A trade agreement signed between Bangladesh and the United States on February 9, just days before a national election, has drawn sharp criticism from economists and policy observers.

The Agreement on Reciprocal Trade, signed by the interim government at the fag end of its tenure, offers only a marginal reduction in US tariffs but binds Bangladesh to a broad framework covering defence, energy, trade, labour and digital governance.

“The agreement could reshape Bangladesh’s economic autonomy, geopolitical balance and long-term development path,” said Professor Selim Raihan, executive director of the South Asian Network on Economic Modeling (Sanem).

Speaking in an extended interview, Raihan described the deal as “highly unequal”, “rushed” and “potentially damaging” to Bangladesh’s strategic independence.

His first concern centres on timing. The agreement was finalised by an interim government just days before the election, a move he believes sets a “troubling precedent”.

The agreement should have been left to the newly elected government. Waiting one or two months would not have created major problems

“I do not understand why our interim government rushed to sign this agreement just days before the election,” he said. “This should have been left to the newly elected government… Waiting one or two months would not have created major problems.”

Raihan contrasted Bangladesh’s decision with India’s slower approach to a similar trade arrangement with Washington.

“I was informed that India and the United States have not yet signed their trade agreement… If a country like India has not finalised such a deal, why were we in such a hurry?” he asked.

He said an agreement of this magnitude should have gone through parliamentary scrutiny and wider consultation with business leaders and trade experts. “Stakeholders, including exporters and experts, were not properly consulted,” he said, calling the process “deeply concerning”.

One of Raihan’s strongest criticisms concerns the imbalance of obligations between the two countries.

In the 32-page document, “Bangladesh shall” appears 158 times, while “the United States shall” appears only nine times, he said. “This shows that most obligations fall on Bangladesh.”

Under the agreement, Dhaka will open its market to around 6,700 US products, including chemicals, medical devices, machinery, ICT equipment, motor vehicles, beef and poultry. In contrast, the US will grant duty-free or preferential access to about 2,500 Bangladeshi items.

In return, Washington has reduced its reciprocal tariff on Bangladeshi exports to 19 percent from 20 percent.

For Raihan, the imbalance is especially troubling given the asymmetry between the two economies. “For a trade agreement between the most powerful country in the world and one of the weakest economies among the least developed countries, this is highly unequal,” he said.

“Here the weaker country is offering more, while the superpower is offering less,” he added. “Bangladesh is actually giving special and differential treatment to the United States.”

Apart from trade, Raihan expressed concern over provisions that could limit Bangladesh’s policy autonomy.

The agreement mandates that Bangladesh endeavour to increase purchases of US military equipment and restricts procurement from certain countries -- language widely seen as aimed at China. It also allows Washington to terminate the deal if Bangladesh enters trade agreements with countries classified as non-market economies.

“In many areas, including defence purchases and trade agreements with other countries, Bangladesh may need endorsement from US authorities,” Raihan said. “This raises concerns about Bangladesh’s independence and sovereign decision-making.”

The deal emphasises “economic and national security alignment” between the two countries, which Raihan describes as “potentially intrusive”.

“This is not just about trade. It is geopolitics,” he said. “Bangladesh is vulnerable in global geopolitical competition, and we must be careful.”

RISK OF LOSING NON-ALIGNED STATUS

Raihan said the agreement could push Bangladesh towards alignment with US strategic interests.

Under one provision, if the US introduces border measures or trade actions on national security grounds, Bangladesh would be required to adopt complementary restrictive measures. Critics say this could bind Dhaka to US sanctions and trade disputes.

“If the United States bans products from certain countries, Bangladesh may be expected to support that,” Raihan said. “Bangladesh has historically remained non-aligned. This agreement could change that stance.”

He also highlighted the challenge of managing relations with China, Bangladesh’s largest import partner, and India, its key regional neighbour.

“China is our largest import source, yet the US has trade conflicts with China. If Bangladesh is pressured to reduce imports from China, it will be extremely difficult,” he said. “We need good relations with everyone -- China, India, the US, and others.”

ZERO TARIFF, BUT NOT REALLY

Raihan criticised what he described as misleading public communication about tariff benefits. “When officials spoke of ‘zero tariff’ for products using US cotton, it actually refers to zero reciprocal tariff, not total tariff removal,” he said. “The original tariff remains.”

Many exporters misunderstood the provision, believing it meant full tariff elimination. “The document clearly states the original MFN [Most-Favoured-Nation] tariff remains,” Raihan added.

Although Bangladesh will notify the World Trade Organization (WTO) of its commitments, Raihan argues that several provisions contradict WTO norms.

“Under WTO principles, weaker economies usually receive special and differential treatment,” he said. “But here Bangladesh appears to offer greater concessions.”

He called this a “serious contradiction” and questioned whether adequate WTO expertise was involved in the negotiations.

Another concern is what Raihan describes as “managed trade”, where Bangladesh commits to importing fixed quantities of US goods regardless of market conditions.

The agreement requires Bangladesh to purchase US liquefied natural gas worth about $15 billion over 15 years and increase imports of aircraft and agricultural products.

This includes plans for Biman Bangladesh Airlines to buy 14 Boeing aircraft and at least $3.5 billion of US agricultural goods such as wheat, soybean and cotton.

“The whole idea is to reduce the bilateral trade deficit,” Raihan said. “You have to import more from the United States, regardless of competitive prices.”

He warned that Bangladesh could be forced to buy more expensive goods even when cheaper alternatives are available.

“If we find a cheaper source elsewhere, we may not be able to choose it,” he said. “This will put additional pressure on our foreign exchange.”

“How are we going to finance aircraft purchases and energy imports? There is a risk of increased reliance on foreign loans,” Raihan said.

The agreement also requires changes to Bangladesh’s labour laws, including expanding union rights and bringing export processing zones under national labour standards within two years. Analysts say this could unsettle investors in the garment sector.

“Labour is a very critical issue in Bangladesh,” Raihan said. “If these new provisions create confusion or discomfort among investors, it could create serious problems.”

He also raised concerns about provisions requiring Bangladesh to recognise US Food and Drug Administration (FDA) approvals for pharmaceuticals and medical devices, which could weaken regulatory sovereignty.

REMOVAL OF NON-TARIFF BARRIERS: ONE POSITIVE AREA

Despite his criticism, Raihan acknowledged some potential benefits.

“There is a positive area in addressing non-tariff barriers,” he said. “But reforms should apply globally, not just for one country.”

He said inefficient regulations raise costs for both domestic and foreign businesses, and reform could support broader economic growth.

Raihan believes the agreement will pose a major challenge for the next government. “The next government will already be occupied with domestic political and economic challenges,” he said. “They may seek a review rather than cancellation.”

Cancelling the deal could damage Bangladesh’s credibility. “Signing and cancelling later does not send a positive signal to trading partners,” he said.

At the same time, moving ahead would lock in long-term obligations. “The pressure will remain - financial, strategic, and geopolitical,” Raihan said.

“We need everyone -- China, India, the United States, and others,” he said. “Maintaining that balance is crucial for Bangladesh’s future.”