Bangladesh’s interim government has signed a sweeping trade agreement with the United States at the twilight of its tenure to secure a partial tariff relief, but the deal comes with significant geopolitical strings attached.
The Agreement on Reciprocal Trade, signed on February 9, goes far beyond standard tariff reductions. Instead, it creates a binding framework that integrates Bangladesh’s defence, energy, trade and digital infrastructure into the US sphere of influence.
The agreement mandates that Bangladesh “shall endeavour to increase purchases of US military equipment” while simultaneously limiting procurement from “certain countries” -- a thinly veiled reference to Chinese suppliers. The US has also committed to working with Bangladesh to “streamline and enhance defence trade.”
The signing of the agreement with Bangladesh is the first of its kind in South Asia and “marks a meaningful step forward in opening markets, addressing trade barriers, and creating new opportunities for American exporters,” United States Trade Representative Jamieson Greer said in a statement.
His office, USTR, published the 32-page agreement on its website.
The deal prohibits Bangladesh from purchasing nuclear reactors, fuel rods, or enriched uranium from any country that “jeopardises essential US interests.” The clause offers a narrow exception only for existing reactors where no alternative supplier exists, effectively vetoing future nuclear cooperation with Russia or China.
Under Article 4.3 of the agreement, if Bangladesh enters into a free trade or preferential economic agreement with a “non-market country” (a US regulatory term used for China and Russia), the US can terminate the entire deal and reimpose punitive tariffs.
According to another provision, if the US implements border measures or trade actions to protect its own national security, Bangladesh is treaty-bound to adopt “complementary restrictive measures” following consultations. This provision obliges Dhaka to automatically align with US sanctions and trade wars, removing its ability to remain neutral in great power conflicts.
As part of the deal, the US has cut its reciprocal tariff on Bangladeshi exports to 19 percent from 20 percent. The US will grant duty-free or preferential access to approximately 2,500 Bangladeshi products, while Dhaka will open its market to around 4,400 American goods on similar terms. The list includes US chemicals, medical devices, machinery and motor vehicles and parts; information and communication technology (ICT) equipment; beef, poultry, and tree nuts and fruit.
However, the deal enforces a kind of managed trade with specific targets. Bangladesh has committed to purchasing $15 billion worth of US energy commodities, including liquefied natural gas (LNG), over 15 years.
Additionally, Biman Bangladesh Airlines, the state carrier, will purchase 14 Boeing aircraft, steering the country’s aviation sector away from European competitor Airbus. In the agricultural sector, Dhaka will import at least $3.5 billion worth of US farm products, including wheat and soya bean.
Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), said the agreement imposes numerous compliance requirements that restrict Bangladesh’s policy flexibility.
Constraints are acute in procurement, especially in the defence sector, as it limits the country’s choices about both suppliers and equipment, he said.
“This is an imposed agreement done through the total weaponisation of trade,” said Mustafizur, adding that the US had attached conditions to the reduction of additional tariffs that were originally imposed unjustly.
“Under the deal, Bangladesh must offer zero duty on a number of US items and slash duties on certain other goods over five and 10 years, beginning with a 50 percent cut from the date the agreement comes into force.
This has “significant revenue implications,” he said.
“We are just two days away from the national election. My point is, why do they have to rush to sign an agreement that the elected government will have to implement? I don’t understand the rationale,” Mustafizur said.
“Couldn’t we request the US to wait for a couple of days so that a democratically elected government could review and finalise the deal?”
In another significant move, Bangladesh will have to remove restrictions on the right to strike, increase fines for anti-union discrimination, and, within two years, bring its Export Processing Zones (EPZs) -- vital to its garment industry -- under the jurisdiction of the general labour law, ending their special regulatory status.
Bangladesh is required to use “digital logistics platforms” for its ports, terminals, and shipping fleet that are not only cyber-secure but specifically built to block “other foreign governments” from accessing the data.
It has to establish measures to restrict the unauthorised export, re-export, and in-country transfer of US-origin or US-controlled items subject to the Export Administration Regulations (EAR) unless they have explicit permission from the US Bureau of Industry and Security.
Dhaka is also required to “screen and share” customs transaction data related to US-origin items with Washington to help identify “transactions of concern,” effectively granting the US oversight of Bangladesh’s trade flows.
“We have a lot of issues in the agreement to be worried about. Signing such a deal at the eleventh hour of this government is controversial. They could say, ‘let’s wait for the elected government,” said Selim Raihan, executive director of the South Asian Network on Economic Modeling.
He argued that the agreement is heavily skewed, imposing a far longer list of obligations on Bangladesh than on the US, which raises serious questions about whether the minimal tariff relief is truly worth the price.
Selim questioned the broader impact of the deal, specifically citing the plan to purchase 14 Boeing jets. “What about the economic security of Bangladesh and its long-term implications?”
“Our national debt has already increased significantly. If we now have to take on additional debt to purchase Boeing aircraft and cannot reap corresponding commercial benefits, that will put further pressure on us. These calculations need careful consideration.”
He highlighted the agreement’s failure to safeguard the nation’s long-term economic security or preserve its policy independence. Questioning the deal’s compatibility with global trade rules, the Dhaka University professor argued that Bangladesh instead should have pursued a conventional free trade agreement with the US.
Although tariffs on Bangladesh’s exports have been reduced somewhat, the cost is too high, he said.
“I am concerned about the kind of pressure we will have to face as a result of the commitments we have made in this agreement.”
He warned that the deal sets a risky geopolitical precedent, questioning how the country would cope if other nations were to apply similar pressure to extract comparable benefits -- a scenario he described as a major challenge for Bangladesh.
The deal mentions the reduction of various non-tariff barriers in Bangladesh.
“This is an important issue, because if we want to increase our share in global trade, there is no alternative to this. However, it must be ensured that these non-tariff measures do not apply only to one country, but are applicable to all countries,” said Selim.
In the past, US medical devices and pharmaceutical products faced lengthy delays and costs because they had to undergo local testing and obtain fresh marketing authorisation from Bangladeshi authorities, even if they were already approved in the US.
Now, Bangladesh must automatically accept US FDA certifications. It can no longer require further inspection or separate marketing authorisation for US medical products, allowing them direct access to the market.
While not explicitly detailed in the agreement, the purchase commitment for $3.5 billion in agricultural products (including cotton) typically links to the removal of the long-standing “double fumigation” requirement, where US cotton was subjected to pest treatment upon arrival.
By agreeing to these purchase quotas, Bangladesh is effectively streamlining the entry of US agricultural commodities, removing the procedural delays that previously hampered these imports.
