Nestled between India and China, Nepal possesses a unique and complex trade history, along with significant market opportunities. However, the country faces multiple constraints—including geographical challenges, weak infrastructure, procedural bottlenecks, and an often unstable political-economic environment. Moreover, the government’s approach to trade negotiations tends to be reactive, shaped by perceived contexts rather than long-term strategy. In this light, it is essential to institutionalise effective standard operating procedures (SOPs) for trade negotiations. Such SOPs would ensure consistency, enhance transparency, and provide strategic direction across bilateral, subregional, and regional trade engagements.
The need for an SOP
Nepal’s trade diplomacy currently relies heavily on ad hoc arrangements and the personal experience of individual bureaucrats. This knowledge-driven, personality-based approach often leads to inconsistencies, a lack of institutional memory, and missed opportunities on bilateral, regional, and multilateral platforms.
A national SOP would promote coherence across government departments and ensure continuity during political transitions. It would also empower negotiation teams with procedural clarity and sectoral insights while presenting Nepal as a prepared and credible counterpart in international forums.
Core SOP features for trade negotiations
Institutional mechanisms
Since the Ministry of Industry, Commerce and Supplies (MoICS) leads trade negotiations, it should initiate the formation of a formal negotiation coordination committee. This body should include representatives from the Ministry of Foreign Affairs, Ministry of Finance, Ministry of Agriculture, private sector associations, academia, legal experts, and provincial authorities. Together, they would set national priorities, vet negotiation positions, and guide strategies.
SOP cycle
Pre-negotiation phase: Conduct data-driven impact assessments, define national priorities, consult relevant stakeholders, and prepare position papers.
Negotiation phase: Select delegation members, assign roles, and maintain real-time internal coordination.
Post-negotiation phase: Identify legal provisions, outline ratification processes, create implementation roadmaps, and establish monitoring indicators.
Sectoral working group
A specialised group should bring together representatives from transit service providers, agriculture, digital trade, transport logistics, and quality assurance sectors to provide technical expertise. Key issues should include Nepal’s transit rights and infrastructure cooperation. The SOP must prioritise multimodal transport corridors, efficient cross-border logistics, and enhanced trade facilitation through modernised customs systems and logistics hubs.
Trade facilitation
Efforts should focus on easing the movement of people, goods, services, capital, and data—while remaining mindful of risks associated with automation and digitalisation. Nepal must align with the WTO Trade Facilitation Agreement and leverage regional initiatives such as BBIN, BIMSTEC, SAARC, SASEC, and the Belt and Road Initiative (BRI).
To support this, a negotiation readiness toolkit is needed. This should include templates, records of past negotiations, sectoral briefings, simulation exercises, and case studies. Trade facilitation measures must align with the Sustainable Development Goals (SDGs) and be benchmarked accordingly.
Establishing bodies such as a National Trade Negotiation Council (NTNC), a National Trade Consulting Forum, or a Trade Intelligence and Analysis Unit is crucial for institutional continuity and informed decision-making.
Infrastructure development—including rail, road, and inland waterway connectivity—must be a priority. Logistical alignment, mutual recognition of standards and certifications, and the promotion of low-carbon, climate-smart trade chains should drive Nepal’s trade agenda.
Legal and risk mitigation
Trade agreements must include robust provisions for dispute resolution, force majeure, and other legal safeguards. It is vital to protect the interests of small producers, uphold environmental standards, and ensure policy space for future reforms.
Inclusion and capacity building
An inclusive trade negotiation process must involve wide consultations with the private sector, civil society, and marginalised communities. The SOP should ensure that all relevant stakeholders are engaged meaningfully.
Capacity building is essential. Members of the negotiation team must receive training in legal interpretation, economic analysis, negotiation tactics, and language skills. Ongoing collaboration with think tanks and trade institutions will enhance capacity and knowledge.
Meeting key performance indicators (KOIs) and conducting annual performance reviews by independent experts will help ensure the negotiation team’s effectiveness and accountability.
Conclusion
Institutionalising SOPs for trade negotiations through a phased, strategic approach is crucial for Nepal. This process should be backed by technical and financial support, and ensure coherence between national development plans and regional trade commitments. Effective monitoring and evaluation must be embedded to achieve desired trade outcomes and social impact.
Nepal should not view its position between two dominant economic powers as a limitation, but a strategic opportunity. By transitioning from a reactive player to a proactive influencer in regional and global trade, Nepal can better serve its national interests. Now is the time to establish a negotiation process that is strategic, inclusive, and driven by national priorities—one that enables Nepal to negotiate with confidence, not just consent.
