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Published on 11/2/2025
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Strengthening Diplomatic Bridges: The Bilateral Consultation Mechanism
Strengthening Diplomatic Bridges: The Bilateral Consultation Mechanism :
In a significant move to deepen their long-standing relationship, Nepal and the United States signed a Memorandum of Understanding (MoU) on September 30, 2024, to establish a Bilateral Consultation Mechanism (BCM). This agreement is designed to foster enhanced cooperation across various crucial sectors, signaling a mutual commitment to a more robust partnership. The BCM aims to create a structured platform for regular high-level dialogues, ensuring consistent engagement on matters of shared interest.
Foreign Minister Arzu Rana Deuba and US Under Secretary for Political Affairs John Bass formalized this agreement in Washington, D.C., marking what Rana described as a 'historic milestone'. The mechanism is expected to facilitate deeper collaboration in key areas such as trade, investment, tourism, and infrastructure development. These periodic consultations, led by senior officials from both nations, will alternate between Kathmandu and Washington, D.C., providing a comprehensive forum to discuss the full spectrum of Nepal-US relations.
Evolving Economic Ties: Trade, Investment, and Preferential Access :
The economic relationship between Nepal and the United States continues to evolve, with recent discussions under the Trade and Investment Framework Agreement (TIFA) Council highlighting key areas of focus. The 7th TIFA Council Meeting, held in Kathmandu on September 16, 2024, addressed a broad range of bilateral trade and investment issues, including agriculture, labor rights, the digital economy, and intellectual property protection.
Nepal expressed a keen interest in securing preferential market access and attracting greater foreign investment from the United States. A critical point of discussion was the Nepal Trade Preference Program (NTPP), which currently grants duty-free access to the US market for 77 Nepali product categories, including garments. This program is slated to expire on December 31, 2025, and Nepal is actively seeking its extension and expansion. Total US goods and services trade with Nepal reached an estimated $1.7 billion in 2024, demonstrating a 23.7% increase from 2023.
Shifting Landscapes in US Development Aid to Nepal :
Recent developments indicate a significant reevaluation of US development assistance to Nepal, particularly impacting USAID-funded projects. Reports from March 2025 revealed that as many as 34 USAID projects, valued at over $329 million, have been permanently terminated. This action reportedly stems from a broader 'global review of USAID support' initiated under the current US administration.
Furthermore, the reimbursement and procurement processes for the $500 million Millennium Challenge Corporation (MCC) Compact, a substantial grant aimed at energy and transport infrastructure, have also been affected. In January 2025, an executive order reportedly paused four specific USAID direct financing projects—Health, Agricultural, Education, and Inclusive Policy—for a period of three months. These shifts have sparked considerable discussion in Nepal, raising concerns about the potential impact on essential services and ongoing development initiatives, and prompting anxieties about a potential increased reliance on other regional powers like India and China.
The Growing Nepali Diaspora: Contributions and Challenges :
The Nepali diaspora in the United States has witnessed a remarkable surge, becoming a significant demographic and economic force. A report from December 2024 revealed that the estimated population of Nepalis in the US now ranges between 185,000 and 215,000 individuals, with a substantial 68.3% having arrived after 2010. Educational opportunities (58%) were cited as the primary motivation for migration, alongside aspirations for improved living standards and better job prospects.
This burgeoning community plays a vital role in Nepal's economy through remittances. In 2023, the total remittance from the US to Nepal was estimated at $1.28 billion, accounting for 11.6% of Nepal's total remittance inflow. Beyond financial contributions, the diaspora also makes investments in sectors like real estate, hydroelectricity, and education in their homeland. The presence of such a large and active diaspora forms a crucial people-to-people connection between the two nations, fostering cultural exchange and strengthening bilateral ties.
Immigration Policies and the Nepali Community in the US :
Immigration policies in the United States have a notable impact on the Nepali community, with recent data indicating a tightening stance. The first half of 2025 saw a significant increase in deportations of Nepali citizens from the US, totaling 182 individuals. This uptick reflects a more stringent approach to undocumented residents, particularly since the start of the current US presidential term.
The situation is further compounded by the impending expiration of Temporary Protected Status (TPS) for approximately 7,500 Nepalis, which could lead to increased risks of deportation. The Nepali Embassy in Washington, D.C., has maintained a cooperative approach, promptly issuing travel documents to facilitate the return of its citizens, thereby avoiding potential diplomatic tensions. While deportations saw a monthly decline in June 2025 compared to May, the overall trend for the year indicates a heightened risk for many within the diaspora.
Nepal vs. USA: A Growing Rivalry on the Cricket Pitch :
Beyond diplomatic and economic discussions, Nepal and the United States have also met on the cricket pitch, fostering a different kind of rivalry. In the ICC Men's Cricket World Cup League 2, the two nations have recently faced each other, providing engaging contests for fans. On November 1, 2025, the USA clinched a four-wicket victory against Nepal in Dubai in the 88th match of the tournament.
In that match, Nepal, batting first, posted a competitive total of 271 runs, anchored by a composed 75 from Dipendra Singh Airee, but the USA successfully chased it down with an over to spare, thanks to key performances. This follows another encounter where the USA beat Nepal by 106 runs on October 26, 2025. However, Nepal had previously secured a T20I victory against the USA by 17 runs in a match held in 2024, highlighting the competitive spirit between the two teams.