US-Bangladesh reciprocal tariff pact materialises after 9 months of talks

Bangladesh and the US on Monday signed a reciprocal tariff deal, marking a breakthrough after nine straight months of negotiations. Bangladesh Commerce Adviser Sheikh Bashir Uddin and National Security Adviser Khalilur Rahman, and US Trade Representative Jamieson Greer formally signed the pact. Commerce Secretary of Bangladesh Mahbubur Rahman and Assistant US Trade Representative Brendan Lynch were present at the event.

"The agreement marks a historically new level in our bilateral economic and trade relations. It will provide substantially enhanced access of Bangladesh and the US to each other's respective markets", said Uddin, who led negotiations from the Bangladesh side.

Under the pact, the US will reduce the reciprocal tariff to 19 per cent following its reduction to 20 per cent in August last year from the originally set 37 per cent in April.

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The US said it remains committed to establishing a mechanism for certain textile and apparel goods from Bangladesh using American-made cotton and man-made fiber to receive zero reciprocal tariff into the US market.

"The reduction of reciprocal tariff from 20 per cent to 19 per cent will grant further advantage to our exporters, while zero reciprocal tariff on specific textile and apparel exports from Bangladesh will give substantially added impetus to our garments sector," said Rahman.

The agreement -- approved by the Council of Advisers on Monday -- will come into force once both sides issue their respective notifications.

Here are answers to a few frequently asked questions (FAQs) on the subject:

What is a bilateral trade agreement?

It is a formal agreement between two nations to set rules for trade, commerce and investment.

What is the purpose of a trade deal?

Trade agreements aim to boost economic growth on both sides through mutually agreeable terms.

How does a trade deal benefit the parties?

Typically, a trade deal leads to lower trade barriers such as tariffs and quotas while ensuring better market access and/or standardised rules for goods and services.

Is a trade deal beneficial?

Trade agreements are generally viewed as beneficial as they underpin economic activity, besides their formally-defined goals and benefits.

What is the Bangladesh-US reciprocal tariff pact?

It is a bilateral trade agreement under which both sides have agreed to reduce reciprocal tariffs on certain goods. This will, in turn, lead to better market access for exporters on both sides.

How long did negotiations take?

The signing of the agreement follows nearly nine months of negotiations between both sides.

What is the main tariff change under the deal?

The US will reduce the reciprocal tariff to 19 per cent, lower from 20 per cent set in August last year and 37 per cent earlier in April.

What makes this agreement significant for Bangladesh?

Officials say the deal enhances market access, improves export competitiveness and provides added momentum to the garments sector for Bangladesh.

Which sectors stand to benefit the most from this pact?

Bangladesh’s textile and garment sector is expected to be a major beneficiary of the development.

When will the Bangladesh-US agreement take effect?

It will come into force after both sides -- Bangladesh and the US -- issue their respective official notifications.