Agreement announced by USTR
The United States and Bangladesh have signed a reciprocal trade agreement designed to reduce tariffs and address related trade issues, the Office of the U.S. Trade Representative said in a Monday press release. The USTR published details of the pact and the implementing documents on its website here.
Change to reciprocal tariff rate and exemption rules
Under the terms announced, the United States will lower the reciprocal tariff rate applied to imports from Bangladesh to 19%. The pact also provides that levies will be eliminated entirely for products that meet exemptions outlined in an executive order issued on Sept. 5. The executive order specifies categories of goods eligible for duty-free treatment when covered by finalized trade agreements.
Textile and apparel exemption mechanism
The agreement creates a mechanism to permit a to-be-specified quantity of textile and apparel imports from Bangladesh to receive tariff exemptions. Eligibility for those exemptions will be tied to the volume of U.S. exports of comparable goods, according to a joint White House statement describing the framework here.
Background on previous tariffs
Imports from Bangladesh had been subject to a 20% reciprocal tariff since the Trump administration finalized country-specific levies in August. The new agreement replaces that 20% rate with the 19% level for covered goods, subject to the exemptions described above.
Bangladesh commitments on standards, market access and purchases
Bangladesh agreed to cut tariffs on many American products and to recognize U.S. standards for certain categories such as automobiles and food. The country also committed to expand market access for U.S. agricultural exports and to purchase $3.5 billion in specific U.S. farm commodities. The joint statement lists the planned agricultural purchases as:
- wheat
- soy
- cotton
- corn
Bangladesh further pledged to remove value-added taxes and digital services taxes that affect U.S. suppliers and to strengthen protections for intellectual property, labor rights and the environment.
Energy purchases and measures on below-market exporters
Another provision of the deal commits Bangladesh to buy $15 billion of U.S. energy products over the next 15 years. The agreement also requires Bangladesh to adopt measures addressing practices by entities owned by third countries that sell below-market goods into the United States.
Implementation timeline and termination conditions
The pact becomes effective 60 days after each country notifies the other that it has completed its internal procedures to formalize the agreement. The United States retains the right to terminate the agreement if Bangladesh enters a bilateral trade arrangement that the U.S. determines would harm American interests.
The agreement specifies that if the U.S. rescinds the pact, tariffs on Bangladesh would revert to the higher rate the Trump administration announced last April. At that time, the president had planned to impose a 37% levy on imports from Bangladesh.
Regional context and recent U.S. trade activity
This deal follows the U.S. framework trade agreement with India and a series of reciprocal trade pacts the United States has formalized with partners in Central and South America, including Argentina, Guatemala and El Salvador.
At the same time, the U.S. has created instability for some previously finalized agreements, with recent actions affecting arrangements with the European Union and South Korea.
Attribution and licensing
This article was written by Phil Neuffer for Supply Chain Dive and was legally licensed through DiveMarketplace by Industry Dive. For licensing questions, contact [email protected].
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