On
July 20,2023, South Asia Watch on Trade, Economics and Environment
(SAWTEE) organized a roundtable discussion on Unpacking Nepal-US Trade.
The main objective of the event was to discuss the prospects and
challenges of exporting to the US. The event was supported by The Asia
Foundation.
Press Release
Kathmandu, 20 July, 2023.
Despite
being granted duty free access to 77 products by the US, Nepal’s export
performance in those select products is dismal. Limited utilization of
trade preferences necessitates a careful examination of the constraints
faced by exporters if Nepal aims at improving export performance through
such facilities, experts said during a discussion event held today.
South
Asia Watch on Trade, Economics and Environment (SAWTEE) organized a
roundtable discussion, in association with The Asia Foundation, to
discuss the prospects and challenges of exporting to the US.
A
SAWTEE study on Nepal-US trade, presented at the event, finds that
Nepal’s merchandise exports to the US in 2021, at US$108.3 million, were
lower than what they were at their peak in the late 1990s even in
nominal terms.
The
US granted duty-free access to Nepal on an additional 77 products under
the Nepal Trade Preference Programme (NTPP), introduced through a
legislation and enforced from December-end 2016. The scheme was unveiled
to help Nepal recover from the devastating earthquakes of 2015. It will
last till 31 December 2025.
As
per the study, while total goods exports to the US have been on an
upward trend since 2012, exports of NTPP products have been on a
downward trend, the study finds. Exports of NTPP products in 2021 were
U$8.47 million and had a share of 7.8 percent in total exports to the US
(compared to 14 percent in 2012). The utilization of NTPP remains low,
at under 50 percent, compared to another duty-free scheme of the US, the
Generalized System of Preferences, which Nepal also benefits from.
Presenting
the study, Dr. Paras Kharel, Executive Director, SAWTEE, added that it
is crucial to address productive capacity and supply-side constraints,
highlighting that even if the available preferences were fully utilized,
it would not lead to a dramatic increase in exports of these products
without resolving the underlying constraints in production and supply.
Mr.
Madhu Kumar Marasini, Secretary, Ministry of Industry, Commerce and
Supplies pointed out that Nepal needs to think outside the conventional
approaches and explore new products to export to the US in which Nepal
has comparative advantage. He said the government is proposing that more
products of export interest to Nepal be included in the US’s trade
preferences for Nepal. Mr. Marasini also highlighted the importance of
services trade, such as IT exports, for which government intends to ease
the process.
Mr.
Kiran Saakha, President, Nepal-USA Chamber of Commerce and Industry,
pointed out that the end of global quotas on textiles and clothing in
the early 2000s dealt a severe blow to Nepal’s exports to the US as
exports of readymade garments, which accounted for over 80 percent of
Nepal’s exports to the US at that time, plunged.
He
highlighted the existing export potential with respect to the US
market, citing the example of Nepali handknotted carpets, which he said
were being bought be American consumers despite being significantly more
expensive than their competition on account of their high quality. He
urged the governments of Nepal and the US to provide meaningful
assistance to exporters.
Mr.
Purushottam Ojha, Former Secretary, Ministry of Industry, Commerce and
Supplies (MoICS), Government of Nepal, said Nepal’s Commerce Policy and
Nepal Trade Integration Strategy, which have identified priority
products, should be the basis for negotiating an extension to the trade
preferences provided by the US.
Mr. Shankar Prasad Pandey, President, Federation of Export Entrepreneurs Nepal (FEEN), said precise
items of export interest to Nepal should be identified when seeking an
extension of the US’ trade preference programme for Nepal. He
expressed concern over the underutilization of the provision for
technical assistance and capacity building under the TIFA. According to
Mr. Pandey, Nepal must establish clear objectives regarding the kind of
technical assistance required from the US to ensure optimal utilization.
Ms.
Vidushi Rana, Executive Director, Goldstar Shoes, highlighted the huge
potential and demand for Nepali footwear in the US and the prohibitively
high tariff it faces there, and urged the US government to include
footwear in the list of preference-granted products, given the
industry’s role in inclusive growth and job creation.
Mr.
Ajit Bikram Shah, Founding member and Chairperson, The American Chamber
of Commerce in Nepal (AMCHAM), expressed the need for Nepal to
strengthen its negotiation skills to tap its export potential in the US
market.
The
participants in the roundtable discussion called attention to the need
for support in promoting Nepali products in the US through trade fairs,
and expanding the product coverage of the NTPP if the latter is
extended. They emphasized the need for the utilization of the capacity
building and technical assistance component of the NTPP and the Nepal-US
Trade and Investment Framework Agreement (TIFA) to enhance the
productive capacity of Nepali exporters.
The
event saw the participation of around four dozen participants,
including trade experts, policymakers, exporters, freight forwarders and
representatives from the US Embassy in Nepal.
Agenda
Presentation
Media Coverage
The Kathmandu Post
Online Khabar
The Rising Nepal
Spotlight
Gorkhapatra
Arthadabali
Pahichan