Under the GSP system, the US pledges duty-free market access to a range of listed commodities. The system was devised to support trade creation in the least developed and developing countries and the USTR office revises its list every 10 years. [break]
“This is the GSP revision year, so taking the opportunity we have lodged a petition for inclusion of 10 items that Nepal deals on,” said Uday Raj Pandey, vice president of Garment Association Nepal (GAN). Going by the US system, USTR office holds hearing on the petition and makes its decision.
Although Nepal exports more than five dozen different lines of garment products, in its petition, the association has mainly requested for the inclusion of gents and ladies pants, shirts and shorts, among others, in the list. It has also appealed for the inclusion of two regular pashimna lines it exports worldwide.
If the US fulfilled the request, exporters believe it will at least give Nepali garment industry fresh hope.
“Our calculation is, the facility will instantly help us double our exports to the US; bring back the shut machines to life, encourage new investment and help create new employment opportunities,” said Pandey.
It is also expected to give boost to pashmina exports.
But as the inclusion of the new commodities in GSP list depends on political backing and lobbying, the association has made special requests to Nepali embassy in Washington, different business associations and buyers to support its endeavor.
The association has also sought backing of the Ministry of Commerce.
RMG industry, which once earned largest export income for the country and employed some 100,000 people, has been on a nosedive over the last eight years.
While international reasons like US duty-free facility pledged to its Caribbean and Sub-Saharan Africa competitors and end of quota regime in apparels trading initiated the downturn, internal factors like frequent labor strikes, political strikes and lack of efforts to modernize and upscale the industry triggered the downfall.
As a result, garment export to the US had hit rock bottom and only a handful of entrepreneurs are currently involved in the business. But Pandey argued such scenario is only one side of the story.
“Despite this worst picture, we must not forget that total garment exports over the last 11 months of 2009/10 still totaled to Rs 3.5 billion. This must not be overlooked,” said he, arguing that Nepal is still one of the cheapest manufacturing hubs and buyers are still placing enquiries for the upcoming Christmas supplies.
“All we need is a renewed confidence. We believe inclusion of garment items in GSP will give us that,” he said.
As for internal constraints, GAN has also urged the government to speed up the development of Garment Processing Zone (demanded since 1999 to lower production cost) and put in place an order-based hiring system (sought since 2007) to resuscitate the industry.
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