Vol

New Destination

One of the leading export products can now make its presence felt in the European Union market, writes our staff reporter

With more than 90 percent of their exports consumed by the United States of America, Nepali garment exporters were little worried about finding new markets. Thus was excluded the world’s largest market for textile products in the European Union (EU).

Thanks to the initiative taken by the private sector and government’s policy of diversification of exports, Nepali readymade apparels were trying to make a place for themselves in EU market. But with the seizure of trans-shipped readymade garments bearing the label ‘Made in Nepal,’ the quality conscious EU authorities demanded with the Nepal government to ensure that export of only genuine Nepali products could enjoy GSP (Generalized System of Preferences) facilities.

According to the ‘Agreement on Trade in Textile Products’ reached between Nepal and the European Union in March last year, the government will monitor the export of textile products to EU countries beginning March 1 (earlier scheduled to come into force from February 1), this year. As per the agreement, the exporters are now required to get Certificate of Origin (CO) for all textile items to be exported to EU. The job, earlier done by local chambers of commerce, has now to be undertaken by a competent government authority – i.e. the Department of Commerce (DOC) in this case.

The Department issues the certificate on the basis of the recommendation made by the Garment Association of Nepal through the local chamber. The agreement also requires entrepreneurs to obtain license for the export of textile products falling in five of total 161 categories, as prescribed by EU, for the purpose of dual checking of the goods exported from Nepal.

The five categories numbered 4, 5, 6, 7 and 26 include the major export items such as shorts, T-shirts, light weight fine knit roll, jerseys, woven breeches, shorts (other than swimwear) and trousers, blouses, jumpers and pullovers made of wool, cotton or man-made fibers, among others.

According to officials, the Department issues the license to the exporters on producing order of goods or the receipt of advance payment made by the European importer to the Nepali exporter or if there exists a back-to-back or buy-back arrangement.

The Ministry and exporters have jointly prepared four criteria, on the basis of which the DoC will endorse the certificate of origin for the products forwarded by the chambers of commerce. One of the criteria is that exporter must verify that the products the being exported are manufactured in Nepal and also prove the originality of the raw material used in the manufacture of the final products.

EU had initially demanded to initiate license system for 15 categories, which Nepal bargained down to 5. India and China are also manufacturing the garment items falling under these categories, which they export to the European market under the quota system. The alleged export of Indian and Chinese goods under the Nepali label reportedly prompted the EU to pressurize Nepal to enter into the agreement.

"This agreement has provided surety of market and sense of confidence to Nepali entrepreneurs," said Leela Mani Poudyal, joint secretary at the Ministry of Commerce. "This might also encourage EU investors to come here and invest in apparels and other export-oriented industries."

Adds Uday Raj Pandey, general secretary of Garment Association of Nepal (GAN), "As Nepal is the only country in the region enjoying GSP facilities, our products will be comparatively cheaper in the EU market, thus boosting our exports."

The Trade Agreement, effective till December 31, 2000 has a provision of further extension with the required amendments. As the Multi-Fiber Agreements will be waived by 2005, Nepali garment industry will no more enjoy quota system being offered by the United States and it will have to struggle on its own in a competitive international market. Carving a niche in European market will help it to keep itself afloat in that time of crisis.