Study calls for comprehensive reforms for Nepal’s upcoming LDC graduation

KATHMANDU: Nepal must implement a comprehensive plan as it gets closer to leaving the Least Developed Country (LDC) category in 2026, according to recent research. The study, which was funded by the European Union's Nepal Trade and Investment Programme (TIP) and commissioned by the Ministry of Industry, Commerce, and Supplies (MoICS), was presented at a public-private discussion with an emphasis on trade policy changes that are required to lessen the impact on WTO obligations.

The report identifies a number of areas in which Nepal needs to implement major changes, such as modernizing institutional protocols, strengthening human resource capacities, and upgrading legal and regulatory frameworks. In order to effectively manage the commercial climate following graduation, it also highlights the necessity for Nepal to expand international cooperation and diversify its export markets.

It is the consensus of policymakers, trade experts, development partners, and representatives of the business sector that immediate legal and regulatory changes are required. In order to optimize the advantages of Nepal's graduation, Secretary of MoICS Krishna Bahadur Raut reaffirmed the government's commitment to addressing the issues brought out by the business sector. Joint Secretary Dev Raj Joshi pointed out that although graduation comes with difficulties, it also brings chances for trade-related policy reform.

Trade expert Purushottam Ojha stressed the importance of complying with new WTO obligations, including those related to agriculture, subsidies, intellectual property rights, and trade facilitation, to ensure a smooth transition. Abhijit Das, an international trade expert, warned that the transition could lead to stricter rules and reduced benefits, such as the loss of lower tariffs, making it crucial to implement the recommended action plan.

The study also highlighted potential losses, such as the end of trade preferences under the Generalized System of Preferences (GSP) and Duty-Free Quota-Free schemes, which could result in higher tariffs on Nepali exports. Recommendations include conducting detailed studies to identify vulnerable products and markets, exploring alternative trade arrangements like GSP-Plus with the EU, and increasing industry awareness through workshops. Strengthening national capacities to handle non-tariff barriers and forming partnerships with key trade partners are also crucial for a successful transition.