Govt asked to lobby with the US for DFQF facility for Nepali garments

KATHMANDU: The government has been suggested to lobby with the US Congress for the approval of a Bill introduced by the United States Senator for California Dianne Feinstein that authorises the President to give preferential treatment to certain articles (including apparels, in which the country has high potential) imported directly from Nepal.

The African Growth and Opportunity Act (AGOA) of the US grants duty free quota free (DFQF) facility to the African states. Similar facility could be extended to Nepal as well as the country has emerged from conflict and has been shattered by the devastating earthquake, according to Shankar Sharma, former Nepali ambassador to the US.

“We should start lobbying for approval of Bill, which was introduced on January 7, utilising the relations of Nepalis with US Congresspersons citing our current status after the quake and because Nepal is eligible to get special facility from the US.”

Sharma suggested the government to start lobbying with the Senators of big states like California, Texas and Virginia, among others, during the consultation meeting held by the Ministry of Commerce and Supplies, today.

Apparel entrepreneurs have been eyeing the US market, which could help resurrect the garment industry of the country, especially if the US Senate approves the Bill introduced by Feinstein.

Downfall of garment industry can be traced back to phasing out of multi-fibre agreement — popularly known as quota phase out — with the US in 2005. Till that time, about 90 per cent of readymade garments produced within the country, amounting to about Rs 10 billion, were exported to the US. In fiscal 2000-01, readymade garments were the top export commodity of the country, with 20 per cent share in the total export. Its ranking had slipped to the 10th position in overall exports of 2013-14, amounting to Rs five billion.

“If Nepal gets DFQF facility from the US, export of garments can easily rise to around Rs 15 billion per year and the industry can offer employment to 500,000 individuals,” opined Chandi Prasad Aryal, acting president of Garment Association Nepal (GAN).

If the Bill is approved by the US Senate, Nepal will enjoy the DFQF facility till January 1, 2025. However, it needs 35 per cent value addition in the product, which is quite high compared to the facility extended by European Union (EU) under generalised system of preferences that allows value addition of 20 per cent. Nepali apparel entrepreneurs have said that they can meet the criteria of 35 per cent value addition as well.

According to the apparel entrepreneurs, Nepal’s export to the US stood at 0.02 per cent of the latter’s total apparel import during the peak time. The limit set by the US customs law allows import of up to 1.5 per cent of the total apparel import under zero tariff facility, which means there is room for the country to expand its apparel market in the US.

Most importantly, Nepal needs to develop its capacity to sanction the waiver (if the Bill is approved) from the multilateral trading arrangement forum — World Trade Organisation (WTO) — if the member nations file discrimination case against the US for extending the facility to Nepal, according to Shankar Das Bairagi, foreign secretary.

“The US can extend the special facility citing that the Nepali economy has been shattered by the earthquake and that special treatment can be justified.”