Review of Nepal’s Commerce Policy in the Wake of LDC Graduation

Abstract

Nepal’s commerce (trade) policy governs both foreign and domestic trade dynamics within its broader trade and investment ecosystem. Despite adopting a liberal trade regime, which was further expedited through WTO accession in 2004, and implementing three successive commerce policies (1990, 2009, and 2015), and formulating the Commerce Policy 2025 aimed at achieving export-driven growth, Nepal continues to witness a persistent trade deficit, even though LDC-specific special and differential preferences were available. With Nepal’s graduation from LDC status scheduled for November 2026, this paper reviews the perspectives of the Commerce Policy 2025 frameworks in preparing for the post-graduation landscape. Utilizing a mixed-methods approach including key informant interviews (KII), content analysis, and quantitative data triangulation the study finds an urgent need for a forward-looking, LDC graduation-centric commerce policy implementation from the mindset of a low-income developing country. Key strategic recommendations include enhancing market access through bilateral and regional FTAs, addressing non-tariff barriers, balancing tariff and non-tariff measures, fostering digital trade including e-commerce, strengthening trade infrastructure and connectivity, implementing sustainable trade facilitation measures, reforming trade finance and incentive mechanisms, advancing economic diplomacy, and investing in multi-level capacity building. These measures are essential to ensure Nepal’s resilient and inclusive trade-driven growth in the post-LDC era.