Nepal's accession to the World Trade Organization (WTO) on April 23, 2004, marked an important milestone in its economic journey. By joining the WTO, Nepal transitioned from reliance on bilateral agreements to integrating into the global trade system, gaining valuable rights such as non-discrimination and access to the WTO’s dispute resolution mechanisms. As the first Least Developed Country (LDC) to negotiate its WTO membership, Nepal secured a balanced accession package, committing to tariff bindings and liberalisation in its service sectors.

The aftermath of Nepal’s WTO accession, however, presents a mixed picture. While the private sector has lamented the underutilisation of global trade opportunities, experts argue that strategic considerations, such as reducing dependency on a single trading partner, were crucial in pursuing WTO membership. Since joining, Nepal has been an active participant in international trade negotiations and has benefited from initiatives like the duty-free quota-free provisions available to LDCs. Despite this, significant challenges, including quality standardisation and infrastructure deficiencies, continue to impede the competitiveness of Nepali exports.

Nepal's trade remains modest even after joining the WTO. The country exports goods to 146 countries and imports from 162, but its trade volume is disappointingly low. In fiscal year 2022/23, Nepal recorded a huge trade deficit as it exported goods and services worth only Rs 157 billion, while imports surged to Rs 1,611 billion accounting for 91.1% of total trade. Nepal’s trade is heavily concentrated with its primary partners, India and China, which together account for over three-quarters of its total trade. Efforts to diversify export destinations have made some progress, yet exports are still predominantly oriented towards India. 

Domestic challenges such as weak governance, corruption and inadequate infrastructure have stymied Nepal's ability to fully leverage the benefits of WTO membership. Moreover, political instability and policy uncertainty continue to deter both domestic and international investments.

Nepal struggled to compete with other markets and meet market preferences and certification requirements of destination markets. Importing countries often impose rigorous technical standards, including quality, safety, and labelling requirements, which are difficult for Nepal to implement due to a lack of resources and expertise.

Looking ahead, experts say Nepal needs to prioritise its industrial sector to enhance exports and seize WTO opportunities. Initiatives like the Nepal Trade Integration Strategy (NTIS) are pivotal in addressing trade deficits by boosting the contribution of goods and services exports to the GDP. The new Nepal Trade Strategy 2023 focuses on emerging sectors, including electricity and IT, to drive growth through trade in services.

As Nepal nears its graduation from LDC, the prospect of losing preferential market access and special treatments looms large. To navigate this transition, experts recommend a transitional strategy to enhance the competitiveness of niche products and services, and secure continued preferences in regional and multilateral forums. Such measures are vital for Nepal to sustain and expand its international trade in the post-LDC era.