Bangladesh Secures Reduced Tariff with US Under Trade Agreement

Bangladesh has recently secured a favorable trade agreement with the United States, allowing for a reduced 19% tariff rate on certain textile and garment exports. This agreement exempts textiles and garments manufactured in Bangladesh with US materials, according to interim government chief Muhammad Yunus.

In a recent announcement, Yunus revealed that Washington has committed to establishing a mechanism that would grant zero reciprocal tariffs to certain textile and apparel goods from Bangladesh, specifically those utilizing US-produced cotton and man-made fibers in the US market. The negotiations for this agreement spanned nine months, culminating in a beneficial outcome for Bangladesh.

The trade deal, which reflects Yunus’ pro-US stance, signifies a significant milestone in US-Bangladesh trade relations. It is expected to boost Bangladesh’s key export-earning sector, particularly the ready-made garments (RMG) industry, which heavily relies on cotton and synthetic fibers imported from the US.

Commerce Secretary Mahbubur Rahman highlighted that under this agreement, RMG exports from Bangladesh would now enjoy zero reciprocal duty, providing a competitive edge in the global market. The deal was officially signed in Washington by Commerce Adviser Sheikh Bashir Uddin and US Trade Representative Jamieson Greer.

In addition to textiles, the agreement includes provisions for importing US agricultural products such as wheat, soybean, and LNG, as well as commitments to e-commerce, intellectual property rights standards, and support for US-led initiatives in the World Trade Organization (WTO).

Furthermore, Bangladesh’s recent purchase of 25 aircraft from US aerospace giant Boeing, worth an estimated Tk 30,000-35,000 crore, aligns with broader efforts to alleviate US tariffs and strengthen bilateral trade ties.

According to Bangladesh’s Export Promotion Bureau (EPB), the US remains the largest export market for Bangladesh. Last year, Bangladesh successfully negotiated a reduction in US tariffs from 37% to 20%, with hopes of further lowering the tariff to 15% in the future.

Industry experts anticipate that the trade agreement will significantly benefit Bangladesh’s apparel exporters, who play a vital role in the country’s economy by contributing over 80% of export earnings and employing millions of workers, predominantly women.

Comparatively, the US recently reduced tariffs for India from 50% to 18%, signaling a broader trend of tariff adjustments in the region. The dynamics of global trade are evolving, with geopolitical considerations influencing trade policies and tariff rates.

As Bangladesh prepares for its upcoming general election on February 12, the trade agreement with the US underlines the country’s commitment to fostering economic growth and strengthening international trade partnerships. The interim government, led by Muhammad Yunus, has played a pivotal role in navigating Bangladesh’s trade relations during this transitional period.