Nepal and its Trade Relations:

An open economy, Nepal, shares an extensive trade relationship with India, its southern neighbor. The two countries have an open border and historical ties. India is Nepal's largest trading partner, and the majority of Nepal's imports and exports pass through Indian ports. The trade relationship is governed by various bilateral agreements. Nepal has been working to enhance its trade relations with China. The two countries signed a trade and transit agreement in 2015, allowing Nepal access to Chinese ports for its foreign trade. However, the volume of trade with China is still smaller compared to that with India.

Nepal has trade relations with various other countries in the region and beyond. Trade agreements and partnerships with countries like Bangladesh, Pakistan, and member states of the South Asian Association for Regional Cooperation (SAARC) contribute to Nepal's external trade. Nepal is a member of the World Trade Organization, and it engages in international trade based on the principles and agreements established by the WTO.

Being a landlocked country, Nepal faces challenges in terms of transportation and logistics, which can affect the cost and efficiency of its international trade. Nepal's unstable political and economic conditions are what define the country. Macroeconomic indicators show that the Nepalese economy is characterized by a number of weaknesses, including inadequate infrastructure, a lack of technological know-how, a lack of capital endowments, ineffective policy implementation, a lack of skilled labor, a sluggish foreign trade sector that is primarily characterized by declining exports and rising imports, and dwindling industries. Due to these flaws, the economy is now heavily dependent on industries like tourism, foreign employment, foreign assistance, balance of trade, and foreign direct investments. 

Economic Diplomacy and Nepal:

A common phrase in the vocabulary of the current international political economy system is "economic diplomacy." The building of bilateral or multilateral relations between states on economic and commercial borders is referred to as development diplomacy. The idea is growing more and more well-known in the current global context. It is not, however, a simple practice. Prior to World War I, political factors rather than economic ones were mostly used to form bilateral or multilateral relationships. Thus, while engaging in diplomacy, the economic goals were viewed as incidental. The goal of this diplomatic strategy was to unite nations into one of the two blocs.

Technical understanding is needed for effective economic diplomacy in order to assess how the political environment and economic interests of the sending state are affected by the economic status of the receiving state. Economic diplomacy demands adaptability, flexibility, good judgment, and strong commercial knowledge. As the region's pioneer in providing affordable and dependable hydro electricity to South Asia, Nepal can play a major role in green energy diplomacy. Furthermore, by using economic diplomacy to promote tourism, Nepali embassies overseas may have a significant impact on drawing visitors to Nepal.

Nepal's extensive international network of diplomatic missions may enhance the country's economic value proposition by drawing on their expertise interacting with foreign government officials and outside investors. Engagement with the nations that contribute the most to our economy should be given top priority. These nations fall under the following categories: India, the USA, Germany, the UK, and Turkey are the top export destinations; India, China, Argentina, the UAE, and the USA are the top import source countries; China (Mainland), India, the USA, South Korea, and the British Virgin Islands are the top foreign investors; India, China, the USA, the UK, and Russia are the top tourist source countries; the USA, the UK, China, India, and Japan are the top bilateral development partners; the World Bank, the Asian Development Bank, the European Union, the United Nations. 

History:

Looking at the history, Nepal started its Trade relations with Tibet and the British in the 18th and 19th century. Mobilization of foreign aid became a priority in the aftermath of political changes in 1950. In the post-1990, several task forces and working groups made diplomacy more effective.  The High Level Task Force Report in 1996 also emphasized on reviewing diplomacy to focus on economic interests wherein the consequent reforms and structural changes made and foreign policy implemented was reoriented to focus on economic interests. In 2006, another High Level Foreign Policy Task Force which stressed on economic relations as one of the major pillars of foreign policy was formulated. Thus, ‘Diplomacy for development’ as a new dimension of Foreign policy was established after the restoration of democratic dispensation in 1990 where national, regional and international factors contributed. 

Of late, economic diplomacy has gradually been developing as an integral part of overall foreign policy. Mainstreaming and institutionalization of economic diplomacy for socio-economic development of the country is emphasized upon from different sectors. Periodic plans also emphasize upon the importance of economic diplomacy for the overall development endeavors of the country. In recent years, 2009 onwards, the Government has been earmarking budgets for economic diplomacy. MOFA allocates those budgets to Embassies based on their proposed programs and actual performances.

The objective of economic diplomacy is to enhance economic and overall national security . It helps in mobilizing resources for development thereby also promoting trade as well as exploring markets for national products. Supporting businesses overseas and promoting culture and tourism is also another mission of economic diplomacy. Attracting Foreign Direct Investment in priority sectors, promoting foreign employment, increasing the volume of aid and its effectiveness  and Mobilizing Diaspora resources are other major goals of economic diplomacy. 

Conclusion:
Economic interests drive modern diplomacy just as much as political and security ones do. In recent years, economic diplomacy has emerged as a key component of international relations. A modern diplomat needs to be knowledgeable with economics, business, investing, tour and travel, etc. At all times, he or she defends and advances the nation's economic interests. To accelerate national growth, proactive, realistic, and constructive economic diplomacy is required at the bilateral, regional, and international levels.