Nepal is a small, landlocked country located between two larger and more powerful countries: India and China. Nepal maintains excellent relations with both of these countries.
Nepal formally established relations with China in 1956, and the two countries have had good relations since that time.
Nepal has strong traditional, cultural, religious, linguistic, and economic ties with India. A bilateral trade treaty signed with India in 1991 is subject to renewal every 5 years. A transit treaty with India, which allows Nepal to trade with other countries through the Calcutta/Haldia ports, was extended on March 30, 2006 for 7 years.
Nepal played an active role in the formation of the economic development organization, the South Asian Association for Regional Cooperation (SAARC), and is the site of its secretariat. Nepal is also a signatory of the agreement on South Asian Free Trade Area (SAFTA), which came into force on January 1, 2006. A SAFTA tariff liberalization program (TLP) is being implemented. On international issues, Nepal follows a non-aligned policy and often votes with the Non-Aligned Movement in the United Nations. Nepal participates in a number of UN specialized agencies and is a member of the WTO, World Bank, and IMF.