But what is also true is that the volume of assistance that Nepal receives from the US has been on a decline. With Nepal losing markets for commodities like readymade garments, its largest export to the US, the country has not much to cheer about regarding trade volume with America. Similar is the situation with foreign direct investment from US investors.
Behind Nepal’s failure in realizing the benefits of good and friendly ties with the US are two crucial reasons: First is the constantly deteriorating investment climate within its borders and the other is Nepal’s failure to establish formal economic and business linkages at government and private sector levels extending beyond borders. Because of this, the Nepali private sector, despite its decades-long trading activities with the US, is finding no formal door to knock on to discuss its problems and revive business partnerships. The government too is suffering a similar fate. In this context, recent efforts by the government to set up a formal mechanism at the private as well as government level is a good move. This will help Nepal deepen its diplomatic relationship, facilitate dialogue, bridge information gaps and enable effective mobilization of economic diplomacy for its own benefit.
Establishment of such mechanisms and frequent exchange of views will help Nepal clarify to the US why as a country undergoing a major political transition it seeks duty-free market access for readymade garments and other key products. As a labor intensive industry, these products create instant employment for thousands of Nepalis, which in turn helps to prevent social unrest. It is important to make the US realize that Nepal’s readymade garment industry can contribute to fulfilling the people’s economic aspirations and help sustain peace. Thus, the establishment of a bilateral forum for dialogue will enable Nepal to make known to the US the sensitivity of different industries here and seek facilities at the bilateral level.
As for pacts like the Trade and Investment Framework Agreement, which can have long-term impact, it is crucial that the government consult all stakeholders to build a national position and ensure benefit from it. Apart from that, the government must also take concrete steps to fix problems existing within Nepal’s borders in order to make the most of benefits coming from beyond borders.
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