Bangladesh’s signing of the Reciprocal Trade Agreement (RTA) with the United States on Monday is being hailed for retaining apparel export competitiveness in the world’s largest economy. However, experts have raised significant concerns over the deal’s impact on Bangladesh’s economic sovereignty.
The agreement imposes serious restrictions that limit Bangladesh’s ability to make independent decisions in critical areas such as choosing trade, energy, technology, and defense partners.
The RTA caps the Trump Tariff at 19 per cent and makes it zero for apparel made from US raw materials. However, this binds Bangladesh to opt for what the USA prefers and avoid what they dislike, undermining Bangladesh’s sovereignty, said trade economist MA Razzaque, Chairman of think tank RAPID.
As global dynamics shift, particularly with the US’s deteriorating relationships with Europe and emerging markets, Bangladesh’s compulsion to stick to the US belt may emerge costly, as other countries may look for similar deals that Bangladesh cannot honour simultaneously, he warned.
The RTA requires Bangladesh to align its trade policies with US priorities, particularly when it comes to countries the US deems a threat.
Bangladesh is now bound to adopt US trade restrictions, including sanctions and tariffs, whenever the US perceives a threat to its national security or economic interests.
This could drag Bangladesh into US-led trade conflicts, especially with key trading partners like China and Russia, who are important to Bangladesh’s economy.
Experts warn that this provision compromises Bangladesh’s diplomatic autonomy and may push it into disputes that harm its long-term economic goals.
In the energy sector, the agreement prohibits Bangladesh from purchasing nuclear materials, such as reactors and enriched uranium, from countries that the US considers a threat to its interests.
Bangladesh’s nuclear energy projects have been heavily reliant on Russia. The restriction now forces Bangladesh to rely on US-approved suppliers, which could increase costs and reduce the reliability of the country’s energy supply.
The deal limits Bangladesh’s ability to source energy from a variety of countries, leaving it vulnerable to disruptions in supply and price hikes, especially as the global energy market becomes more complex.
The technology sector is also significantly impacted by the RTA.
Even though no country was specifically named in the agreement, the clauses will require Bangladesh to exclude countries like China from its telecommunications and technology infrastructure, even if those countries offer better or more cost-effective solutions.
The provision reduces Bangladesh’s ability to diversify its technology partners, locking the country into reliance on US suppliers.
As the digital landscape evolves, this dependency could stifle Bangladesh’s ability to access cutting-edge technologies at competitive prices, hindering its long-term technological growth.
The defense sector is another area where Bangladesh is forced into alignment with US priorities.
The RTA compels Bangladesh to increase its purchases of US military equipment, alongside refraining from buying those from some other countries, to be decided by the USA.
Bangladesh’s defense strategy will now be shaped by US interests, which reduces the country’s flexibility to form independent defense alliances.
This provision undermines Bangladesh’s sovereignty in military matters, forcing it to prioritize US products and strategies over its own national security considerations.
The agreement also extends into Bangladesh’s domestic regulatory framework, which experts have long been pushing for. However, it may confront Bangladesh with many emerging market partners that are not aligned with the US standards.
Bangladesh must now accept US certifications for imported goods, bypassing its own regulatory processes.
The RTA restricts Bangladesh from signing economic partnership deals with countries that the USA does not endorse due to standards or market freedom.
Additionally, the RTA forces Bangladesh to adopt US-defined labor standards. While some of these labor reforms may benefit workers, experts argue that the imposition of foreign labor laws ignores Bangladesh’s socio-economic context.
More importantly, Bangladesh must ban imports of goods mined or produced out of child or forced labor, limiting its access to cheaper or diversified sources.
The RTA is also likely to increase Bangladesh’s apparel exports to the US, its largest market.
However, experts question whether the short-term economic gains from higher exports will offset the long-term costs of over-reliance on the US.
Bangladesh risks losing its ability to diversify its trade relationships and diplomatic alliances, leaving it vulnerable to external pressures.
Over-reliance on the US could reduce Bangladesh’s ability to negotiate freely with other global partners, in the developed and emerging markets.
The deal also severely restricts Bangladesh’s ability to negotiate freely with non-US-aligned countries.
A key clause prohibits Bangladesh from entering trade agreements with countries that are considered “non-market countries” by the US, such as China. This provision limits Bangladesh’s foreign policy options, especially when the global landscape shifts and new economic powerhouses emerge.
Experts warn that this restriction could stifle Bangladesh’s ability to engage with powerful regional partners like China and India, which are critical to Bangladesh’s long-term economic growth.
As the US faces growing tensions with Europe and emerging markets, Bangladesh’s future economic strategies will need to strike a delicate balance.
The country must weigh the short-term benefits of increased exports to the US against the long-term risks of losing its independence in global trade and diplomacy.
The RTA ties Bangladesh’s decisions on energy procurement, technology partnerships, defense strategies, and domestic regulations to US interests, making it increasingly difficult for the country to pursue policies that are in its best national interest.
Bangladesh now faces a crucial decision: whether the economic benefits of deeper ties with the US are worth the long-term costs of diminished sovereignty and reduced geopolitical flexibility.
MA Razzaque said, “The pressure the deal could put on Bangladesh from other blocs in the future is a significant concern.” Bangladesh must carefully navigate this trade-off, ensuring that it does not sacrifice its long-term autonomy for short-term economic gain, he said, terming the deal as “unequal.”
Humayun Kabir, former ambassador to the USA, said the deal now shows too many critical bindings for Bangladesh that the interim government should not have inked just before the election.
M Masrur Reaz, Chairman of Policy Exchange Bangladesh, said the deal is significant in terms of Bangladesh’s trade with its largest single market, which offers a huge growth.
“But the cost of confrontation with other economic partners should be kept in mind,” he added.
While the deal offers the promise of enhanced trade, Bangladesh must ask itself whether deeper integration with the US will ultimately be in its best interest or whether a more diversified, independent approach will better serve the country in a rapidly changing global economic landscape.
