Gold traders in Nepal and China will have to use letters of credit (L/Cs) to finance cross-border trades under a new bilateral agreement between the two countries.

The 14-point agreement was made by Nepalese and Chinese customs officials and aims in particular to curb gold smuggling through Nepal's Tatopani customs point.

Smuggling curb

The agreement bars Nepali traders from using telegraphic transfers and bank drafts to pay for Chines gold imports, while the promotion of the L/C as the principle instrument for such imports aims to stem revenue losses from gold smuggling.

The agreement was signed during an annual meeting of customs officials from Nepal and Chinese governed Tibet.

Trade promotion

The agreement also aims to promote bilateral trade, with China agreeing to make it easier for Nepalese exports to reach Chinese markets.

Under the agreement, China is to ease quarantine restrictions on Nepalese live animal imports and streamline customs clearance procedures.

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