Nepal is a beneficiary of the EU's "Everything but Arms" (EBA) scheme for least developed countries. Nepal is considered a lower-middle income economy by the World Bank and the per-capita income currently stands at $ 1.340 (2022). Overall EU imports from Nepal have been decreasing in recent years and most recently stood at EUR 93,8 million. A high share of these imports are eligible for tariff suspensions granted by the EBA and Nepal currently takes good advantage of the preferences.
The “Everything but Arms”(EBA) scheme is a permanent arrangement covering Least Developed Countries (LDC’s) as classified by the United Nations. This arrangement enables duty-free and quota-free access for all products (7200 products in total) originating in LDC’s except for arms and ammunition. Different from the Standard GSP and GSP+, LDC’s are not excluded from the scheme if they benefit from other preferential arrangements.
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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.
Nepal's most important export products are palm oil and soy-bean oil, carpets, non-alcoholic beverages, articles of plastic as well as yarn and woven fabrics.
Nepal is highly dependent on India as a trading partner. The neighbouring country accounts for more than 65% of overall trade, leaving Nepal vulnerable to fluctuations in the Indian economy.
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 23.1 % in 2022.
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.
Total trade with the EU amounted to € 301 million in 2022. With 2.3% of overall trade, the EU only plays a minor role in Nepal's overall trade relations. Nonetheless, it ranks third as an export market with about 6.6% of Nepalese products being exported to Europe.
The large majority of Nepal's exports to the European market are eligible for EBA preferences.
With a preference utilisation rate of almost 87%, Nepal makes considerable use of EBA preferences.
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% despite fluctuations in eligible imports, and stood at 87% in 2022. Imports have been increasing since 2020. The most prominent export products, textiles and clothing, use EBA preferences for 90% of eligible tariff lines.
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.
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.
Access all info about EU-Nepal relations on the International Partnerships website: https://international-partnerships.ec.europa.eu/countries/nepal_en