Kathmandu, May 25 :

Nepal is among the hardest-hit countries since the end of textile and clothing quotas from January last year, with the Nepali textile and clothing exports plummeting by over 20 per cent.

The value and volume of the exports declined by 22 and 28 per cent

respectively during 2005, according to the United Nations Development Programme (UNDP).

Losses in the US market were more severe than in the European Union (EU), Nepal’s other big textile and clothing customer. Among knitted ready-made garments from Nepal, the value of US imports plunged

by more than half — some 55 per cent — with woven garments losing 30 per cent of the market. Together, the two markets represent the destinations of nearly all of Nepal’s textile and clothing exports.

The new figures contain the latest quarterly tracking report on impact of the lifting of quotas, prepared by the UNDP Regional Centre in Colombo. ‘Sewing Thoughts: How to Realise Human Development Gains in the Post-Quota World’

examines the effects on trade flows in 12 selected Asia-Pacific countries during the first full year of the post-quota regime.

“Nepal remains extremely vulnerable and locked into the export of a narrow range of items,” states the report. It recommended major investments in training and human resource development.

In value, Asia-Pacific’s share in the United States rose from 41 to 49 per cent, while it increased from 47 to 53 per cent in the EU. In contrast, regions such as Africa and the Caribbean that have trade agreements with the US have lost shares of textile and clothing products, despite their preferential market access.

Data show that China and India have been clear winners by expanding their market shares in both the US and the EU. On the other hand, landlocked countries like Nepal and Mongolia, along with small island economies such as Fiji and Maldives, have been devastated by the elimination of quotas, these countries’ textile and clothing exports fell sharply in 2005.

Moreover, further safeguards imposed on Chinese exports of textile and clothing products will be lifted in 2008, which poses a threat even to those countries that have been able to hold onto past gains so far.

Increasing price competition, closures of factories, job losses and deterioration of workers’ conditions have been reported in countries like Nepal that lost export orders as well as in countries that managed to keep their export volume.

For its part, Nepal ‘urgently needs to diversify its exportable products as well as markets,’ suggests the report. Carpets represent the top Nepali export commodity in both the US and the EU. But three out of Nepal’s top five commodities are those that face more competition after the elimination of quotas and also are produced by other countries in the region.

“With this kind of competition, a small country like Nepal is pushed out of competition at the initial stage,” states the report. Competitiveness is affected by several factors, including low

level of skills and productivity, absence of opportunities for upgrading technology, limited linkages to the local economy as well as the global supply chain, poor quality of infrastructure, cumbersome trade procedure and documentation requirements and

lack of finance.