Nepal-US 'TIFA Meeting' being held on Monday

Published On: September 13, 2024 05:40 PM NPT By: Republica | @RepublicaNepal

Key agendas include tax exemption on 77 Items

KATHMANDU, Sept 13: The seventh Trade and Investment Framework Agreement (TIFA) Council meeting between Nepal and the United States is set to take place. The secretary-level meeting is scheduled for September 16 in Kathmandu.

For the meeting, the Nepali side will be led by Secretary of the Ministry of Commerce and Supplies, Madhusudan Burlakoti, while the US side will be co-chaired by an official from the United States Trade Representative. Although the seventh TIFA meeting was initially planned to take place in Washington, DC, it will now be held in Kathmandu.

Under the Nepal Trade Preference Program (NTPP), the US has been providing zero-duty benefits on the export of 77 items from Nepal. The continuation of this benefit will be discussed, along with discussions from the sixth council meeting regarding the potential for Nepal's IT service exports.

The Cabinet meeting held on September 5 decided to approve the agenda items to be presented by Nepal at the seventh Nepal-USA TIFA Council meeting and to form a negotiation team.

According to a source, the main topics Nepal will raise include three key issues. One major agenda is to ensure the continuation of the benefits provided under the NTPP program, as the current zero-duty benefit on 77 items from Nepal is set to expire in December 2025.

Currently, there is zero customs duty on 77 items. There will also be discussions on including additional potential export items from Nepal in the list for duty exemption.

"There will be discussions on which items available in the Nepali market are eligible for export to the US," the source said.

The third main agenda will be discussions on receiving technical assistance from the United States, the source added.

Fifteen months ago, in May 2023, the sixth TIFA Council meeting was held. The meeting was co-chaired by the then Secretary of the Ministry of Commerce and Supplies, Madhu Kumar Marasini, and the US Trade Representative for South and Central Asia, Brendan Lynch.

Last year, there was a discussion on how Nepal could export IT services to the US. Currently, the discussion will focus on how to benefit from exporting such IT and other services.

During the meeting, the delegation discussed a range of bilateral trade and investment-related issues covered under TIFA, including, among others, policies impacting the investment climate, digital economy, intellectual property protection and enforcement, customs and trade facilitation, agricultural trade, market access and technical barriers to trade, Nepal’s graduation from the LDC status, labor rights, and utilization of the Nepal Trade Preference Program.

Nepal provided an update on recent efforts and initiatives taken to improve its trade and investment climate, and reinforced its desire to attract additional foreign investment from the United States. The United States appreciated Nepal’s efforts and initiatives to reform its trade and investment regimes and encouraged Nepal to continue such initiatives to enhance their investment climate. The United States acknowledged the role of investment in supporting economic development and outlined policy reforms that could further enhance the business climate in Nepal.

In 2015, following the earthquake, the US introduced a policy, granting zero-duty on the export of 77 items from Nepal to promote Nepali exports. This benefit is set to expire in just a year and a half.

A few years ago, Nepal exported goods worth $200 million to the United States. However, by 2022, this figure had decreased to $150 million. While exports of carpets and pashmina increased, the overall trade declined due to a reduction in the export of ready-made garments, according to business owners.

The United States is Nepal's second-largest market for goods after India. Despite the US providing customs duty exemptions on many products, Nepal has not been able to fully capitalize on these benefits.

The Generalized System of Preferences (GSP) provided by the US has been suspended since 2021. The private sector believes that reinstating it would boost Nepal's export promotion.