KATHMANDU: A new study has emphasised the need for Nepal to adopt a comprehensive approach to navigate the complexities of its upcoming graduation from Least Developed Country (LDC) status in 2026.
The study, titled "Nepal LDC Graduation: Report on Trade Policy Reforms to Mitigate the Impact on WTO Obligations," commissioned by the Ministry of Industry, Commerce and Supplies with support from the European Union Nepal Trade and Investment Programme (TIP), was presented at a public-private dialogue on Wednesday.
The study emphasises the need for Nepal to update its laws and regulations, improve institutional processes, strengthen human resource skills, expand export markets, and enhance international cooperation.
Policymakers, trade experts, development partners, and private sector representatives hold a common view that Nepal must expedite legal and policy reforms, and strengthen institutional and human resource capacities to be better prepared to face the post-graduation trade scenarios.
Secretary at the Ministry of Industry, Commerce, and Supplies, Krishna Bahadur Raut, who was presiding over the program, said the government is serious about the concerns raised and suggestions offered by the private sector regarding Nepal’s preparation for graduation.
Raut expressed commitment to making maximum efforts from the government to ensure post-graduation benefits for Nepal.
Joint Secretary at the ministry Dev Raj Joshi said Nepal’s graduation presents both challenges and opportunities adding that Nepal needs to continue to make reforms in trade-related policies and laws.
Purushottam Ojha, a trade expert and former Commerce Secretary, emphasised the importance of adhering to new WTO obligations, including agreements on agriculture, subsidies, the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), and the Trade Facilitation Agreement (TFA) for a smooth transition.
An International Trade Expert from the International Trade Centre, Abhijit Das, cautioned that the transition leads to stricter rules and reduced benefits, such as the loss of lower tariffs stressing the urgent need to implement the action plan to ensure a smooth transition from LDC status.
Shobha Gyawali, president of the Federation of Nepal Women Entrepreneurs’ Association (FWEAN), said that Nepal is not yet ready for LDC graduation and emphasised the need to ensure that women entrepreneurs benefit from international trade.
Other representatives of the private sector said graduation seemed to be without due preparation given the low competitiveness of Nepali businessmen and the higher cost of production and export compared to other countries.
The study also warns that Nepal might forfeit its trade preferences under the Generalised System of Preferences (GSP) and Duty-Free Quota-Free schemes, which could result in increased tariffs on exports.
It suggests conducting a thorough diagnostic study to identify vulnerable products and markets, exploring alternative trade arrangements such as GSP-Plus in the European Union, and enhancing industry awareness through workshops.
Strengthening national capacity to address non-tariff barriers, developing national standards, forming mutual recognition agreements with key trade partners, promoting products prioritised by the Nepal Trade Integration Strategy (NTIS) 2023, drawing lessons from other LDC-graduated countries, fostering partnership among governments, private sector, and international partners, are other recommendations of the study to ensure a successful transition by mitigating the impacts of LDC graduation.
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