Canada-Nepal Relations

I. Political Relations

Nepal and Canada established diplomatic relations on January 18, 1965. The Ambassador of Nepal to Washington D.C. is accredited to Canada and the Canadian Ambassador to New Delhi is accredited to Nepal.

Canada has maintained its presence in Kathmandu through Canadian Co-operation Office that oversees the projects under Canadian aid in Nepal. Nepal and Canada enjoy cordial relations based on mutual understanding and co-operation. Nepal and Canada share common views on many international issues. Like Nepal, Canada is also a major troop contributor to UN Peace-Keeping operations for the maintenance of international peace and security.
Nepal has appointed Hon. Consul General in Toronto and Victoria, British Colombia. At the invitation of the Honourable Raymond Chan, Secretary of State (Asia-Pacific) of Canada, the then Water Resources Minister Govind Raj Joshi paid a working visit from October 11 to 15, 1999 to Canada. The central theme of the visit was to discuss on the water resources management in particular and further strengthen the existing bilateral relations in general.

II. Economic Relations
Canadian aid program in Nepal began in 1958. But the official bilateral program commenced in 1970 which mainly focused on capacity building for Nepal’s aviation sector. Under this programme, Canada provided seven Twin Otters, constructed a hanger at Nepalgunj, and provided airport security equipment, and training to RNAC and the Department of Civil Aviation officials. Despite over-all cuts in assistance to Asia and Africa, Canada has assured that the Canadian aid to Nepal will be continued in the years to come.

Canada expanded its aid program in Nepal to sectors like energy, rural development, health, education, geographic survey and agriculture as well as poverty alleviation, health care and food security. Canada’s development aid is concentrated on strengthening institutional capacity and human resource. The program strategy includes; (a) poverty alleviation and meeting basic human needs while promoting food security, (b) continued assistance to Nepal in its energy policy planning and in pursuing sustainable energy alternatives and environmental management and (c) support to Nepal’s decentralized aviation strategy through enhanced safety and security.

Canada provided assistance to Nepal in the past in the following sectors: Karnali Bheri Rural Development (KBIRD), fertilizer fungicide support, health development project, institutional support to Water and Energy Commission Secretariat and the Nepal Electricity Authority, Engineering Education, Nepalgunj aircraft maintenance base, airport security at TIA and the women development.

In 1997, the Canadian International Development Agency (CIDA) provided a total of US $ 3.5 million through bilateral and multilateral channels plus the food aid worth about one million US Dollar. Canada also channels its aid through NGOs and Canadian Partnership Programmes.

CIDA local initiative funds like Canada Fund, Women’s Initiatives Fund and Environment Fund are concentrating their efforts on farmers, local communities, women and children, disadvantaged and other vulnerable sections of the society. There are other two community development projects which promote good governance, covering Jumla, Baitadi, Dadeldhura and Surkhet districts.

Government of Nepal and the Canadian Centre for International Studies and Cooperation (CECI) signed an agreement, with a validity of five years, on June 19, 2001 for establishment of the CECI Asia Regional Office in Kathmandu. The CECI is a non-profit, non-political and non-religious organisation with its headquarters in Montreal. The Regional Office in Kathmandu will coordinate the programme activities of CECI within the countries of Southeast Asia (Vietnam, Cambodia, Malaysia, Thailand and Indonesia) and South Asian Countries (Nepal, India and Sri Lanka) and provide greater coordination as well as management and technical assistance to the CECI country programme for the benefit and well-being of the poor people with special focus on women.

CIDA has accepted to finance phase II of Nepal Water Strategy Formation Study, which is worth US $ 1 million. The World Bank is co-financing this project which covers 12 districts of Terai region. CIDA is also co-financing with ADB a Ground Water Irrigation Sector Loan. CIDA’s component aid is worth US $ 2.8 million in this initiative. The Canadian Cooperation Office is financing many small activities under the Ministry of Population and Environment. It has agreed in principle to support the Ministry on a larger bilateral scale, specially for building institutional capacity. The other CIDA new initiative is a project on gender equality in Nepal. This project will complement the efforts of NGOs and government institutions.

III. Trade Relations
Major item of export from Nepal is ready-made garments, which amount to 85% of total exports to Canada. The Nepali apparels export to the Canada has increased by double-fold during the first three months of 2005. In terms of value, import by Canada for the first three months of this year is US dollar 2,45,000/- in comparison to 1,22,000 US dollar in the same period of the previous year.

The other items are woolen goods and handicrafts. Following is the table showing our trade with Canada and balance of trade situation.

Value in Rs. ‘000
Year Import Export Trade Balance
1997/98 258,936 96,978 – 161,958
1998/99 326,953 156,136 – 170,817
1999/00 461,944 284,958 – 176,986
2000/01 222,354 365,823 + 143,469
2001/02 305,978 262,594 – 43,384
2002/03 383,651 407,402 – 23,751
2003/04 546,403 688,247 – 141,844

Nepal and Canada agreed to extend the validity of the existing Memorandum of Understanding for four years with effective from January 1, 2001 up to December 31, 2004 to facilitate Nepal’s export of certain textile products to Canada. The agreement was signed on 14 July 2000 in Ottawa, Canada.

Similarly the delegations representing the Government of Canada and Government of Nepal also agreed to make a one time increase of 25% to category 5 in the year 2000 without modifying the Annex I of the MOU signed on January 17, 1996.

A Memorandum of Understanding was signed between Nepal and Canada in 2003 for duty free and quota free access of Nepalese products to Canadian markets.

IV. Tourist Arrival in Nepal from Canada

Year Tourist Arrival
2001 6,949
2002 3,747
2003 4,154
2004 4,825

There is a need to promote Nepal’s tourism in Canada in consultation with tour operators and travel agents who are based in Canada and also are specialized in South Asia and South East Asia.

V. Prospects of Future Co-operation
There is a tremendous scope of promoting relations between Nepal and Canada in the fields of trade, investment and even development cooperation. As all the countries of the region, including Bangladesh and Sri Lanka, have opened their embassies in Canada and are getting more benefits from their relations with Canada, Nepal-Canada relations could be reinforced with the establishment of residential Embassy of Nepal in Ottawa. .

Canada is interested in the development of Nepal’s hydropower potentials. It is also interested in providing assistance to Nepal to deal with the social issues like refugees, narcotics, empowerment of women, girl trafficking, child labour, human rights etc.

At present, there is only one Canadian joint venture named the Devtech (Nepal) Pvt. Ltd., in the field of consultancy, where N.D. Lee and associates have financial collaboration. The joint venture projects with Canada could be launched in future, especially in the field of hydro-power generation and tourism.

Europe America Division
Ministry of Foreign Affairs
Government of Nepal
Last updated on April 3, 2006

External Source: Government of Nepal 

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