A fresh study has emphasised the need for Nepal to adopt a comprehensive approach to navigating the complexities of its upcoming graduation from a Least Developed Country in 2026.

The study, Nepal LDC Graduation: Report on Trade Policy Reforms to Mitigate the Impact on WTO Obligations, was commissioned by the Ministry of Industry, Commerce and Supplies, with support from the European Union Nepal Trade and Investment Programme (TIP). It was presented at a public-private dialogue.

The study highlights the need for Nepal to reform its legislative and regulatory frameworks, enhance institutional procedures, improve human resource capabilities, diversify export markets, and bolster international collaboration.

Policymakers, trade experts, development partners, and private sector representatives agree that Nepal must expedite legal and policy reforms and strengthen institutional and human resource capacities to better prepare for post-graduation trade scenarios.

Krishna Bahadur Raut, secretary at the Ministry of Industry, Commerce and Supplies, who presided over the programme, said the government seriously considers the concerns of, and suggestions from, the private sector regarding Nepal’s preparations. He also pledged efforts from the government side to ensure post-graduation benefits for Nepal.

Debraj Joshi, joint-secretary at the ministry, said Nepal’s graduation presents both challenges and opportunities, adding that the country needs to continue 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, Agreements on Trade-Related Aspects of Intellectual Property Rights (TRIPS), and Trade Facilitation Agreement (TFA) for smooth transition.

Abhijit Das, an International Trade Expert from the International Trade Centre, cautioned that the transition leads to stricter rules and reduced benefits, such as the loss of lower tariffs and stressed the urgency for implementing the action plan to ensure a smooth transition from the LDC status.

Shobha Gyawali, president of the Federation of Nepal Women Entrepreneurs’ Association, said that Nepal is not yet mature enough for LDC graduation, and demanded benefits for women entrepreneurs from international trade.

Other representatives of the private sector said the graduation seems to have been planned 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 cautions that Nepal will lose trade preferences under the Generalized System of Preferences (GSP) and Duty-Free Quota-Free schemes, potentially leading to higher tariffs on exports. It recommends detailed diagnostic study to identify vulnerable products and markets, exploring alternative trade arrangements like GSP-Plus in the European Union, and raising 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.