India, Nepal agree to review Friendship Treaty

IThe two neighbours have finalised a revised trade agreement and a treaty on controlling unauthorised trade.

New Delhi and Kathmandu revealed the decision to review the 1950 peace and friendship treaty in a joint statement that was issued on Saturday – the last day of the Nepalese Prime Minister Madhav Nepal’s five-day tour to India.
The negotiators of both the countries failed to narrow down differences on the issue of reciprocity of re-export facility, but went ahead to finalise the Agreement of Cooperation to Control of Unauthorised Trade without inserting the contentious provision.

New Delhi is reluctant to reciprocate Kathmandu’s offer of allowing India to re-export to Nepal imports from third country. The Ministry of Commerce in New Delhi anticipates that such a provision might turn Nepal into a transit point for export of Chinese products to India. The revised Treaty of Trade is expected to give a boost to the economic engagement by increasing the mutually agreed points of trade and result in both investment and employment generation. It aims at enlarging the scope of the existing institutional framework, under which India gives goods manufactured in Nepal duty-free access to its market.

External Affairs Minister S M Krishna and Nepalese Commerce Minister Rajendra Mahato were present when commerce secretaries of both the countries initialed the agreements. The present trade between India and Nepal during the year 2008-09 (April-February) is US $ 1,862.02 million and is expected to go beyond US $ 3 billion.

To help boost foreign trade of Nepal, India has also agreed to let its landlocked neighbour to use the Vishakhapatnam port in Andhra Pradesh for transit traffic. Nepal has already been using the port in Kolkata. New Delhi agreed to consider Kathmandu’s request for use of an additional sea port on the western coast for trade purposes.
The 1950 Treaty of Peace and Friendship between India and Nepal allows for free movement of people and goods between the two nations and a close relationship and collaboration on defence and foreign affairs. For New Delhi, the treaty is a tool to lessen Beijing’s influence on Kathmandu. But it has been drawing flak in Nepal, with the Maoists who now outnumber others in the Himalayan country’s Constituent Assembly demanding revision of the treaty.

The decision to review the treaty was taken during a meeting between Prime Minister Manmohan Singh and the visiting premier of Nepal. According to the joint statement issued on Saturday, the two PMs directed the Foreign Secretaries to discuss and review the treaty and other bilateral agreements to strengthen the relationship between the two neighbours.

Secretary Commerce Rahul Khullar (R) with Nepalese Counterpart Purushottam Ojha (L) signing the agreemnet in the presence of External Affairs Minister S M Krishna with Commerce and Supplies Minister of Nepal Rajendra Mahato, during the signing of Indo-Nepal agreement ceremony in New Delhi on Saturday. PTI