Trade Agreement

His Majesty's Government of Nepal and the Government of the Democratic Socialist Republic of Sri Lanka (hereinafter referred to as the Contracting Parties.")

Being desirous of perpetuating the age-old bonds of friendship between the two Governments and the peoples of the two countries and of the two countries and of strengthening and further developing their economic, trade and cultural relations on the basis of equality and mutual benefit.

Have agreed as follows:

Article I

The Contracting Parties shall take all appropriate measures to develop and expand the trade between their two countries and agree to facilitate the exchange of goods between them.

Article II

1. The Contracting Parties agree to accord to each other in their trade relation treatment no less favourable than that which is accorded to any other country in respect of issuance of licenses, custom formalities, customs duties and taxes and other charges for the import and export of goods and commodities.

2. Provisions of para I shall not, however, apply to the grant or continuance of any:

3. advantages accorded by either of the Contracting Parties to contiguous countries in order to facilitate frontier trade;

1. advantages resulting from any customs Union, clearing Union of Preference, Free Trade Area to which either of the Contracting Parties is or may become a party;

2. advantages accorded by virtue of Multilateral Economic Agreements relating to International Commerce.
   
   

The Contracting Parties through the competent authorities of both countries shall issue the necessary licenses for export and import of commodities mentioned in schedule "A" and "B" annexed to this Agreement which are indicatives and not exhaustive, in conformity with the laws, rules and regulations in force in their respective countries.

Article IV

The trade between the two countries may be conducted through their State Trading Organizations as well as other importers and exporters of the two countries.

Article V

All payments between the Contracting Parties resulting from the deliveries of goods and services as well as any other payments shall be expressed and effected in any freely convertible currency mutually agreed upon between the Parties to any transaction in accordance with the laws, rules and regulations pertaining to foreign trade and force in either country.

Article VI

The prices of goods supplied under this Agreement shall be fixed by mutual agreement between the exporters and importers of the two countries.

Article VII

Aircraft and ships, their crews, passengers and cargoes of one Contracting Party shall be accorded in ports of internal sea water of the other Contracting Party treatment no less favourable than that accorded to any other country.

Article VIII

The provisions of Article VII shall not apply to coastal and inland shipping.

Article IX

The Contracting Parties agree to set up a Joint Committee in order to examine any issues that may arise in the course of the implementation of this Agreement and to find ways and means for the further expansion of trade between the two countries. The Joint Committee shall meet at mutually agreed dates in Sri Lanka and Nepal alternately upon the request of the either party.

  Article X

The provision of this Agreement shall also apply after the expiry of its validity to contracts concluded during the periods of its validity but not fulfilled before its expiry.

Article XI

Amendments and Supplements to this Agreement shall require the consent of both Contracting Parties.

Article XII

This Agreements shall come into force provisionally on the date of its signature and finally from the date of the exchange of diplomatic not confirming the approval or ratification of this Agreement by the Contracting Parties.

It shall remain valid for a period of three years and shall be renewed automatically by periods of one year each unless either Contracting Party gives three months notice in writing before the expiry of its validity of its intention to terminate this Agreement.

Done and signed in Kathmandu on Tuesday Third Day of April Nineteen Hundred and Seventy Nine in two originals in the English language, both of which are equally authentic. The Nepalese and Sinhala text of this Agreement shall be exchanged through diplomatic channel within a period of three months. In case of divergence in the interpretation of this Agreement, the English text shall prevail.

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SCHEDULE "A"
List of Exportable Items from Sri Lanka to Nepal

1. Arecanuts

2. Betel Leaves

3. Spices including cardamoms, cloves and nutmegs

4. Tea including packeted tea

5. Rubber

6. Coconut Products

7. Cement

8. Textile including made-up garments of batkis, shirts etc.

9. Medicinal herbs including indigenous preparations

10. Footwear

11. Paper

12. Pharmaceuticals

13. Miscellaneous

SCHEDULE "B"
List of Exportable Items from Nepal to Sri Lanka

1. Rice

2. Sugar

3. Jute and Jute Products

4. Potatoes and other Vegetables

5. Ghee

6. Hide and Skins

7. Medicinal Herbs

8. Spices including dry ginger, chilies, turmeric

9. Lentils

10. Cheese and Butter

11. Wheat Flour

12. Timber and Wood products

13. Plywood

14. Miscellaneous