ASYMMETRY in the Agreement on Reciprocal Trade between Bangladesh and the United States, signed on February 10, is glaring. Presented as a breakthrough that averts US punitive tariffs, the deal places Bangladesh in a tight corner. Dhaka will extend tariff concessions across 6,710 categories of US goods and receive reciprocal zero-duty access on 1,638 Bangladeshi products. Although Washington has reduced the reciprocal tariff on Bangladeshi exports to 19 per cent, the cut from 20 per cent is modest at best. Bangladesh now exports more to the United States than it imports, largely driven by apparel exports. The agreement makes items manufactured using cotton sourced from the United States only eligible for zero reciprocal duty under a specific mechanism and volume threshold. It, thus, opens Bangladesh’s market far wider than the US market opens in return. Duties on around 4,500 US product categories will be eliminated immediately, with thousands more phased out gradually. These concessions span industrial machinery, agricultural and energy products, vehicles, chemicals and ICT equipment. Bangladesh has also agreed not to impose quotas on US imports and to accept US or international conformity standards without additional assessment.
Such commitments are likely to undercut domestic producers and erode tariff revenue in import. The agreement also ventures into strategic terrain that might disturb Bangladesh’s long-standing policy of balanced economic diplomacy. Clauses commit Bangladesh to facilitate substantial purchases of US goods: 14 Boeing aircraft, $15 billion in US energy and liquefied natural gas for 15 years, billions more in agricultural imports and efforts to increase military procurement from the United States while limiting purchases from certain countries. The commitments blur the line between voluntary trade and managed commerce. Policy and trade flexibility, the ability to procure energy or food at the most competitive global prices, will almost certainly be constrained. Equally troubling are provisions on standards, intellectual property, sanitary and phytosanitary measures and alignment with potential US border or regulatory measures. Bangladesh undertakes not to enter into third-country arrangements that disadvantage US exports and to coordinate in the event of US trade actions aimed at preventing regulatory arbitrage. Bangladesh’s requirement to refrain from subsidising domestic goods producers and submit a complete notification of all subsidies may also constrain support for domestic industries and affect the broader public interest.
As a developing economy, Bangladesh’s growth depends on diversified sourcing of raw materials, technology and energy, but the deal appears a significant strategic concession. What is also problematic is the issue of political legitimacy. The deal was concluded by an interim government, yet it binds the elected administration on trade, procurement, regulatory standards and strategic alignment. The government must, therefore, thoroughly review the agreement.
