Amid tariff deadline, Bangladesh urges fairer deal with USTR

Highlights: TBS

Bangladesh has responded to a draft Reciprocal Tariff Agreement proposed by the United States Trade Representative (USTR), making counter-proposals regarding certain conditions and urging for a fairer deal.

The Bangladesh government has recommended that reciprocal tariffs be capped at a maximum of 10%, countering a US proposal that implied Bangladesh must adopt American trade laws – something officials say is not permissible under international trade norms.

The interim government has been in negotiations with the US to secure a fairer deal since early April after President Donald Trump imposed an additional 37% reciprocal tariff on Bangladesh, which was later suspended for three months.

Sources close to the discussions said Khalilur Rahman, the interim government's national security adviser and high representative for Rohingya affairs, held a pivotal meeting with USTR officials yesterday at 6:30pm Bangladesh time to finalisethe draft. Another crucial meeting is slated for 29 June, after which the agreement could potentially be signed.

This development follows a non-disclosure agreement signed by Bangladesh with the US on 12 June concerning reciprocal tariffs, the terms of which are not to be publicly disclosed by either government. The US had previously sent a draft of the Reciprocal Tariff Agreement, and both nations decided to proceed with the agreement during an online meeting on 17 June.

Officials from the commerce ministry confirmed that the US's proposed draft of the Reciprocal Tariff Agreement suggests that Bangladesh adhere to US domestic laws in international trade. However, Bangladesh has expressed its disagreement, sending its counter-proposal to Khalilur on 25 June, which he presented to the USTR during yesterday's session. Bangladesh's counter-proposal specifically requests that the reciprocal tariff imposed on it be limited to a maximum of 10%, which is currently in effect.

Furthermore, Bangladesh formally submitted a proposal for a Free Trade Agreement (FTA) based on verbal consent from USTR officials. However, Commerce Adviser Sk Bashir Uddin informed TBS on Wednesday that the US has not agreed to sign an FTA with Bangladesh. When pressed on whether an extension would be sought to finalise negotiations, he did not provide a direct answer, stating only that Khalilur is currently in the US for discussions on these matters.

Boosting imports from US

Before the potential agreement, Bangladesh has embarked on several initiatives to boost imports from the US, which Khalilurhighlighted during his meeting with the USTR. Commerce ministry officials noted that an initial approval for wheat imports from Ukraine by the Cabinet Committee on Economic Affairs was subsequently revoked at the ministry's request, with the decision made to import wheat from the US instead.

Similarly, the civil aviation and tourism ministry is planning to acquire aircraft from the US manufacturer Boeing, with a proposal expected soon. The Energy Division has also intensified efforts to increase LNG imports from the US. The majority of LNG approved for purchase from the spot market has been sourced from US companies since April.

When questioned about the progress of reciprocal tariff discussions with the US, Commerce Secretary MahbuburRahman told TBS yesterday afternoon, "The Bangladesh government is continuously active regarding the imposition of additional tariffs by the US. Every letter from the USTR is being responded to on time.

"Bangladesh has already provided its feedback on the draft Reciprocal Tariff Agreement. A special meeting with the USTR will take place on 29 June, which will determine the nature and timing of the Reciprocal Tariff Agreement."

On April 2, the US government proposed imposing an additional 37% reciprocal tariff on Bangladesh, alongside increased taxes on various other countries. In response, Bangladesh and other nations requested more time from the US and offered to sign new trade agreements and increase imports. Consequently, US President Donald Trump announced a three-month suspension of the reciprocal tariff, although a minimum 10% additional tariff was implemented.

Exporters concerned

With the US's suspension of the increased tariff set to expire on 9 July, exporters are expressing considerable apprehension.

Business leaders say they remain uninformed about the progress of discussions with the US regarding the withdrawal of reciprocal tariffs. They are also unaware of any developments concerning the Bangladesh Garment Manufacturers and Exporters Association (BGMEA)'s proposal to the government to appoint a lobbyist in the US.

Mahmud Hasan Babu, president of BGMEA, told TBS, "We are concerned about the US reciprocal tariff. This concern led us to hold a meeting with the US Ambassador in Dhaka on Tuesday. He advised us to be more specific and serious." 

The BGMEA president added, "On Wednesday, we discussed this with the commerce ministry. The ministry informed us that the government is working on the matter very seriously. KhalilurRahman presented Bangladesh's feedback on the draft Reciprocal Tariff Agreement to the USTR on Thursday."

Mahmud further said, "We do not know what is in the non-disclosure agreement signed by the government on 12 June. As it is a G2G non-disclosure agreement, we do not wish to embarrass the government by inquiring about it. 

"However, our sole demand is that the tariff rate imposed on Bangladesh must not be higher than that of other competing countries." 

The BGMEA president suggested that if the government believes more time is needed for negotiations to finalise the agreement, it could request a further 90-day extension of the tariff suspension, emphasising that the agreement must ensure Bangladesh's tariffs are not higher than its competitors.

Anwar-Ul-Alam Chowdhury (Parvez), president of the Bangladesh Chamber of Industries, told TBS, "The BGMEA has proposed to the government to appoint a lobbyist firm. As the 37% tariff suspension expires on 9 July, our concern is growing. But we have no information on how far the government's discussions with the US have progressed."

Bangladesh ahead of peer countries

Commerce ministry officials said Bangladesh is ahead of countries like India, Vietnam, and Cambodia in its reciprocal tariff discussions with the US. While these nations are still in the discussion phase, Bangladesh has already signed one agreement and continues negotiations for a final agreement under its framework, they argued.

The officials said that in yesterday's meeting with USTR officials, Khalilur elaborated on Bangladesh's initiatives to increase imports from the US. He also presented the government's plans and highlighted perceived errors in the data provided by the US for imposing reciprocal tariffs.

Objection to tariff calculation

Khalilur also highlighted that Bangladesh believes the US's calculation that Bangladesh imposes a 74% tariff on American goods is incorrect. 

He presented the actual tariff rates imposed by Bangladesh on US products at the USTR meeting, and changes made in the upcoming fiscal year's budget concerning US product imports will also be highlighted.

The commerce ministry officials said following the imposition of additional tariffs, Chief Adviser Muhammad Yunus sent a letter to President Trump requesting a three-month suspension and resolution through dialogue, while Commerce Adviser Bashir sent a letter to the USTR. In these communications, Dhaka pledged to increase imports from the US, including LNG, wheat, aircraft, arms, and ammunition, and to reduce tariffs on 190 US products. Additionally, it was proposed that central bonded warehouse facilities would be provided to facilitate US cotton exports to Bangladesh.

Subsequently, commerce ministry officials held an online meeting with the USTR on 9 April, where the USTR requested in writing what facilities Bangladesh sought for exports to the US. A Bangladeshi delegation then met the USTR in Washington on 21 April, where the USTR agreed to discuss six key points. Bangladesh later sent another letter to the USTR on 4 June.

According to data from the National Board of Revenue, Bangladesh exported goods worth $8.36 billion to the US in 2024, while imports from the US amounted to $2.21 billion.