Nepal after LDC Graduation: New avenues for exports

Nepal after LDC Graduation

Nirmala lives in Sindhupalchowk district in Nepal an LDC that is soon to graduate.

Created over 50 years ago, the Least Developed Country (LDC) category was always meant to be a temporary phase for the countries furthest behind in their development.

Belonging to the LDC category can boost development, particularly through duty-free, quota-free access granted by multiple markets. Graduating from this category remains the goal of all LDCs and, when it happens, is recognition by the international community of progress made.

At the same time, with the phased removal of special support measures, graduation forces ex-LDCs (or soon to be ex-LDCs) to navigate new paths through trade.

Nepal's Road to Graduation

Nepal has been an LDC since the category was established in 1971 and after remarkable progress, especially with respect to the human assets and economic vulnerability criteria, it was agreed in 2021 that Nepal would graduate by the end of 2026.

Graduation from the LDC category is a key milestone in the sustainable development progress of any country. Each graduation constitutes an extraordinary achievement. Transitioning out of the LDC category can be a complex path with important implications that need to be fully analysed and a key role of OHRLLS is to support those LDCs preparing to graduate with a sustainable transition plan.

As it prepares to leave the category, Nepal faces challenges common to all LDCs: climate change concerns and the consequences of the COVID-19 pandemic. But Nepal faces its own unique challenges as a landlocked least developed country. 

The period until graduation will be dedicated to preparing a smooth, sustainable transition out of LDC-specific support. This entails identifying the consequences of the loss of LDC support measures and devising strategies to offset them. In line with that goal, this study projects export losses for Nepal connected to the removal of LDC preferential tariffs and identifies approaches to mitigate them.  

The International Trade Centre and the United Nations Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States joined forces to produce this study, which we hope will be an invaluable tool for Nepal's ongoing efforts to more fully integrate into the global economy.

Download the report here.