Nepal – US Relations


Diplomatic Relations

Nepal and the United States of America (US) established the diplomatic relations between them on 25 April 1947. The US is the second country, only after the UK, with which Nepal established diplomatic relations. Nepal established its Embassy in Washington D.C. on 3 February 1958. On 6 August 1959, American Embassy in Kathmandu was opened. A number of Nepal’s honorary consuls have been appointed in various US cities.

Exchange of Visits

High level visits have served to further cement the bilateral relations between Nepal and the US. Prominent visits to Nepal from the US include high dignitaries of various government agencies.

From Nepal:

  • Prime Minister Rt. Hon. K P Sharma Oli visited the US to attend the 73rd session of the UN General Assembly in September 2018.
  • Prime Ministers or the Heads of Nepali delegation to the UN General Assembly briefly meet US Presidents every year during banquet receptions hosted in honour of the visiting heads of the delegation.
  • Minister for Foreign Affairs Hon. Pradeep Kumar Gyawali visited the US on 18-20 December 2018 and held delegation-level talks with Secretary of State H.E. Mr. Michael Pompeo.
  • COAS General Rajendra Chhetri participated in Chiefs of Defense Conference on Countering-Violent Extremist Organization in 2017.
  • Late Mrs. Sahana Pradhan (September 2007) visited the US in capacity of Minister for Foreign Affairs.
  • Rt. Hon. K.P. Sharma Oli, in his capacity as Deputy Prime Minister and Minister for Foreign Affairs, (September 2006) met with the Secretary of State Dr. Condoleezza Rice.
  • Prime Minister Sher Bahadur Deuba visited the US from 6 to 11 May 2002.
  • Late King Birendra visited the US in 1983.

 

From the US:

  • Samuel D Brownback, US Ambassador At Large for Religious Freedom visited Nepal in November 2019.
  • Admiral Harry B. Harris, Commander of the United States Pacific Command, visited Kathmandu, Nepal to attend the UN Peacekeeping exercise Shanti Prayas in March 2017.
  • CEO of Millennium Challenge Corporation (MCC) Ms. Dana Hyde visited Nepal in February, 2015 and briefed about the MCC’s decision and potentiality of various sectors in which the aid can be utilized to Ministers and high level dignitaries.
  • Gen. Colin Powell, Secretary of State, paid an official visit to Nepal in 2002.
  • Various State Department officials, including Assistant Secretary of State Christina Rocca in 2001, 2002, 2003 and 2005, Assistant Secretary of State Richard Boucher in 2006 and 2009, Under Secretary of State Henrietta Fore in 2007, Assistant Secretary of State Robert Blake in 2009 and 2012, Under Secretary of State Wendy Sherman in 2012 and Under Secretary of State María Otero in 2012, visited Nepal.
  • Former US President and a Nobel laureate Jimmy Carter paid a visit to Nepal (in 2007, 2008,) in capacity of Founder of the Carter Center.
  • US First Lady Hillary Clinton visited Nepal in 1995.

 

 Development Cooperation 

The USA is one of the first countries to extend development assistance to Nepal. The development cooperation harks back to 1951 when it supported Nepal with its Point Four Program. USAID/Nepal is the development assistance arm of the US Mission to Nepal. Various sectors such as transport, communication, public health, family planning, malaria eradication, agriculture, forestry, energy etc. have benefitted from the development assistance spanning more than 5 decades. Of late, US cooperation is geared towards the institutionalization of peace and democracy. US cooperation has equally been instrumental in the field of human resource development.

As per USAID Country Development Cooperation Strategy 2014-18–extended through September 2020, its assistance focuses on a) inclusive governance, b) sustainable economic growth c) human capital and, d) Post-earthquake Nepal rebuilt to be disaster resilient and well positioned for sustainable development with special emphasis on gender, marginalized and vulnerable communities.

There have been regular exchanges of visits and sharing of expertise and experiences between the armies of the two countries in the area of training, disaster management, peacekeeping capacity building and security cooperation, logistics management, counter terrorism and so on.

Millennium Challenge Corporation: The MCC Compact Agreement (worth 630 million USD) was signed on 14 September 2017 with the aim to enhance Nepal’s energy connectivity and minimize transportation cost through construction of about 300 km of electricity transmission lines and support for maintenance of 300 km of roads within 5 years of the project’s period. Nepal has included the MCC project as a national pride project and is committed to its implementation. The MCC Agreement is currently under consideration of the Federal Parliament for ratification.

(The  $500 million compact aims to spur economic growth and reduce poverty in Nepal. The total budget of the compact is $630m, of which Nepal has the share of $130m. Nepal joined MCC in 2010 when it was considered eligible for its “Threshold Program”, after passing through a scorecard consisting of 20 indicators.)

 

Reconstruction support: The US has lent generous support in the area of post-quake reconstruction of heritage sites, hospitals and schools.

 

Trade/Investment

The US is one of the important trading partners of Nepal. After the end of the quota system under Multi-fibre Agreement (MFA) in 2004 the export of Nepali readymade garments to the US has declined significantly. Nepal has been advocating for duty-free facilities for its exports to the US, especially the readymade garments. The following is the position of trade balance with the US, which shows a generally favourable balance of trade until 2015. There is a negative trade balance in the years 2018 and 2019.

Value in Rs. ‘000

Year Export Import Balance
2014 7,806,483,315 6,867,459,065 939, 024, 310
2015 8,415,217,476 7,869,054,024 546, 163, 452
2016 4,642,439,205 5,600,845,065 -958, 405, 860
2017 8,624,978,069 8,542,584,493 82,393,576
2018 0,127,502,470 10,287,724,598 -160,222,128
2019 4,393,013,543 5,968,517,977 -1,575,504,434

(Source: TEPC, Nepal)

Trade and Investment Framework Council: The US-Nepal Trade and Investment Framework (TIFA) Council, co-chaired by Mark Linscott, Assistant US Trade Representative, and Chandra Ghimire, Commerce Secretary, held its fourth meeting on 13 November 2018 in Washington. The meeting discussed investment, implementation of the WTO Trade Facilitation Agreement, e-commerce, sanitary and phytosanitary measures, as well as market access. They discussed the importance of utilizing preferential trade benefits for select products from Nepal. The 5th TIFA Council Meeting will be held in Kathmandu.

 

The duty-free program came into effect from 16 December 2016 following introduction of the US Trade Facilitation and Trade Enforcement Act (H.R.1907) to support Nepal’s economic recovery in the aftermath of the 2015 earthquakes. Carpets and rugs, shawls, scarves, luggage articles, handbags and other containers, headbands, blankets, hats and gloves can now enter the US market at zero tariff.

Investment: The US is among the largest investors in Nepal. As of 15 July 2020, Rs. 13.4 billion FDI has been received from the US, which is invested in 418 different companies and they have generated 18,848 jobs. (Department of Industry)

Education, tourism and people to people contacts

The number of Nepali students studying in the US has been on a constant rise, ranking among the top twelve sources of overseas students in 2018. The number of Americans studying in Nepal has also increased over the years.

Peace Corps: Peace Corps began in Nepal in 1962 and over 3,800 volunteers have served in Nepal since. The Peace Corps Nepal, which temporarily suspended its operations and activities from 2004, reopened in 2012. The volunteers work in rural areas in various sectors including teaching in schools.

 

Lincoln School: Lincoln School has been serving as an international school since 1954 teaching foreign and Nepali students under the American school curriculum.

Tourism: The US is one of the largest sources of visitors in Nepal. The number of visitors has been increasing each year, except for the year 2015 for the cause of the earthquakes. The number was close to one hundred thousand in 2018 and 2019. The number of tourist arrival from the US to Nepal in the past few years is as follows:

 

Year 2014 2015 2016 2017 2018 2019
Arrivals 49,830 42,687 53,645 79,146 91,895 93,218

Source: Tourism Statistics

 

Europe and the Americas Division
Ministry of Foreign Affairs
July 2020