Report No: AUS7462 . Nepal Nepal Trade Facilitation & Competitiveness Nepal’s Trade of Agriculture and Food Products SPS-related Issues and Proposed Solutions . January 2015 . GTI06 SOUTH ASIA . 1 . Standard Disclaimer: This volume is a product of the staff of the International Bank for Reconstruction and Development/ The World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. . Copyright Statement: The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development/ The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone 978-750-8400, fax 978-750-4470, http://www.copyright.com/. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail pubrights@worldbank.org. 2 Nepal’s Trade of Agriculture and Food Products: SPS-related Issues and Proposed Solutions By Kees van der Meer1 SPS and Trade Facilitation Specialist World Bank consultant Supported by Mr. Murari Prasad Gautam Upadhya Project Manager/Technical Advisor NIRTTP/PCO and other PCO staff January 2015 1 This report is based on information of many persons and sources. The interpretation and conclusions are the sole responsibility of the Consultant. 3 Table of Contents Acknowledgement .................................................................................................................................... 5 Abbreviations and Connotations ............................................................................................................... 6 Executive summary ................................................................................................................................... 7 I. Introduction ................................................................................................................................. 10 II. Exports and imports subject to SPS measures ............................................................................ 11 III. Export market access .................................................................................................................. 12 A. Formal market access in India .................................................................................................... 12 B. Formal market access in China ................................................................................................... 12 C. Formal market access in other countries ..................................................................................... 13 D. Requirements of private buyers .................................................................................................. 13 IV. Nepal’s SPS system: critical policy issues .................................................................................. 13 A. SPS system not risk-based .......................................................................................................... 14 B. Food control system mainly based on quality requirements ....................................................... 14 C. Inability to retain specialist staff ................................................................................................. 14 V. Basic capacity for SPS management ........................................................................................... 14 A. Insufficient capacity in plant pest surveillance and diagnostics ................................................. 14 B. No capacity to control pesticides ................................................................................................ 14 C. SPS import inspection ................................................................................................................. 15 D. Capacity for food safety surveillance and testing ....................................................................... 15 VI. Sustainability of SPS laboratories ............................................................................................... 15 A. Cost of laboratories is generally high ......................................................................................... 15 B. Staff requirement ........................................................................................................................ 16 C. Crucial factors for sustainability of laboratories ......................................................................... 16 D. Co-location of laboratories.......................................................................................................... 16 VII. Demand for SPS laboratory services .......................................................................................... 17 A. Regulatory laboratories ............................................................................................................... 17 B. Private laboratories ..................................................................................................................... 17 C. Geographic spread of regulatory laboratory services .................................................................. 17 D. Is a laboratory for pest-free analysis (PFA) reports at the border checkpoint desirable? ........... 19 E. Customs laboratory ..................................................................................................................... 19 F. Should SPS support be focused on products? ............................................................................. 19 VIII. Conclusions and recommendations ............................................................................................. 20 A. SPS policy priorities ................................................................................................................... 20 B. Donor support for SPS ................................................................................................................ 20 C. SPS laboratory priorities ............................................................................................................. 21 D. Proposed next steps ..................................................................................................................... 22 E. Outline TOR for two consultants for designing the investment plans ........................................ 23 ANNEXES .............................................................................................................................................. 26 4 Annex 1 Visit Schedule ...................................................................................................................... 26 Annex II Nepal Export and Import 2013 ............................................................................................ 28 Annex III Regional spread of DFTQC, DLS, PQO, DPR .................................................................. 35 Acknowledgement The Consultant is very grateful for the support received from government agencies, private sector entities and development partners. Special thanks go to the excellent support from the NIRTTP Project Coordination Office, in particular Mr. Mahesh Timsina, Project Coordinator and Mr. Murari P. Gautam Upadhya, Project Manager/Technical Advisor. World Bank staff Ms. Diep Nguyen-Van Houtte and Mr. Gerard McLinden provided helpful comments. 5 Abbreviations and Connotations AEC Agro-Enterprise Center CIQ China Inspection and Quarantine DFTQC Department of Food Technology and Quality Control DOA Department of Agriculture DOC Department of Customs DOLS Department of Livestock Services DPR Department of Plant Resources EU European Union FAO Food and Agriculture Organization of the United Nations FNCCI Federation of Nepalese Chambers of Commerce and Industry GAP Good agricultural practice GHP Good hygiene practice GMP Good manufacturing practice HACCP Hazard analysis and critical control point HMF 5-hydroxymethylfurfural ICD Inland containers depot ICP Integrated checkpoint IPPC International Plant Protection Convention ISO International Organization for Standardization ISPM International standards for phytosanitary measures MAPs Medicinal and aromatic products MOAD Ministry of Agricultural Development MOCS Ministry of Commerce and Supplies MRA Mutual recognition agreement MRL Maximum Residue Limit NBSM National Bureau of Standards and Metrology NIRTTP Nepal-India Regional Trade and Transport Project NPPO National Plant Protection Office NTIS Nepal Trade Integration Study PACT Project for Agriculture Commercialization and Trade PC Phytosanitary certificate PCO Project coordination office PFA Pest-free analysis PRIP Policy Reform Initiative Project (USAID) PRA Pest risk assessment SPS Sanitary and Phytosanitary STDF Standards and Trade Development Facility TA Technical assistance TBT Technical Barriers to Trade TOR Terms of reference US United States of America USAID United States Agency for International Development WTO World Trade Organization 6 Executive summary 1. Background of the report. The development objective of the Nepal-India Regional Trade and Transport Project (NIRTTP)2 is to decrease transport time and logistics costs along the Kathmandu-Kolkata corridor for the benefit of traders. Sanitary and phytosanitary (SPS) measures contribute significantly to time and costs and some of these can be reduced. There are occasional requirements by import authorities in India to send samples to a laboratory in India3 for testing because SPS certificates from Nepal are not recognized. Nepal has also market access problems because it lacks capacity for SPS management. Since Customs faces technical constraints in clearing goods, suggestions have been made for building co-located multi-functional laboratories at Kathmandu and at the border near Birgunj for facilitating border clearance. From 16-29 November, 2014, an assessment was made of (i) SPS capacity needed for market access and health protection; and (ii) laboratory services needed in SPS and Customs clearance. 2. Trade. Birgunj is the main border checkpoint for trade in goods subject to SPS measures. In 2013, Nepal had recorded exports and imports subject to SPS measures of about US$ 250 million and US$ 1.16 billion, respectively. One-quarter of these exports and more than half of these imports were cleared at Birgunj while one-third of exports and 13% of imports were cleared at Biratnagar. It is noteworthy, however, that there is a significant amount of informal exports and imports. 3. SPS requirements. Market access for plant products is most important for Nepal’s exports. Phytosanitary requirements for most plant products are dominant in India, China and most other countries. Food safety requirements are usually less constraining, unless there is a history of non-compliance. About 70 percent of Nepal’s exports go to India. Nepal presently does not have any capable food safety laboratory with accreditation and insufficient capacity in plant pest surveillance and diagnosis that meets Indian requirements. Working relations between SPS authorities in Nepal and India are limited and their improvement could enhance transparency and mutual trust. Three years ago Nepal and Tibet Autonomous Region, PR China, agreed on a SPS protocol for citrus exports, but successful implementation is pending because Nepal cannot meet the requirements yet. Private buyers often add additional safety and quality requirements to those of the importing country. 4. Nepal’s current SPS system has major capacity gaps and weaknesses in WTO compliance: (i) the SPS system is not risk-based; (ii) the food control system is mainly focused on quality requirements, not on food safety requirements; (iii) SPS agencies and laboratories suffer from frequent rotation of staff; (iv) insufficient capacity in plant pest surveillance and diagnostics; (v) no capacity to control pesticides; (vi) SPS import inspection is hardly in place and ineffective; and (vii) there is at present no testing capacity and accreditation for food safety parameters in microbiology, pesticide residues, veterinary drug residues, heavy metals, other pollutants and mycotoxins in any of the food laboratories including the Central Food Laboratory. 5. Sustainable investment in laboratories. Government regulatory agencies and private enterprises need access to laboratories. But, sustainability of investment in laboratories is a major challenge for developing countries. The cost of laboratories is generally high. Investment costs are often not the bottleneck, since donors provide funds and, if well maintained, equipment may have an economic life of 5- 8 years. Crucial factors for sustainability of laboratories are: (i) availability of sufficient operational funding; (ii) a sufficiently large stream of samples; and (iii) experienced and dedicated laboratory staff. 2 Nepal-India Regional Trade and Transport Project (NIRTTP). World Bank Report No. 78199, 3 June 2013. 3 Choice at convenience of the exporters is Kolkata or Patna of Bihar or Lucknow of UP. 7 6. For Nepal the option of co-location of SPS and Customs laboratories in an integrated institution has been raised as a possibility for reducing costs. However, there are technical constraints about co- location and benefits are mainly restricted to overhead. An important institutional obstacle for integrated institutions is that plant health, animal health and food safety authorities each have their own legal mandates that can only be changed by new legislation. Shared use of laboratory services also requires sophisticated rules for funding and accounting. Therefore, it is uncommon in most countries to combine plant diagnostics, animal disease diagnostics, food and chemical laboratories in one institution. 7. Testing in regulatory laboratories depends largely on government programs and funding. Private laboratories focus on service that satisfies customers (e.g. operation 7x24 hours and rapid turn-around). Their income from government services is mostly limited. 8. Considerations for proposed investment in laboratories. Duplication of public laboratory services is undesirable for expensive equipment because it increases need for government funding and can worsen sustainability of laboratory functions. Therefore, most countries have an apex laboratory structure for regulatory laboratories and samples for expensive chemical testing are sent to the central laboratory. Priority for expensive chemical food testing is to strengthen the Central Food Laboratory in Kathmandu. 9. A laboratory for pest-free analysis (PFA) reports at the border checkpoint is uncommon. International practice is that phytosanitary certificates (PC) certify the pest-free status of the consignment as required by importing authorities. If India would recognize Nepalese PCs then a PFA is redundant. The real problem is lack of capacity of the Nepal National Plant Protection Office (NPPO) to issue credible PCs. By international standards, plant pest screening and issuance of PCs always needs backup from crop pest surveillance, a reference laboratory, and inspection at production and/or packing locations. Nepal does not have a national reference laboratory for diagnostics of plant pests and diseases and its pest surveillance methodology and coverage are deficient. Without addressing these deficiencies, even investment in screening capacity on the border is of limited use. 10. Customs laboratories should focus on testing needed for support of raising revenue and controlling fraud and smuggling. The present Customs laboratory in Kathmandu has limited capacity and structural, climatic and safety deficiencies. At the border checkpoints, Customs lacks back-up from rapid tests and screening, and considers especially screening for chemicals high priority. 11. A product focus can be desirable for product-specific SPS risks and market access. For example, soil on root products forms a special phytosanitary risk for ginger imports in other countries, which can only be addressed by adequate washing facilities for ginger. Quarantine pest lists of the importing country often require product specific care in surveillance, mitigating treatment and inspection. However, most SPS capacity needed is basic and cross-cutting and therefore, senior officers in SPS agencies do not support the idea of having priority export products as an important consideration for investment in laboratories. 12. Recommendations. The proposals for NIRTTP have been developed against (i) recommended overall SPS policy priorities; and (ii) ongoing support from development partners. Recommended SPS policy priorities: • Improve compliance with WTO requirements by introducing risk-based SPS measures. • Follow good international practice and develop safety requirements for food products, in particular Maximum Residue Limits (MRLs) for pesticides residues, veterinary drugs and growth enhancers, mycotoxins and other contaminants, and tolerances for microbiological contamination. • Address retention of SPS specialists in laboratories and inspectorates. 8 • Tasks of Customs and SPS agencies need alignment. The principle of “quarantine release before Customs release” is properly enacted, but implementation is insufficient. • Laboratory support for Customs should focus on support for revenue collection, control of smuggling and fraud, and rapid release at the checkpoints. • SPS controls at border checkpoints deserve improvement with regard to international SPS good practice, since presently they are low effective. 13. Donor support for SPS. NIRTTP support should not overlap with support by other agencies. No other agency supports laboratory capacity for Customs. However, in the SPS area several other agencies provide support. 14. The World Bank Project for Agriculture Commercialization and Trade (PACT) has a small component to improve SPS services, including laboratory capacity, with equipment, training and support for accreditation, mainly in the Department for Food Technology and Quality Control (DFTQC). Much of the support has been allocated for strengthening and accreditation of quality controls. 15. The USAID Policy Reform Initiative Project (PRIP) focuses on policy reform in the SPS area. 16. A new EU project will enhance the capacity of the DFTQC Central Food Laboratory and the regional food testing laboratory at Biratnagar. It will extend accreditation to food safety parameters, including pesticide residues. The project will also support National Bureau of Standards and Metrology (NBSM) laboratories for testing vegetable fats and oils and microbiology parameters, and provide technical assistance to prepare a training program on the application of GHP, GMP, and HACCP in the tea, coffee, dairy processing, and meat processing industries. Recommendations for NIRTTP: • Establish a plant diagnostic reference laboratory and support the enhancement of a program for pest surveillance. • Upgrade the Customs laboratory in Kathmandu. • Establish at the border checkpoint at Birgunj screening laboratories for Customs, food safety, plant quarantine and animal quarantine, preferably co-located with separate rooms (or in laboratory buildings in or near the border checkpoint). • Adequate space in buildings at suitable locations will be needed for the laboratories. (A difficulty for planning screening laboratories on the Birgunj border is that Nepalese authorities seem to be uncertain about time of delivery of works at the Integrated Check Post or ICP.) 17. Proposed next steps. This report provides steps for implementing the proposals in the next 2-3 years. The first step is to have Government endorsement for the proposals. After approval the Government of Nepal might consult with Indian SPS authorities, aiming at obtaining cooperation in SPS capacity building and building mutual trust. Other steps include the recruitment of international phytosanitary and chemical laboratory specialists for designing the proposed investment plans. Outline Terms of Reference (TOR) for the international specialists are provided. 9 Introduction 18. Background of the report The development objective of the Nepal-India Regional Trade and Transport Project 4 is to decrease transport time and logistics costs for bilateral trade between Nepal and India and transit trade along the Kathmandu-Kolkata corridor for the benefit of traders by reducing key infrastructure bottlenecks in Nepal and by supporting the adoption of modern approaches to border management. Its Component B: Strengthen Trade-Related Institutional Capacity in Nepal, has a sub- component “Improvement of Trade-Related Laboratories” (with indicative budget of US$3m), including laboratories for Customs and sanitary and phytosanitary testing for food safety, plant quarantine and animal quarantine. The project document mentions the possibility of co-located multi-functional laboratories for facilitating the border clearance process. 19. In recent years, concerns have been raised in Nepal by government agencies and the private sector about occasional requirements by import authorities in India to send samples to Kolkata for testing because certificates from Nepal were not recognized. In the Aide Memoire of the NIRTTP Implementation Review and Support Mission5 the question was raised whether investment in trade-related accredited integrated laboratories for SPS and Customs functions are desirable and feasible, e.g. one at Kathmandu Valley and one at a border checkpoint. It was agreed that as next steps the government would prioritize export products that should be promoted through consultation with public and private sector stakeholders, and that the Bank would send an international expert on laboratory certification to review assessments done and to propose an action plan for moving forward, including helping the Department of Customs (DoC), the Ministry of Commerce and Supplies (MoCS), and the Ministry of Agricultural Development (MoAD) to draft Terms of Reference (TOR) for a consultant to begin the design of the laboratories. 20. Work conducted. The Consultant visited Nepal during 16-29 November, 2014 and, in close cooperation with the NIRTTP Project Coordination Office (PCO), conducted interviews with public and private stakeholders in Kathmandu and Birgunj, and organized on Monday, 24 November a consultative workshop with stakeholders in Kathmandu. The list of interviewed persons is attached as ANNEX I. In addition, information was collected about foreign trade of products that might be subject to SPS requirements, i.e. (i) agriculture and food products, and (ii) medical and aromatic products (MAPs). It also appeared necessary to collect information about activities and experiences of projects supported by Development Partners, especially the EU, the World Bank Project for Agriculture Commercialization and Trade, and USAID. 21. The agencies and stakeholders directly involved in this initiative include the Ministry of Commerce and Supplies, Department of Customs, Department of Agriculture (DoA), Department of Livestock Services (DoLS), Department of Food Technology and Quality Control, and the Agro-Enterprise Center of the Federation of Nepalese Chambers of Commerce and Industry (AEC/FNCCI). 22. Structure of the report The subsequent chapters of this report cover the following: • Exports and imports subject to SPS measures • Nepal’s SPS system: critical policy issues • Basic capacity for SPS management • Sustainability of SPS laboratories • Demand for SPS laboratory services • Conclusions and recommendations 4 Nepal-India Regional Trade and Transport Project (NIRTTP). World Bank Report No. 78199, 3 June 2013. 5 World Bank, Aide Memoire, 22 October, 2014. 10 Exports and imports subject to SPS measures 23. WTO members have the right to take sanitary and phytosanitary measures necessary for the protection of human, animal or plant life or health, provided that such measures are not inconsistent with the provisions of the SPS Agreement. All imported plants, animals and products thereof, including food and feed, can cause risks to the life and health of consumers, animals, plants and the biodiversity, and are therefore subject to sanitary and phytosanitary measures. 24. Exports. In 2013, Nepal had recorded exports of about US$ 250 million of products that are subject to SPS measures. (See Annex II Table II.1) The exports include a broad range of products. Among these, there were 25 products of which the export value was more than US$ 1 million and their total value was US$218 million and 36 products with export value of more than US$ 0.5 million with a total export value of US$225 million. Important products include: • Agriculture crop commodities: cardamom, big cardamom, black fermented tea, lentils, betel nut and ginger; • Processed products: fresh and frozen fruit juices, oil cakes, pasta; and • Medicinal and aromatic products: these include plants and parts of plants (including seeds and fruits) of a kind used primarily in perfumery~ in pharmacy or for insecticidal or similar purposes. Export value of animals and animal products is relatively limited. 25. Imports. In 2013, recorded imports subject to SPS measures were about US$ 1.16 billion (See Annex II Table II.2). Of these, there were 43 and 109 products with import values of US$ 5 million and US$ 1 million, respectively, and total import value of US$ 0.94 billion and US$ 1.10 billion. Most imported products are processed food, and agriculture crop products, including cooking oil, fruit and vegetables. Animals and animal products form a small share of imports and import of MAPs is limited. 26. Informal export and import. Nepal has an open border with India and in addition to recorded formal exports and imports of agriculture and food products there is much informal trade, especially with India. According to independent specialists, much more agricultural and food products are exported informally than formally, mostly potatoes, rice and vegetables from border districts. The Nepal tax system is said to provide incentives for informal export. By legislation, tax can be levied in the district of production and the district of consumption. However, districts also tax transiting cargo, which means that there is costly accumulation of taxes between production areas and Kathmandu. Informal trade with China is of much smaller scale and concentrated in particular locations, but may include some export of highly valuable MAPs. Informal imports include a range of products, including goats and buffalo. 27. The implications of informal trade are that there is no protection against health risks and that there is no tax revenue. 28. Border checkpoints. In 2013, one-third of all recorded exports were cleared at Biratnagar, followed by Birgunj with one-quarter and Tribhuvan International Airport with about one-fifth (Annex II Table II.3). More than half of all recorded imports enter the country at Birgunj and Birgunj Dry Port. Bhairahawa handles 15 % and Biratnagar 13% of imports. 29. Recorded exports subject to SPS controls contribute 27% of the export value. Most exports subject to SPS controls are released at Biratnagar (37%), Birgunj (27%) and Mechi (20%) (Annex Table II.4). Birgunj and Birgunj Dry Port together have the biggest share in handling recorded imports subject to SPS with 57%, followed by Bhairahawa with 20% and Biratnagar with 16%. 11 Export market access 30. Given their dominant share in trade, market access for plant products is most important for Nepal’s exports. Second priority is access for processed food products. Formal market access in India 31. About 70 percent of Nepal’s formal exports go to India and therefore market access requirements in India are very important. There are clearly SPS issues with market access to India, but much information is anecdotal and without detailed interviews of traders and officials on both sides of the border and assessment of India’s SPS imports policies and its implementation it is not possible to pinpoint exact bottlenecks. The implementation of SPS requirements among different border checkpoints apparently differs and may be subject to discretionary powers by authorities in different Indian states. Experiences differ among products and allegedly rent-seeking may also affect decision-making. The formal requirements for food safety and plant quarantine are provided and some experiences discussed below. 32. Initial market access for plant products requires that they need to be listed in the Plant Quarantine Order of India. If this is not the case products may be refused access because of suspicion that they may be in transit from China. Listing requires a formal request from Nepal to India and can perhaps trigger a pest risk assessment (PRA) by India before the listing is approved. For most processed food products no special market access approvals are required. 33. For regular shipments of approved plant products, the formal requirements for each consignment are that a random sample is taken and that for release (i) a pest-free analysis report and (ii) a pesticides residues report are required from the importer. An alternative for regular exporters of plant products to India is to obtain through an agent a special approval for a number of months or for the growing season. For this, traders need to present a so-called “type sample” of their product to the Indian authorities. The approval takes time and is costly, but the advantage is that subsequent imports are smooth. 34. Special issues for SPS management are that India requires phytosanitary certificates from Nepal but does not seem to recognize them and neither does India recognize the capacity of SPS testing laboratories in Nepal to provide test reports on pesticides residues. As a result, Indian authorities can and do sometimes require for some products at some border checkpoints that pest-free analysis and tests for pesticides are conducted at a laboratory in India6 which requires long turn-around times of 7-10 days. However, it was reported that in Birgunj Indian importers manage to avoid long delays. There are concerns about rent-seeking on the Indian side of the border, which do raise transaction costs and in some cases result in increased waiting times. It is generally believed that the government of Nepal should ask for a Mutual Recognition Agreement (MRA) to solve SPS issues in bilateral trade, but that most likely India will respond that Nepal presently does not have any capable food safety laboratory with accreditation and insufficient capacity in plant pest surveillance and diagnosis. 35. At present working relations between Nepalese and Indian SPS authorities are limited and their improvement could enhance transparency and mutual trust. Formal market access in China 36. PR China has demanding phytosanitary requirements. Market access for each product requires a signed protocol. So far Nepal only signed a protocol with Tibet Autonomous Region, PR China, for citrus 6 Choice at convenience of the exporters is Kolkata or Patna of Bihar or Lucknow of UP. 12 exports three years ago. In order to implement this protocol, Nepal needs crop pest surveys of which the results need to be approved by China Inspection and Quarantine (CIQ). China has specified 24 quarantine pests, of which according to Nepalese specialists about 20 are absent in Nepal. However, no evidence based on international surveillance standards has been provided. After approval, it is likely that registration of production areas, traders, and packing houses will be required.7 So far, successful implementation is pending and food safety requirements are not fully clear yet. Formal market access in other countries 37. Market access requirements can vary much country by country, but phytosanitary requirements are likely to be dominant in most countries. They can be specific for plant species and pests and diseases. 38. Food safety requirements are generally not dominant, unless there is a history of non-compliance for certain food safety parameters. Food safety testing costs can be high, e.g. for the EU, because of the range of test parameters and tolerance levels. Sometimes, Good Agricultural Practice (GAP), Good Hygiene Practice (GHP), Good Manufacturing Practice (GMP), Hazard Analysis Critical Control Points (HACCP), and health certificates are required. Requirements of private buyers 39. Often requirements of buyers are additional to the requirements of the importing country. They differ much between market segments, e.g.: • In demanding markets, such as supermarkets and branded food companies in the EU, Japan, private inspection companies are often used for certification of safety and quality parameters. • Less demanding markets, such as the modern sector in developing countries. • Markets with low requirements, which are typically traditional market segments in developing countries, including wet markets. • Private buyers in demanding markets can have many requirements. Food safety requirements can include GAP, GMP, HACCP, ISO 22000, etc. Often there is routine testing for each shipment, with preference for private laboratories (which provide 7x24 hours service with short turn around). Some private schemes accept third party laboratories only. The choice of laboratories depends in addition to trust also much on logistics. • Quality requirements also differ much depending on the product and its commercial purpose. Often there is routine testing for each shipment. Public mandatory quality standards are mostly not useful for private buyers, or even a burden. Increasingly, requirements include environmental and labor conditions. Control of storage pests is common, but generally there are no other private requirements on plant and animal quarantine, except by seed and breeding businesses. • Special requirements from buyers of MAPs include testing reports about concentrates of essential oils and active ingredients. This is about product characteristics, not SPS requirements. Technical capacity requirements for tests can be very diverse. Nepal’s SPS system: critical policy issues 40. The current SPS system has major capacity gaps and weaknesses in WTO compliance. Some of these weaknesses are being addressed with support from development partners, which need to be taken into consideration while designing improved laboratory capacity (See Chapter VIII). 7 In protocols with countries in Southeast Asia such requirements are common. 13 SPS system not risk-based 41. The present SPS system is not compliant with the WTO SPS Agreement. SPS measures should be risk-based and controls should be proportionate to risk. This requires risk categorization of products and processes, which still has not received attention. Adoption of risk-based management will shift attention from routine controls to prevention and targeted controls, and the need for laboratory testing may turn out to be much lower than assumptions based on the present non-risk based system. USAID is providing support for adopting risk-based management. Food control system mainly based on quality requirements 42. Nepal has about 115 mandatory food product standards which contain mainly minimum quality requirements and only a limited number of safety requirements. Good international practice suggests that, generally, quality standards should be voluntary, and that mandatory standards (called technical regulations in the Technical Barriers to Trade (TBT) Agreement) should only be used where necessary for the protection of safety, environment, and consumers. Food safety requires SPS measures with Maximum Residue Limits for chemical and microbiological contamination. The main DFTQC Central Food Laboratory has accreditation for 27 food quality parameters, not food safety parameters. Much of the capacity for quality testing is not relevant for international food safety requirements. Legislation and the policy framework for food safety are deficient. USAID and the EU are supporting formulation of food safety policy, testing capacity and accreditation for food safety parameters. Inability to retain specialist staff 43. Diagnostics, testing, and quarantine inspection require high level specialists, of whom training is costly and requires much time. Frequent rotation of staff is a serious obstacle for building sustainable capacity in laboratories and inspectorates. Much international support has been provided for training in the country and abroad, but often after training the trained staff move to better paying employment in and outside of government. Basic capacity for SPS management Insufficient capacity in plant pest surveillance and diagnostics 44. Plant quarantine capacity, which is highest priority for market access for plant products, is very weak. International standards (i.e. the International Plant Protection Convention (IPPC)’s International Standards for Phytosanitary Measures (ISPM)) have been adopted with international support, but there is no implementation. A main shortcoming is that there is only ad hoc pest surveillance and no central diagnostics laboratory with specimen collection. There are insufficient numbers of specialists in pathology, entomology, taxonomy, etc., in the country. Capacity in plant quarantine is critical for (i) market access negotiations for plant products; (ii) developing quarantine and non-quarantine pest lists; and (iii) issuance of reliable phytosanitary certificates. No capacity to control pesticides 45. Nepal has pesticides registration in place, but there is no market surveillance and no laboratory to control the approval status, prescribed quality and labeling requirements of pesticides in the market. These 14 issues are overlooked in public documents such as the agricultural development strategy8 and present donor support. SPS import inspection 46. SPS import inspection is hardly in place and ineffective. Samples are taken of every incoming consignment and papers are inspected, but at the main import checkpoint, Birgunj, testing is generally not conducted and no interceptions are being reported for food, plant and animal products. 47. The legal principle of the sequence in border release processes is correct: quarantine release before Customs release. However, the lay-out of border checkpoints is not suitable for correct implementation and quarantine inspectors are not operating in the Customs area but located behind. Capacity for food safety surveillance and testing 48. There is at present no testing capacity and accreditation for food safety parameters in microbiology, pesticide residues, veterinary drug residues, heavy metals, other pollutants and mycotoxins in any of the food laboratories including the Central Food Laboratory. 49. There is an urgent need to build this capacity, which EU support is addressing. However, since testing for chemical parameters is often more expensive than quality testing, there will be competition for skilled staff and funding within the DFTQC Central Food Laboratory. Sustainability of SPS laboratories 50. Sustainable use of SPS laboratory capacity is a major challenge for developing countries. This chapter discusses the main issues. Cost of laboratories is generally high 51. Costs of SPS laboratories depend on the area and range of parameters. Investment costs are (i) high for: • Food safety testing for chemical parameters for the international markets • Animal disease control • Quality testing of veterinary drugs and bio-active substances (ii) moderate for: • Quality of pesticides (iii) low to moderate for: • Plant pest and disease diagnostics • Microbiology in food 8 Ministry of Agricultural Development 2014. Agriculture Development Strategy (ADS) 2014 , Singhdurbar, Nepal. See also Nepal Country Report in: FAO 2013. Advancement of Pesticide Regulatory Management in Asia. RAP publication 2013/08. 15 52. Investment costs are often not the bottleneck, since donors provide grants, and if well maintained, equipment may have an economic life of 5-8 years. 53. Annual operational costs, however, are usually much more constraining since donors are reluctant to pay for them and operational funding largely depends on Government. They are usually about 25% of investment costs in equipment and include expenses for: • Participation in proficiency testing and maintaining accreditation • Maintenance and calibration • Expensive chemicals and standards needed for testing • A minimum number of tests per year for maintaining proficiency and operational functioning of advanced testing equipment: it requires preferably 1000-2000 tests per year for advanced equipment and a minimum of at least 500 tests per year • Collecting sufficient numbers of samples through active and passive surveillance and sending them to laboratories Staff requirement 54. Staff requirements depend on the kind and range of tests. Specialized equipment and testing parameters require significant special training, and reliable results require experience and proficiency of staff. Staff cannot easily be reallocated to other equipment and other tests. Therefore, if a specialized staff takes another job, the laboratory may not be able to continue testing until replacement staff has been trained. Therefore, more than one staff has to be trained for sustainable use of sophisticated equipment. Crucial factors for sustainability of laboratories 55. There are many examples of laboratories and testing capacity in developing countries that are not sustainable. Main factors for sustainability are: • Availability of sufficient operational funding • A sufficiently large stream of samples • Experienced and dedicated laboratory staff Co-location of laboratories 56. Given the sustainability constraints, the question arises whether co-location of laboratories (or integrated laboratories) would mitigate bottlenecks of funding, samples and staff. For Nepal the option of combining SPS and Customs laboratories in an integrated institution has been raised. 57. Different laboratories can be combined in one location. However, testing for different groups of products and parameters will require physical separation of individual rooms and groups of rooms to prevent cross-contamination. For example, microbiological and chemical testing needs to be done in separate laboratories and plant pest diagnostics has to be separated from food safety testing. There are only limited options for multiple use of expensive equipment for testing of different parameters. For example, testing pesticides quality and pesticides residues requires the same type of equipment but use of the same equipment and the same rooms for these different purposes should be avoided. 58. For all these reasons possibilities for cost saving though co-location are limited and are mainly restricted to overhead and staffing. Benefits of co-location for users are limited since multiple testing of samples is infrequent. Testing the same samples for food safety and plant pests rarely occurs. Testing animal (including fish) food and feed can have overlap of testing for zoonotic and general food/feed safety parameters. Therefore, there is a dilemma whether to establish animal food and feed laboratories near 16 animal disease diagnostic laboratories or near general food safety laboratories. In developed countries where the number of samples for testing is high, the choice is usually for duplicated laboratory capacity in general food safety and laboratories for safety of animal food and feed. 59. A complicating factor for co-locating SPS regulatory laboratories under one management is that plant health, animal health and food safety authorities each have their own different legal / institutional mandates. Use of services of a legally independent common laboratory requires sophisticated rules for funding and accounting for which present systems have no ready solutions. For all these reasons, it is uncommon in most countries to combine plant diagnostics, animal disease diagnostics, food and chemical laboratories in one institution. 60. Sometimes, combination of SPS laboratories with research, education and commercial testing are proposed for possible saving of costs. However, advantages are limited at best. International experience shows that combining research and regulatory laboratory functions is problematic because of different cultures and disruption of disciplined regulatory testing. Combining educational and regulatory laboratory functions is undesirable, because of risks of disruption and damage to expensive equipment.9 Finally, combining regulatory and commercial testing functions is possible, especially in food and feed testing, but there is a difference in culture between commercial and regulatory testing laboratories as will be pointed out below. Demand for SPS laboratory services Regulatory laboratories 61. Testing in regulatory laboratories depends largely on government programs and funding. Funding can be lump sum, per test, and combinations of these. Demand and fee income from the private sector are often limited. As indicated already, often lack of funding is a main constraint for sustainability. It results in lack of samples, maintenance, calibration and accreditation, lack of safety, environmental care and climatic facilities, and last but not least, lack of quality of services. 62. In such cases, there is temptation to use regulatory powers to earn fee income from private enterprises, and sometimes also to set fees below cost in order to compete with other laboratories. Private laboratories 63. Private investment in laboratories is subject to expected demand. If there is enough paying demand for quality of services, the investor will seek ISO 17025 accreditation. Private laboratories often have a limited range of tests, compared to reference laboratories. Their focus is on service to satisfy customers (e.g. operation 7x24 hours and rapid turn-around). They mostly earn little income from government services. Geographic spread of regulatory laboratory services 64. Duplication of laboratory services is undesirable for expensive equipment because it increases need for government funding and can worsen sustainability of laboratory functions. Mostly, it is better to send samples for expensive chemical testing to the central laboratory than to duplicate capacity. However, it can be unavoidable for services of which turn-around time is critical. Duplication need not be a problem for 9 This does not mean that groups of students cannot visit a regulatory laboratory to learn about the use of sophisticated equipment, but that is different from getting laboratory skills. 17 services with limited economies of scale, e.g. microbiology testing, simple quality parameters, and if logistics costs of central sample collection is relatively high. It can be even attractive if it generates sufficient extra demand. 65. For these reasons, it is common to have an apex laboratory structure for regulatory laboratories. It will have one central laboratory with reference function and expensive equipment that cannot be duplicated. In addition, it will have regional and local laboratories where unavoidable, or where duplication is not a problem, or even attractive. Decentralized laboratories need back-up from central laboratories. Nepal SPS agencies and the Department of Plant Resources (DPR) all focus on an apex structure. Figures A, B, C and D in ANNEX III show their present regional spread. 66. Is a laboratory on the border a good contribution, given the requirements by Indian authorities sometimes to send samples to Kolkata for analysis? Common international practice is to have only screening functions at border checkpoints. Many good screening tests are available for residues of (part of) pesticides, veterinary drugs / growth enhancers, aflatoxin, which provide cheap alternatives for conventional testing. Only ports with large volumes of trade have laboratories to avoid logistical delay and to facilitate trade. For financial and operational sustainability of a laboratory, at least 1000 samples of testing is required per year, and it should be taken into consideration that expensive testing equipment at the border competes with capacity at central laboratories. 67. Because it is important to avoid queuing at the border, testing for which cargo has to wait for release at the border is undesirable for all testing with turn-around time of more than one day. This applies to all microbiology testing since it requires several days. Moreover, testing of perishables that requires more than a few hours is undesirable because of rapid loss of quality. 68. India’s future requirements for testing pesticide residues will be the main factor for demand. Will it be mandatory for all food consignments or will there be options for mitigation? If testing would become mandatory, the overall demand for testing services would probably jump to many thousands of samples per year. It would also make private investment in accredited laboratories attractive. 69. It is important to note that imposition of mandatory testing of all consignments may not be risk- based, unless India makes the point that there is frequent and persistent non-compliance. In the years ahead risk-based testing intensity by India may be modified when compliance improves, for example because of proper response from exporters. 70. Without mandatory testing, private sector demand for testing at the border is uncertain because the cost of conventional testing of pesticides residues is at least US$50 per sample. For most informal exporters the present system is preferable, and if testing becomes mandatory, incentives for informal exports will increase. For many formal traders, the present practice of approval for several months based on type sample may be more attractive than testing for each consignment. Some of the exporters may for logistical reasons prefer using the Central Food Laboratory after its accreditation. Most exporters to the EU, Japan etc., will probably not use a testing laboratory on the border since requirements in these countries cover more parameters and require lower levels of detection than India does. 71. Would requirements for import of food products in Nepal add demand for testing pesticide residues? This is not sure yet. To date, Nepal has only been testing for compliance with mandatory product standards, and these standards do not include requirements for maximum residue limits for pesticide residues and other contaminants. Development of food safety policy is needed to establish such requirements. However, these requirements should be risk-based and a system combining use of rapid test kits and conventional testing seems to be most appropriate for Nepal. Mandatory testing of pesticides 18 residues for all imports will impose significant costs. If the government pays it will be a drain on public finances and if private traders have to pay it would be an incentive for informal imports. Is a laboratory for pest-free analysis (PFA) reports at the border checkpoint desirable? 72. Common international practice is that phytosanitary certificates certify the pest-free status of the consignment, as required by importing authorities. If India would recognize Nepalese PCs then a PFA is redundant. The real problem is lack of capacity/recognition of Nepal National Plant Protection Office (NPPO) to issue credible PCs. 73. By international standards, plant pest screening and issuance of PCs at the border always needs backup from crop pest surveillance, a reference laboratory, and inspection at production and/or packing locations. Therefore, a plant pest diagnostic laboratory on the border has only limited technical use, and is generally not good international practice. 74. Nepal does not have a national reference laboratory for diagnostics of plant pests and diseases and its pest surveillance methodology and coverage are deficient. Without addressing this deficiency, investment in screening capacity on the border is of limited use. Customs laboratory 75. Customs laboratories should focus on testing needed for support of raising revenue and controlling fraud and smuggling. Duplication of laboratory functions of regulatory agencies can create sustainability problems and confusion because of the legal mandate of regulatory agencies. 76. The present Customs laboratory in Kathmandu has limited capacity and structural, climatic and safety deficiencies. At the border checkpoints, Customs lacks back-up from rapid tests and screening, and considers especially screening for chemicals high priority. Should SPS support be focused on products? 77. The Nepal Trade Integration Study (NTIS) 2010 has a focus on institutions, policies, projects and trade issues for major export goods: cardamom, ginger, honey, lentils, green tea, black tea, uncooked pasta, medicinal plants and essential oils. Several donor projects focus on supply chains for some of these commodities, such as the STDF/FAO project for ginger. SPS capacity is often only one of many factors for trade facilitation and the question is how much weight should be given to product specific considerations for building SPS laboratory capacity. 78. A product focus can be desirable for product-specific SPS risks and market access constraints. For example, soil on root products forms a special phytosanitary risk for ginger imports in other countries, which can only be addressed by adequate washing facilities for ginger. Quarantine pests lists of the importing country often require product specific care in surveillance, mitigating treatment and inspection. However, some capacity needed is basic and cross-cutting. Testing pesticides residues requires costly generic testing capacity that can with limited fine-tuning be applied for all domestic and export products. Following international standards for crop pest surveillance and diagnostics requires generic capacity. Laboratory capacity needed for ISO 17025 has requirements that are partly basic and partly focused on a specific testing parameter. The actual range of products subject to SPS controls exported at the main checkpoints is broad (See Annex II Table II.5). Focusing on specific capacity for a few products can only be justified for specific constraints of major export products, such as ginger which should be free of soil. 79. In a consultation workshop, senior officers in SPS agencies did not support the idea of having priority export products as an important consideration for investment in laboratories. 19 80. Conclusions and recommendations 81. Requirements by India for pest-free analysis and testing for pesticide residues have triggered the proposal to establish two new integrated laboratories for SPS and Customs, one in Kathmandu and one on the border. The assessment of this proposal should be conducted against (i) overall SPS policy priorities; and (ii) ongoing support by development partners. SPS policy priorities 82. Recommended policy priorities are: • Improve compliance with WTO requirements by introducing risk-based SPS measures. This includes SPS policy reform, strengthening of the legal framework and risk-categorization. • Follow good international practice and develop safety requirements for food products, in particular MRLs for pesticide residues, veterinary drugs and growth enhancers, mycotoxins and other contaminants, and tolerances for microbiological contamination. In this context, the present system of product standards with regard to WTO compliance and necessity should be reviewed. At present, quality requirements are much more demanding than safety requirements and there will be strong competition for scarce funds and staff between testing for quality and safety requirements. • Address retention of SPS specialists in laboratories and inspectorates. The high job rotation of technical specialists affects capacity and creates recurrent gaps in capacity for use of advanced equipment in laboratories, plant pest and animal disease diagnostics, and surveillance and inspection. High mobility thwarts the buildup of specialized capacity in SPS agencies, and causes continuous high training costs to fill vacancies with adequate technical experience. • Tasks of Customs and SPS agencies need alignment. The principle of quarantine release before Customs release is properly enacted, but implementation is insufficient because of deficiencies in the lay-out of border checkpoints and perhaps lack of SPS inspectors. • Laboratory support for Customs should focus on support for revenue collection, control of smuggling and fraud, and rapid release time at the checkpoints. Better alignment with regulatory laboratories is desirable. • SPS controls at border checkpoints deserve improvement with regard to international SPS good practice since presently they are not very effective. Technical screening capacity in Birgunj checkpoints appears to be missing for animal quarantine, poor for food quarantine, and limited for plant quarantine and underutilized. At present there appear to be virtually no interceptions. Requirements need to be clarified, and procedures reconsidered, also in interaction with Customs. • Following international good practice in SPS it is desirable to have intensive contacts and regular consultations with the trading partners. Therefore, bilateral working groups should be considered for SPS – food safety, animal health, and plant health – with the main trading partners, i.e. India, China and Bangladesh. The Government of Nepal may propose to the authorities of the respective countries to include this in the agenda for the next trade treaty negotiations. Donor support for SPS 83. NIRTTP support should not overlap with support by other agencies. No other agency supports laboratory capacity for Customs. However, in the SPS area several other agencies provide support which covers priority areas identified above. 84. The World Bank PACT has a small component of US$ 5.39 million to improve effectiveness and efficiency of SPS services, including strengthening laboratory capacity with equipment, training and support for accreditation, mainly in DFTQC. About US$ 0.8 million is not spent yet. PACT did not carry 20 out an initial needs assessment of laboratory capacity and responded generally to demand formulated by the SPS departments. Much of the support to DFTQC seems to have been allocated for strengthening of quality controls, and the 27 parameters for which accreditation has been obtained are not in SPS food safety, but in quality control.10 Following a recent project review11 it was decided to assess effectiveness of this support. The assessment will focus on output and outcome of support for testing, and for what parameters have been tested. 85. The SPS authorities have felt urgency to improve the legal framework to harmonize with international and WTO regulatory provisions. The USAID Policy Reform Initiative Project is addressing policy reform in the SPS area. It includes a.o. support for (i) food safety policy formulation; (ii) improving compliance of the food law and regulations with the WTO agreements; (iii) development of national standards on plant and animal quarantine; (iv) commodity-based pest lists; (v) assessment of strengths of public and private laboratories; and, (vi) a needs assessment of screening facilities on the border. 86. A new EU project will enhance the capacity of the DFTQC Central Food Laboratory and the regional food testing laboratory at Biratnagar to reach international benchmarks. It will provide technical assistance to extend accreditation to parameters of testing of pesticide residues, heavy metals, mycotoxins, veterinary drug residues, food colors, caffeine in tea and coffee, HMF12 in honey, benzoic acid, nitrites and microbiological testing parameters for total plate count, coliform count, E.coli, and yeast and molds. Training will be provided on site using installed equipment in Kathmandu in which staff from regional laboratories and one or more private sector laboratories will participate. A laboratory needs assessment will be carried out in the first quarter of 2015 to identify equipment to be provided. The laboratory equipment and supplies will be delivered in June 2016. 87. The EU project will also support National Bureau of Standards and Metrology laboratories for testing vegetable fats and oils and microbiology parameters. It will also provide technical assistance to prepare a training program on the application of GHP, GMP, and HACCP in the tea industry, the coffee industry; the dairy processing industry, and meat processing industry. SPS laboratory priorities 88. Considering the above, prioritized recommendations for NIRTTP are: i. Establish a plant diagnostic reference laboratory and support the enhancement of a program for pest surveillance. Nepal lacks capacity in this area and given the dominant importance of exports of crop and other plant products, highest priority should be given to solve this bottleneck in phytosanitary capacity needed for negotiating improved market access. The laboratory and surveillance should serve all exported crop products and other plant products, such as MAPs and other non-timber forest products, for which importing countries require phytosanitary controls. For this, the MOAD should work in close cooperation with the Ministry of Forestry and Department of Plant Resources (DoPR). 10 It has been estimated that to date only 10% of the testing is focused on food safety. 11 Progress report 14-6-2014: Nepal - Project for Agriculture Commercialization and Trade (PACT) : P087140 - Implementation Status Results Report: Sequence 10 (English) http://www- wds.worldbank.org/external/default/WDSContentServer/WDSP/SAR/2014/06/14/090224b0824f935c/1_0/Render ed/PDF/Nepal000Projec0Report000Sequence010.pdf 12 5-hydroxymethylfurfural 21 ii. Upgrade the Customs laboratory in Kathmandu. It should support revenue collection and control of smuggling and fraud. Its technical scope should not duplicate capacity and mandates of regulatory agencies and NBSM laboratories. iii. Establish at the border checkpoint at Birgunj screening laboratories for Customs, food safety, plant quarantine and animal quarantine, preferably co-located with separate rooms (or in laboratory buildings in or near the border checkpoint). The selection of technical facilities, equipment and screening kits should focus on bottlenecks for timely release of consignments of regularly traded goods. The capacity on the border should be related to capacity of more advanced laboratories of SPS regulatory agencies, customs and NBSM. 89. Laboratory buildings. Adequate space in buildings at suitable locations will be needed for the laboratories. DoA needs a building for the plant quarantine. Customs has a laboratory building already in Kathmandu. At the Inland Container/Clearance Depot (ICD) or Integrated Checkpost (ICP) in Birgunj one or a few co-located buildings are needed for screening laboratories for quarantine and Customs, for which a building is under construction, but it may not provide sufficient space. There is also a canteen building at the ICD, presently used by security personnel which may offer additional suitable place. If existing buildings are made available, structural improvements will be required to make them suitable for the designed tasks, but this will most likely be much cheaper and cost less time than creating new buildings. iv. The PCO should in consultation with the concerned agencies identify possible buildings. The specification of building requirements and necessary upgrading/new construction should be based on a detailed assessment of the scope of work for each laboratory. The assessment needs to be done by the responsible agencies with support from international laboratory specialists. A difficulty for planning screening laboratories on the border is that Nepalese authorities seem to be uncertain about delivery of works at the ICD. 90. Already covered by other donors. As mentioned earlier, USAID and EU are already offering support focusing DFTQC capacity on testing and accreditation for food safety control, including pesticides residues testing. 91. Not recommended. The following actions are not recommended based on the above analyses: • Establishment of large integrated laboratories for SPS – this requires a costly and complex reorganization, including new legislation, and has limited advantages. • Establishment of a laboratory on the border for pest free analysis – this addresses symptoms of weaknesses in plant quarantine management screening, not the basic weakness of the system. • Establishment of an accredited pesticides residues testing laboratory on border – this duplicates capacity of advanced equipment already being created at DFTQC and has serious sustainability issues given the expected limited demand for testing. Proposed next steps 92. For implementing the recommendations in the next 2-3 years, the following activities are recommended. i. Discuss proposals of this report with relevant Government agencies ii. The Government needs to propose suitable buildings for the plant diagnostic reference laboratory and screening laboratories on the border for Customs, food safety, plant quarantine and animal quarantine 22 iii. After its approval, the Government of Nepal might consider to consult about the overall plan and its implementation with Indian authorities, which will enhance mutual trust. Special issues for discussion might be: a. Adopting firm dates for finishing infrastructural work for the ICP b. Explore possibilities of establishing bilateral working groups for plant health, animal health and food safety with major trade partners which meet twice per year to share information, discuss coordination and harmonization issues for SPS border release, and possible cooperation in capacity building for plant pest diagnostics and surveillance, and exchange programs for SPS staff iv. Contract two specialists for designing the proposed investment plans: a phytosanitary specialist with expertise in plant pest surveillance, pest diagnostic reference laboratories, and pest screening at border checkpoints; and a chemical laboratory specialist with expertise in chemical laboratory analysis, and screening at border checkpoints (outline TORs are proposed in the section below) v. Procure the renovation/adjustment of buildings for the laboratories, laboratory equipment and supplies, and vehicles for plant pest surveillance vi. Provide relevant general and hands-on training through TA by consultants (and if possible by exchange programs with India) for: • staff in plant pest surveillance, pest identification and improvement of quarantine pest lists • staff in the Customs laboratory • the preparation of inspection manuals and training of SPS staff at the ICD and IPC and the border screening laboratories vii. Provide support for the operational cost of plant surveillance during two years Outline TOR for two consultants for designing the investment plans (1) Phytosanitary specialist (1.5 PM) Under guidance of the PCO and in close cooperation with the Plant Protection Directorate and in consultation with the Ministry of Forestry and Department of Plant Resources (DoPR) the consultant will: • Take stock of the capacity in phytosanitary management and ongoing upgrading, with special attention to compliance to international standards in pest surveillance, pest diagnostics, pest specimen collection, and border screening. • Prepare a proposal for priorities for plant pest surveillance for export crops and MAPs in the next five years. • Prepare the design for the institutional and physical establishment of a basic reference laboratory for plant pest and disease diagnosis and specimen collection, compliant with international standards for phytosanitary measures (ISPM), and with priority in entomology and pathology. (Other specialist fields may be strengthened later) • It is assumed that an existing building will be proposed by government, and the consultant will identify necessary structural, climatic, and power supply improvements for the proposed building. • Identify jointly with government staff and the chemical laboratory specialist, and taking into consideration assessments and recommendations from other projects, in particular the EU and USAID projects, the scope of screening laboratories on the border checkpoint at ICD or ICP near Birgunj, structural requirements of the building(s), equipment for simple screening that can be used (i) to improve SPS quarantine controls; and (ii) to enhance the timely SPS release for most common imports. 23 • Identify major gaps in staff qualification for pest surveillance and pest identification and diagnostics, and make a proposal for training and mitigation of bottlenecks for the next five years; this can involve arrangement with an expert center abroad (or a bilateral arrangement with plant quarantine of India), and technical assistance. • Prepare a list of equipment and current supplies for two years with specifications required for NIRTTP procurement for surveillance (including necessary vehicles), the reference laboratory, and screening at the quarantine border inspection station. • Provide itemized cost estimates for the proposed improvements by NIRTTP. • Provide itemized estimates of annual operational cost needed for the government to make sustainable use of the investments. • The ambition level of the proposals should take into consideration the size of the country and the low present capacity that forms the basis for improvements. • Requirements: An advanced degree in entomology or plant pathology or equivalent, at least ten years of international experience in plant quarantine, and demonstrated experience in having designed/upgraded similar laboratories as specified herein. (2) Chemical laboratory specialist (1.0 PM) Under guidance of the PCO and in close cooperation with the Customs Department and the SPS departments the consultant will: For the Customs laboratory • Assess the capacity of the Customs laboratory, its operation, current use, and funding. • Assess the need for in-house testing services in the Customs laboratory in support of Customs responsibility for revenue raising and control of smuggling and fraud, taking into consideration capacity in regulatory and other laboratories. Unnecessary duplication with other laboratories will be avoided. • Prepare a proposal for upgrading of the building with regard to solving structural, climatic, safety and power supply deficiencies, and ISO 17025 accreditation for a few core parameters. • Prepare a list of equipment and current supplies for two years with specifications required for NIRTTP procurement. • Identify skilled staff requirements for operation of the laboratory and make a proposal for staff training; this will include technical assistance. For the border screening laboratory • Identify jointly with government SPS and Customs staff and the phytosanitary specialist and taking into consideration assessments and recommendations from other projects, in particular the EU and USAID projects, the scope of screening laboratories at the border checkpoint at ICD or ICP near Birgunj, structural requirements of the building(s), equipment for simple screening, and rapid test kits that can be used (i) to improve SPS quarantine controls; (ii) Customs controls; and (iii) enhance the release time for most common imports. • Identify skilled staff requirements for operation of the screening laboratories and make a proposal for staff training by SPS agency and Customs laboratory staff in Kathmandu. For each of the facilities above • Provide itemized cost estimates for the improvements by NIRTTP. 24 • Provide itemized estimates of annual operational cost needed for the government to make sustainable use of the investments. • The ambition level of the proposals should take into consideration the current conditions and low capacity that form the basis for improvements. • Requirements: An advanced degree in chemistry or equivalent, at least ten years of international experience in chemical and food laboratories, and demonstrated experience in having designed similar laboratories as specified herein. 25 ANNEXES Annex 1. Visit Schedule Persons contacted by Mr. Kees Van Der Meer, World Bank SPS Laboratory Experti Day/ Timing Visit and other programs Location Tel. No. Date Mon, 10.00 AM Purushottam Ojha (former Secretary, MoCS), World World Bank Office, 9851091822 17 Nov Bank Consultant to NIRTTP Kathmandu 11.00 AM Mr. Mahesh Timsina, Project Coordinator and Mr. NIRTTP/ PCO, Nepal 9851161777 Murari P. Gautam Upadhya, Project Manager/T A Food Corp Building 9841325382 NIRTTP 11.30 PM Dr. Dinesh Prasad Parajuli, Joint Secretary, and Dr. Singha Durbar, 4211687 Pradyumna Pandey, Under Secretary, Ministry of 9841295259 Agricultural Devevelopment 9851125554 12.30 PM Mr. Narendra Khadka, President, Mr. Hemanta Raj NIRTTP/ PCO, Nepal 9842711994 Bohora, Secretary, Nepal Ginger Producers and Traders Food Corp Building, 9851069351 Association 9813542100 9851033784 01.30 PM Mr. Toya Narayan Gyawali, Joint Secretary, Ministry Singha Durbar of Commerce and Supplies 02.30 PM Mr. Krishna Bhandary, Advisor, Large Cardamom PCO Office , 9841373171 Entrepreneurs Association Nepal (LCEAN) 9852671150, (President Rajendra K. Ghimire) 03.30 PM Professor Biswo Poudel, Kathmandu University biswo@kusom.edu.np 9851147844 Tues, 10.00 AM Mr. Yam B. Thapa, Director General, and Ms. Sushma Thapathali, Kathmandu 9851010997 18 Nov Upadhya, DDG, Department of Plant Resources 4251171 11.00 AM Mr. Surya P. Acharya, Director General, Mr. Ramesh Tripureswor, 9841323983 Sharma Paudel, Director, and Mr. Manoj Nidhi Wagle , Kathmandu 9851123119 Laboratory Director, Department of Customs 9848029138 02.00 PM Ms. Rita Pandey, Director General, Mr. Mohan K. Babarmahal, 4262369 Maharjan, Sr. Food Res. Officer, and Mr. Gajendra K. 4262741 Paudyal, Sr. Food Res Off., Department of Food 9841339911 Technology and Quality Control (DFTQC) and 4262337 Wed, 10.30 AM Dr. Vijay Kant Jha, DDG (Dr. Keshav P. Premy, DG), Harihar Bhawan, 5522056 19 Nov Department of Livestock Services, 5521610, 9804439035 11.30 AM Mr. Dilliram Sharma, Program Director, Plant Protection Harihar Bhawan, 5535844 Directorate, Department of Agricultural; Mr. Prakash Pulchowk 9841369615 Paudel, PQO, Mr.Harihar Acharya, NPQP. 9841882798 01.00 PM Mr. Bimal Nepal, DED, Mr.Suyas Khanal Director, Mr. Trade and Export Surendra Gongal, Director & Mr. Rajendra Shrestha, Dir Promotion Centre (TEPC) 02.45 PM Mr. Dilli Baskota, General Secretary, Himalayan hotpa@mail.com.np 5521942/20 Orthodox Tea Producers Association (HOTPA 41036 03.30 PM Mr. Lobsang Lama, Vice Chariman/MD, Ms. Shanta sagro@wlink.com.np 4469503 Baskota Koirala, Director, Shangrila Agro World (P) www.saw.com.np 9851082828 Ltd. Shinamanagal 03.30 PM Ms. Tara Baskota, Director, Kanchanjangha Tea Estate kte@organic.wlink.com 4493303 & Research Centre Pvt. Ltd. .np 4469503 Shinamanagl 05.00 PM Mr. Colm Halloran, Quality Infrastructure Development Hotel Yak & Yeti 9808150228 Advisor, GFA Consulting Group GmbH Thurs, 10.30 AM Mr. Yogendra K.Karki, Project Director, Project for Maharagunj, 4017765 20 Nov Agriculture Commercialization and Trade (PACT) ykkarkee@hotmail.com 26 12:00PM Dr. Deva Bhakta Shakya, Project Coordinator, and Mr. Mandikhatar, 9851066062 Madhab Karki, Policy Reform Initiative Project (PRIP) dbshakya@gmail.com 01.00 Pm Mr. Bishwo Babu Pudasaini, DG, Nepal Bureau of Balaju, 4350818 Standard and Metrology , 9841440568 / 4356810 4350445 03.00 PM Mr. Prem Tiwari, Vice President, Nepal Herbs & Herbal 4462208/nehhpa@gmai 9851060062 Producers Association (Mr Govinda Ghimire, President), l.com, 9851120541 Fri, 11.00 AM Mr. Pradeep Maharjan, Executive Director, AEC/FNCCI info@aec-fncci.org, 4262260/45 21 Nov Teku 01.00 PM Mr. Ganesh Dawadi, NTIS PCO, Bhadrakali 9841364722 Sun, 9:30 Ms. Shova Basnet, MD, Zest Laboratories (P) Ltd. Gothatar, Thimi 9851055140 23 Nov Mon, 01.00 to Consultation workshop with all stakeholders, Jointly PCO N F C Building, 4267534 24 Nov 4.00PM organized by MOAD and NIRTTP of MOCS. Bhadrakali Tues, 06.00AM Departure to Birgunj 25 Nov 01.00 PM Meeting with Mr. Animesh Kumar, Himalayan Terminal ICD and ICP Syrsiya 9855026969 02.00 PM Meeting with Mr. Moti Lal Shah, SPS Inspector, Plant ICD Syrsiya 9804216219 Q. 03.00 PM Visit sites at ICD and ICP 04.00 PM Meeting with Customs Officials, Mr. Man Bahadur ICD Customs Office, 9851105176 Poudel and Mr. Harihar Poudel Syrsiya 9742043797 Wed, 8.00AM Meetings with Mr. Bijaya Khanal, Chief, DFTQC, Food Birgunj Border Area 9845289672 26 Nov Quarantine Office, 9.30 AM Meeting with Dr. Hareram Yadav,Chief Animal Animal Quarantine Quarantime, Dr. Rakesh Mohan, Chief Check post, and Office, Birgunj Mr. Dhanai Prasad Yadav, Fisheries Officer 11.00 AM Meeting with Mr. Shankar Neupane (PQO), Plant Birgunj Border 9841607670 Quarantine Office and Mr. Jhalaknath Kandel, S.Agri Customs 9845671372 Ext. Officer (National Plant Quarantine Office) 12.00 PM Meeting with Mr. Gopal Khatri, Chief Customs Officer Birgunj Customs 9851092382 Thurs, 06.00AM Travel back to Kathmandu 27 Nov Fri, 11.30 M Briefing to Dr. Dinesh Prasad Parajuli, Joint Secretary, Singha Durbar Postponedii 28 Nov and Dr. Pradyumna Pandey, Under Secretary at MoAD 12.30 PM Briefing to Mr. Jibraj Koirala, Joint Secretary, MOCS Singha Durbar Postponedii 01.30 PM Wrap up and general discussion at PCO office with PCO Postponedii Project Coordinator, PM/TA Notes: i The team members comprised of Mr. Kees Van Der Meer, WB Laboratory Expert; and Mr. Murari P.Gautam Upadhya, Project Manager/Technical Adviser, NIRTTP. ii Mr. Murari P.Gautam Upadhya to complete all the postponed briefing meetings to the Joint Secretaries in the MoAD and MoCS after draft report is submitted. 27 Annex II. Nepal Export and Import 2013 Table II.1 Nepal's Exports of Agricultural, Food, and Medicinal and Aromatic Plant Products - 2013 S.N. HS Code Product Name Unit Quantity Value(USD) 1 09083010 Cardamom Kg. 2,914,470 28,211,343 2 20099000 Mixture of juices Ltr 34,376,568 25,054,999 3 09024000 Black tea fermented Kg. 10,805,321 21,609,279 4 09083110 Big Cardamon (Alaichi) Kg. 2,403,939 20,153,948 5 07134000 Lentils Kg. 13,323,172 18,151,830 6 08029000 Betelnuts Kg. 10,420,723 17,043,942 7 20091100 Frozen orange juice Ltr 12,795,315 10,079,631 8 24039910 Jarda~ Khaini~ Snuff~ Ghutka and similar Kg. 2,210,655 preparations containing chewing tobacco 9,390,712 9 12119090 Plants and parts of plants ( including seeds and Kg. 5,060,183 fruits) of a kind used primarily in perfumery~ 9,159,304 in pharmacy or for insecticidal or similar purposes 10 09101000 Ginger Kg. 27,824,777 7,255,995 11 19021900 Uncooked pasta~ not stuffed or otherwise Kg. 5,510,197 prepared 6,859,847 12 23064100 Oil-cake and other solid residues of low erucic Kg. 24,748,550 acid rape or colza seeds 6,076,861 13 21069020 Panmasala plain Kg. 1,370,286 5,493,901 14 02023000 Meat of bovine animals~ frozen~ boneless Kg. 4,125,053 5,424,116 15 20097100 Apple juice of a Brix value not exceeding 20 Ltr 8,415,045 4,935,166 16 01029000 Bovine animal ( Buffalo) Pcs. 125,919 4,182,305 17 20094100 Pineapple juice~ of a Brix value not exceeding Ltr 6,315,834 20 3,904,951 18 14049020 Vegetable products (khayar kattha) Kg. 738,300 3,370,598 19 15159000 Fixed vegetable fats and oil Kg. 3,200,854 2,298,443 20 14049012 Catechu of acacia (Kathas) Kg. 346,000 2,072,166 21 23091000 Dog or cat food Kg. 193,512 1,815,710 22 4059000 Fats and oils derived from milk Kg. 466,542 1,548,252 23 23024000 Bran~ sharps~ and other residues of cereals Kg. 10,747,764 1,278,182 24 09101110 Ginger~ fresh Kg. 7,678,414 1,190,473 28 S.N. HS Code Product Name Unit Quantity Value(USD) 25 23023000 Wheat bran Kg. 4,740,485 1,121,734 Sub-Total 25 products 217,683,688 26 9109990 Spices Kg. 1,400,872 889,152 27 12119000 Plants and parts of plants ( including seeds and Kg. 756,461 fruits) of a kind used primarily in perfumery~ 884,282 in pharmacy or for insecticidal or similar purposes 28 14049011 Semi-prossed Catechu of acacia (liquid Kattha) Kg. 238,830 789,679 29 23099090 Preparations of a kind used in animal feedings Kg. 360,000 784,251 30 12119010 Yarchagumba Kg. 274 710,708 31 21069010 Dalmott~ papad~ salted bhujiya and chamena Kg. 616,033 687,684 32 11010000 Wheat flour Kg. 1,935,233 648,573 33 24039100 Homogenised or reconstituted tobacco Kg. 148,682 617,715 34 02021000 Meats of bovine animals~ caracasses and half- Kg. 872,540 caracasses~ frozen 574,571 35 09061100 Cinnamon (Cunnamomum zeylanicum Blume) Kg. 722,715 561,566 36 20092100 Grapefruit (including pomelo) juice~ of a Brix Ltr 812,772 value not exceeding 20 542,530 Sub-Total 36 products 225,374,399 Grand total 234,923,940 Source: Export Import Trade Data Bank, Trade and Export Promotion Centre, www.tepc.gov.np Table II.2. Nepal’s Imports of Agricultural, Food, and Medicinal and Aromatic Plant Products – 2013 Product S.N. Product Name (Covered by HS 01 to 24) Unit Quantity Value(USD) Code 1 15071000 Crude soyabean oil Kg. 139,623,685 152,610,348 Semi milled or wholly milled rice~ whether or 2 10063000 Kg. 247,537,401 99,703,014 not polished or glazed 3 10059000 Maize corn Kg. 207,235,767 52,442,342 4 10061000 Rice in the husk Kg. 216,305,229 49,420,292 5 23040000 Oil cakes Kg. 76,174,711 48,943,747 6 8029000 Betelnuts Kg. 53,634,082 46,528,530 7 15111000 Crude palm oil Kg. 46,573,989 39,514,973 8 7019000 Potatoes~ fresh or chilled Kg. 214,273,497 35,031,550 9 21069040 Concentrate of non-alcoholic soft drinks Kg. 8,736,557 27,766,401 10 24012000 Tobacco~ partly or wholly stemmed/stripped Kg. 8,045,608 23,612,053 11 12051000 Low erucic acid rape or colza seeds Kg. 37,263,985 22,899,320 12 23099000 Preparations of a kind used in animal feeding Kg. 19,250,861 21,057,842 13 12075000 Mustard seeds Kg. 38,329,064 19,961,340 14 7031000 Onions and shallots Kg. 80,829,226 19,797,431 15 12010000 Soya beans~ whether or not broken Kg. 26,855,149 18,421,809 29 Product S.N. Product Name (Covered by HS 01 to 24) Unit Quantity Value(USD) Code 16 8081000 Apples~ fresh Kg. 56,827,596 17,509,844 17 19019000 Malt extracts Kg. 7,433,260 17,136,066 18 15121100 Crude sunflower oil Kg. 16,444,880 13,677,216 19 1042000 Goats Pcs. 460,260 13,382,974 20 7139000 Dried leguminous vegetables Kg. 21,003,586 12,946,804 21 22029000 Water~ non alcoholic beverages Ltr 13,236,644 11,984,960 22 19053100 Sweet biscuits Kg. 9,019,696 11,967,362 23 7131000 Dried peas Kg. 21,154,142 11,283,536 24 7132000 Chickpeas Kg. 16,597,771 11,158,786 25 17049000 Sugar confectionery not containing cocoa Kg. 5,132,260 10,933,802 26 12019000 Soya beans~ whether or not broken Kg. 16,727,856 10,709,418 27 7134000 Lentils Kg. 16,457,313 10,679,302 28 17011490 Cane sugar Kg. 18,689,694 10,340,485 29 18069000 Chocolate in blocks~ slab or bars Kg. 1,970,851 9,928,684 30 8028000 Areca nuts Kg. 11,036,826 9,779,230 31 9041100 Pepper~ neither crushed nor ground Kg. 1,318,458 9,605,079 Plants and parts of plants ( including seeds and 32 12119000 fruits) of a kind used primarily in perfumery~ in Kg. 2,261,861 7,407,380 pharmacy or for insecticidal or similar purposes 33 10011000 Durum wheat Kg. 25,859,564 6,923,616 Sugar~ raw not containing added flavouring or 34 17011110 Kg. 11,176,466 6,893,198 colouring matter 35 10019000 Wheat and meslin Kg. 27,587,474 6,770,447 36 9083090 Cardamom~ Small~ Sukumel Kg. 1,712,995 6,739,792 37 22083090 Whiskies Ltr 516,900 6,353,640 Undenaturated ethyl alcohol of an alcoholic 38 22071000 Ltr 7,771,105 6,162,897 strength by volume of 80% or higher 39 11010000 Wheat flour Kg. 17,430,285 5,412,447 40 3019900 Live fish Kg. 7,372,121 5,336,210 41 12011000 Soya beans~ seed Kg. 8,126,281 5,297,668 42 9093000 Cumin seeds Kg. 3,144,025 5,271,024 43 15119000 Palm oil Kg. 5,403,060 5,094,225 Sub-total 43 products 944,397,084 44 10064000 Broken rice Kg. 22,897,805 4,795,197 45 21069090 Food preparations Kg. 2,061,664 4,635,427 Milk and cream in powdered and granules of a fat 46 4022900 content by weight exceeding 1.5% containing Kg. 963,001 4,616,847 sugar or added sweetening matter 47 9101000 Ginger Kg. 12,270,593 4,594,544 48 21069010 Dalmott~ papad~ salted bhujiya and chamena Kg. 2,808,442 4,185,774 Vegetable products (including unroasted chicory 49 12129900 roots of the variety Cichorium intybus sativum) Kg. 72,624,202 4,135,551 of a kind used primary for human consumption 50 17041000 Chewing gum Kg. 1,491,980 3,644,945 51 9093100 Seeds of cumin~ neither crushed nor ground Kg. 2,228,365 3,611,081 52 19011000 Preparations for infant use Kg. 1,141,259 3,540,254 Edible mixtures and preparations of animal or 53 15179000 Kg. 3,646,790 3,406,214 vegetable fats or oil Alcoholic fluids including spirits used as raw 54 22085010 Ltr 235,107 3,348,783 materials of Gin and Geneva 55 21039000 Sauces Kg. 1,269,759 3,328,107 56 20089910 Fruit pulp Kg. 4,498,536 3,209,660 30 Product S.N. Product Name (Covered by HS 01 to 24) Unit Quantity Value(USD) Code 57 7032000 Garlic Kg. 6,108,824 3,017,653 Fruits of the genus capsicum or of the genus 58 9042000 Kg. 3,395,524 2,798,990 pimenta~ dried or crushed or ground 59 1051900 Live poultry weighing not more than 185g Kg. 237,848 2,723,110 60 19059020 Potatoes chips Kg. 616,835 2,668,031 Fruits of the genus Capsicum or of the genus 61 9042100 Kg. 2,622,286 2,645,965 Pimenta~ Dried~ neither~crushed or ground 62 8109000 Fresh fruit Kg. 6,201,189 2,537,850 63 20099000 Mixture of juices Ltr 3,923,573 2,485,976 64 10019900 Wheat and meslin Kg. 8,917,489 2,483,982 65 10011900 Durum wheat Kg. 8,849,375 2,462,012 66 8011100 Desiccated coconut Kg. 2,448,676 2,454,311 Beans (Vigna spp.~ phaseolus spp.)~ shelled~ 67 7133900 Kg. 3,877,268 2,451,856 whether or not skinned or split 68 11071000 Malt~ not roasted Kg. 5,014,225 2,436,756 69 21069060 Kurkure~ kurmure~ lays & Similar goods Kg. 699,459 2,433,391 70 12099100 Vegetable seeds Kg. 275,390 2,430,004 71 10019100 Wheat and meslin~ seed Kg. 9,375,458 2,385,793 72 15121900 Sunflower oil Kg. 1,377,830 2,326,814 Glucose and glucose syrup not containing 73 17023000 fructose or containing in dry state less than 20% Kg. 3,321,960 2,325,860 by weight of fructose 74 8059000 Citrus fruits Kg. 11,116,246 2,280,090 75 8061000 Fresh Grapes Kg. 12,006,129 2,277,001 76 10011100 Durum wheat~ seed Kg. 8,631,620 2,211,166 77 15020000 Fats of bovine animal~ sheep or goats Kg. 3,010,794 2,199,222 Protein concentrate and textured protein 78 21061000 Kg. 324,558 2,121,003 substance Flour~ meals and pellets of fish or of 79 23012000 Kg. 2,786,071 2,113,561 crustaceanes 80 10051000 Maize seeds Kg. 1,368,796 2,055,993 81 8051000 Oranges Kg. 9,849,477 2,023,644 82 19059090 Bakers wares Kg. 724,529 1,920,857 Bean of the species vigna mungo~ Hepper or 83 7133100 Kg. 2,818,695 1,886,614 vigna radiata Wilczek 84 21011100 Extracts~ essences and concentrates Kg. 151,988 1,885,842 85 11090000 Wheat gluten Kg. 1,220,255 1,710,094 86 12024200 Ground-nuts~ shelled Kg. 1,706,251 1,706,682 87 22041000 Sparkling wine Ltr. 539,488 1,679,220 88 4051000 Butter Kg. 610,476 1,655,773 89 10082900 Millet Kg. 6,513,595 1,605,057 90 9092000 Seeds of coriander Kg. 2,139,836 1,588,913 91 10082000 Millet Kg. 8,151,178 1,559,480 92 8013200 Cashew nuts shelled Kg. 354,066 1,544,857 Milk and cream in powder~ granules or other 93 4021000 solid form~ of a fat content~ by weight~ not Kg. 584,139 1,533,926 exceeding 1.5% 94 7099000 Vegetables~ fresh or chilled Kg. 13,110,928 1,505,651 95 8021200 Almonds~ shelled Kg. 253,290 1,406,231 96 9092100 Seeds of coriander~ neither crushed nor ground Kg. 1,617,127 1,363,240 97 8041000 Dates Kg. 2,503,249 1,355,437 31 Product S.N. Product Name (Covered by HS 01 to 24) Unit Quantity Value(USD) Code Lemons (Citrus limon~ citrus limonum) and 98 8055000 Kg. 4,092,443 1,296,335 limes (Citrus aurantifolia~ Citrus latifolia ) 99 8045000 Mangoes Kg. 10,838,709 1,286,581 100 24039100 Homogenised or reconstituted tobacco Kg. 546,721 1,220,470 101 11031100 Groats and meals of wheat Kg. 3,778,604 1,206,661 102 21041000 Soups and broths and preparations thereof Kg. 196,926 1,181,934 103 8013100 Cashew nuts in shell Kg. 295,026 1,178,688 Milk and cream~ not concentrated nor containing added sugar or other sweetening matter of a fat 104 4012000 Kg. 2,480,740 1,174,357 content~ by weight~ exceeding 1% but not exceeding 6% 105 23061000 Oil-cake and other solid residues of cotton seed Kg. 5,843,427 1,085,168 106 23024000 Bran~ sharps~ and other residues of cereals Kg. 7,489,975 1,028,188 107 19053200 Waffles and wafers Kg. 249,736 1,025,686 108 24039930 Cut tobacco~ dust tobacco not for retail sale Kg. 593,141 1,015,832 109 8011900 Cocunuts Kg. 3,709,668 1,006,645 Sub-total 109 products 1,095,413,921 Total all products 1,160,975,862 Source: Export Import Trade Data Bank, Trade and Export Promotion Centre, www.tepc.gov.np 32 Annex II Table II.3. Total trade share by customs checkpoint Total trade (%) Subject to SPS controls* Checkpoint Export % Import % export % import % Biratnagar 34 13 37 16 Birgunj 25 41 7 45 Dryport Birgunj 3 10 2 13 T.I. Airport 21 11 8 1 Mechi 7 3 20 5 Tatopani 2 3 4 1 Bhairahawa 5 15 2 20 Sub-total 100 100 Nepalgunj 2 3 Krishnanagar 1 1 Kailali 1 1 Other Customs 0 1 Total 100 100 * includes agricultural products and food only (HS codes 1-24); timber and other plant products not included Annex Table II.4. Export and import by major checkpoint of which subject to SPS controls* total (US$'000) US$'000 % checkpoint export import export import export import Biratnagar 300,714 856,849 84,488 171,500 28.1 20.0 Birgunj 218,366 2,792,049 61,019 467,678 27.9 16.8 Birgunj dry port 21,730 643,139 3,694 131,873 17.0 20.5 T Intern Airport 184,658 740,784 18,269 7,599 9.9 1.0 Mechi 64,735 220,215 45,267 46,890 69.9 21.3 Tatopani 15,250 189,731 9,021 14,924 59.2 7.9 Bhairahawa 44,658 984,570 4,675 208,966 10.5 21.2 Total 850,111 6,427,337 226,433 1,049,430 26.6 16.3 * includes agricultural products and food only (HS codes 1-24); timber and other plant products not included 33 Annex II Table II.5. Main export products subject to SPS* at main customs checkpoints Checkpoint Main export products Biratnagar Meat Mechi Live animals Fresh Vegetables Fresh Vegetables lentils Lentils plants and parts of plants Green and black tea vegetable products Ginger betel nuts Vegetable seeds fresh fruits Plants and parts black tea Wheat bran pasta Oil cakes biscuits cinnamon Cardamom Ginger papad brans oil cakes Bhairahawa cinnamon ginger spices buck wheat uncooked pasta plants and parts of plants and oil cakes brans macadam Birgunj meat fresh/dried vegetables lentils fresh fruits coffee green tea ginger spices veg and oil seeds plants and parts of plants pasta prepared foods fruit fuice pan masala catechu of acacia soapnuts veg oils cane molasses oil cakes T I Airport live plants, bubs, coffee and tea pan masala * includes agricultural products and food only (HS codes 1-24); timber and other plant products not included 34 Annex III. Regional spread of DFTQC, DLS, PQO, DPR Figure III.A Figure III.B 35 Figure III.C Figure III.D 36