Nepal is among the hardest-hit countries since the end of textile and clothing quotas from January last year, with the Nepali textile exports plummeting over 20 percent, a report reaching here Friday said.

The value and volume of the exports declined 22 and 28 percent, respectively, in 2005, according to the report from the United Nations Development Program (UNDP).

Losses in the United States (U.S.) market were more severe than in the European Union (EU) market, Nepal's other big textile and clothing customer.

Among knitted ready-made garments from Nepal, the value of US imports plunged more than half - some 55 percent - with woven garments losing 30 percent of the market.

Together, the two markets represent the destinations of nearly all of Nepal's textile and clothing exports.

Increasing price competition, closures of factories, job losses and deterioration of workers' conditions have been reported in countries like Nepal that lost export orders as well as in countries that managed to keep their export volume.

The report called on Nepal "to diversify its exportable products as well as markets."

Carpets represent the top Nepali export commodity in both the U. S. and the EU. But three out of Nepal's top five commodities are those that face more competition after the elimination of quotas and also are produced by other countries in the region.

"With this kind of competition, a small country like Nepal is pushed out of competition at the initial stage," the report stated.