These refugees brought with them the knowledge and skills of woolen carpet craftsmanship to the country. So, export of carpet to Tibet represents a complete trade reversal. Secondly, carpet export to Tibet also represents a fresh initiative of the manufacturers and exporters for market diversification.
The major drawback of Nepal’s foreign trade is its high dependence on limited products and few overseas markets for export. Dependency on fewer markets always rendered the products vulnerable. The impact of this is already visible, mainly as deepening slowdown in the European markets -- which consumes more than 70 percent of Nepal’s total overseas exports -- has pushed numerous industries to a brink of collapse. The fall in exports of pashmina (worth Rs 8 billion in 1999/2000) and garment (totaling Rs 12 billion in 1999) can be attributed to this. The carpet industry too has witnessed a drop in its exports to Rs 4.9 billion in 2000/2001 from Rs 14 billion in 1998/99 due to the same reason.
Tibet is a fast growing market. It shares a border with Nepal and its middle class population is growing rapidly, creating more demands for luxury goods. The very fact that Tibetans are readily paying Rs 11,000 to Rs 22,000 – double the amount offered by European buyers -- for Nepali carpets, shows the potential of carpet exports. Besides, special focus on Tibet and other Chinese markets is urgent as Nepal’s trade deficit with the northern neighbor has swollen sharply. Nepal’s trade deficit with China in 2008/09 was Rs 32 billion, whereas in 2010/11 it jumped to Rs 45 billion. Clearly, Nepal must take such trade gap seriously and make serious efforts to narrow it down.
Hence, while lauding the private sector’s initiative, we would like to urge the government to make concrete efforts to complement them.
Construction of roads and other trade facilitating infrastructures like dry ports on the northern border are urgent. Presently, China has provided duty-free market access to around 4,000 product lines for LDCs, including Nepal. However, the list hardly includes items that Nepal exports. Hence, the government must push China to extend this facility to items that Nepal actually exports. The government should also pursue China to do away with non-tariff barriers like rigid quarantine laws and put in place transparent customs regime and mechanism to promptly disclose any changes in its customs and trade policy.
For highly potential products like carpet, the government should also encourage rearing of sheep locally. Only such initiatives can render Nepali exports competitive and enable the country to realize the poverty reduction targets from trade.
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