Preparation and Implementation of Nepal Trade Integration Strategy (NTIS 2010) Shiv Raj Bhatt EIF Programme Manager, Nepal Enhanced Capacities for Trade and Development (NECTRADE) Ministry of Commerce and Supplies Government of Nepal Presented at experience sharing program with the High Level Delegation from Bangladesh Kathmandu, Nepal (30 June 2011)

Objectives: Information and experience sharing between Nepal and Bangladesh on trade and development through mobilization of Aid for Trade, particularly Enhanced Integrated Framework (EIF). Contents: –Background (EIF and Nepal) –NTIS and status of its implementation –Next steps (the way forwards)

Background The EIF (previously IF) was set up in 1997 at the WTO. The EIF is a multi-donor program, which supports LDCs to be more active players in the global trading system by helping them tackle supply-side constraints to trade. The EIF is currently helping 47 LDCs worldwide, supported by a multi-donor trust fund, with contributions from 22 donors. Aim: The EIF is working in close cooperation with donors, six core partner agencies, observer agencies, the Executive Secretariat (ES) and the Trust Fund Manager (TFM) and other development partners who are supporting LDCs' own drive to: –mainstream trade into national development strategies; –set up structures needed to coordinate the delivery of trade- related technical assistance; and –build capacity to trade, which also includes addressing critical supply-side constraints. –The EIF process aims to strengthen donors' support to a country's trade agenda.

Institutions and Instruments to Implement EIF/Mobilize AfT 2007: the IF Working Group (IFWG) and the IF Steering Committee (IFSC) adopted a package of recommendations to implement the Enhanced IF (EIF). Institutions: a guideline has been prepared for implementation of EIF and as prescribed in it, an institutional set-up (at country level) is needed for implementation of EIF. –At Global Level: EIF Board; EIF Secretariat at WTO Geneva, led by the Executive Director and United Nations Office for Project Services (UNOPS) as EIF TFM –National Level: National Steering Committee (NSC); Focal Point (FP); National Implementation Unit (NIU); Donor Facilitator; and any other committees/task force/working groups etc., as needed and decided by the respective government. Instruments: Diagnostic Trade Integration Study (DTIS).

EIF and Nepal: Stock taking of DTIS 2004 Nepal submitted a proposal under revamped IF and received support under IF (Window I and Window II) during 2003/04. Prepared Diagnostic Trade Integration Study 2003/04 (Nepal Trade and Competitiveness Study 2004). To implement recommendations (Action Matrix) of DTIS 2004, Nepal Window II Trade Related Capacity Building Project was implemented in –Only a few recommended actions of DTIS 2004 were completed/conducted under the project (duration of the project was very short –one year, and limited resources – less than one million). –Major activities recommended by DTIS 2004 were left because of the limited resources and time available. ‘Enhancing Nepal’s Trade Related Capacity Project’ was designed and implemented ( ) to follow the DTIS 2004 and update it as per the changed context.

Stock taking of DTIS 2004 (Problems) Limited resources from IF trust fund to implement actions recommended under DTIS Weak co-ordination and lack of capacity (intergovernmental, government-private sector and government-donors) to implement the reform measures. Inadequate response by local donors. Ambiguity of ownership for implementation of DTIS 2004 itself (no implementation arrangement, responsible agencies not specified clearly, budgetary requirements are not in place, etc.). No proper implementation mechanism at place.

Overcoming problems A. Instrument/Strategy: NTIS 2010 (updated DTIS) was launched in June B. Institution/Implementation Mechanism To provide overall guidance and strategic direction, the GoN has constituted EIF National Steering Committee (NSC) - Chaired by the Chief Secretary of the GoN. Secretaries and officials of the GoN and business representatives are the members of NSC. The GoN has appointed the Secretary, Commerce & Supplies as EIF Focal Point (FP). In order to facilitate EIF process and establish an effective coordination between GoN and the donors, NIU was established at MoCS (headed by the Joint Secretary). Donor facilitator is selected (UNDP till November 2010 and Germany thereafter).

The Road Map to EIF/NTIS (June onwards) Work in Progress: Implementation of NTIS 2010 Implementation of EIF Tier1 Trade mainstreaming actions Renewing DPs Commitment Move towards Trade SWAp Development & implementation of Tier 2 Projects in line with NTIS 2010 DONE (till June 2010) : Constituted a Transition Team to formulate NTIS NTIS formulated and launched. Concept note on implementation mechanism Capacity Building Plan EIF Tier 1 approved NTIS endorsed by the Council of Minister Trade as a priority area in NDP. Formulate – Own – Implement – Communicate - Monitor

I. Identify NTIS Focus and Prepare NTIS Work February-September 2009: –Formulated a Transition Team –Drafted NTIS Table of Content and organized a seminar/WS with Government, Business, and Development Partners to discuss and endorse proposed Table of Content. –Drafted Chapters ToRs –Identified/Recruitment of Team Leader and chapter teams (mostly mixed national-international) –Worked with Donor Facilitator (UNDP) to secure additional funding from other DPs (DFID, Gov’t of Finland, IFC) Preparation of NTIS

Preparation of NTIS…….Contd. II. Conduct NTIS Work (Sept 2009-May 2010) Full report containing 12 chapters. Each chapter team presented initial findings to relevant EIF Technical Committee for feedback. 3 review workshops organized with GoN, Business, DPs (September 2009, November 2009, March 2010). Separate focus group discussion were organized for some chapters (e.g. investment facilitation, SPS and TBT, Trade support institutions).

Preparation of NTIS….contd. Prepared Action Matrix & Executive Summary (April-June 2010) Drafted ES+AM and Main Report (Background Report). Draft NTIS 2010 sent to GoN concerned Ministries and Departments, private sector organizations and to DPs for comments. Incorporated comments/suggestions of agencies/individuals NTIS 2010 launched 24 June

National trade strategy to enhance 'supply side capacity' for Nepal's space in global market; Prioritized strategy launched by PM himself. An outcome of analysis & consultation with broad range of stakeholders, but led by the GoN. What is NTIS?

19 goods & services identified as priority items; Plus 5 other goods suggested; 10 potential destination markets identified; 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

NTIS Priority Export Sectors

Having 4 strategies:  Strengthening trade negotiation capacity (Market Access)  Strengthening NTB related domestic capacity (Overall Supply Capacity…….trade facilitation/Product standards/quality/etc.)  Strengthening supply capacity of "inclusive exports" (Supply Capacity of priority export sectors)  Strengthening capacity to manage AfT/TRTAs (Resource mobilization) Having 87 cross cutting actions and 171 product/service specific & total 268 actions to be implemented Salient Features of NTIS 2010

Coordination with the Stakeholders GoN Buy-in:  Meetings with National Planning Commission to ensure alignment of NTIS proposed priorities with 3-year National Development Plan (NDP) priorities  Endorsement of NTIS 2010 by Council of Ministers DPs Buy-in:  MoCS intensifies discussions with interested DPs to identify possible ODA support for implementation of NTIS 2010  MoCS officials meets with concerned DPs individually and in groups several time.

Coordination with the Stakeholders Business Sector Buy-in:  From the start of NTIS process, business sector is co- organizer of NTIS seminars/workshops.  Business sector closely associated with work of the chapters teams, especially with the export potential assessment of the 19 sectors selected for priority focus.  Export Promotion Forum (EPF) created at FNCCI was engaged in NTIS preparation through creation of a public-private dialogue form (PPDF-Nepal) by MoCS.

Implementation Status Endorsement of NTIS 2010 by Council of Ministers. Trade is one of the six strategies of current three year plan. Mainstreaming of trade in sectoral plans (e.g. Industry and Agriculture) To intensify the mainstreaming process, senior officials of concerned ministries are being re-orientated Budget allocated for NTIS implementation in current FY budget. Tier 1 project implemented to support NIA in trade mainstreaming actions and AfT mobilization. TORs for NIU/Extended NIUs prepared and govt officials and experts appointed for NIU/Extended NIUs.

Implementation Status Development of project proposals (Tier 2) underway. Consultation workshops/meetings held with concerned stakeholders. Advocacy for trade development and mainstreaming Training for journalist and grassroots entrepreneurs. Donor Group was established with the support of DF and 3 DG meetings were held so far. Efforts for mainstreaming of trade in DPs' country strategies. Mobilizing AfT/TRTA  EIF Tier 1 (NECTRADE)  USAID/NEAT  GIZ/2 projects on Bio-Trade and WTO Implementation Support  EC-WTO Project  Consultation with other DPs (WB, ADB, DFID, Finland, Swiss, etc.)

Work Ahead I.Identify implementation mechanism (move towards Trade SWAp or other better options) II.Develop tools to monitor the progress (periodic/annual…..) III.Renew DPs Commitments IV.Involve stakeholders more deeply in the process V.Further mainstreaming of trade in national as well as sector development strategies

Conclusion The DTIS process is not simply about a Ministry preparing a trade sector development strategy with the support from a team of consultants. It is about creating buy-in from all key stakeholders (Concerned Ministries, business community, DPs and others) so that everyone can participate in its implementation without any hesitation. The process takes time, but is the key for success.

THANKS