Nepal enjoys trade surplus with only 18 countries

September 20, 2017

The Himalayan Times, 20 Sep 2017

The number of countries with whom Nepal enjoys trade surplus is on the decline.

As of mid-August, the country had trade surplus with 18 countries out of 94, with whom the country has trade relations. The number of countries with which Nepal had trade surplus stood at 30 in the first month of the last fiscal 2016-17.

As per the trade statistics of the first month of this fiscal unveiled by the Department of Customs (DoC), the country had trade surplus with the United States, United Kingdom, Czech Republic, Norway, Romania, Namibia, Portugal, Uruguay, Morocco, Yemen, Bolivia, Chile, Dominica, Azerbaijan, New Caledonia, Tajikistan, Iceland and Lithuania.

Nepal exports handicraft products, carpets, garments, pashmina, jewellery, among others, to the aforementioned countries.

Though advanced economies like the United States and European countries have extended zero tariff facility for Nepali products as the products manufactured in least developed countries, the country has not been able to capitalise on this facility due to the country’s low production base.

Until a few years back, the country had trade surplus with Bangladesh, among the South Asian countries, as Bangladesh used to import lentils and fresh vegetables from Nepal. However, the country is now facing trade deficit with Bangladesh also, as export of lentils plummeted along with the rise in production in their own country.

Nepal’s weak production base is considered to be a major reason for the country’s huge trade deficit. “But, there is a lot of potential to increase export of products that have niche market advantage,” said Murari Gautam, an expert of international trade.

“The country needs to focus on the need of the buyers and produce and design the products as per their demand.”

Zero tariff facility extended by the developed countries has remained largely unutilised as the country has not enhanced its capacity to produce goods in the country.

Nepal has huge trade imbalance with neighbouring India and China. The country had trade deficit worth Rs 52 billion and Rs 11 billion with India and China, respectively, in the first month of this fiscal. Nepal’s major exports to India are the locally produced goods of Indian multinationals, like juice (production of Dabur Nepal), yarn, jute and other primary products.

Northern neighbour China has also been providing zero tariff facility for 7,787 items of all tariff lines. However, the country’s export to China has not increased despite this provision.

As per Gautam, though the developed countries have been offering duty-free, quota-free market access to their countries, Nepal has not been able to utilise the facility due to supply-side constraints and the non-tariff barriers imposed by the developed countries.

In excess

Country Trade balance 
Azerbaijan Rs 180,000
Bolivia Rs 563,000
Chile Rs 303,000
Czech Republic Rs 2,427,000
Dominica Rs 359,000
Iceland Rs 4,734,000
Lithuania Rs 387,000
Morocco Rs 707,000
Namibia Rs 936,000
New Caledonia Rs 5,174,000
Norway Rs 75,870,000
Portugal Rs 7,293,000
Romania Rs 1,340,000
Tajikistan Rs 189,000
United Kingdom Rs 210,065,000
United States Rs 221,695,000
Uruguay Rs 1,445,000
Yemen Rs 7,341,000