Kathmandu Post

MONEY»

Opportunities for development

APR 24 -
Nepal’s economic ties with the US were strengthened after the establishment of diplomatic relations on April 25, 1947. Exchange of high-level visits has also significantly contributed to strengthening Nepal-US relations. The US has always extended cooperation to develop Nepal’s socio-economic status. The Commerce and Friendship Agreement signed in 1947 and the General Agreement for Technical Cooperation signed in 1951 have contributed to consolidating bilateral ties between the two countries.

Nepal recently signed the Trade and Investment Framework Agreement (TIFA) with the US. The US has stated that it looks forward to deepening its relations with Nepal and breaking down any and all barriers that may prevent Nepali producers and exporters from selling their products in the US.

TIFA has a provision of a permanent body to hold regular meetings on issues of bilateral trade and investment at least once a year, thereby serving as a forum for bilateral talks to enhance trade and investment and discuss specific trade issues. Some have opined that the new agreement promises preferential entry facility to Nepali products, however, merely signing the agreement will not help the country to increase its exports to the US. We must have products that can be competitive in the US market to attain the desired growth in trade.

TIFA contains seven articles. Article 2 provisions formation of a Nepal-US Trade and Investment Council (NUSTIC) led by the commerce secretary from Nepal and senior officials from the USTR. The council will meet at least twice a year in Nepal and the US alternatively and work to eliminate trade related barriers. Likewise, in Article 3, the US promises to provide support to Nepal to remove trade related barriers. The agreement also says that the two countries will work together with the private sector and civil society to promote bilateral investment. It also has provisions on protection of intellectual property rights and expansion of service trade.

Just to recapitulate, Nepal’s private sector in cooperation with the US Embassy in Kathmandu had in the recent past successfully conducted the GSP seminar. The private sector of Nepal has always regarded the US market as an important market for Nepali products. A large amount of handicraft, paper products, jewellery and gems are exported to the US. For the last decade, the US has been among the major importing countries of Nepal’s readymade garments, the industry which has helped to reduce poverty and generate a high employment rate. But after the MFA phase-out, there has been a drastic decline in readymade garment exports, resulting in loss of employment.

As per the Garment Association of Nepal’s data, total garment exports have plunged 81 percent. Nepal should take the issue unilaterally. The bill on opening imports from 14 LDCs to the US market has opened new avenues for development of the readymade garment sector in Nepal.

The Sixth WTO Ministerial Declaration has announced providing duty-free and quota-free (DFQF) market access to products of the developing and least developed countries. Nepal believes that successful implementation of this provision will help to lessen the poverty prevailing in the least developed countries like Nepal and hopes that a developed and powerful country like the US will see that this provision is adopted successfully in the international trade regime.

While talking about the DFQF provision, Nepal is quite apprehensive about the provision of the 3 percent tariff line. Nepal fears that the 3 percent tariff line might apply to all the exportable items of the LDCs like Nepal. So, Nepal would like to be assured on this issue. Nepali entrepreneurs are of the belief that the US Embassy in Kathmandu will address this apprehension in a positive way.

Nepal is rich in water resources, and has great potential for generating hydropower. Hydropower is one of the sectors where Nepal can invite foreign investors. It is noteworthy that the US Embassy here in Kathmandu organized a seminar on hydropower a few years ago. Nepal believes that the US Embassy will continue its support to promote FDI in Nepal. Apart from hydropower, Nepal also has great tourism potential. Tourism is a niche market that Nepal could offer in the international arena. So the development of tourism could bring a massive change in the livelihood and economic situation of Nepal.   

Regarding joint venture projects too, Nepal would like to attract mega projects from the US which could transform the living standards of the Nepali people.

With a view to promoting and increasing bilateral relations, an increase in the exchange of trade delegations between the US and Nepal is desired, and opportunities to participate in trade fairs and exhibitions should also be provided in both countries. The US Embassy could play a vital role in this regard.

Posted on: 2011-04-25 09:32

---