WTO Commitments and Compliance in Nepalese Agriculture: Implications for the Tea Sector

Abstract

Despite more than two decades of Nepal's membership in the World Trade Organization (WTO), limited empirical evidence exists regarding the implementation of its agricultural commitments and their implications for strategic export commodities such as tea. This paper examines the commitments of Nepal under the WTO system and assesses how these obligations have been implemented and their impact on the agricultural sector and specifically on tea. To assess the implications of WTO accession at the institutional and policy level, it focuses on three pillars of the AoA, namely market access, domestic support, and export competition. Moreover, it also examines the obligations and challenges of the Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT) agreements. The analysis is performed using WTO notifications, national budgetary data, and industry-specific information to assess the tariff bindings along with intensity of domestic support and export incentives. The findings suggest that Nepal has maintained the applied tariffs much lower than the bound rates and utilized Green Box and Special and Differential Treatment with domestic support that is considerably low. Export incentive measures implemented during the study period were modest in scale. The evidence related to SPS and TBT challenges indicates that there are several capacity and compliance issues. Overall, the study concludes that Nepal has implemented its WTO commitments conservatively and recommends utilising the policy space available for supporting domestic producers.