Nepal looking for US duty-free status

Nepal would benefit from duty-free and quota-free access to the US market if US Congress approves a bill last week introduced by US Senator Feinstein. After falling in the last two years, US apparel imports from Nepal are now sharply rebounding in US$ terms.
US Senator Dianne Feinstein from California last week introduced a new legislation which would grant duty free and quota free status to Nepalese apparel imports in the United States.
Under the new bill, Nepal would be granted the same preferential treatment already offered to Sub-Saharan Africa with the African Growth and Opportunity Act (AGOA).
"Nepal is the 12th poorest country in the world with a per capita income of US$240," Ms Feinstein said in a statement. "Approximately 42 percent of Nepal's 24 million people live in poverty and 47 percent of the Nepalese people are unemployed," she added.
The Kingdom is also confronted with a Maoist rebellion since 1996 wich resulted in killing of thousands of inhabitants and added to usual economic difficulties.
About 40% of total exports
Nepal's garment industry is 100% export-oriented, accounting for 40% of the kingdom's export earnings and employing about 100,000 workers.
Apparel exports to the United States account for about 80% of total shipments. They sharply decreased in the recent past as a result of political troubles after king Gynendra and a good part of its relatives were murdered in June 2001 by crown prince Dipendra who apparently killed himself a few minutes later.
As a result, a new king came to power who dissolved parliament and postponed elections.
Although a cease-fire was concluded in January, observers fear terrorism to resume in the coming months.
The fall in apparel exports to the United States is mainly due to US preferential treatments offered to Africa and Caribbean nations, Nepal's Garment Association last January explained to Senator Feinstein when visiting the United States.
Nepalese visitors also met US trade officials, requesting the duty-free quota-free status as a least-developed country (LDC).
Although the European Union and Canada already offered such a treatment to poorest countries of the world, Washington preferred granting concessions to regional entities until now.
Far from being adopted
The US Congress is not expected granting any preferential treatment to Nepal as a consequence. For the same reason, Bangladesh was already refused duty-free and quota-free access to the US although being one of the poorest LDCs.
In addition, US imports from Nepal sharply rebounded since last July.
According to local surces, shipments were up no less than 72% in February at US$16.87 million after already rising 48% in January at US$16.33 million, compared with the same month of 2002.
According to US official data, apparel imports were only up 4.5% in volume terms in January but increased by 22.54% in value terms at US$13 million.
Shipments surged in very sensitive categories 339 (W&G T-shirts) and 348 (W&G cotton trousers, including jeans). Imports rose 323% in US$ terms in category 339 while increasing 89% in category 348.
As a result, the US limit of 1.08 million dozens is already 55% filled in merged categories 347/348 after being saturated in 2002.
US importers were confronted with a series of Asian quotas in these categories last year. Nepal clearly benefits from the low level in limits imposed to other low-cost nations.
With or without duty-free access, sales to the United States could therefore sharply fall after the removal in quotas after 2004.