Nepal
As a least-developed country (LDC), Nepal is a beneficiary of the EU's "Everything but Arms" (EBA) arrangement. The World Bank classifies Nepal as a lower middle-income economy with a per-capita income of $1,378 in 2023. Total EU imports from Nepal amounted to about €101 million in 2023, and preferential imports to €73 million.
What is the EBA?
The EBA arrangement covers all LDCs as classified by the United Nations. This arrangement enables duty-free and quota-free access for all products originating in LDCs except for arms and ammunition. Unlike beneficiaries of the Standard GSP and GSP+, LDCs are not excluded from the scheme if they benefit from other preferential arrangements or agreements with the EU.
At a glance: EU preferential imports from EBA beneficiary countries (2023, € million)
29.7M (2023)
Population
Federal Parliamentary Republic
Government
2.0% (2023)
GDP Growth
7.1% (2023)
Inflation
$ 40.9B (2023)
GDP
Facts about Nepal's economy
Landlocked Economy
Located in South Asia, Nepal is a landlocked country bordering the powerful economies of China and India. The country is covered by the Himalayas and is home to eight of the world’s ten highest mountains.
Export Products
Nepal's most important export products in 2023 were carpets, vegetable oils, yarn, waters, and spices.
Trade Partners
Nepal is highly dependent on India as a trading partner. The neighbouring country accounted for more than 59% of overall trade in 2023, leaving Nepal vulnerable to fluctuations in the Indian economy. China and the EU are the second and third most important trading partners, with some distance.
Economic Structure
Agriculture is the mainstay of the Nepalese economy, employs the large majority of the workforce and accounts for a large share of exports. The main commodities include rice, corn, and wheat. Small scale industries mainly focus on the processing of agricultural commodities and process jute, sugar, and rice. Furthermore, Nepal largely depends on the inflow of remittances which amounted to about 26% of GDP in 2023.
Cardamom Production
With an annual production between 5000 and 6000 metric tonnes, Nepal is on the list of the world’s leading producers and exporters of cardamom.
Trade with the EU
Total trade with the EU amounted to €492 million in 2023. Although this accounts for only 4% of Nepal's total trade, the EU is the third most important trading partner. The EU also ranks third as an export market with a share of 7% of Nepalese total exports.
Nepal and the EU
Imports from Nepal by product section (2023, € million)
Imports from Nepal over time (€ million)
NEPAL AND THE EU GSP
Economic Impact
86%
The large majority of Nepal's exports to the EU were eligible for EBA preferences in 2023.
85%
Nepal's preference utilisation rate in 2023.
87%
Share of zero-duty imports from Nepal.
Preference utilisation and export diversification
EU imports from Nepal (€ million)
Preference utilisation (%) vs. total eligible imports (in € million)
The largest share of EU imports from Nepal is eligible for EBA preferences. Imports were fairly constant over the years, fluctuating between €75 million and €85 million annually, with the exception of 2020 and 2021. Nepal makes consistently high use of the free access to the EU market granted under the EBA: until 2020, the preference utilisation rate was always above 90%; in 2023 it was 85%. The most prominent export product, clothing, uses EBA preferences for 90% of eligible tariff lines; for the second most important product group, textiles, the utilisation rate dropped to 77% in 2023.
The largest product sections under EBA (€ million, 2023)
Imports from Nepal predominantly come from the textile and apparel sector, which accounts for about 84% of total imports under the EBA. Exports of headgear, leather articles and manufacturers are also imported under the EBA, but only account for small shares.
SUSTAINABLE DEVELOPMENT
The preferential access to the EU market granted by the EBA scheme is not bound to the ratification of international conventions. Nepal upholds a very high level of ratification and has ratified 14 out of 15 core conventions on the protection of human and labour rights. Furthermore, Nepal has ratified 7 environmental protection conventions and is a signatory of the Cartagena Protocol. The country has also ratified 4 conventions on good governance.
Core international conventions on human rights and labour standards
Ratified
- Convention on the Prevention and Punishment of the Crime of Genocide (1948)
- International Convention on the Elimination of All Forms of Racial Discrimination (1969)
- International Covenant on Civil and Political Rights (1976)
- International Covenant on Economic Social and Cultural Rights (1976)
- Convention on the Elimination of All Forms of Discrimination Against Women (1981)
- Convention Against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment (1987)
- Convention on the Rights of the Child (1990)
- Convention concerning Forced or Compulsory Labour, No 29 (1930)
- Convention concerning the Application of the Principles of the Right to Organise and to Bargain Collectively, No 98 (1949)
- Convention concerning Equal Remuneration of Men and Women Workers for Work of Equal Value, No 100 (1951)
- Convention concerning the Abolition of Forced Labour, No 105 (1957)
- Convention concerning Discrimination in Respect of Employment and Occupation, No 111 (1958)
- Convention concerning Minimum Age for Admission to Employment, No 138 (1973)
- Convention concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour, No 182 (1999)
Not Ratified
- Convention concerning Freedom of Association and Protection of the Right to Organise, No 87 (1948)
Additional Conventions
- Convention on International Trade in Endangered Species of Wild Fauna and Flora (1973)
- Montreal Protocol on Substances that Deplete the Ozone Layer (1987)
- Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal (1989)
- Convention on Biological Diversity (1992)
- The United Nations Framework Convention on Climate Change (1992)
- Cartagena Protocol on Biosafety (2000) (signed)
- Stockholm Convention on persistent Organic Pollutants (2001)
- Kyoto Protocol to the United Nations Framework Convention on Climate Change (1998)
- United Nations Single Convention on Narcotic Drugs (1961)
- United Nations Convention on Psychotropic Substances (1971)
- United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988)
- United Nations Convention against Corruption (2004)
EU-Nepal Bilateral Development Cooperation
DG INTPA
Access all info about EU-Nepal relations on the International Partnerships website.