The US-Bangladesh trade agreement, signed on 9 February, comes after nine months of “intensive discussions” and reduces the general US tariff cap on Bangladeshi imports from 20% to 19%, while products not produced or available in the US will receive a zero tariff.
The arrangement enables certain Bangladeshi textile and apparel products to enter the American market at a zero reciprocal tariff rate, with the eligible import volume linked to the quantity of US-produced cotton and man-made fibre textile inputs supplied to Bangladesh.
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) lauded the deal, saying that it would help increase garment exports to the US.
However, BGMEA called for “proper valuation and traceability” of US-origin raw materials used in production to take full advantage of this opportunity.
“As US cotton is of superior quality and relatively higher cost, significant export opportunities can be created if local spinners are able to ensure competitive yarn pricing. It is important to note that BGMEA has not yet been formally informed of the complete terms and conditions of the agreement. Upon receiving detailed documentation from the government, BGMEA will convene an urgent meeting with its members and engage in discussions with the US Embassy in Dhaka and the USTR to determine the next course of action,” BGMEA on a LinkedIn post.
Key highlights from the agreement
Bangladesh agrees to grant “significant preferential market access” for a range of American industrial and agricultural goods by removing some import duties immediately and reducing others by half before eventual elimination.
Covered categories include chemicals, medical devices, machinery, motor vehicles and parts, ICT equipment, energy products, soy products, dairy items, beef, poultry, nuts, and fruit.
Additional provisions require Bangladesh to improve customs processes through technology solutions that enable full pre-arrival processing and digitisation by 2030.
The country will also adopt measures consistent with its laws in support of any US border actions that are undertaken for economic or national security reasons.
The deal further obliges Bangladesh to strengthen export controls and enforcement mechanisms, including establishing systems to address export practices by companies owned or controlled by third countries that might distort trade and to conclude a duty evasion cooperation agreement with the US.
Bangladesh has also committed to removing discriminatory value-added taxes on American companies, eliminating import restrictions or licensing requirements on US remanufactured goods or their parts. It also agreed to adopt policies protecting internationally recognised labour rights, such as prohibiting forced labour imports and strengthening collective bargaining rights under amended labour laws.
Environmental clauses require Bangladesh to maintain high levels of environmental protection and enforcement of related laws, alongside measures addressing subsidies and activities involving state-owned enterprises.
Both countries indicated plans to finalise domestic procedures before the agreement enters into force.
