Nepal's Foreign Policy

Foreign Policy

• A government strategy in dealing with other nations, also called foreign relations or foreign affairs policy
• Refers to the principles, interests, and objectives a country promotes when interacting with other countries

Ministry of Foreign Affairs (MOFA)

• The government agency responsible for Nepal's foreign relations

Guiding Principles of Nepal's Foreign Policy

• Abiding faith in the United Nations
• Nonalignment or Neutrality
• Mutual respect for territorial integrity and sovereignty
• Non-interference in internal affairs

Objectives of Every Country's Foreign Policy

• Preservation of independence and security
• Pursuit and protection of economic interests

Historical Overview of Nepal's International Relations

• Formal beginning: Junga Bahadur Rana's visit to Britain in 1850 AD
• Treaty of Peace and Friendship: Signed with British government in 1923 during Chandra Shamsher's rule
• Entry into the international world: After establishing diplomatic relations with China, the Soviet Union, and France following the political change of 2007 BS
• Relations with Britain: The service of British Gurkhas had officially started on 24 April 1815 after the Treaty of Sugauli

The Tripartite Agreement of 1947

• Organized the recruitment of the Gurkha Army among Nepal, India, and the UK, following India's independence

Nepal's Diplomatic Relations

• Increased to 179 countries
• Nepal established diplomatic relations with Nauru in May 2023
• States exchange diplomatic agents like ambassadors to facilitate dialogues and cooperation

United Nations Membership

• Nepal became a member on December 14, 1955

Nepal's Foreign Policy and Constitution

• Foreign policy is conducted based on the UN Charter, non-alignment, principles of Panchasheel, international law, and world peace norms
• Considers national interests and safeguards sovereignty, territorial integrity, and independence

Panchasheel Agreement's Five Principles

• Mutual respect for territorial integrity and sovereignty
• Mutual non-aggression
• Mutual non-interference in internal affairs
• Equality and mutual benefit
• Peaceful co-existence

Characteristics of Nepalese Foreign Policy

• Based on geographical, political, social, economic, intellectual, historical, and religious context
• Friendly relations with neighboring countries
• Has always been independent
• Began participating in non-aligned summit conferences from 1961
• Nepal became an active member of the UNO in 1955

Objectives of Nepalese Foreign Policy

• Mutual respect for territorial integrity and sovereignty
• Non-interference in each other’s internal affairs
• Respect for mutual equality
• Non-aggression and peaceful settlement of disputes
• Cooperation for mutual benefit
• Abiding faith in the Charter of the United Nations
• Value of world peace
• Preserving autonomy while building relations with neighbors
• Bringing foreign investment to spurt economic growth

Foreign Trade

Trade Definition

• The action of buying and selling goods and services in exchange for something else, often a commercial transaction

Types of trade.

• Internal trade, also known as Home Trade, is conducted within the political and geographical boundaries of a country
• Foreign trade, Refers to buying and selling between two or more countries

Types of Foreign Trade

• Export Trade: A trader from a home country sells goods to a trader in another country
• Import Trade: A trader in a home country obtains or purchases goods from a trader in another country
• Entrepot Trade: Goods are imported from one country, processed, and then re-exported

Nepal's Trade Relations

Key Trading Partners

• India, China, Bangladesh, and the USA

Exports

• Clothing, carpets, handicrafts, leather and jute products, vegetables, and cereals

Imports

• Oil and oil products, machinery & equipment, and electronics

Nepal's Trade Policy

• Adopted a liberal trade policy in 1992
• New Trade Policy announced in 2014
• The foreign trade is directed toward a wide range of countries after Nepal joined the WTO in 2004

Additional Trade Facts

• Trade relations with more than 100 countries
• Has identified 19 selected items for exports through the National Trade Integration Strategy (NTIS) in 2010

Importance of Trade

• Allows countries to develop skills relating to developing high-quality goods
• Creates employment opportunities
• Expands the market
• Resources and means are utilized properly
• Helps in industrialization
• Enables foreign currency earnings
• Aids preservation and encouragement for the arts and crafts skills
• Increases government revenue and strengthens the national economy
• Strengthens relationships between countries

Current Situation of Foreign Trade in Nepal

• Still in its infancy, with a small but growing manufacturing sector
• Before 1951 AD, trade was mainly limited to India and Tibet
• Now, has trade relations with various overseas countries besides India and China

Problems of Foreign Trade in Nepal

• Trade imbalance
• Landlocked geography
• Open border with India
• High imports and low exports
• Low-quality goods
• High production costs
• Low-capital formation
• Tough competition
• Lack of proper policy

Landlocked Problem

• Lacks seaports and relies on Indian ports, leading to transit problems and increased costs

Open Border with India

• Large flow of cheap Indian goods impacts Nepal
• Smuggling through unofficial routes benefits individuals but hurts the country's trade balance

Trade Imbalance

• High import and low export result in a trade deficit.
• Exports consist of agricultural products, handicrafts, and raw materials; while imports include daily-use items and luxury goods

Quality and Cost Issues

• Nepal lacks a well-developed industrial base
• Production costs are high
• Products are unable to compete in international markets

Low Capital Formation

• Limited economic activities and underdeveloped infrastructure
• Lack of private and foreign investment creates issues

Competition

• International trade is becoming highly competitive
• Countries export quality goods at lower rates to increase their market share

Trade Policy Issues

• Liberal trade policy adopted in 1990
• The Open door policy leads to uncontrolled flow of foreign goods.
• Causes a trade deficit due to political instability and lack of commitment

Solutions to Foreign Trade Problems

• Enhance industrial bases
• Promote export-oriented goods
• Give appropriate incentives to exports
• Improve quality of goods
• Adopt proper trade policies
• Enhance training and skills

The United Nations

• Secretary-General: António Guterres, re-appointed on June 18, 2021, for a second term
• Main bodies: General Assembly, Security Council, Economic and Social Council, Trusteeship Council, International Court of Justice, and the UN Secretariat, all established in 1945

United Nations Specialized Agencies

• FAO: Food and Agriculture Organization
• ICAO: International Civil Aviation Organization
• IFAD: International Fund for Agricultural Development
• ILO: International Labor Organization
• IMF: International Monetary Fund
• IMO: International Maritime Organization
• ITU: International Telecommunication Union
• UNESCO: United Nations Educational, Scientific and Cultural Organization
• UNIDO: United Nations Industrial Development Organization
• UNWTO: World Tourism Organization
• UPU: Universal Postal Union
• WHO: World Health Organization
• WIPO: World Intellectual Property Organization
• WMO: World Meteorological Organization
• World Bank Group
• IBRD: International Bank for Reconstruction and Development
• IDA: International Development Association
• IFC: International Finance Corporation

Introduction to the United Nations

• Established in 1945 for peace, security, and cooperation
• Currently has 193 member states
• UN Headquarters: New York City

Basic Principles of the UN Charter

• Maintain international peace and security
• Develop friendly relations among nations
• Cooperate in solving international problems and promote respect for human rights
• Be the center for harmonizing the actions of nations

Reasons for Forming the UN

• To solve member nations' problems peacefully
• To stop disputes between nations
• To stop wars between member nations
• To create welfare policies
• To promote globalization
• To protect human rights, dignity, and freedom
• To work for economic and social progress
• To achieve international cooperation in solving nation's problems

Roles of Nepal in the United Nations

• Joined the UN on December 14, 1955
• Has actively supported the principles in the UN charter
• Contributes to UN peacekeeping operations since 1958
• Shows commitment to peace, security, and disarmament
• Has fulfilled responsibilities as a member of the Security Council: in 1969-70 and 1988-89
• Supports UN reform for a more representative, transparent, and democratic Security Council
• Has always supported UN decisions and resolutions for peace and security
• Promotes human rights
• Hosts the UN Regional Centre for peace and disarmament in Asia and the Pacific in Kathmandu
• Advocates for the rights of small landlocked countries

SAARC (South Asian Association for Regional Cooperation)

• Established in 1985 to promote economic and socio-economic development
• Initial members: Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka
• Afghanistan later received full member status
• Respects sovereign equality, territorial integrity, and national independence

SAARC Facts

• 36-point Kathmandu Declaration: Adopted in November 2014, the declaration was entitled 'Deeper Integration for Peace and Prosperity'
• Nepal's Initiative: Cooperation in migration, cooperatives, and social protection featured for the first time in the SAARC agenda

Apex Bodies of SAARC

• SAARC Disaster Management Centre (SDMC) in New Delhi, India
• SAARC Meteorological Research Centre (SMRC) in Dhaka, Bangladesh
• SAARC Forestry Centre (SFC) in Thimphu, Bhutan
• SAARC Coastal Zone Management Centre (SCZMC) in Male, Maldives

SAARC Summits in Kathmandu

• Nepal organized the 3rd and 11th Summits. * In 1987 and 2002 respectively
• 3rd Summit: Signed the SAARC Regional Convention on Suppression of Terrorism, enforced on August 22, 1988
• 11th Summit: Signed the SAARC Convention on Preventing and Combating Trafficking in Women and Children for Prostitution and the SAARC Convention on Regional Arrangement for Promotion of Child Welfare in South Asia