Meeting US standards and compliances will be challenging: Stakeholders
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Cooperation for trade
KATHMANDU, March 8: Officials of the Office of the United States Trade Representative (USTR) will be arriving in Nepal on Saturday to discuss and help simplify the process of obtaining duty-free access for Nepali products to the United States.
Though US President Barack Obama signed the Trade Preference Act, a legislation which also provides some Nepali products duty-free access to the US market on February 26, Nepali stakeholders say that it will be challenging for the domestic industry to actually benefit from the provision as the industry and its products will have to meet the standards set by the US first.
In such a context, USTR’s visit to Nepal is expected to help with turning the potential from the new provision into reality.
“USTR officials are visiting Nepal on March 12,” Chandi Prasad Aryal, the president of Garment Association of Nepal (GAN), told Republica, adding: “Discussion with USTR officials will help set guidelines for our industry to move ahead to take this benefit.”
The legislation grants duty-free tariff benefits to 66 Nepali products, including certain carpets, headgear, shawls, and scarves, among others. But very little has been done by the Nepali side to benefit from it.
Though the Ministry of Commerce (MoC) sat down with representatives of the private sector, the meeting could not finalize how to domestic products could benefit from the new US provision.
Meanwhile, stakeholders have already said that it would be challenging for the domestic industry and its products to enjoy the free-tariff provision allowed to Nepali products as the provision will benefit only those industries with products that meets the US-set standards.
“To benefit from the free-tariff provision, the domestic industry will have to meet certain standards set by the US authorities,” Dinesh Kumar Ghimire, Joint Secretary at the Ministry of Industry (MoI) says, adding: “The US side often cross-checks of the products and factories enjoying the free-tariff benefit to see if they continue to meet the pre-set standards.”
In a bid to meet the standards under the provision, an industry should have to be operated within an export processing zone (industrial estate). Stakeholders opined that this provision alone could prove challenging to manufacturers located in the densely populated capital.
According to MoI data, 343 garment and apparel units are operating in the Kathmandu Valley. If these products from companies that operate these units are to enjoy free-tariff access to the US, they should operate from industrial estates; there are three in the Valley.
Likewise, among others, the units and supply chain should also be environment-friendly, meet labor standards and have a history of producing products that are of certain quality and competitive, as per US standards.
