Increasing imports and decreasing exports has made Nepal loose its comfortable trade position with the European Union (EU) as in the last five years it has narrowed down its trade deficit with Nepal by eight times, according to the data.
In the year 2006, trade deficit of the EU with Nepal stood at Euro24 million and last year, it came down to Euro3 million only, the data revealed.
In the year 2006, Nepal exported Euro88 million worth goods to the EU and last year (2010), Nepal exported Euro3 million less goods to Euro85 million only.
Similarly, Nepal used to import Euro64 million worth goods -- in 2006 from the EU -- which has increased to Euro82 million -- in 2010 -- fast loosing its comfortable trading situation.
However the total trade between two trading partners have increased consistantly in the last five year. In the year 2006, the total trade between them stood at Euro152 million and in 2010, it has increased to Euro167 million.
EU is the third largest trading partner of Nepal as Nepal exports raw hides and skins, leather, furskins and articles; wood and articles of wood; wood charcoal; cork and articles of cork; textiles and textile articles -- that has plunged in recent years -- natural or cultured pearls, precious or semi-precious stones.
Similarly, Nepal imports machinery and mechanical appliances; electrical equipment, vehicles, aircraft, vessels and associated transport equipment, optical, photographic, cinematographic, measuring, checking and products of the chemical or allied industries from the EU.
An Agreement between the European Community and Nepal on Trade in Textile products was signed on December 10, 2003 that had given a boost to the textile products in the past.
Nepal and European Commission (EC) have also singed a Framework Agreement for exporting sugar to EC under the Everything but Arms (EBA) initiative.
As EU is also a key development partner of Nepal, it has committed more than Euro130 million in development assistance to Nepal since 1977 in irrigation and rural development, as well as programmes in animal health, watershed management, reproductive health, primary education and institution building.
On December 20, 2004, the European Commission adopted the regulation prolonging Nepal's derogation from GSP rules of origin for certain textile products for the period of two years December 31, 2006.