Soaring shipping costs make Nepalese products less competitive in the United States

Shipping costs to the United States have more than tripled since the pandemic, preventing Nepalese products from competing with products from neighboring countries in the U.S. market, traders said.

Kiran Prakash Saakha, chairman of the Nepal-US Chamber of Commerce and Industry, said shipping costs have increased faster than in other countries, making life difficult for domestic exporters.

“Due to the high costs, Nepalese products cannot compete with those produced in neighboring countries, so the government should closely monitor tariffs and seek solutions to bring prices back to where they were before the pandemic,” he said. he declared.

Speaking at a virtual interaction program hosted by the Nepal-U.S. Chamber of Commerce and Industry, most exporters said they were concerned if freight costs remained high even after the pandemic , it might become impossible for them to compete in the world market.

“Online commerce is booming in the United States, but domestic merchants are unable to make payments online due to the lack of an international payment gateway. This is one of the biggest barriers to trade with the United States, ”said Saakha, who is also the executive director. by Saakha Steel.

Online shopping has taken off around the world due to movement restrictions resulting from the pandemic, but this has not happened in Nepal as domestic sellers still cannot accept international online payments, according to the report from the virtual interaction program.

According to the Trade and Export Promotion Center, Nepal’s exports to the United States in the last fiscal year 2020-21 amounted to 13.79 billion rupees, a jump of 46.1% from 9.44 billion rupees in the previous fiscal year. The United States accounted for 9.8 percent of Nepal’s total exports.

Nepal had a 5.7 billion rupee trade deficit with the United States in fiscal year 2020-21.

Imports from the United States amounted to Rs 19.50 billion in 2020-2021, down 17.2% from Rs 23.54 billion in 2019-20.

In fiscal year 2018-19, Nepal purchased Rs 13.42 billion worth of goods from the United States, while exports were valued at Rs 10.84 billion.

Nepal sent woolen rugs, woolen felt items, ready-made clothes, handicrafts and dog chews from the Himalayas to the United States.

“US foreign direct investment in Nepal has declined due to the lack of a compensation law which is the number one priority for US investors,” Saakha said.

“We even appealed to the government to pass a compensation law two years ago, but it did not listen to us,” he said. “As duplicate products are readily available in the market, US investors are concerned about putting money into the country.”

Saakha added: “American financiers are also very demanding on intellectual property rights, but the government does not seem to be serious about it, because of which they are not keen to invest in Nepal.

According to the Ministry of Industry, Nepal received investment pledges for seven projects worth Rs 1.67 billion from the United States in fiscal year 2020-20. There were four investment pledges valued at Rs4.53 billion from the United States during fiscal year 2019-2020.

Saakha said there was a huge potential market for Nepalese wool rugs in the United States, but Nepal had not been able to market them on big platforms like big trade fairs.

“Nepal must hold government-to-government talks so that Nepalese products can be exhibited at major trade fairs in the United States, as exporting is one of the main means of bringing foreign currency into the country,” he said. he declared.

For Nepal to be competitive in the international market, technical assistance from the US government could be a huge support, according to the report. However, it is up to companies to conduct research on what kind of technical assistance Nepal can receive under the Trade and Investment Framework Agreement (TIFA) and how it can be used. to make Nepal more competitive.

Although the United States granted preferential treatment to 77 Nepalese products, such as rugs, pashmina and travel goods, Nepal was unable to take advantage of this facility. The country has not been able to produce them on a large scale, market them properly, improve the quality and ensure the quality of the products.

According to the Trade and Investment Framework Agreement between Nepal and the United States signed in 2011, Nepal is entitled to receive technical assistance. However, the Nepalese government has not been able to explore the different types of technical assistance it can receive from the US government.

“It has been a decade since the deal was concluded, but Nepal has not been able to obtain expert technical assistance aimed at increasing exports to the US market. The Trade and Export Promotion Center and the Department of Industry, Commerce and Supply appear to be doing nothing to benefit from the facilities provided by the United States, ”Saakha told the Post.

At the fifth virtual meeting on the Trade and Investment Framework Agreement held in December of last year, the United States agreed to provide technical support for capacity building of Nepalese producers to increase the volume of exportable goods.

The Trade and Investment Framework Agreement signed in April 2011 between Nepal and the United States is a bilateral pact aimed at developing trade, increasing investment and technical cooperation, and strengthening economic ties.

Due to the disruption caused by the pandemic, many sectors, including small, medium and large Nepalese-US trade stakeholders, have been affected, according to the report.

Even domestic production has been affected, with the transport of raw materials compromised due to travel restrictions and imports stranded at the border or somewhere between the border and the factory, according to the report.

The government should examine the reasons why Nepal’s imports of raw materials and goods remain blocked at various border points such as the Nepal-China border, and find the best way to clear customs and route the shipments to their destinations at most. early.

The report suggests that it would be better if the U.S. Embassy could bring greater clarity to its communication system targeting affected businesses and come up with a plan to alleviate the problem of inadequate visa interview dates.

“Overall exports to the United States have increased in recent years despite various problems, but it is believed that they may inflate even more if the Trade and Export Promotion Center and the Government of Nepal seriously consider the above-mentioned problems. above and the solutions provided by the association. heads of various export-oriented companies, ”the report concludes.

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