The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has proposed expanded cooperation with the European Union (EU) to maintain Nepal’s export competitiveness as the country prepares to graduate from least developed country (LDC) status. FNCCI President Anjan Shrestha discussed the need for enhanced collaboration with Charles Whiteley, the European Union Ambassador to Nepal, during a meeting at the FNCCI Secretariat in Teku, Kathmandu.
The discussions focused on strengthening Nepal-EU economic relations through trade, investment, technology transfer, and private sector partnerships. This initiative comes as Nepal is scheduled to transition from an LDC to a developing nation on November 24, 2026, a move that poses significant challenges to its preferential market access.
Impact of LDC Graduation
Nepal, which has been on the LDC list since 1971, currently benefits from the EU’s “Everything but Arms” (EBA) arrangement. This scheme grants tariff-free and quota-free market access for most Nepali products. In 2024, Nepal’s total exports to the EU were approximately €91 million, with €72 million benefiting from preferential import treatment. A substantial 89% of Nepal’s exports were eligible for EBA facilities, with an 89% utilization rate.
Upon graduation, Nepal risks losing these trade concessions, which could adversely affect its export industries. The country has met the criteria for human asset index (HAI) and economic and environmental vulnerability index (EVI) for graduation, though it has not yet met the per capita gross national income (GNI) threshold.
Request for Extension and UN Response
Recognizing the potential impact, the Government of Nepal requested an extension of its preparatory period for LDC graduation on May 15, 2026. The United Nations Committee for Development Policy (CDP) concluded in July 2026 that an extension of the preparatory period would be appropriate. However, the CDP stipulated that any such extension must be linked to a clear and time-bound action plan.
The UN Economic and Social Council (ECOSOC) has recommended that the UN General Assembly take action on this matter before November 24, 2026, considering the CDP’s findings. Nepal had previously met the graduation criteria in 2015 and 2018 but requested a delay in 2018 due to the economic impact of the 2015 earthquake and subsequent disasters. The CDP officially recommended Nepal’s graduation in February 2021, a recommendation later approved by ECOSOC and the General Assembly.
Uncertainties Remain
It remains unconfirmed whether the UN General Assembly will approve Nepal’s request for an extended preparatory period, which the government sought until November 2029. Furthermore, the specific trade facilities Nepal will receive from the EU after graduation are not yet fully clear, including whether the country will qualify for the GSP+ scheme. A detailed action plan outlining concrete steps by the government and private sector to mitigate the impact on Nepal’s exports is also yet to be publicly released.
