Great news for the Nepalese garment industry: USA's Nepal Trade Preferential Act, 2016

There is a very welcoming news for the Nepalese garment industry this week: thanks to the US senator US Senator Dianne Feinstein, who introduced the Nepal Trade Preferential Act in the congress, and President Obama who signed it today. The bill, which has now become a legislation with the president's signature, authorizes duty-free tariff benefits for up to 66 types of items, including certain carpets, headgear, shawls, scarves, and travel goods made in Nepal. This legislation will remain valid for next 10 years. It aims to boost the Nepalese textile and apparel industry which has been severely impacted since 2005 when the global garment quota was eliminated. There are some specifics in the legislation which are targeted to promote the textile, garments, and carpet products made in Nepal utilizing local traditions and cultures:

1. The legislation covered products should not be import-sensitive (i.e., should not be competitive to other similar types of import products in the US). Also, 35% of these products value must be derived from Nepal, in that it can't be just shipped via Nepal. 
2. The textiles and apparel products should be assembled in Nepal. These products can be hand loomed, handmade, folklore articles and ethnic printed fabrics;
3. Nepalese industry should be mindful that there is a limit in the total quantity of exports. The total volume of duty-free imports should not be 1.5% of total U.S. textile and apparel imports.

More analysis on this topic will be forthcoming in this blog. To know more about the legislation, please visit:

1. http://nepal.usembassy.gov/pr-02-25-2016.html
2. http://www.feinstein.senate.gov/public/index.cfm/files/serve/?File_id=7ade3fba-fdd1-44a7-8157-6b658b15110e
3. http://www.feinstein.senate.gov/public/index.cfm/textonly/press-releases?ID=8B3656CA-DBF2-4EE8-BDC6-329B31CCBD9B

Exports trend of Nepal, India, China and USA from 2006-2015/2016

This post presents trends of total exports of Nepal and its two bordering countries- India and China between 2006 and 2015. Export trend of USA for the same period is also included at the bottom just for a quick comparison purpose. Graph source: http://www.tradingeconomics.com/united-states/exports. 

These graphs speak for themselves. The exports trend line for Nepal is more flat than it is for India, China and USA. The data for Nepal are less up to date. Nepal's exports volume is too small (presented in Nepali Rupees), relative to other countries which are presented in US dollars. 

It should be noted that India, China and USA are not strictly comparable to Nepal in many respects- size of the country, geography, populations, etc. Neither the attempt here is to strictly compare the export numbers of these countries. Instead, the goal is to have a quick visual observation how Nepal's exports look like vis-a-vis other countries in the last 10 years. 

Nepal's total exports may not ever be at part of China and India due to country's size and economic potentials. However, the exports most certainly need to grow more robustly in coming years to lift the country from economic destitutions.