The Nepal Trade Preference Program (NTPP) of the US government, which promised Nepali exporters rare, duty-free access to the US market, has expired, delivering far fewer benefits than many had hoped for.
The expiry of the NTPP on Wednesday midnight has ended duty-free access to the US market for 77 Nepali products. The US Congress passed a law in 2015 to support Nepal’s economic recovery following the devastating 2015 earthquakes. Under the law, products made in Nepal were allowed preferential access to the US market for a decade. The facility came into effect in early 2016.
The program covered a wide range of goods including textiles, ready-made garments, leather products, footwear, luggage, carpets, shawls, scarves, hats, handicrafts and travel goods, among others.
However, Nepal failed to fully capitalize on the opportunity. According to the Ministry of Industry, Commerce and Supplies, more than a dozen of the listed products were never exported to the US under the scheme. Other products were also exported in very small volumes.
According to the 2024 USTR Annual Report to Congress on the Implementation of the NTPP, total imports under the program were $3.9m and accounted for 2.9 percent of total US imports from Nepal in 2023. The largest import categories were container bags and boxes ($1.7m), handbags ($745,000), and hats and other headgear ($649,000). During the period, total US imports from Nepal totaled $134m.
Interestingly, Nepali exporters did not make a preference claim for export of 52 out of 77 products included in the list. “It might be that these goods did not meet the rule of origin, or it might be that the importer simply failed to file the claim for duty-free treatment,” the report states.
With the program’s expiry, all eligible products will now be subject to regular US customs duties. This is certain to affect the competitiveness of Nepali exports in the American market.
Analysts say Nepal failed to take much benefit from the program due to issues with product selection. They say the US government granted duty-free access mainly to handicraft products, shawls, travel materials and similar items. Since many of these products were already levied tariff in the US, the incentive did not make Nepali exports much more competitive.
Private sector representatives have long called for inclusion of high-potential products like ready-made garments and information technology services. The government even pushed for duty-free access for 30 additional goods and services. But it did not materialize.
After the 7th Nepal–US Trade and Investment Framework Agreement (TIFA) Council meeting held in Kathmandu in Sept 2024, Nepali officials said that the US delegation had agreed to advocate for extending the NTPP. The Nepali delegation was led by then ministry secretary Govinda Bahadur Karki, while the US side was led by Brendan Lynch, Assistant US Trade Representative for South and Central Asia.
Both sides had planned to hold the 8th TIFA Council meeting in Washington in 2025. The meeting was expected to focus on labor rights, investment, digital trade and the possible extension of the NTPP. However, the meeting did not take place.
Exporters say high production costs, weak supply chains, limited scale, and compliance affected Nepal’s ability to benefit from the scheme. Poor trade facilitation and lack of export readiness further weakened outcomes, they added.
Hand-knotted carpets were among the few products that benefited meaningfully from the preferential access. Nepali carpets enjoyed zero-duty access to the US market under the program. However, the Donald Trump administration imposed a 10 percent duty on these products in April, even before the NTPP expired.
With the duty-free window now closed, exporters say Nepal risks losing whatever foothold it had built in the US market. They say the government should push for extension for the facility by including new high-value products.
