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Nepal Trade Agreements

Nepal Trade Agreements

Nepal Trade Agreements: Understanding the Benefits and Implications

Nepal, a landlocked country in South Asia, has been making strides towards expanding its trade relations with the rest of the world. Over the years, Nepal has signed several trade agreements with other countries, both within and outside the region. These agreements have opened up new avenues for Nepal`s exports and helped the country to attract investment and technological know-how. In this article, we will discuss the most significant trade agreements that Nepal has signed and their implications for the country.

1. South Asian Free Trade Agreement (SAFTA)

Nepal is a member of the South Asian Association for Regional Cooperation (SAARC), a regional organization comprising eight countries in South Asia. In 2006, SAARC signed the SAFTA, which aims to create a free trade area among its member states. Under this agreement, Nepal has access to a market of over 1.7 billion people. However, despite being a member of SAFTA, Nepal`s trade with other SAARC countries remains relatively low due to various non-tariff barriers.

2. Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC)

Nepal is also a member of BIMSTEC, a regional organization comprising seven countries in South and Southeast Asia. BIMSTEC aims to promote economic cooperation and integration among its member states. In 2004, BIMSTEC signed a framework agreement on a Free Trade Area (FTA), aiming to enhance trade among its members. However, the FTA is yet to be implemented.

3. Nepal-India Trade Treaty

Nepal and India have a long-standing trade relationship. In 1996, the two countries signed a bilateral trade treaty, which has been regularly renewed since then. The treaty allows for duty-free access for Nepali goods to the Indian market. India is Nepal`s largest trade partner, accounting for over two-thirds of Nepal`s total trade.

4. Nepal-China Free Trade Agreement (FTA)

Nepal and China signed the FTA in 2018, which came into effect in 2021. Under the FTA, Nepal has access to the Chinese market with few or no tariffs on 8,000 products. The agreement also covers investment and services. The FTA is expected to boost Nepal`s exports to China and attract Chinese investment in Nepal.

5. Preferential Trade Agreement (PTA) with Bangladesh

Nepal and Bangladesh signed a PTA in 2018, which came into effect in 2020. Under the PTA, Nepal`s exports to Bangladesh will receive a preferential tariff treatment, making them more competitive in the Bangladeshi market. The agreement covers 50 products.


Trade agreements can have numerous benefits for a country, such as increased exports, investment, and job creation. However, they also have potential downsides, such as increased competition and the risk of losing domestic industries. For Nepal, signing trade agreements with other countries is a step towards greater integration into the global economy. The agreements can help Nepal to diversify its exports and attract investments in new sectors. However, Nepal needs to address its infrastructure and non-tariff barriers to fully reap the benefits of these agreements. Overall, Nepal`s trade agreements show promise for the country`s economic growth and development.

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