Trade

Trade

Traditionally, most foreign trade was with Tibet. By 1960, however, following the closing of the Bhutan-China border and the development of closer ties with India, formal trade with India replaced that with Tibet. Although banned by the Bhutan government by 1961, barter trade with Tibet has persisted. Since 1960 nearly all of Bhutan's exports (93 percent in 1989) and the majority of its imports (67 percent in 1989) have been with India. Payments for imports in the 1980s were usually made with Indian rupees. There were no import duties on Indian imports, but customs fees had to be paid on imports from other nations.

Both imports and exports increased steadily during the 1980s, from a total of Nu805.9 million in 1983 to more than Nu2.9 billion in 1990. The balance of trade also improved as the decade progressed. In 1983, for example, only 20 percent of trade was in exported goods, whereas 80 percent was imports; this negative trade balance improved markedly by 1990, however, when exports accounted for 40.2 percent and imports for 59.8 percent of foreign trade. Although there was little trade with the United States, in recognition of its economic status Bhutan was granted an exemption in 1985 from the competitive trade requirements provided by the United States' Generalized System of Preferences.

Exports, which reached almost Nu1.2 billion in 1990, consisted primarily of cement, talc, fruit (mostly oranges) and fruit products, alcoholic beverages, resin, cardamom, lumber products, potatoes, and handicrafts. Although most trade was with India, such specialties as timber, cardamom, and liquor were exported to Bangladesh, Singapore, and countries in the Middle East and Western Europe. The opening of thirteen border crossings with customs facilities for Bhutan's exports and imports also eased trade with Nepal and Bangladesh. An increasingly important export to India was surplus power from Bhutan's Chhukha Hydel Project, which earned Bhutan Nu22.3 million in FY 1988; that figure increased to nearly Nu399 million only two years later.

Imports amounted to nearly Nu1.8 billion in 1990. They consisted of raw materials; textiles; cereals; fuel; investment goods, including motor vehicles; and other consumer goods, primarily from India.

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