the direction to curb Nepal's dependence on India for trade.

"China has agreed to let Nepal use Tianjin, Shenzhen, Lianyungang and Zhanjiang open seaports and Lanzhou, Lhasa and Xigatse dry ports for trading with third countries," a statement issued by Nepal's Ministry of Industry, Commerce and Supplies read.

According to the protocol, Nepalese traders can gain access to the Chinese side after producing an electronic invoice. This is in sharp contrast to the current business norms applied while trading through Indian ports, wherein they have to produce the original invoice. The protocol is expected to be implemented in the next one month. Nepal will use six border points opened by the Chinese side to trade through these ports.

"We have agreed to use international standards in all processes. The process of negotiation has now ended," Ravi Shankar Sainju, joint secretary at the Ministry of Industry, Commerce and Supplies told local media in Setopati.

Nepal and China signed the agreement on trade and transit when Nepalese Prime Minister K.P. Sharma Oli visited China to explore alternate international trade routes after India stopped supplying essential commodities, including petroleum products to the Himalayan state, in an alleged bid to maneuver Nepal's constitution as per its own wish.

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"We had talked about doing trade then. We have now agreed on how to do the trade. This is a significant achievement," Sainju added. 

Nepalese commentator Kanak Mani Dixit further delved into the transit protocol and pointed out a very crucial part of it.

"The transit protocol does not specify paths, allowing Nepal to choose viable routes; additional ports and dry ports can be added without amending the treaty, and Nepali trucks plates may go all the way to Shigatse (Xigatse) railhead to pick up goods," Kanak Mani Dixit wrote on Twitter.

At #breakthrough meeting lasting till late Thursday night in Kathmandu, Nepali & Chinese officials agreed on protocol to allow third country goods transit to Nepal via Chinese ports including Tianjin, Shenzhen, Lianyungang, Zhanziang & dry ports including Lhanzou, Lhasa, Shigatse pic.twitter.com/SzyHENZsjt

— Kanak Mani Dixit (@KanakManiDixit) September 7, 2018

It was being widely speculated that the Nepalese side may delay the finalization of the protocol with China given Indian Prime Minister Narendra Modi's efforts to retune the bilateral ties. However, with the mounting public pressure on Oli, the agreement had to be concluded sooner. Experts are of the opinion that Nepal would now have to build an infrastructure network connecting to these Chinese ports.

"It is now time to make the roadways ready to link Nepal to Shigatse, only then can we say Bye Bye Blockade forever! For fastest and most practical connectivity, probably the Kimathanka Corridor in ProvinceNo1 should be prioritized," Kanak Mani Dixit added.

It is now time to make the roadways ready to link Nepal to Shigatse, only then can we say #ByeByeBlockade forever! For fastest and most practical connectivity, probably the #Kimathanka Corridor in #ProvinceNo1 should be prioritised.

— Kanak Mani Dixit (@KanakManiDixit) September 7, 2018

Nevertheless, India is also leaving no stones unturned to remain influential despite the Chinese overtures in Nepal. India is constructing two rail lines, while three more are being planned with an aim to lend fillip to bilateral trade ties. During the February visit of Prime Minister Oli to New Delhi, India had agreed on giving dedicated access to Nepal to the port of Vizag.