Originally posted in Dhaka Tribune on 7 April 2026
Distinguished CPD fellow urges urgent review of the bilateral agreement, citing revenue losses, asymmetrical obligations, and risks to trade sovereignty
The recently signed bilateral trade agreement between Bangladesh and the United States could have far-reaching implications for the country’s fiscal stability, industrial competitiveness, and trade sovereignty, warns Centre for Policy Dialogue (CPD) Distinguished Fellow Prof Dr Mustafizur Rahman.
In an exclusive interview with Dhaka Tribune’s Shaikh Shahrukh, Dr Mustafizur Rahman said the deal—while potentially opening new trade avenues—contains structural imbalances, revenue risks, and compliance burdens that Bangladesh must urgently reassess.
Dhaka Tribune: How do you assess the overall impact of the US–Bangladesh bilateral trade agreement?
Dr Mustafizur Rahman: The agreement has significant implications for Bangladesh’s macroeconomic stability and fiscal sustainability. One of the most immediate concerns is revenue loss. By granting zero-duty access to US products, Bangladesh’s National Board of Revenue (NBR) is projected to lose around $100 million annually—equivalent to roughly Tk1,200 crore—in net revenue.
This loss will directly affect fiscal space, particularly funding for social safety programs and infrastructure development. Reduced domestic revenue mobilization could also widen the fiscal deficit.
You described the timing of the agreement as problematic. Could you elaborate?
Yes, the timing raises serious concerns. The agreement was signed just three days before the national election, limiting the scope for broader political consensus.
From a strategic perspective, this reflects what I would describe as a “negotiation failure.” Bangladesh missed an opportunity to wait for a newly elected government to review and negotiate more balanced terms.
At the same time, the United States is increasingly shifting away from multilateral trade platforms such as the WTO and adopting a more transactional bilateral trade model, and Bangladesh appears to be among the countries targeted under this approach.
There has been discussion about imbalances in the legal language of the agreement. What does that indicate?
The linguistic structure of the agreement clearly reflects asymmetry. The phrase “Bangladesh shall” appears 108 times, whereas “USA shall” appears only six times.
This indicates an unequal mandate and highlights Bangladesh’s weak bargaining position. Such asymmetry may ultimately limit Bangladesh’s policy autonomy and align its regulatory framework more closely with US commercial law.
What will be the revenue impact of tariff concessions under this agreement?
The agreement requires Bangladesh to provide immediate zero-duty access to more than 4,000 US products, with provisions to extend this benefit to almost all goods within five to ten years.
Current estimates suggest that imports from the United States stand at approximately $108 million annually. The existing tariff revenue from these imports amounts to roughly $120 million, of which $20 million is advance income tax (AIT) that is later refunded.
After adjustments, Bangladesh is expected to face net annual revenue losses of about $100 million, or approximately Tk1,200 crore. This will significantly constrain the government’s fiscal capacity.
The agreement includes specific import commitments. How could these affect Bangladesh’s economy?
The deal introduces binding import commitments that restrict Bangladesh’s sourcing flexibility.
For example, Bangladesh has committed to importing 3.5 million tonnes of US wheat over five years, equivalent to 700,000 tonnes annually, purchasing 14 Boeing aircraft, and increasing imports of US LPG and agricultural commodities.
These commitments could force Bangladesh to shift away from lower-cost suppliers such as India, China, or Russia. If US products are priced above international market levels, subsidies may be required, putting pressure on the balance of payments and foreign exchange reserves.
What risks do you foresee for the textile sector, particularly regarding cotton imports?
The cotton sourcing issue is particularly important. The United States is currently the fifth-largest supplier of cotton to Bangladesh. However, local manufacturers typically rely on suppliers in China, India, and Pakistan due to shorter lead times and better suitability for production requirements.
Mandatory imports from US sources may increase lead times and raise production costs. This could undermine Bangladesh’s competitiveness in export-oriented sectors, especially ready-made garments.
Are there geopolitical risks associated with this agreement?
Yes, the geopolitical implications are significant. Provisions relating to state-owned enterprises (SOEs) could discourage Bangladesh from maintaining trade relationships with countries that provide subsidies.
This may affect trade relations with China and Russia, particularly in areas such as electronics imports and nuclear energy cooperation.
Another critical issue is Bangladesh’s alignment with the US position on maintaining the e-commerce tariff moratorium. While countries such as India and South Africa are exploring digital taxation for revenue generation, Bangladesh may lose potential fiscal gains by supporting the moratorium.
The agreement includes reciprocal tariff provisions. How risky is this arrangement?
This is not a fully reciprocal free trade arrangement. While Bangladesh provides zero-duty access, the United States retains the authority to impose tariffs of up to 34% on Bangladeshi exports.
This includes a 15% base tariff (MFN rate) and a 19% punitive surcharge, which may be triggered if Bangladesh fails to comply with intellectual property rights (IPR), labour standards, or environmental regulations.
Such provisions may conflict with the Most Favoured Nation (MFN) principle under WTO rules. If other trading partners, particularly the European Union, demand similar concessions, Bangladesh’s customs regime could face serious legal and financial risks.
What is your view on investment prospects under this agreement?
While the agreement is expected to attract US investment, the reality remains uncertain. Bangladesh’s current foreign direct investment (FDI) inflows are below $2 billion annually.
Strengthening intellectual property protection and facilitating profit repatriation alone will not be sufficient to attract investment. Structural reforms—such as infrastructure development, regulatory efficiency, and institutional stability—are essential.
It is also evident that US development support mechanisms, including USAID and Asia Foundation funding, are gradually shifting toward commercially driven engagements rather than long-term development partnerships.
What steps should Bangladesh take at this stage?
There are several immediate actions Bangladesh should consider.
First, Bangladesh should utilize the 60-day ratification window to renegotiate or revise imbalanced provisions, particularly the asymmetrical obligations.
Second, the government must conduct legal and economic reviews to assess the possible use of US trade laws such as Trade Law 242 (1977) or Super 301, which may impose additional global tariffs.
Third, Bangladesh should introduce price-alignment clauses linking US import prices to international minimum price benchmarks, ensuring that excessive subsidies are not required in public procurement.
Finally, what broader message does this agreement send for Bangladesh’s economic future?
Bangladesh must maintain strong trade relations with the United States, which remains a key export destination. However, this should not come at the cost of fiscal stability or industrial capability.
This agreement appears to have been concluded in what may be described as a “negotiation vacuum.”
Now is the time to adopt a “Review and Revisit” strategy, ensuring that Bangladesh protects its national interests while pursuing a balanced and sustainable economic partnership with the United States.
