Bhutan and Nepal to sign bilateral trade agreement


The governments of Bhutan and Nepal are expected to sign a formal bilateral trade agreement in three months to promote and strengthen trade and commerce.

So far, the two governments did not have any form of trade agreement arrangements.

The draft trade agreement, which was discussed during the virtual 4th trade talks on June 20, provides for an accord of preferential treatment to imports originating from the other country. Such an arrangement is expected to boost the export of not only mineral products but all export potential goods from Bhutan.

Director General (DG) of Trade, Sonam Tenzin said, “When we do not have an agreement, the goods were levied duties which makes very competitive in the market.” The DG said that with the agreement between the two countries, the goods would be provided exemption on duties.

The meeting finalised the text of the trade agreement and its protocol and the draft text on the rules of origin. The rules of origin state that both countries will give concession for the origin of the goods of the country.

Sonam Tenzin said that the revised list of goods for concessions was agreed to be updated by both the countries and shared shortly.

The bilateral trade between the two countries has grown steadily over the last decade with total trade in goods accounting for Nu 862M in 2021. This was an increase from Nu 398M in 2020 with Nepal being recorded as Bhutan’s fourth-largest export destination. Bhutan has been able to maintain a positive trade balance with Nepal since 2016 with exports increasing each year. Despite the non-existence of a formal trading arrangement, the trade record has been progressive.

Imports mainly comprised of slags, dross, scaling of iron or steel, statues, readymade garments, kitchen appliances, silk garments, mobile phones, religious articles and printing machinery.

Major exports to Nepal consisted of gypsum anhydrite and plaster of gypsum, collectively accounting for 97 percent of the total export. Other goods comprised tableware and kitchenware of wood, incense stick, soap, handmade paper and bamboo products.

The Bhutanese delegation was led by trade Director General Sonam Tenzin, and the Nepalese delegation was led by Dr Narayan Prasad Regmi, Joint Secretary, Ministry of Industry, Commerce and Supplies.

The third trade talk was held in Nepal in August 2019.