A Decade Lost: Why Nepal Failed to Benefit from US Trade Preferences

The Nepal Trade Preference Programme (NTPP), a US law that allowed duty-free entry for selected Nepali products into the American market, expired at midnight on Wednesday, ending a decade-long trade facility for Nepal.

The programme, introduced following the devastating 2015 earthquake to support Nepal’s economic recovery, had provided zero-tariff access to 77 Nepali products in the US market. The US Congress had passed the law in 2015, granting duty-free treatment for a 10-year period, which took effect from early 2016 and expired on December 31, 2025.

Under the NTPP, products such as textiles, ready-made garments, leather goods, footwear, travel goods and luggage, carpets, caps and shawls were eligible for duty-free exports to the United States. However, according to the Ministry of Industry, Commerce and Supplies, more than a dozen of the listed products were never exported during the programme period.

With the programme’s expiry, Nepali products covered under the NTPP will no longer enjoy duty-free access to the US market. Although the facility was intended to help Nepal rebuild its economy after the 2015 earthquake, Nepal failed to fully capitalise on the opportunity, according to business stakeholders and trade experts.

Entrepreneurs say the decade-long duty-free access did not yield satisfactory results, calling Nepal’s inability to benefit from preferential entry into a large market like the US a major missed opportunity. Trade experts argue that the US extended tariff concessions mainly to products that Nepal either could not export or exported only in limited quantities.

Paras Kharel, executive director of South Asia Watch on Trade, Economics and Environment (SAWTEE), said the private sector also showed limited interest in producing and exporting items eligible for duty-free access.

“Had a country like Bangladesh received such a facility, it would have made a significant leap,” he said, adding that capacity constraints also prevented Nepal from benefiting. Kharel noted that neither the private sector nor the government introduced targeted policies to encourage production and exports of the eligible goods.

Although the overall impact of the programme’s expiry may not be significant, Kharel said businesses currently exporting under zero-tariff provisions—mostly small and medium-sized enterprises—will be affected. “The impact may not be large at a macro level, but at a micro level, such industries will feel the pressure,” he said.

The Government of Nepal had repeatedly requested the US to extend the programme and expand the list of eligible products. During the seventh meeting of the Trade and Investment Framework Agreement (TIFA) Council between Nepal and the United States in September 2024, Nepal formally sought an extension of the programme.

The TIFA Council serves as a bilateral mechanism to promote trade and investment between the two countries. The Ministry of Industry, Commerce and Supplies had also planned to request duty-free access for around 30 additional products and services under the NTPP.

The private sector had been urging the government to push for an extension over the past year. However, officials were not optimistic, citing the protectionist trade stance of the current US administration under President Donald Trump.

Balaram Gurung, president of the Nepal Carpet Producers and Exporters Association, said many products listed under the NTPP had previously been exported to the US with tariffs of only 3–4 percent, limiting the programme’s benefit. “If the US had waived tariffs on goods subject to 35–40 percent tariffs, Nepal would have gained meaningfully,” he said, adding that Nepal failed to take advantage even when concessions were offered.

Gurung said exporters had requested the government to seek a five- or 10-year extension, noting that the Covid-19 pandemic disrupted trade for nearly four years during the programme period. He added that footwear exports to the US have recently begun, but meaningful growth would be possible only if the existing 35 percent tariff were removed.

Nepali carpets enjoyed zero tariff access to the US until April 2025, but a 10 percent tariff has been imposed since then following changes in US tax policy.

Similarly, Pashupati Dev Pandey, president of the Garment Association of Nepal, said Nepal failed to reap adequate benefits despite having a decade-long window. “Nepal exports most of the items that still face high tariffs, while low-export items were given duty-free access,” he said, adding that exporters of handbags, woollen garments and caps are likely to be affected following the programme’s expiry.