The expiry of the Nepal Trade Preference Programme (NTPP) provided by the United States is unlikely to have a serious impact on Nepal’s overall exports to the US, as shipments under the facility remained limited throughout its operation, trade experts said.

The NTPP expired in December.

The programme was introduced by the US Congress under the Trade Facilitation and Trade Enforcement Act of 2015 to support Nepal’s economic recovery following the devastating earthquakes that year.

Under the scheme, the US granted duty-free market access for a 10-year period to 77 Nepali products, including 56 textile items, 10 footwear products, nine clothing items and two fodder manufacturing products.

“Exports to the US account for about 10 percent of Nepal’s total merchandise exports to the world,” said Paras Kharel, executive director at South Asia Watch on Trade, Economics and Environment (SAWTEE). “Under the NTPP, Nepal exported goods worth $12.24 million, which is about 8.5 percent of total exports to the US. So the expiry of the NTPP will not seriously affect Nepal’s exports to the US.”

According to trade data, utilisation of the NTPP preferences averaged around 50 percent during the programme period. Of the total exports made under the facility, only about $6 million actually benefited from zero-duty treatment.

Exporters, however, said that those who relied on the NTPP—particularly small and medium enterprises—will feel the impact as costs rise following the end of duty-free access.

Duty-free products accounted for 9.4 percent of Nepal’s exports to the US in 2015-16. This share declined steadily to 8.6 percent in 2016-17, 7.3 percent in 2017-18 and 6.3 percent in 2018-19.

Market insiders said export performance under the programme remained weak across most of the eligible items. Among the 77 products listed, exports of 11 items were zero, while exports of three items were below $1,000. Shipments of 12 items were valued at less than $10,000. Exports of 14 items totalled less than $50,000, while only 26 items recorded exports exceeding $50,000.

Experts said the introduction of the NTPP did not lead to a meaningful increase in exports of the eligible products, rendering the duty-free access practically non-operational.

Exporters and traders attributed the poor utilisation partly to the lack of technical assistance from the US side, despite provisions for such support under the Trade and Investment Framework Agreement (TIFA) aimed at enhancing Nepal’s export capacity.

“Definitely, the expiry of the facility will increase costs for exporters who were using the NTPP,” said Rabindra Shakya, president of the Federation of Handicraft Associations of Nepal. “Exporters will also have to reduce their profit margins.”

Shakya said the government is working on measures to revive exports to the US. Officials at the Ministry of Industry said the issue could be addressed if Nepal formally requests the US government for renewed support or alternative arrangements.

Trade experts said that the Generalized System of Preferences (GSP) is far more important for Nepal than the NTPP. The suspension of the GSP by the US in 2020 affected about 12 to 15 percent of the value of Nepal’s exports to the US and had a much larger impact on trade flows than the expiry of the NTPP, Kharel said.

“GSP was not a Nepal-specific programme but one available to a wide range of developing and least developed countries, including Nepal,” he said.

A SAWTEE working paper titled ‘The 66/77 products inside out: The long and short of the United States’ Nepal Trade Preference Programme’, published in December 2023, noted that the restoration of the GSP would preserve preferential access for more than a third of Nepal’s exports even if the NTPP is not renewed.

Despite these challenges, Nepal’s exports to the US grew by 5.83 percent in the last fiscal year ended mid-July 2025 compared to 2023-24. According to the Department of Customs, Nepal exported goods worth Rs18.32 billion to the US during the period, while imports rose by 33.26 percent to Rs25.96 billion.

Experts also pointed to new dynamics in competitiveness following the US imposition of a baseline reciprocal additional tariff of 10 percent on Nepal, alongside much higher duties on competing countries. These changes, they said, have made preferential schemes in the US market almost irrelevant.

Currently, Nepal enjoys a significant tariff advantage over competitors such as India, which faces an additional tariff of up to 50 percent. India is a major competitor in segments such as hand-knotted woollen carpets, where Nepal has continued to perform well despite higher production costs, trade experts said.