BENGALURU: Bangladesh has secured a reduced 19 per cent US tariff under a trade agreement signed between the two countries on Monday, granting exemptions for some textiles and garments manufactured with US material.
Muhammad Yunus, chief advisor heading Bangladesh’s interim government, said Washington had “committed to establishing a mechanism for certain textile and apparel goods from Bangladesh using US-produced cotton and man-made fiber to receive zero reciprocal tariff in (the) US market.”
The White House said Bangladesh had agreed to provide significant preferential market access for US industrial and agricultural goods, including chemicals, medical devices, machinery and motor vehicles and parts, soy products and dairy goods, beef, poultry, tree nuts and fruit.
Bangladesh will also ease non-tariff barriers by accepting US vehicle safety and emissions standards, recognising US Food and Drug Administration certifications and removing import restrictions on remanufactured goods, the White House added.
BANGLADESH TO BOOST US PURCHASES
The nations also noted recent and upcoming commercial deals including aircraft procurement, around US$3.5 billion in purchases of US agricultural products, and an estimated US$15 billion in US energy product purchases over 15 years.
According to the US-Bangladesh agreement’s 32-page text released by the US Trade Representative’s (USTR) office, Biman Bangladesh Airlines intends to purchase 14 Boeing aircraft, with options for additional purchases. The airline first announced a Boeing order last July as negotiations were underway.
Bangladesh also will purchase an unspecified amount of US military equipment and limit purchases from certain countries.
The South Asian low-wage country also pledged to uphold internationally recognised labour rights and strengthen environmental protections.
Yunus said the agreement followed nine months of negotiations that began in April last year.
The South Asian nation in August had secured a reduction in US tariffs on its exports to 20 per cent, down from 37 per cent initially proposed by Washington, offering much-needed relief to the nation’s apparel exporters.
INDIA STILL NEGOTIATING
Bangladesh’s tariff rate is slightly above the 18 per cent rate for imports from India agreed last week by the Trump administration, but that deal requires more negotiations to be finalised.
US Trade Representative Jamieson Greer said that Bangladesh was the first country in South Asia to complete a reciprocal trade deal with the US, and “marks a meaningful step forward in opening markets, addressing trade barriers, and creating new opportunities for American exporters.”
The readymade garments sector is the backbone of Bangladesh’s economy, accounting for more than 80 per cent of total export earnings, employing about four million workers and contributing about 10 per cent to gross domestic product.
Bangladesh goes to the polls on Thursday to elect new leadership after being governed by an interim government since August 2024, when former Prime Minister Sheikh Hasina fled to India, where she remains.
According to tariff schedules released by USTR, Bangladesh will cut high tariffs to zero on many farm and food products, such as poultry, pork, seafood, rice, corn and cereal grains when the agreement enters into force.
Other tariffs fall by 50 per cent at the start and are gradually reduced to zero over five or 10 years, depending on the import. It will take a decade for the current 53.6 per cent duty on almonds to fall to zero and five years for the 53.6 per cent duty on four-stroke auto rickshaw engines to be eliminated completely.
Most US tariffs are a flat 19 per cent, but Bangladeshi-made ingredients for pharmaceuticals and parts for aircraft are allowed in duty-free, consistent with treatment for other countries that have inked tariff-reducing trade deals with President Donald Trump‘s administration.
© New Straits Times Press (M) Bhd
