Kathmandu, June 11
Nepal's exports to the
USA that enjoyed zero-tariff facility until now will face at least 10 per cent
duties following the latter's new policy to hike tariff. But it has not yet
responded to the USA's recent policy to negotiate the tariff rates, primarily
on the basis of reciprocity.
However, producers and
exporters are seeking government's pro-active role in it.
About 70 countries
have shown their willingness to talk with the White House to negotiate the
tariff rates. Following his entry to the White House, US President Donald Trump
has pushed a policy for reciprocal tariff with its trade partners regardless of
the size of their economy.
If the new tariff
policies are fully implemented, Nepal's zero-duty products like carpets,
dog/cat food, shawls, essential oils and antiques will face at least 10 per
cent duty.
Exporters of carpet, one
of the top exports of Nepal to the USA, are particularly worried as they have
been sending their products without any tariff but if the new policies are
implemented by the US, they will face at least 10 per cent duties in export.
Speaking at an interaction
on 'Nepal-US trade: Opportunities and challenges' jointly organised by Garment
Association of Nepal (GAN), Nepal-USA Chamber of Commerce and Industry
(NUSACCI), and Nepal Carpet Manufacturers and Exporters' Association (NCMEA) in
Kathmandu on Wednesday, the exporters sought government interventions in moving
forward with negotiations with the USA – Nepal's second largest goods export
market.
This 10 per cent duty would
be felt as 30 per cent for duties for China as Nepal's cost of production is
significantly high which makes Nepali products less competitive in the
international markets.
Nepal's trade with the
USA was in deficit from 2019 to 2022 and witnessed surplus in 2023.
Reliable trade
partner
Nepal's exports to the
USA have been stable. In 10 months of the current Fiscal Year 2024/25 (by
mid-May), Nepal exported goods worth Rs. 14.43 billion and imported merchandise
worth Rs. 22.31 billion. The USA is the second largest export market for Nepal
while it’s the sixth largest source for imports which makes it a market of
advantage.
In the last FY
2023/24, Nepal exported goods worth Rs. 17.31 billion and imported goods of Rs.
19.48 billion.
The Nepal Trade
Preference Programme (NTPP) – that allowed the zero-duty entry of 77 Nepali
goods to the USA – is a sympathetic bill that could have massively contributed
to the development of business and industries in Nepal but the country largely
failed to benefit from it. Entrepreneurs said that it’s a failure on Nepal's
part.
The USA has also
sought above 60 per cent value addition to export goods to the former. But
Nepal's handicraft and products like dog-chew have enough value addition to be
eligible for the export.
Trade of preference
Dr. Paras Kharel, an
economist, said that Nepal's growing export to the USA is identical to garments
export – it went up when garment export increased and dropped when its export
decreased.
According to him, in
2022, only about 2 per cent goods from Nepal reached the US beyond the
preferential categories like NTPP, LDC, Generalised System of Preference (GSP),
Most Favoured Nation (MFN) Zero and MFN Positive.
Pashupati Dev Pandey,
President of GAN, stressed on pro-active approach both on the part of the
private sector and government to sustain the export of Nepali goods.
President of
Federation of Exporters Entrepreneurs of Nepal (FEEN) Govinda Ghimire suggested
to create a collective trademark of Nepali garment products to create an
identity of the country and products.
Participation in the
trade fair in the USA and business to business meetings should be promoted and
the government should support the entrepreneurs in such activities. "However,
reducing cost of production and enhancing quality should be our focus,"
said Birendra Pandey, vice-president of the Confederation of Nepalese
Industries (CNI).
Kiran Sakha, President
of NUSACCI, said that the entrepreneurs must be clear about the rationale
behind every demand that we put to the government of Nepal as well as that of
the USA. "Especially in the wake of the tariff-row between the USA and its
large trade partners like the China, Canada and USA, we must rationalise out
demand of seeking zero-tariff entry of made in Nepal goods," he said.
Dr. Yuba Raj
Khatiwada, Economic Advisor to the Prime Minister and former Finance Minister,
said that Nepal needs to argue that its bilateral trade relations should be
non-reciprocal as the country is graduating to a 'developing country' from the
Least Developed Country (LDC).
"We need to
convince the USA as well as other large trade partners/economies about Nepal's
situation and need for favourable treatment to our goods," he said.
'Promote economic
diplomacy'
Minister for Industry,
Commerce and Supplies, Damodar Bhandari said Nepal should boost activities at
the front of economic diplomacy, trade and investment promotion, and market
identification for Nepali products.
"Promotion of the
export of Nepali goods would create multiple opportunities in several sectors.
The government has expressed its intentions to promote industries that export
goods or substitute imports," he said.
Dr. Prakash Shrestha,
Member of the National Planning Commission (NPC), said that Nepal needs
long-term vision and plan to promote export trade. "All stakeholders
should sit together and design their part of actions in the strategy. I see
lapses on the part of the government in enhancing the capacity of the producers
and exporters," he said.
Published in The Rising Nepal daily on 12 June 2025.
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