July 23: Experts have called for Nepal to carefully assess the constraints faced by exporters and increase the utilization of trade preferences granted by the US.

Despite receiving duty-free access to 77 products, Nepal's export performance in these select products has been disappointing.

To address this issue and improve export performance through such facilities, a roundtable discussion was organized by the South Asia Watch on Trade, Economics, and Environment (SAWTEE) in association with The Asia Foundation on July 20.

During the discussion, a SAWTEE study on Nepal-US trade was presented, revealing that Nepal's merchandise exports to the US were lower in 2021, standing at US$108.3 million, compared to its peak in the late 1990s.

The US granted duty-free access to these additional products under the Nepal Trade Preference Programme (NTPP) to support Nepal's recovery from the 2015 earthquakes, and this program will continue until December 31, 2025.

However, the study found that while total goods exports to the US have been increasing since 2012, exports of NTPP products have been declining.

 In 2021, NTPP products accounted for only US$8.47 million, constituting 7.8 percent of total exports to the US, compared to 14 percent in 2012.

 The utilization of NTPP remains low, at less than 50 percent, compared to another US duty-free scheme, the Generalized System of Preferences.

Dr. Paras Kharel, Executive Director of SAWTEE, emphasized the importance of tackling productive capacity and supply-side constraints.

He highlighted that even if the available preferences were fully utilized, it would not lead to a significant increase in exports without resolving production and supply-related challenges.

 Madhu Kumar Marasini, Secretary of the Ministry of Industry, Commerce, and Supplies, suggested that Nepal explore new products with comparative advantages for exporting to the US.

 He proposed including more products of export interest in the US's trade preferences for Nepal and emphasized the potential of services trade, particularly in IT exports.

 Purushottam Ojha, Former Secretary of the Ministry of Industry, Commerce, and Supplies, suggested using Nepal's Commerce Policy and Nepal Trade Integration Strategy, which have identified priority products, as the basis for negotiating an extension of the US trade preferences.

Shankar Prasad Pandey, President of the Federation of Export Entrepreneurs Nepal (FEEN), emphasized the importance of identifying precise items of export interest for Nepal when seeking an extension of the US trade preference program.

 Pandey expressed concern over the underutilization of the provision for technical assistance and capacity building under the Nepal-US Trade and Investment Framework Agreement (TIFA). To maximize benefits, he stressed the need for Nepal to establish clear objectives regarding the type of technical assistance required from the US.

 Vidushi Rana, Executive Director of Goldstar Shoes, highlighted the significant potential and demand for Nepali footwear in the US.

However, the prohibitive high tariff faced by Nepali footwear in the US market poses challenges. Rana urged the US government to include footwear in the list of preference-granted products, considering the industry's potential to contribute to inclusive growth and job creation in Nepal.

 Ajit Bikram Shah, Founding member and Chairperson of The American Chamber of Commerce in Nepal (AMCHAM), stressed the need for Nepal to strengthen its negotiation skills to unlock its export potential in the US market.

The participants in the roundtable discussion called for greater support in promoting Nepali products in the US through trade fairs and expanding the product coverage of the Nepal Trade Preference Programme (NTPP) if it is extended. They emphasized the crucial role of the capacity building and technical assistance component of the NTPP and the Nepal-US TIFA in enhancing the productive capacity of Nepali exporters.

The event witnessed the participation of approximately four dozen attendees, including trade experts, policymakers, exporters, freight forwarders, and representatives from the US Embassy in Nepal.

Participants in the discussion stressed the need for support in promoting Nepali products in the US through trade fairs and expanding the product coverage of the NTPP if it is extended.

They emphasized the utilization of capacity building and technical assistance components of the NTPP and the Nepal-US Trade and Investment Framework Agreement (TIFA) to enhance the productive capacity of Nepali exporters.

Around four dozen participants, including trade experts, policymakers, exporters, freight forwarders, and representatives from the US Embassy in Nepal, attended the event.