Readymade garments from Nepal will get duty-free entry into the US. The special trade preference now allows duty-free tariff benefits for up to 66 types of garment items including certain carpets, headgears, shawls, scarves and travel goods. Nepal will have this facility for 10 years. So far the US had been imposing an average of 16 to 17 per cent duty on Nepali garments.

Nepal sees this as a tremendous opportunity to expand exports to the US market. At one time exports to the US accounted for over 80 per cent of Nepal’s total garment exports. However, Nepal’s garment industry witnessed a prolonged slump after the US scrapped the quota system in 2005. Garment exports fell and the number of garment industries came down.

However, only 40 per cent of Nepali garments being exported to the US could be eligible for receiving the GSP. Nepal should meet the eligibility requirements of the program. If the requirements are not met, the rest 60 per cent could be excluded from the facility. Nepal’s garment industry has started homework to improve production capacity. In the meantime it’s grappling with problems like shortage of skilled manpower, power outage, transit problems while exporting through India and labor issues.