The 66/77 products inside out: The long and short of the United States’ Nepal Trade Preference Programme

This paper contributes to the limited literature on the effects of unilateral trade preferences on exports by assessing the effect of a unilateral duty-free market access scheme offered by the United States to Nepal, a landlocked least developed country, for a 10-year period. Launched in 2016 to support Nepal in the wake of the devastating earthquake of the previous year and having obtained a waiver from a non-discrimination requirement at the World Trade Organization, the Nepal Trade Preference Programme(NTPP) provides duty-free access on 66 products (later converted into 77 products after a change in the tariff classification system) from Nepal. We find that there are overlaps in the product coverage of the NTPP and the Generalized System of Preferences (GSP), the latter applicable to a broader group of developing countries. In 2021, some 21 percent of Nepal’s exports to the US (in value terms) were potentially eligible for GSP only, 5 percent for NTPP only and 3 percent for both. Preference utilization was lower among NTPP products than GSP products. Employing difference-in-differences and triple-difference estimations on detailed product-level data, we do not find conclusive evidence that the introduction of the NTPP led to an increase in Nepal’s exports of the products the scheme granted duty-free market access to.