The European Union (EU) market has been providing LDCs including Nepal Generalized System of Preference (GSP) with quota-free and tariff-less access on all imports including textiles and apparels since 2001 under the Everything But Arms (EBA) initiatives.

“It gives preference to Nepal for an unlimited period and is not subject to periodic review. As such, the EBA should provide exporters and investors with greater certainty of market access to the EU,” writes Bijendra Man Shakya in a paper assessing the impact of quota lifting to Nepal.

Besides, Nepal stands to gain more from the EU market as it enjoys derogation from the EU GSP Rules of Origin for apparels allowing it greater flexibility in choosing raw materials. After the offering of this facility, EU’s share of garment exports from Nepal grew substantially. “If the derogation facility, which will expire in December 2004, is extended even after 2004 (Nepal has already formally requested the EU for extension)

and nothing changes in favor of Nepal in the American market, the EU market will be of more value for market diversification and sustainability post MFA,” writes Shakya.

But making inroads into EU market is easier said than done. “We have been catering to the US market for the last 22 years and so we know a lot about it and understand their tastes. But tastes of European consumers are very different – they have different tastes from individual to individual on color, design, texture etc,” said Udaya Raj Pandey. “Having said that we have to accept that EU does provide us with huge opportunities. We need to cash it just as we need to cash the opportunity provided by Canada, which is also a duty free market for us,” he added.