Nepal - Country Commercial Guide
Trade Agreements
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Nepal has ratified the South Asian Association for Regional Cooperation (SAARC) Agreement on a South Asian Free Trade Area (SAFTA).  Under SAFTA, the eight SAARC nations (Nepal, Bhutan, India, Bangladesh, Pakistan, Sri Lanka, Maldives, and Afghanistan) have pledged to cut tariff rates on a product-by-product basis, and more than 5,000 items are entitled to preferential duty treatment in the participating countries.  However, the long “negative list” of goods that are excluded from preferential duty treatment under SAFTA has limited the agreement’s impact on regional trade.

Nepal became the 147th member of the World Trade Organization (WTO) in April 2004.  Nepal was given until December 2006 to comply with its WTO obligations, but to date it has only partially fulfilled these obligations.

In February 2004, Nepal became a member of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC).  Other members include Bangladesh, Bhutan, India, Myanmar, Sri Lanka, and Thailand.  BIMSTEC seeks to establish a more comprehensive free-trade area through deeper and more substantial sector coverage of services and an open and competitive investment regime.  The regional group constitutes a bridge between South and South East Asia and represents a reinforcement of relations among these countries.  BIMSTEC has also established a platform for intra-regional cooperation between SAARC and ASEAN members.  

Nepal has signed bilateral trade agreements and treaties with seventeen countries, including the United States, United Kingdom, Yugoslavia, India, Russia, Republic of Korea, North Korea, Egypt, Bangladesh, Sri Lanka, Bulgaria, China, Czech Republic, Pakistan, Romania, Mongolia, and Poland.  The treaty Nepal signed with India in 1996 and amended in 2009 is its most important in terms of trade volume.  Except for some items under quantitative restrictions, the trade treaty puts Nepal in a unilateral duty-free trade regime with India, which accounted for more than 60 percent of Nepal’s total trade in FY 2019/20.