US announces expansion of trade facilities for Nepal

Nepal received duty-free market access in the US for its travel goods like luggage, backpacks, handbags and wallets under the Generalised System of Preferences (GSP) programme. The United States Trade Representative's (USTR) Office has announced the Annual Product Review under the Generalised System of Preferences (GSP) Programme.
The measure adds new duty-free status for travel goods – like luggage, backpacks, handbags, and wallets – for Least Developed Beneficiary Developing Countries (LDBDCs), including Nepal.
According to a statement issued by the US Embassy in Kathmandu today, the new rule makes these products eligible for duty-free status beginning July 1. "US imports of travel and luggage goods products totaled almost $10 billion in 2015," it added.
"This is a tremendous opportunity for Nepali businesses to expand their exports to US markets,” US Ambassador Alaina B Teplitz is quoted in the statement. "A strong commitment to open-market policies, a stable and transparent legal environment that secures property rights, policies that foster dynamic entrepreneurial activity and strategic infrastructure investments will help Nepal make the most of this opportunity," she added.
In 2015, Nepal ranked second, after Cambodia, of all LDC exporters of luggage products to the US. Nepal's exports of these products have grown seven per cent since 2014, totaling $1.8 million in 2015.
US trade preference programmes provide opportunities for many of the world's poorest countries to use trade to grow their economies and climb out of poverty.  The 40-year old GSP is the largest and oldest US trade preference programme.
Under GSP, the US provides duty-free treatment for many imports from beneficiary developing countries, and additional products for LDBDCs. About 5,000 products from 122 beneficiary developing countries and territories, including 43 least-developed countries, are eligible for duty-free treatment when exported to the US under the GSP programme.
Nearly 1,500 of these products are reserved for duty-free treatment for LDBDCs only.
According to economic counsellor at the Nepali embassy in the US Kailash Raj Pokhrel, Nepal has received the duty-free facility for 27 items. These items are in addition to the 66 garment products that have received a similar facility under a separate Nepal-specific legislation.
Although the GSP facility covered 5,000 items from 127 countries, the list included only 5 per cent of Nepali products, including flags, caps, cigars and scarves of the total items exported to the US. Now, the new items have been added to the list of goods for which Nepal will get duty-free market access in the US.
Earlier, in February, US President Barak Obama signed legislation authorising special trade preference to Nepal providing duty-free market access to 66 types of garment items including certain carpets, headgears, shawls, scarves and travel goods. This is a new Nepal-specific tariff preference programme while the GSP is a 40-year-old trade preference programme, the oldest such programme.

'Nepal needs to boost competitiveness of its exportable items'

The US has asked Nepal to identify its needs for boosting competitiveness of exportable items so that Nepali products could stay competitive even after the expiry of trade preference programme.
"We will be taking Nepal government's input on what type of technical assistance it needs to stay competitive for longer time, even after the expiry of the trade preference programme by the end of 2025," deputy assistant US Trade Representative (USTR) for India and Nepal Dawn M Shackleford said.
The Nepal programme is authorised for ten years and is designed to help Nepal's economic recovery.
In addition to the duty-free tariff benefits from the trade preference programme, there is also a trade capacity building programme outlined in the legislation, focused on helping Nepal implement the World Trade Organisation's (WTO) Trade Facilitation Agreement (TFA), she added. "Thus, the US is ready to assist Nepal in trade facilitation under its technical assistance (TA)," Shackleford said without elaborating how much the assistance is worth.
Referring to her discussions with the Nepali authorities and private sector, she said that Nepal can take maximum advantage from the Trade Facilitation and Trade Enforcement Act. "Especially handicrafts can take advantage from the trade preference program," she added.
With a view to facilitating economic growth through trade, the US is establishing a new stand-alone trade preference program for Nepal. On February 24, US President Obama signed the Trade Facilitation and Trade Enforcement Act of 2015. The Act allowed the President to authorise special tariff preferences for Nepal to help support the country's economic recovery following the devastating earthquakes of 2015.
Under the Act, the US President will have the authority to grant duty-free tariff benefits for several products not currently eligible for benefits under existing trade agreements, including certain kinds of carpets, headgear, shawls and scarves, handbag, and suitcases. The exports of Nepali goods covered by the Act totaled $8 million in 2015.
However, she said that for the new preference program to go into effect, certain administrative steps need to be completed in the US. "First, the US President must certify that Nepal meets the country criteria and eligibility requirements of the programme which are the same as those for countries that participate in the GSP Programme and the African Growth and Opportunity Act," Shackleford, who is currently in Nepal to finalise the date for second TIFA meeting, said, adding that it might take few months. "In the first phase, the US looks at status of rule of law, anti corruption measures and human rights violation, and in the second the US administration is also required to request a review by the US International Trade Commission of the products covered by the preference programme to ensure that an increase in imports of these products into the US market will not negatively affect the US economy," she said, adding that these statutorily-required reviews will take several months to complete, but the administration is making efforts to complete the processes as soon as possible.
In 2015, total trade between Nepal and the US was worth $123 million. During the year, Nepal exported goods worth $87 million to the US. Of the exports, Nepal enjoyed access to duty-free treatment for eligible products under the Generalised System of Preferences (GSP) of approximately $5.8 million.

NEPAL NEEDS TO PUBLICISE REFORMS
Shackleford also suggested Nepal to publicise its economic reform efforts to attract foreign investments. "There are investment opportunities in Nepal, but the investors should be made aware of the opportunities it offer," she said, adding that foreign investors should know what reforms have Nepal made to ease doing business in Nepal. "Based on the new Trade Policy and comparative advantage in growing ICT, tourism and service sector, Nepal should exploit its opportunity," she added.