Listed products have greater potential, say US officials

  • duty-free access to nepali garments
- Post Report, Kathmandu

Mar 15, 2016-

Amid concerns from Nepali garment manufacturers that they might not be able to take optimum benefit of the duty-free access facility offered by the United States to 66 products -- most of which they do not manufacture presently -- visiting US officials have made it clear that the listed products have competitive advantage in the US market compared to traditionally-exported items.

Nepali garment manufacturers are disappointed that they cannot avail the facility instantly as the products they make currently are not listed under the scheme and that they have to make additional investment to become eligible for getting the facility.

A recent US legislation has provided duty-free access to 66 Nepali garment and carpet pr- oducts, including certain typ-es of carpets, headgears, sha-wls, scarves and travel goods. 

The US team led by Deputy Assistant US Trade Representative Dawn Shackleford on Monday met officials from the Commerce Ministry and discussed about the facility. The team is here to prepare groundwork for the next meeting of the Trade and Investment Framework Agreement (TIFA) council.

The US team told the ministry officials the products were chosen after a careful study of Nepal’s export potential, according to Rabi Shankar Sainju, joint secretary at the Ministry of Commerce. “They told us it will be difficult for Nepal to compete in the US market in traditional products even if the duty-free access facility is provided.”

In the last week of February, US President Barak Obama had signed the legislation providing special trade preferences to Nepal for the next 10 years. The US has also promised aiding Nepal in capacity development of garment manufacturers as per the law.

The garment makers, however, said it would have been more beneficial for Nepal had the US offered the facility to products they currently manufacture. “Among the products listed under the facility, we have never exported 11, while 23 are being exported in limited numbers and the rest are being exported in relatively higher numbers,” said Ashok Kumar Agrawal, general secretary of the Garment Association of Nepal (GAN). “Of the total garment exports to the US, Nepal will be getting the duty-free access only for items worth $8 million (Rs860 million).”

According to the garment makers, they have to make fresh investment to produce new items in which do not have any experience and the workers should also be trained accordingly. “Many garment makers have folded their business after the export market shrank,” said Agrawal. “It is difficult to bring them back to the business to produce new products as they are not experienced in producing them.”

Iman Singh Lama, second vice-president of GAN, said the garment manufactures could be encouraged to make further investment if the government ensures loans at 4 percent interest rate for at least two years and labour flexibility. Currently, Nepal Rastra Bank has made available refinance facility at 4 percent interest rate for the export industry.

The US, one of the major markets for Nepali garments, currently imposes 16-17 percent duty on the products on an average. In 2000-01, Nepal’s garment exports had reached an all-time high of Rs13.12 billion, with exports to the US accounting for 86.49 percent.

However, the industry witnessed a prolonged slump after the US scrapped the quota system in 2005 as per the agreement on Textiles and Clothing of the World Trade Organisation. The garment exports slumped to Rs5.28 billion in 2014-15 and the number of garment industries came down to around 50 from over 400 in 2000-01.

Published: 15-03-2016 09:16

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