THE ECONOMIC WEEKLY

W H I L E the trade routes to Ind i a and fur ther overseas th rough

I n d i a are qui te convenient, w i t h the Himalayan range — ridges stretching southward f r o m the H i ­malayan highlands to the low lands of the Ta ra i — f o r m i n g the border between Nepal and the Tibe t region of China, t ransport is a handicap to trade w i t h China. The. Kyerong Pass, which lies Northeast f r o m K a t h m a m i u and is situated at an al t i tude of about 9,000 feet through Rasua Gadhi , is regarded as the shortest route to the Tibe tan capi­ta l , Lhasa, at a height of 14,000 feet. The K u t i Pass is inaccessible even to park animals. In add i t ion to a few passes wh ich are related respectively to the r ivers , Sun K o s i , T r i s u l i and Gandaki , a series of breaks in the Hima layan range th rough which r ive r gorges penet­rate provide the setting for trai ls . The market t own of Taklakot over­looks K a r n a l i r iver between the Nandag i r i and Dhau lag i r i peaks. This route also has been sometimes used between K a t h m a n d u and Tibe t . On this t rade route is situat­ed a prosperous Nepalese v i l lage Thak, which is a depot for salt brought f r o m T i b e t .

On the Eastern side the K a l i -Gandaki r iver , a t r i b u t a r y of the Candaki river, breaks through a small town, Mustang, w h i c h is jus t accessible to pack animals. It is said that in olden days smugglers of o p i u m used to pass through this t o w n . The Doodh K o s i , a t r i b u t a r y of Sapta Kos i closed over a pass, Naugpa, at an a l t i tude of about 25,000 feet, takes a trade route over a water-shed, Because of the

inaccessibility to the pack animals, generally men and women carry f re ight on the i r backs over these passes. Though in the past there has been some physical con­tact or communion of t rade and commerce and cul ture between Nepal and China across the Hima­layas through the passes, so far they have proved useful for local transit rather than for internat ional trade and commerce.

The difficulties of most of these regions can be conceived f rom some other facts also. The Northern-most region is the least populated par t of the country, and main ly Hima­layan w i t h huge deposits of snow in most places, Here ice-clad moun­tains w i t h angular outlines shine h igh up in the temperate sky, giv­i n g l i fe to moravian streams and r ivulets that gush fo r th in zigzags, to i r r iga te the tara i plains and the vast plains of Ind ia .

Small Volume of Trade

Thus Nepal 's trade w i th Tibet is carr ied on over the Himalayas, and does not constitute more than one per cent of the total trade of the country. As explained above there was some physical contact since ancient times between Nepal and Tibet region of China. His tor ica l changes and developments in China have left some marks f rom t ime to t ime in Nepal.

The his tory of trade relations be­t w e e n N e p a l and T ibe t part o f C h i n a c a n be traced f rom 1872 w h e n a treaty was signed. This t r e a t y g o v e r n e d the relations be­t w e e n t h e m and provided, among o t h e r t h i n g s , fo r freedom of trade

and commerce for the citizens of both countries in each other's ter r i tor ies . Th i s was fur ther streng­thened after the t reaty of Thapa-tha l i . This cont inued t i l l 1904 when the famous B r i t i s h Expedi t ion to settle differences between the B r i t i s h and the Tibe tan Governments was sent in 1904 under Colonel Young-husband. Since the Tibetans refused to enter in to negotiations and offered active resistance to the B r i t i s h entry , this became a m i l i ­tary expedi t ion afterwards. The terms of the Indo-Tibetan ' Trea ty concluded in 1904 included " the opening of three trade marts one at Gyantsc. one at Yatung, and the t h i r d a t G a r t o k ; the abol i t ion of trade duties between Tibet and I n d i a ; the payment of indemni ty to the Br i t i sh Government and pro­h ib i t i on of secession or lease of any Tibetan te r r i to ry to any foreign power wi thout B r i t i s h consent."

The opening of trade marts by the Br i t i sh Government had an adverse effect on Nepal-Tibet trade. The trade w i t h Ind ia started be­coming more favourable and i t was after this t reaty that most of the Nepalese traders went and settled down i n K a l i m p o n g i n I n d i a fo r trade purposes. In fact, K a l i m p o n g and Calcutta started becoming more prosperous centres for transactions w i t h T ibe t pa r t o f China. At the same t ime Nepal 's role as an en­t repot t r a d i n g count ry between Ind ia and Tibet also dwindled con­siderably when faster and better connections di rect ly through Sik-k i m were established in the beginn­i n g of the present century. The road was soon opened for commercial

621

A p r i l 14, 1 9 6 2

Nepal-China Trade Relations Y P Pant

Nepal is a land-locked country bordered on the West, South and East by India and on the North by the Tibet region of China. The regions adjoining the Chinese frontier are mountainous. Consequently, about 95 per cent of Nepal's foreign trade is with India, Trade with overseas countries is also carried on through the ports of India, principally Calcutta. Trade with the Tibet region of China does not constitute more than one per cent of Nepal's total trade.

In spite of the small volume of trade, it is interesting to study commercial relations between Nepal und China. The purpose of this article is to analyse, on the basis of available information, recent trends in trade between the two countries.

As there is a considerable vo lume of trade which goes unrecorded as a result of difficulties of establish­ing comprehensive customs control along the mountainous frontier the statistics used here, collected by the Central Bureau of Statistics, Nepal, are not, however, entirely reliable.

[The views expressed in this article are the author's own and have nothing to do with his position as Finance Secretary to His Majesty's Government of Nepal.]

April 14, 1962 T H E E C O N O M I C W E E K L Y

A p r i l 1 4 , 1 9 6 2

traffic. Of course, trade through Nepal i n a l im i t ed sense s t i l l con­t inued—from Kathmandu to the Tibetan border—to use the o ld , slow and costly way of car ry ing by hu« man beings.

The establishment of the B r i t i s h consulate at Gyantse made the Br i t i sh a l l the more effective in this respect and strengthened their posit ion against Nepal in commer­cial relations. In fact, "opening up of the new road of Chhumbi al­most stopped a l l trade which Nepal used to have through K i r o n g and Yenam marts, and thus Nepal had to suffer losses." Certain amend­ments to the treaty were made at subsequent dates. Some of them were, of course, helpful in develop­ing brisk trade between the two countries. In 1926 the Tibetan Government established a foreign office in Lhasa and this greatly faci­l i tated official communication w i t h foreign Governments inc lud ing Nepal.

However, because of the un­developed transport system trade relations could not flourish w i t h the Tibet region. Since 1950 when Tibet became a par t of China and China proper came to be regarded as a t rading partner, a motor road has been b u i l t f rom Peking to Lhasa, and trade between the Tibe­tan capital Lhasa and its leading trade centres and Nepal further dwindled as a result of this deve­lopment.

In fact, u n t i l 1955 when diplo­matic relations between China and Nepal were established, relations between these two countries were more or less completely cut off. In September 1956 Nepal and China signed a comprehensive treaty of friendship in which both the coun­tries expressed their desire to deve­lop their t radi t ional economic and trade relations on the principles of equali ty and mutual benefit. Af te r this fol lowed the signing of the Nepal China a id agreement, accord­ing to which the Peoples' Republic of China, w i t h a view to he lp ing Nepal develop economically, under­took to provide economic a id . In M a r c h 1960 an agreement between the Governments of China and Nepal on economic aid was signed. This was a good start for develop­i n g trade relations w i t h China-

Even though, as Table 3 shows, the value of trade wi th China is almost insignificant in the country's total trade, an analysis of the trends of exports to and imports f rom Tibe t region of China is quite interesting.

Composition of Trade Exports to T ibe t are almost ex­

clusively of agr icul tura l o r ig in , w i t h the exception of a few com­modities l ike batteries, shoes, mat­ches and cigarettes, which in some cases are jus t re-exports to Tibet f rom India . It is also seen that more than 80 per cent of exports are foodstuffs, wh ich pr inc ipa l ly include rice, sugar, tea, wheat, chillies and so on. Most of the products are f rom the h i l l y regions though a few might have come f rom India also. Crude materials include hides and skins, indigenous herbs and drugs and manufactured goods comprise of cigarettes, matches, batteries, lea­ther shoes and so on. In the mis­cellaneous group horses and dogs are also included. Though on the basis of the figures for two years, much generalisation is not possible, s t i l l certain trends can be deduced. In spite of the fact that the total volume of exports over the two years has remained more or less constant, certain change^ can be noticed in the indiv idual items. For example, a slight increase is noticed in the export of food, while excepting oils and chemicals, there has been a considerable shrinkage in the value of other commodities exported. This m i g h t be par t ly be­cause of the disturbances in Tibet i n 1960.

The value of impor ts of almoat al l commodities in 1959-60 in seen to have gone up considerably, p a r t l y because quite a number of people left Tibet and migrated to Nepal as a result of the po l i t i ca l distur­bances. These people may have impor ted goods f rom their country.

Scope for Development Though the volume and value of

trade of Nepal w i t h T ibe t region of China has somewhat dwindled in recent times, Nepalese merchants s t i l l have some interest in the Tibe­tan trade. There are some traders in Kathmandu dealing w i t h Lhasa or the border distr icts . The border trade, however, is to a great extent of a barter character. The Hima­layas have always constituted a difficult frontier and the Tibetan market is very l imi t ed . The popula­t ion of Tibet is only 4 m i l l i o n hav­ing p r imi t i ve fa rming and animal husbandry as two main occupations.

The peasants use p r imi t i ve woo-den ploughs and herdsmen s t i l l follow their (locks to water and grass. Hence the commodities en. ter ing into trade have generally been articles of da i ly consumption so far. Since the p r imary occupa­tion of the people in Tibet is animal husbandry, they depend for food supply on Nepal. There is some entrepot trade in specific goods such as petrol , kerosene and so on. Wool is by far the largest i tem of export f rom Tibet . Gene­ra l ly , imports f rom Tibe t region of China include salt, sheep and goats, horses, raw wool , furs and skin, blankets, yak tails and herbs, whi le

623

THE ECONOMIC WEEKLY

A p r i l 14, 1962 E C O N O M I C W E E K L Y

exports to Tibet comprise of rice and oi l ier foodgrains, meal and flour, sugar, chill ies, cigarettes, matches, shoes, textiles, herbs and drugs.

As Table 3 reveals, over a pe r iod of two years Nepal 's total fore ign trade w i t h T ibe t has considerably gone up. A f t e r the complet ion of the construction of a h ighway l i n k i n g k a t h m a n d u w i t h Tibe t , 1

there w i l l be s t i l l greater possibi­lities of trade w i t h Tibet on a larger scale. But s t r ic t ly f r o m the econo­mic poin t of view trade relations on any substantial scale migh t not be possibly developed in the years to come. The total vo lume is l ike ly to continue to be too small to deserve any great a t tent ion . A g a i n , foreign trade between two countries is more or less a p roduc t of their respec­

tive sizes locational factors, rela­tive stages of economic g rowth and needs. The development of trade is not j u s t dependent on t ransport faci l i t ies . 1 On September 15, 1961 Nepal and

China signed an agreement in Peking for the construction of a Kathmandu —Tibet highway. For this the Chinese Government wilt pay £ 3.5 million in instalments from July 1962 to June 1966.