US trade deal details: Who benefits?

Opinion

Some are trumpeting Bangladesh’s recent trade agreement with the United States as a diplomatic success, using tags such as “win-win”, “regional parity”, “garments-friendly deal” and so on.

But in this election season, a small request from this humble person, hey, wake up Bengalis, especially those Bengalis who got their PhDs from Facebook, read the entire agreement at least once, even if it seems boring. Use Google Translate, AI, whatever is convenient. Because if you don’t try to understand, you won’t understand how much damage the great Yunus government has inflicted not only on the present, but also on the future policy capacity of Bangladesh.

If you read the full agreement published by the USTR (link in the comment box), you will quickly understand that Bangladesh has gradually handed over the keys to its policymaking to the United States, without making a sound or creating a fuss.

The first reality to acknowledge is that reciprocity in trade is justified only when the economic power, market size, industrial capacity, and technological position of the two countries are relatively close. The US economy is about 30 times larger than Bangladesh’s. On the one hand, they export high-value technology, agricultural products, energy, and services, while Bangladesh is still mainly dependent on apparel and a limited number of agricultural products. Reciprocal tariffs between these two economies mean the same thing: legalizing unequal competition.

The most dangerous aspect of the agreement is that it does not stop at just reducing tariffs; it also locks down Bangladesh’s policymaking. In terms of import licensing, quality control, conformity assessment, Bangladesh has practically promised not to create any barriers for US products. That is, if Bangladesh wants to impose any standards or testing conditions in the future to protect its industry or agriculture, that too can be challenged as a disguised trade restriction.

Yes, on paper, the US tariff on Bangladesh has come down from 20% to 19%. But the story of this 1% reduction becomes meaningless when you see that through the same agreement, Bangladesh is unilaterally removing or greatly reducing tariffs on about 4,400 US products. In other words, we are opening our market wide open, and in return we are getting a marginal tariff relief that does not change much in regional competition. Although Bangladesh is close compared to India (18%), Vietnam and Sri Lanka (20%), in reality we have lost a lot of our policy space.

The most dangerous area is agriculture, dairy, beef and poultry. With this agreement, Bangladesh has for the first time in its history given formal access to US corporate agriculture in core sectors of its food and protein security. US agricultural products are subsidized, highly mechanized, and produced on a massive scale. When these products enter the Bangladeshi market, local farmers, small dairy producers and the poultry sector, where the livelihoods of millions of people are directly linked, will not be able to survive in the price competition. This is not market opening, it is a recipe for gradually eliminating domestic production.

More seriously, Bangladesh has effectively acknowledged that it must open its market to US agricultural products and that imports cannot be blocked on the grounds of health, environmental or risk concerns unless they are ‘scientifically justified’, meaning acceptable to the US. In other words, Bangladesh’s public health or farmer safety concerns will only be valid if they are acceptable to the US.

But Bangladesh’s agriculture cannot be evaluated only by a GDP number. Agriculture means livelihood, food security, rural stability, social balance. No country in the world that has truly developed has opened up agriculture like this. India did not, China did not, Vietnam did not. Bangladesh did, because there was pressure on paper, and there was no political and policy courage.

This has been accompanied by conditions related to SPS, standards and conformity assessment. According to the agreement, US products can enter Bangladesh only if they have certification from a US or internationally recognized lab, without additional testing. While it may sound like modern trade facilitation, what it really means is that Bangladesh has effectively outsourced a large part of its regulatory sovereignty. If Bangladesh wants to impose any strict standards in the interest of public health, the environment or farmers in the future, it can easily be challenged as a “disguised trade barrier”. Then the question will not be whether this policy is good for the country or not, the question will be whether Washington complies with it or not.

Even more alarming is the case for digital trade. Bangladesh has pledged not to impose a digital services tax, not to restrict cross-border data flow, and not to enter into any digital deals that jeopardize US interests.

This means that they will not impose any discriminatory digital taxes on US companies, data will flow freely, and most surprisingly, if Bangladesh makes any digital agreement in the future that harms the essential interests of the US, the US will be able to unilaterally cancel the agreement and re-impose tariffs. This means that your future policy is already being vetoed by someone else.

What does this mean? This means that if Bangladesh wants to move to a different technology or data structure with China, Russia, or any other country in the future, the United States can unilaterally terminate the agreement and reimpose tariffs. That is, digital sovereignty is now conditional, reversible, and subject to Washington’s veto.

Going further, it seems that this is not a negotiation, it is a surrender in advance. Bangladesh has practically promised that if the US gives any border tax or tax benefits, Bangladesh will not challenge it in the WTO. The legal weapon that small countries use the most in international trade has been put on the table in advance.

The optimistic talk about garments, zero-duty, extra textile advantage if you use US cotton, there is a trap there too. The advantage is tied to input sourcing. That is, Bangladesh’s export competitiveness in the future will depend on whether you use US cotton or man-made fiber. As a result, domestic spinning mills, regional raw material sourcing, and even future industrial diversification, everything will be constrained. Short-term orders may increase, but long-term industrial autonomy will be damaged.

This agreement creates three long-term traps for Bangladesh. First, import dependence will deepen. Second, future governments will be stuck with the terms of this agreement if they change policies, this is called policy lock-in. Third, US conditions will become an obstacle when it comes to building trade relations with China, Russia or any other power.

The most telling thing is that the US has not made such an agreement with any other country in South Asia. India has not given up agriculture and dairy despite much pressure, because they know that giving up those sectors will destroy not the economy, but the society. Bangladesh has not learned that lesson, or even if it has learned, it has ignored it.

This agreement is more than just trade. It is a mortgage on Bangladesh’s future industrial policy, agricultural policy, and diplomatic independence. The market may open up, but the space for decision-making will be narrowed.

The biggest loss has been in the state’s bargaining power. Trade agreements are never just about tariffs, they are a place to create leverage. You give some concessions, you get something in return. But here Bangladesh has opened almost all the doors in advance, agriculture, digital data, services, quality control, tax policy, everywhere. This means that if Bangladesh has to negotiate with the United States on any issue in the future, it will have nothing to give. This is called front-loaded concessions, all concessions at the beginning, nothing later.

The interim government has pushed Bangladesh’s economy on a path through this agreement, where there is no policy flexibility. The greatest asset of developing countries is not money, nor the market, their greatest asset is the ability to change policies. Today, subsidies to save agriculture, tomorrow tariffs to save industry, tomorrow regulations to protect labor, countries grow with this flexibility. This agreement has tied that flexibility in the name of “non-discriminatory”, “not unduly burdensome”, “reciprocity”.

Another big danger is structural dependency deepening. Subsidized agricultural products, energy and technology from the United States will enter, and domestic producers will not survive. Initially, prices will seem low, and consumers will be happy. But in a few years, when domestic production weakens, there will be no alternative but to import. Who will then set the price? Not Bangladesh, but the market and the supplying country. This story has been seen many times in history, from Latin America to Africa.

The digital and data chapter is particularly dangerous for future generations. Data is not just information these days, it is economic power. Bangladesh has practically admitted here that it will not build its own digital sovereignty. If any government in the future says, “We want data localization, we want to protect our startups”, then this agreement will be the biggest obstacle. In other words, today’s interim government has already limited the digital state of the next decade.

Here comes the most serious question, legitimacy. This agreement was made without full discussion in parliament, without public consultation, without open discussions with businessmen, farmers, workers, anyone. The interim government has weakened the future of Bangladesh economically and diplomatically.

The biggest political loss is that this agreement has damaged Bangladesh’s non-alignment credibility. Bangladesh has long said that it will work with everyone, not with any bloc. But this agreement says that the interests of the United States must also be considered in trade and technology agreements with third countries. This is de facto alignment, without naming names.

It’s disappointing that we are now in a position where agriculture, food, digital space, industrial policy, everything has been brought under conditional access. Today it is being called a “meaningful step forward”, tomorrow it will be called a “locked-in commitment”.

There is a saying in political science, bad governments fail fast, bad agreements fail slow. The results of this agreement will not come today, but gradually. First, imports will increase, then production will decrease, then employment will shrink, and finally, the policy power of the state will erode.

This agreement is a kind of mortgage agreement on Bangladesh’s future industrial policy, agricultural policy, and diplomatic independence. At the price of losing power, we gained the market.

Dr. Lubna Ferdousi
Teacher and Researcher, University of Hull, England