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Nepal: US floats TIFA for zero-duty facility

Republica | 3 November 2009

US floats TIFA for zero-duty facility

New agreement can revive Nepal’s garment industry


KATHMANDU, Nov 3: The United States has responded positively to Nepal´s call for duty-free market access facility at the bilateral level — a move which if materialized could help country revive its almost dead garment industry and create thousands of additional jobs.

In this connection, US Trade Representative (USTR) has floated an option of two countries signing Trade and Investment Framework Agreement (TIFA) and it has forwarded a text of TIFA to the Commerce Ministry for necessary study for further negotiations.

The text was handed over when a senior US Trade Representative (USTR) visited Nepal over a month back, said an official. “

"We have responded positively to the US proposal, and have forwarded the template back to the USTR, making some changes in ”t," Commerce Secretary Purushottam Ojha told He, however, refused to disclose the text and the changes Nepal sought in it.

If the US government agreed to it, the two sides will move on toward signing the framework agreement, constituting technical teams for negotiating on the agreement in detail.

The signing of the treaty is expected to give new impetus to bilateral trade and investment. Presently, bilateral trade between Nepal and the US stands very nominal with Nepal enjoying trade surplus of Rs 180 million. US investments in the country too have dropped over the years.

Nepal had long been seeking the duty free facility with the US, mainly to revive its garment industry that is dying largely due to duty concessions the US pledged to Caribbean and Sub-Saharan competitors and the phase out of quota system in global apparel trading.

Acquisition of the facility is also believed to give boost to handmade woolen carpet, pashmina and other exports that are barely covered under GSP (generalized system of preferences).

Ojha said the agreement will reverse dwindling economic engagements between the two countries.

"If the US really offered the facility to products of Nepal´s export interest, it will be a major contribution the US would make in this country´s trade development, job creation, peace and social stability," said Uday Raj pandey, vice president of GAN.

Trade experts such as Dr Posh Raj Pandey of South Asia Watch on Trade, Economics and Environment (SAWTEE) suggested the government to be cautious while negotiating on the deal.

But sources at the ministry said that TIFA framework provided by the US is relatively lenient, ´as it is similar to the one the US signed with Afghanistan´“

"Besides, we believe the US will not have any problem providing zero-tariff facility to 97 percent of its tariff lines on unilateral basis, especially as it has already promised the same to all the LDCs under the World Trade Organization," said the source.

So, effectively, Nepal´s only request to the US in TIFA was to include the products like readymade garments that are of exports interest of Nepal in the facility list, he added.

 source: Republica