Where global trade dynamics are rapidly evolving now, the prospect of Bangladesh signing a Free Trade Agreement (FTA) with the United States emerges as a beacon of opportunity for the nation’s economic growth.
As highlighted by Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue, the US stands as Bangladesh’s largest export destination, making a potential FTA not just desirable but essential for long-term trade expansion.
While sceptics may argue that such an agreement is unattainable, Rahman’s insights remind us that successful negotiations are possible, as evidenced by existing FTAs between the US and countries like Costa Rica and Bahrain.
Our newspaper on Friday reported that the key lies in Bangladesh’s readiness to undertake significant reforms, particularly as it prepares to graduate from the least developed country (LDC) status.
These reforms, aimed at enhancing trade competitiveness, would also serve as a solid foundation for FTA negotiations.
The economic implications of an FTA with the US are profound. Currently, the US collects over $1 billion annually in tariffs on Bangladeshi exports, while Bangladesh imposes a mere 6.2 per cent average duty on US imports.
The disparity in tariff structures — 15.1 per cent on US imports from Bangladesh — highlights the potential for mutual benefit through reduced tariffs.
An FTA could alleviate the financial burden on Bangladeshi exporters, particularly in the apparel sector, which is crucial for the nation’s economy.
Moreover, the Centre for Policy Dialogue has rightly pointed out the need for Bangladesh to monitor the impact of US tariffs on its export competitiveness, especially in comparison to countries like Vietnam.
Engaging with the US through the Trade and Investment Cooperation Forum Agreement (TICFA) could pave the way for strategic discussions on tariff concessions. However, care must be taken to adhere to the Most Favoured Nation (MFN) principle, which could complicate revenue implications.
Bangladesh could explore innovative solutions, such as offering special warehouse facilities for US cotton imports, which may facilitate negotiations on tariff waivers for apparel made with American cotton.
The potential FTA with the US represents a strategic opportunity for Bangladesh to enhance its trade landscape. By embracing this challenge, Bangladesh can secure its economic future and solidify its position in the global market.
