It has happened at last. Two and a half years after Prime Minister KP Sharma Oli signed the landmark trade and transit agreement during his state visit to China in 2016, the protocol to make the agreement functional has finally been agreed to. China will now allow Nepal four ports and three dry ports for third-country trade. As per the agreement, Nepali cargo vehicles will be allowed into China to ferry goods to and fro from these ports. When the finalized protocol is signed at the highest level—most probably during the expected Nepal visit of Chinese President Xi Jinping, sometime in 2019—it will be a monumental development for the landlocked Nepal.
It will once and for all end the state of Nepal’s near complete dependence on India, with which it does nearly 90 percent of its trade and through which it carries out all of its third-country trade. When the Chinese routes are open, never again will India be able to impose the kind of crippling economic blockades it has resorted to whenever Kathmandu has not agreed to do its bidding. That at least is the idea.
But there are some hitches. The nearest Chinese port is over 2,600 km away while the port of Kolkata that Nepal has traditionally relied on for third-country trade is just 627 km from the Nepali border. That being the case, how many traders will choose Chinese routes instead of Indian ones? Thus by the time the finalized protocol is signed, Nepal and China must explore ways to make transit via China both cheap and hassle-free. For instance one advantage of Chinese ports could be that the freight-handling there is fast and Nepali traders will not have to spend much to store their goods there.
We believe that irrespective of the issue of financial viability, just having the option of reaching the high seas via China will greatly boost the morale of the landlocked country. In today’s interconnected world, no country can afford to completely rely on another; it must rather look to engage with the widest spectrum of countries possible. We also hope that India understands this and that it does not look to punish Nepal for ‘cozying up’ to China. Such churlishness will only undercut India’s standing among the smaller countries in the region.
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