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Bangladesh is also considering the proposal of allowing duty-free entry of a variety of American goods as India did, as a strategic move to gain tariff concessions on her part in Washington. The relocation, being considered by the commerce ministry, is in the background of the recent tariff cut by the United States to Vietnam and the mounting pressure on Dhaka to replicate in trade talks.
Commerce Secretary, Mahbubur Rahman said this is corroborated to the fact that the government is willing to provide tariff relief to the US, particularly on commodities such as LNG, wheat, and aircraft. Nevertheless, he stated that whatever agreement would be reached would have to be within the precincts of World Trade Organization (WTO) regulations and the idea of conforming with the US domestic trade laws would have to be abandoned.
Rahman said: we are not against the provision of duty concessions on US imports. We are already ramping up our imports with the US and the move will also motivate the private sector to diversify the sources without hitting the local industries.
As the US is said to be readying an annexure with the tariff structure that they are likely to offer in the deal, Bangladesh has been made known that they are not ready to accept those points which demand that they have to follow what is written in the American laws, rather than the rules of global trade.
Strategic Response to Vietnam’s Tariff Gains
The most recent are the actions taken by Washington to lower its retaliatory tariffs on Vietnamese imports, cutting the rates of 46 percent to 20%, following the decision taken by Hanoi to drop tariffs on American goods. Vietnam is a major competitor of Bangladesh in the ready made garment (RMG) industry particularly in terms of exporting to the US.
With the status of being a Least Developed Country (LDC), Dhaka is now optimistic that it can get even low tariff rates as compared to Vietnam. Such expectations correlate with recent statements of the Office of the United States Trade Representative (USTR) that separate tariff considerations might be made with the LDCs.
Secretary Rahman pointed out that we are putting our national interests foremost especially the preservation of our RMG exports and are negotiating in earnest with reference to the WTO stipulations.
Uncertainty Over July 9 Tariff Deadline
It has been under strain with the US on a high tariff imposed on Bangladesh goods at a high rate of 37 percent which came in early April. Although three-month relief is provided by its temporary suspension by President Trump, the relief will end on July 9. Other countries such as Vietnam have also agreed on partial tariffs to be levied.
Bangladesh has however been guaranteed that the 37 percent duty will not be imposed as long as active negotiations are in place. This was strengthened by a session that was conducted on July 3 in Washington among top leaders of both parties.
The main Bangladesh negotiators in the talks are the Commerce Adviser Sk Bashir Uddin and the National Security Adviser Khalilur Rahman. The next round of talks will occur on July 9-10 and will spell out the details of an exchange of tariffs depending on the transmission of US annexure.
It has been observed by the officials that the US proposal has been unconventional in its structure. Normally, the trade agreements commenced with clear annexure and list of offered goods and then there is negotiation of broader legal structures. The US, on the other hand, began with the descriptive, legal terms of the deal leaving the specifics regarding tariffs without clarity.
Consequently, an official by the commerce secretary who was scheduled to visit Washington has been postponed by Bangladesh. He replied that when the annexure came we should settle our technical position. It is then only that I shall go up to Washington to start again.
The reasoning behind this reserved mindset is the need to circumvent, to this end, any premature commitments that may interfere with the current trade agenda or the industrial policy in the country. It also indicates how Dhaka is inspired to have good diplomacy and at the same time be financially independent.
The talks with the US is among multiple efforts by Bangladesh to increase bilateral trade treaties before it graduates as an LDC. As FTAs and PTAs are being negotiated with a number of countries, the government is eager to achieve agreements that will guarantee the sustained access to its major exports especially those in the RMG segment which contributes to the major portion of the foreign income.
But the Washington idea of the reciprocity tariff system also has its advantages and disadvantages. On the one side, it may expand access to one of the largest consumer markets in the world; on the other it provokes the issue of dependency, imbalance of trades and protection of national industries.
The next US-Bangladesh gathering and the overall possibility of the annexure that Washington has promised to provide before the discussions can proceed are on everyone’s lips at this moment.
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