Trade treaty may revive garment sector

KATHMANDU: A trade treaty between Nepal and United States can once again give a new lease of

life to the export of Nepali Readymade Garment (RMG) to the US.

According to Garment Association. Nepal (GAN) president Prashant Kumar Pokharel, during the recent visit of United States Trade Representatives (USTR) to Nepal a draft proposal of US-Nepal trade agreement was prepared that might facilitate duty-free access of Nepali RMG in the American market.

“Though a draft of the trade treaty between the two

countries has been prepared, Prime Minister Madhav Kumar Nepal and Foreign Minister Sujata Koirala during their visit to the US did not take any initiative during their visit,” he complained.

“They should have lobbied with American senators who were very positive about duty free access for Nepal,” he said adding that the visiting dignitaries also failed to take up the issue of the trade treaty. “The government has also not shown any interest in the Trade Treaty draft proposal,” said the president of GAN.

The US earlier used to be the largest buyer with its RMG import volume of around 80 per cent but the export of Nepali garment has plunged to almost zero at present. According to GAN, in August the total garment export plunged by 81 per cent and the total value of Nepali RMG exported was worth $1.45 lakh.

Nepal has lost the American market and it is now also losing the Indian market that recently emerged as a rescuer for the ailing industry. “The Indian market, which holds great possibility of Nepali garment export, is observing a decline,” Pokharel said.

The trade treaty made during the visit of Prime Minister Madhav Kumar Nepal to India was supposed to support strongly in granting great relief to Nepali industries but garment export to India is still charged four per cent additional duty over and above the maximum retail price (MRP).

The 2007-08 garment export data to India reveal that

there was export worth Rs 1,620 million to India but due the additional duty charge of four per cent, export possibility to India is falling.

Pokharel said the additional duty charge on garment products exported to India was unjustified. “The Counter Valuing Duty (CVD) of four per cent is rational but we are having great problems due to the additional duty charge on MRP,” he said adding that an immediate meeting of Inter-Government Committee (IGC) could rescue the garment sector and boost export to India.