Kathmandu, Aug 8: A new study stresses that Nepal needs a broad approach to handle the complexities of graduating from Least Developed Country (LDC) status in 2026.
Commissioned by the Ministry of Industry, Commerce and Supplies (MoICS) and supported by the European Union Nepal Trade and Investment Programme (TIP), the study was shared at a dialogue on “Nepal LDC Graduation: Report on Trade Policy Reforms to Mitigate the Impact on WTO Obligations.”
The study emphasizes several key areas for Nepal:
– Reform Legislation and Regulations: Update laws and regulations to meet new trade requirements.
– Enhance Institutional Procedures: Improve how institutions operate.
– Improve Human Resources: Invest in training and development for trade and industry professionals.
– Diversify Export Markets: Explore new markets to reduce dependence on current ones.
– Bolster International Collaboration: Strengthen partnerships with other countries and international organizations.
Policymakers, trade experts, and private sector representatives agree that Nepal must quickly make legal and policy reforms and build institutional and human resource capacities to handle post-graduation trade challenges.
Krishna Bahadur Raut, Secretary at MoICS, affirmed the government’s commitment to addressing the concerns and suggestions from the private sector to ensure benefits after graduation.
Joint Secretary at MoIC, Dev Raj Joshi, noted that while graduation presents challenges, it also offers opportunities and highlighted the need for ongoing trade policy reforms.
Trade expert Purushottam Ojha stressed the importance of meeting new WTO obligations, such as those related to agriculture, subsidies, intellectual property rights (TRIPS), and trade facilitation (TFA), to ensure a smooth transition.
Abhijit Das, an International Trade Expert from the International Trade Centre, warned that graduation will bring stricter rules and fewer benefits, like the loss of lower tariffs, and emphasized the need to implement an action plan for a smooth transition.
Shobha Gyawali, President of the Federation of Nepal Women Entrepreneurs’ Association (FWEAN), expressed concerns that Nepal is not yet ready for LDC graduation and stressed the need to ensure that women entrepreneurs benefit from international trade.
Other private sector representatives pointed out that Nepal’s graduation seems to be happening without adequate preparation, noting issues like low competitiveness and high production costs.
The study also highlighted that Nepal will lose trade preferences under the Generalized System of Preferences (GSP) and Duty-Free Quota-Free schemes, which could lead to higher tariffs on exports. It recommends:
– Conducting Detailed Studies: To identify vulnerable products and markets.
– Exploring Alternative Trade Arrangements: Such as GSP-Plus in the European Union.
– Raising Industry Awareness: Through workshops and information sessions.
Additionally, the study suggests strengthening national capacity to tackle non-tariff barriers, developing national standards, forming mutual recognition agreements (MRAs) with key trade partners, promoting products prioritized by the Nepal Trade Integration Strategy (NTIS) 2023, and learning from other countries that have graduated from LDC status. Fostering collaboration among governments, the private sector, and international partners is also crucial for a successful transition.
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