New US Trade Act to benefit Nepal

Kathmandu, May 1:

At a time when the US assistant secretary of state for South and Central Asian Affairs is visiting Nepal beginning May 2, garment manufacturers here have demanded with the US government that the proposed Trade Act by US senators and its congressmen, a bill urging for duty free treatment to all LDCs in Asia and Pacific Region, be passed for offering duty free treatment to all apparel exports from the 14 LDC countries in the Asia and Pacific.

According to Garment Association of Nepal (GAN), the proposed bill has already been co-sponsored by 10 senators at the Senate and 13 at the US House of Representatives (HoR).

Uday Raj Pandey, general secretary of GAN, talking about the Trade Act commented that if this bill is passed by the US government, Nepali apparel exports can benefit from duty advantage of approximately 16 per cent in the US market which can help offset the higher cost of production in the Nepali garment industry. He however underlined the fact that it does not benefit Nepal alone but other LDCs in the Asia and Pacific region. According to Pandey, Trade Act 2005 (Tariff Relief Assistance for Developing Economies Act ) was proposed by Senator Gordon Smith at the US Senate in January 2005 and US Congressman Jim Kolbe at the US House of Representatives in March 2005. The Trade Act applies to duty free treatment, without any quantitative limitations to textile and apparel articles being imported from LDCs.

Pandey said that apart from Bangladesh and Cambodia (which will still have dominating roles in the US apparel market), Nepal would be one of the major beneficiaries of the Trade Act as its exports to US market is bigger compared to other LDCs. If US could give duty free access to Nepali apparels, it would create job opportunities for over 50,000 unskilled labours that will ultimately help in reducing poverty, stop insurgency and discourage women trafficking. He said that export of apparels to US has decreased by 59 per cent recently.

Even if US does not pass the Trade Act, Nepal can propose a bilateral free trade agreement (FTA) with the US, considering the political and economic interest of US in Nepal.