Source: www.myrepublica.comDiplomacy that promotes national economic interest and business in other countries is defined as economic diplomacy. It is associated with trade, business, market and investment promoted through political diplomacy. Economic diplomacy depicts how states conduct their economic relations with other countries by using politicalinfluence and promoting trade and investment to find a market for its products and services.
The emergence of democracy and globalization has transformed the role of political diplomacy toward economic diplomacy. Before the late 1970s, South Asia was one of the most highly-regulated economies outside the communist block. Sri Lanka was the first to liberalize its economy in 1977, followed by Bangladeshin 1980, Nepal in 1986, Pakistan in 1989 and India in 1991.
There is a growing realization that economic relationships have a strong impact on political diplomacy. The end of the Cold War, emerging democracy and development are the products of economic diplomacy. For instance, many Eastern European states joined the European Union in the 1990s to fulfill a larger economic interest amongEuropean nations.
Economic diplomacy is functional at three levels: Bilateral, regional and multilateral.
Bilateral economic diplomacy plays a major role in economic relations. It includes bilateral trade and treaty; agreements on investment; employment or avoidance of double taxation; and range of formal and informal economic issues between two countries. Bilateral Free Trade Agreements havebeen the order of the day, and is being implemented by many countries around the world.
Being a sandwiched and landlocked country, Nepal´s bilateral trade agreements with India and China are of paramount importance. Nepal should always be aware of its geographic reality, national interest, sociocultural settings and economic dimension.
Regional cooperation is of growing importance in economicdiplomacy. National interest and economic liberalization is easily accepted when it is confound to a particular region. Opening of borders and markets become easier within a regional framework.
Multilateral economic diplomacy takes place within the framework of World Trade Organization (WTO), World Bank, International Monetary Fund (IMF), UN agencies et al. With the establishment of WTO, therehas been a policy shift in global trading system to promote economic activities. However, there is a challenge in sustaining competitiveness in multilateral and bilateral trade agreements. Nepal, so far, has not been influential on issues of aid, trade and FDI in multilateral development forums such as the World Bank, IMF, WTO and UN agencies.
For Nepal, economic diplomacy is not a newphenomenon. In 18th and19th century, Nepal had established business ties and an effective trade system with Tibet and British India. It was created as a result of strategic alliance and was based on economic interest rather than political gain.
The focus of Nepali diplomacy has to shift from mere political relations and foreign aid to trade, tourism, investment, joint ventures and employmentgeneration.
Foreign policy needs a strong and broader national consensus as it is linked with national interest and sovereignty. Nepal´s foreign policy is guided by the Charter of the United Nations, the principles of Panchsheel, co-existence, non-interfernce and respect for sovereignty of its neighbors and solidarity with other small, least developed and landlocked developing nations.
The success ofpolitical diplomacy is a reflection of economic dimension. Today, Nepal does not have economic diplomacy and economic affairs are handled on an ad hoc basis.
In the year 2000, the Ministry of Commerce and Industry organized the first consultation meeting to emphasize the need of economic diplomacy with foreign countries. The purpose was to provide an economic hat to political diplomats and to...