Signing a Free Trade Agreement (FTA) with the United States can be a long-term solution for Bangladesh’s trade growth, as the country is the largest export destination for Bangladeshi goods, an economist said on Thursday.
Many believe such a deal may not be possible, but that is not the case, as everything depends on negotiation, said Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD).
He made the comments at a dialogue titled “Trump Reciprocal Tariffs and Bangladesh: Implications and Response”, organised by the CPD at the Lakeshore Hotel in Dhaka.
Rahman pointed out that the US already has FTAs with countries like Costa Rica, Bahrain, and Jordan. “So, Bangladesh can also negotiate a deal with the US,” he said.
The economist pointed out that Bangladesh will need to undertake major reforms as it prepares to graduate from the least developed country (LDC) group.
“Those same reforms will be useful if Bangladesh moves forward with an FTA negotiation with the US,” he added.
He also mentioned that an FTA with the US would be more beneficial than deals with China or India, as Bangladesh would lose a significant amount of revenue from import duties if such agreements were signed with its regional neighbours.
However, the United States collects more than $1 billion annually in tariffs on goods exported by Bangladesh, while Bangladesh gets about $180 million in duties on American products, according to an analysis by the CPD, informed the dialogue
The CPD said Bangladesh imposes customs and other duties averaging 6.2 per cent on US imports. However, when rebates are taken into account, the weighted average duty drops to 2.2 per cent.
In contrast, the weighted average tariff on US imports from Bangladesh stands at 15.1 per cent.
Total US duty on apparel imports from Bangladesh amounts to over $1 billion, said Professor Mustafizur Rahman, a distinguished fellow of the CPD, at a dialogue titled “Trump Reciprocal Tariffs and Bangladesh: Implications and Response,” held at the Lakeshore Hotel in Dhaka.
The CPD suggested that Bangladesh should closely monitor the impact of US tariffs on its export competitiveness, particularly in comparison with countries such as Vietnam.
It also recommended that Bangladesh explore strategic options, including engaging with the US through the Trade and Investment Cooperation Forum Agreement (TICFA).
The country may request a list of products on which the US would like to see duty-free or reduced-duty access when exporting to Bangladesh.
However, if Bangladesh offers tariff concessions to the US on certain products, it would be obliged to extend the same treatment to all trading partners under the Most Favoured Nation (MFN) principle.
Depending on the product categories, this could have notable revenue implications.
A Free Trade Agreement (FTA) with the US could address such concerns, the CPD noted.
Bangladesh could also consider offering special warehouse facilities for cotton imports from the US, which may facilitate negotiations on tariff waivers for apparel made with US cotton.
