NATIONAL 2 (Spotlight Weekly)]

Under Threat

Garment exports from Nepal come down drastically after the introduction of new policy by the United States

By A CORRESPONDENT

First it was the African bill. Now it is the Carrebean bill. The decision by the US government to give special facilities to the garment exports from African and Carrebean countries are bound to have a negative impact on Nepalese garment sector.

Garment is one of the major sources of foreign exchange earnings. Garments worth more than Rs 13 billion are exported each year from Nepal. The lion's share of the Nepalese garments goes to the USA.

With African and Carrebean countries enjoying special facilities, Nepalese garments will lose its competitive edge in the US markets, say entrepreneurs. Till now the sector is surviving on quota. But after 2005 when the quota system will be revoked as per the WTO provisions, the sector is going to die.

Garment products : Uncertain furure

Nepalese garment entrepreneurs believe that if the Nepalese government takes up its case before the American counterparts, Nepal, too, could enjoy such facilities.

"It is true that after 2005, we will not enjoy quota system. But if the government takes up our case we can gain financial strength in the meantime and be able to survive the WTO regime," said Udaya Raj Pandey, general secretary at the Garment Association of Nepal (GAN).

Garment is one of Nepal's largest exportable items and decline of its export may have far-reaching impact upon the total exports. The export of carpets, another major exportable item, has also declined over the years because of recession in the European market, particularly in Germany.

The United States of America is the largest market for Nepalese garments as Nepal exports more than 90 percent of its garment products to the US. Germany remains a major market for Nepalese carpets.

Having joined World Trade Organization (WTO), most of the western countries are now in no position to provide special privilege for a particular country. This is the reason Nepal has to compete with other countries in the world.

"The government is well aware about the situation and is trying to diversify the Nepalese export market," said Bhanu Acharya, Secretary at the Ministry of Industry, Commerce and Supplies. "The present trend is just a temporary one."

According to GAN, exports to the USA declined by 30 percent in the first six months of the year 2001 compared to the same period last year.

In the first six months of the year 2000, Nepal exported 90.97 million US dollars worth garment apparels to the United States. This year, Nepal could export garments worth US dollar 70.97 million only during the same period.

"If the government does not make sincere efforts, the garment export to the USA will come down by more than 15 percent in the year 2001," said Kiran Prakash Sakha, President of the GAN. "We hope the government will take necessary steps to protect this industry."

As Nepal cannot influence the US government's policy to give similar customs exemption like the one enjoyed by the Caribbean and African countries like Nepal, what Nepalese entrepreneurs have to do now is to produce quality products to compete with the products from other countries.

"The bookings of Nepalese readymade garments has decreased drastically in the last few months. If the situation continues, Nepalese garment industry will have no other options than to close down," said Chandi Raj Dhakal, former President of GAN.

The garment entrepreneurs have pinned their hope on the visit of the US Assistant Secretary of State Ms Christina Rocca this week. They hope that the senior US official will be apprised of their concerns sympathetically and take initiative to extend facilities for Nepalese product.