From Leaves to Markets: Assessing Trade Competitiveness of Nepalese Tea in the WTO Era
DOI:
https://doi.org/10.61841/7raydk97Keywords:
Competitive analysis, Domestic Resource Cost, Nominal Protection Coefficient, WTOAbstract
Tea is one of the major exportable agricultural commodities of Nepal. This study explores the implications of Nepal’s accession to WTO in the tea trade with objectives of identifying potential opportunities and challenges. The study was conducted in Jhapa and Ilam through structured interview on 5 tea processing units in each district. Moreover, secondary data were obtained from the trade portals and database available at the public domains. The data collected were analysed by using quantitative techniques to make comparative analysis of the growth between pre and post WTO accession scenarios. The research also examined the trade measures and market access barriers that affects the export of Nepalese tea. The study found that WTO membership has opened up a plethora of opportunities as the increase in tea exports from Nepal can be attributed to its membership in the WTO, notably seen in the fiscal year 2003/04 when it joined WTO. Moreover, the competitive analysis using Nominal Protection Coefficient (NPC) and Domestic Resource Cost (DRC) illuminated the trade dynamics of CTC and Orthodox teas. While the findings revealed a cost-competitive edge in the export market for Orthodox tea (NPC=0.67), the export market presented challenges in case of CTC (NPC =1.15) due to over-dependence in India. The DRC ratio of 0.86 and 0.80 for CTC and orthodox tea respectively provides strong evidence that Nepal has comparative advantage in producing both types of tea.
References
Adhikari, R., Dahal, N. and Pradhanang M. (2008). Ensuring Development-Supportive Accession of the Least Developed Countries to the WTO: Learning from Nepal - Research Report. Trade Knowledge Network, Winnipeg: International Institute for Sustainable Development.
Anderson, K., & Martin, W. (2005). Agricultural trade reform and the Doha development agenda. World Bank Policy Research Working Paper, (3607).
Baldwin, R., & Evenett, S. J. (2015). Value creation and trade in 21st century manufacturing. Journal of Industry, Competition and Trade, 15(3), 237-254. doi:10.1007/s10842-015-0186-9
Bhaumik, S. K., Majumder, A. D., & Basu, A. (2005). Globalization and tea industry in India. Economic and Political Weekly, 40(9), 833-840.
Bhaumik, S. K., & Chakraborty, D. (2010). Impact of liberalization on Indian tea industry. Indian Journal of Agricultural Economics, 65(3), 428-439.
Birovljev, J., & Ćetković, B. (2013). The Impact of the WTO Agreement on Agriculture and Food Security in Developing Countries. 135 EAAE Seminar Challenges for the Global Agricultural Trade Regime after Doha.
Boccanfuso, D., & Savard, L. (2008). The impact of trade liberalization on the global economy. Canadian Journal of Agricultural Economics/ Revue Canadienne d' agroeconomie, 56(4),
DoC. (2020). Customs Bulletin (Nov2019- July 2020). Department of Customs, Tripureswar, Kathmandu.
DoC. (2023). Foreign Trade Statistics FY 2021/22. Department of Customs, Tripureswar, Kathmandu. Retrieved from https://www.customs.gov.np/page/fts-fy-207980
Driem, G. L. van. (2019). The Tale of Tea: A comprehensive history of tea from prehistoric times to the present day. Koninklijke Brill NV, Leiden, The Netherlands.
FAO. (2009). Assessment of comparative advantage in aquaculture: framework and application on selected species in developing countries. FAO Fisheries and Aquaculture Technical Paper. No. 528. Rome, FAO, 5-6.
MoAD. (2015). Agriculture Development Strategy, 2015-2035. Ministry of Agricultural Development, Singhadarbar, Kathmandu, Nepal.
MoICS. (2023). Nepal Trade Integration Strategy, 2023. Ministry of Industry Commerce and Supplies, Singhadarbar, Kathmandu, Nepal.
Mishra, P., Kattel, R. R, Dhakal, S.C., & Bhandari, P. L. (2020). Orthodox Tea: Value Chain Analysis from the Perspective of Certification in Ilam District of Nepal. Food & Agribusiness Management, 1(2), 63-67.
NTCDB. (1994). Tea A Tea. National Tea and Coffee Development Board, Kathmandu, Nepal. Vol.2, Year 1. Retrieved from https://teacoffee.gov.np/public/images/pdf-21545382012.pdf
NTCDB. (2023a). Tea Statistics for fiscal year 2021/22. National Tea and Coffee Development Board, Kathmandu, Nepal. Retrieved from https://teacoffee.gov.np/statistics
NTCDB. (2023b). Nepal Tea History. National Tea and Coffee Development Board, Kathmandu, Nepal. Retrieved from https://teacoffee.gov.np/teainfo/teahistory
Prasain, K. (2022). For Nepal's Troubled Tea Industry, India's Import Barriers Could Be a Death Knell. The Wire. Retrieved from https://thewire.in/trade/india-nepal-tea-import-barrier.
Sharma, R.P., & Karkee, M. K. (2004). Introduction and Overview. In: Implications of the WTO Membership on the Nepalese Agriculture. FAO/UNDP, Kathmandu, Nepal.
Thapa, Y.B. (2004). Commodity Case Study - Tea. In: Implications of the WTO Membership on The Nepalese Agriculture: Introduction and Overview. FAO/UNDP, Kathmandu, Nepal.
WTO. (2018). Trade Policy Review-Nepal. WT/TPR/S/381. WTO secretariat, Geneva.
WTO. (2023). Understanding the WTO: The Agreements. World Trade Organisation. Retrieved January 5, 2022, from https://www.wto.org/english/thewto_e/whatis_e/tif_e/ agrm1_e.htm
Downloads
Published
Issue
Section
License
Copyright (c) 2024 Gaurab Luitel, Dr. Hari Krishna Panta, Dr. Kishor Chandra Dahal, Dr. Tara Prasad Bhusal, Dr. Krishna Prasad Timsina

This work is licensed under a Creative Commons Attribution 4.0 International License.
You are free to:
- Share — copy and redistribute the material in any medium or format for any purpose, even commercially.
- Adapt — remix, transform, and build upon the material for any purpose, even commercially.
- The licensor cannot revoke these freedoms as long as you follow the license terms.
Under the following terms:
- Attribution — You must give appropriate credit , provide a link to the license, and indicate if changes were made . You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.
- No additional restrictions — You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.
Notices:
You do not have to comply with the license for elements of the material in the public domain or where your use is permitted by an applicable exception or limitation .
No warranties are given. The license may not give you all of the permissions necessary for your intended use. For example, other rights such as publicity, privacy, or moral rights may limit how you use the material.