Nepal and China Move to Ease Trade Through AEO Recognition

Nepal and China have agreed to implement the concept of an Authorised Business Person (ABP), aligning it with the global Authorised Economic Operator (AEO) system, officials said.

The agreement was reached during the Third Meeting of the Nepal–China Coordination Mechanism on Border Trade and Cooperation held on January 20–21 in Lhasa, Tibet.

Under the arrangement, qualified individuals and businesses engaged in bilateral trade will receive AEO status. The recognition is expected to ensure faster customs clearance and additional facilitation benefits, subject to compliance with prescribed standards.

Bharat Mani Pandey, Deputy Director General of the Department of Customs, said the internationally used AEO framework corresponds to the ABP provision already incorporated in Nepal’s amended Customs Act.

He said implementation would follow the framework agreed during the January meeting.

Section 27 of the amended Customs Act provides for the listing of Authorised Business Persons, introducing a new practice in Nepal’s international trade system.

The criteria for AEO registration include full compliance with customs laws over the past three years, strong internal control mechanisms, reliable maintenance of business records, and financial soundness, including the ability to provide security or guarantees if required.

The act also specifies grounds for removal from the AEO list. These include failure to meet prescribed conditions, involvement in revenue leakage-related offences, and participation in smuggling or illegal trade.

Internationally, AEO-recognised businesses receive benefits such as expedited inspections, priority clearance, and access to customs services outside official working hours.

Under the Customs Act, the Ministry of Industry, Commerce and Supplies may list a person or entity as an ABP on specified grounds.

Pandey said the objective was to recognise private sector businesses that meet government-defined indicators and conditions.

Beyond trade facilitation, the two sides agreed to resume the Kathmandu–Lhasa bus service, strengthen cooperation in traditional medicine, and establish a Nepal–China high-tech agricultural park in Nepal.

China will send a formal proposal to establish a sister-city relationship between Jilong in China and a municipality in Rasuwa district.

Nepal also proposed the construction of a friendship bridge and an Integrated Check Post at the Kimathanka border point in Sankhuwasabha district, along with a road link to Chentang in Tibet. Both sides agreed to advance the proposal through diplomatic channels.

Discussions also covered the construction of the Integrated Check Post project in Timure, Rasuwa, simplification of customs procedures at the Korala border in Mustang, and acceleration of construction of the Korala Inland Container Depot.

Both sides agreed to facilitate construction of the Hilsa–Simikot road and the Rasuwa–Syafrubensi road on the Nepali side, while urging China to accelerate related works on its side.

Pandey said drafting of regulations to operationalise the ABP provisions of the Customs Act is underway.

Once Nepal grants AEO recognition, China will reciprocate by extending similar recognition to Nepali businesses.

He added that a bilateral understanding would be required to enforce the agreements reached at the meeting.

Businesses seeking recognition will be required to apply to the Department of Customs.

Draft regulations propose eligibility criteria including compliance with the Customs Act, absence of penalties or fines, regular business transactions, and no outstanding government dues.

Recognised businesses will be entitled to expedited clearance, fast-track services, quicker processing during peak inspection periods, and the option to clear goods outside office hours.

International practice also allows customs clearance without guarantees in certain cases. Pandey added the regulations will include additional provisions. Nepal can extend AEO recognition through mutual agreements with other trading partners, he noted.