Dhaka and Washington are scheduled to formalize a bilateral trade agreement on February 9, 2025. This significant diplomatic move comes just three days before Bangladesh's national elections scheduled for February 12. The interim administration, led by Muhammad Yunus, has finalized the deal amidst growing concerns regarding regional trade dynamics and export competitiveness. The timing of the agreement has sparked intense debate among political analysts and industry stakeholders.
Competition with India and Market Share Concerns
According to trade analysts, the urgency behind this agreement stems from the recent trade developments between India and the United States. Following a bilateral arrangement, tariffs on Indian goods were reduced to 18%. Bangladesh, whose economy is heavily reliant on Ready-Made Garment (RMG) exports to the US, fears losing its competitive edge. RMG products constitute approximately 90% of Bangladesh's total exports to the American market, making any tariff disparity a critical economic threat.
Evolution of Tariff Structures
The trajectory of tariff negotiations shows a significant shift over the past year. In April 2025, Washington imposed a high tariff of 37% on Bangladeshi imports. Subsequent negotiations led to a reduction to 35% in July and further to 20% in August. The upcoming agreement on February 9 is expected to bring the tariff down to 15%, which would position Bangladesh favorably compared to the 18% rate currently applied to Indian goods. However, this reduction comes with specific geopolitical and economic conditions.
Non-Disclosure Agreement and Transparency Issues
A major point of contention regarding this deal is the lack of transparency, while in mid-2025, the interim government signed a formal Non-Disclosure Agreement (NDA) with the US, ensuring that all tariff and trade negotiations remain confidential. Consequently, the draft of the agreement has not been shared with the public, the parliament, or key industry leaders. While Commerce Advisor Sk Bashir Uddin maintained that the deal wouldn't compromise national interests, the secrecy surrounding the terms has drawn criticism from various sectors.
Strategic Conditions Imposed by the United States
Reports indicate that the agreement includes several strategic conditions. Firstly, Bangladesh is expected to reduce its reliance on Chinese imports and increase military procurement from the United States. Secondly, the deal mandates unrestricted entry for US goods into the Bangladeshi market. On top of that, Dhaka must accept US standards and certifications without additional inspection. This is particularly relevant for the automotive sector, as Washington seeks easier access for US-made vehicles and parts into the South Asian nation.
Expert Analysis and Future Implications
Debapriya Bhattacharya, a distinguished fellow at the Center for Policy Dialogue (CPD), has raised concerns about the timing and transparency of the deal. According to analysts, signing such a comprehensive agreement just days before an election effectively binds the hands of the future elected government. The responsibility for implementing these terms will fall on the incoming administration, despite them not being part of the negotiation process. Experts suggest that a post-election agreement would have allowed for broader political consensus and parliamentary scrutiny.