The EU-supported Trade and Investment Programme (TIP) that provided crucial support to Nepal’s efforts to enhance trade and investment and prepare the country for graduation from Least Developed Country (LDC) status concluded on Monday.

TIP was initiated in February 2020 and had two components—the 44-month Investment Support Facility (ISF), implemented by Deutsche Gesellschaft fuer International Zusammenarbeit (GIZ) and the 60 months project implemented by the International Trade Center (ITC).

The 8 million euro programme involves a trade component of 5 million euros implemented by the ITC and an investment and policy support component of 2.8 million managed by the GIZ.

Speaking at the closing ceremony, Ambassador of the European Union to Nepal, Véronique Lorenzo, said the TIP has been instrumental in enhancing Nepal’s trade and investment capacities and reiterated the EU’s commitment to continue supporting Nepal’s graduation to a middle-income country.

“Our cooperation wishes to strengthen Nepal in the multilateral trade system,” Ambassador Lorenzo said. “However, we must be aware that the graduation may affect Nepal’s trade, particularly exports to European and other markets.”

This is because the EU’s Everything But Arms (EBA) scheme will not be available for duty-free exports to Europe after the three-year transition period following its graduation in 2026. The Ambassador also stressed the need for creating employment in Nepal, and said she wished to see more Nepali products in European shops.

Lorenzo added that the EU offers Nepal access to the Generalised Scheme of Preference Plus (GSP+).

For trading under GSP+ Nepal would need to make an application and ratify the required international conventions on human rights, labour rights, environmental protection, climate change and good governance. Most importantly, the conventions will need to be implemented.

The Ambassador also spoke about some achievements of TIP.

Under the trade component, TIP supported the development of a National Pashmina Sector Export Strategy, the establishment of a Pashmina Fibre Processing Centre, and the training of over 2,500 coffee and pashmina producers and exporters.

For sustainable graduation from LDC status, TIP supported enhancements in trade negotiation skills for government officials and collaborated with private sector associations and other civil society organizations to review the policy framework with a gender lens. It also facilitated public-private dialogues and developed recommendations for gender-friendly policies.

Similarly, the investment component was instrumental in supporting Nepal’s efforts to improve the investment climate and attract foreign direct investment (FDI).

“We identified green projects for all four sectors of priority— IT, agriculture, tourism, and renewable energy,” said Claudius Preville, team leader of TIP.

“One of the important work that we have done is the use of technology in modernising the trade infrastructure in Nepal. In that connection we did two major interventions—development of an FDI toolkit and development of an FDI automatic route,” said Preville.

“These two applications together have proven to be very effective in the country.”

TIP has three objectives: increased trade and participation in regional and global value-chains, improved investment climate for attracting FDI and improved trade and investment.

TIP supported the drafting of and consultations on six policies and strategies aimed at addressing different bottlenecks faced while investing in Nepal, including Nepal Trade Integration Strategy (NTIS 2023).

“NTIS 2023 was a huge project for us and it has already been more than 10 months of implementation. We resourced more than 200,000 euros for the project,” said Perville.

TIP supported consultation on the Micro, Cottage and Small Industry Promotion Policy 2023 and National Start-up Enterprise Policy 2024.

“The project has significantly increased the percentage of women engaged in events involving investment and trade,” Perville said.

“We have also seen a significant uptick in FDI through the automated route.

A total of 139 companies were registered through the automated FDI process in the last few months, he said.

In terms of improvement of FDI in Nepal, Preville said that there is a need to reform the business visa regime as EU countries found this to be very problematic. There is a need to address the issue of profit repatriation for foreign investors and work-related earnings, he added

According to TIP, EU imports from Nepal grew by 87 percent to 101 million euro since the project inception in 2020.

Coffee exports surged by 89 percent since the project started, reaching Rs150 million in the fiscal year 2023-24. Coffee production increased by 33 percent since project inception, reaching 395 tonnes in the last fiscal year.

The export of knitted pashmina products grew 75 percent since the project inception, reaching Rs3.1 billion in 2023-24.

“Nepal has untapped export potential of $9.2 billion than of current $1.2 billion,” said Preville.