There have been a couple of wonderful news from the United States over the past week or so. First, American President Barack Obama on February 24th signed a new legislation that provides up to 66 types of items produced in Nepal—including carpets, headgear and travel goods—duty-free access to the US market. If the legislation is given a green light by the US International Trade Commission and if Nepali goods meet certain statutory requirements, the new legislation would be a big boost to the Nepali garment industry, and by extension, the national economy. Back in the early 2000s, 85 percent of Nepali garment exports went to the US alone, earning Nepal Rs 12 billion a year. But after the US scrapped its quota system in 2005, garment exports to America plummeted, today earning for Nepal just Rs 5 billion a year.Another bit of good news was the cancellation on February 29th of travel warnings issued by the American government to its citizens wanting to come to Nepal. The warning had followed last year's devastating earthquakes, prolonged unrest in Tarai and severe fuel crunch resulting from India's economic blockade. The US State Department has now cancelled the travel warning "because conditions have changed." This could be huge fillip to tourism that was badly battered by the earthquakes and the Indian embargo. This is because other countries tend to follow America's lead when it comes to issuing (and lifting) travel warnings to their citizens. So we would like to take this opportunity to thank the American government for these two wonderful gestures. They could not come at a more appropriate time. As Nepal now has a permanent constitution and the long political transition has formally come to an end, the country, if it can peacefully settle a few remaining political issues, is nicely poised for sustained economic growth.
But first we need to deal with the basics. The Garment Association of Nepal (GAN) has, following the signing of the new American legislation, asked Nepal government to take immediate measures to address persistent (and largely home-grown) problems like long power cuts, shortfall in skilled manpower and unreliable transit facilities through India. Only then, says the association, will the country be in a position to benefit from the new tariff-free access. Makes sense. Even with duty-free access, Nepali garments won't be able to stay competitive for long if production costs back home are not cut, mainly by reducing load-shedding and ensuring smooth transit facilities via India. And this is why, as we have repeatedly pointed out in this space before, it is so important to settle outstanding political issues in the country without further delay. For Nepal cannot sustain itself indefinitely on remittance. The sudden decision of a major manpower importer like Malaysia to stop receiving Nepali workers offers a cautionary example. In the long haul Nepal must find ways to properly train and employ its youth in the country, not just to sustain the economy, but also to ensure lasting peace and stability. The growing ranks of unemployed youths are a tinderbox; they must be defused with stable and well-paying jobs. So let us decisively deal with our own politics first. However well-meaning our foreign friends they can only do so much.
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