A recent UNDP study has concluded that Nepal is among the hardest-hit countries since the end of textile and clothing quotas from January last year, with the Nepali textile and clothing exports plummeting by over 20 percent.

The report further said that the value and volume of the exports declined by 22 and 28 percent respectively during 2005.

Losses in the US market were more severe than in the European Union (EU), Nepal’s other big textile and clothing customer. Among knitted ready-made garments from Nepal, the value of US imports plunged by more than half — some 55 percent — with woven garments losing 30 percent of the market.

The new figures contain the latest quarterly tracking report on impact of the lifting of quotas, prepared by the UNDP Regional Centre in Colombo.

“Nepal remains extremely vulnerable and locked into the export of a narrow range of items,” states the report. It recommended major investments in training and human resource development.

In value, Asia-Pacific’s share in the United States rose from 41 to 49 percent, while it increased from 47 to 53 percent in the EU. In contrast, regions such as Africa and the Caribbean that have trade agreements with the US have lost shares of textile and clothing products, despite their preferential market access, the report states.

Data show that China and India have been clear winners by expanding their market shares in both the US and the EU. On the other hand, landlocked countries like Nepal and Mongolia, along with small island economies such as Fiji and Maldives, have been devastated by the elimination of quotas; these countries’ textile and clothing exports fell sharply in 2005.

Increasing price competition, closures of factories, job losses and deterioration of workers’ conditions have been reported in countries like Nepal that lost export orders.

For its part, Nepal ‘urgently needs to diversify its exportable products as well as markets,’ suggests the report.

Among others, the report has reinforced the local garment entrepreneurs’ view that development of strategic export processing zones, enhancing entrepreneurs’ access to credit and reducing the trade transactions cost was necessary to revive the sector.