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Info Service on WTO and Trade Issues (Feb26/12) Geneva, 11 Feb (D. Ravi Kanth) — The “Agreement on Reciprocal Trade” signed by the United States and Bangladesh on 9 February seemingly paves the way for a new round of competitive appeasements in the global tariff wars launched by the Trump administration, providing sweeping market access for a range of American farm and industrial products at zero percent tariff in the latter’s market. In return, the US will selectively allow the export by Bangladesh of several categories of textile and apparel products at zero percent duty and provide an export quota for textile products, as well as apply a 19% tariff on all other products exported to the US by Bangladesh, which is set to hold crucial elections on 12 February. The US also appears to have foisted an investment commitment on a country that is set to graduate from the least-developed country status. Dhaka has agreed to “purchases of approximately $3.5 billion of US agriculture products, including wheat, soy, cotton, and corn.” The agreement also requires Bangladesh to purchase from the US “energy products, with an estimated value of $15 billion over 15 years.” A fact sheet issued by the White House on 9 February suggests that Dhaka has given up its policy space by agreeing to several of Washington’s demands at the World Trade Organization, including lending support to the US push for a permanent moratorium on customs duties on electronic transmissions at the upcoming WTO’s 14th ministerial conference (MC14), to be held in Yaounde, Cameroon, on 26-29 March. The bilateral agreement appears to be strewn with intrusive trade policy commitments that Bangladesh will have to implement in areas such as intellectual property rights, import licensing, technical barriers to trade covering standards and conformity assessments, geographical indications, services, labour, environment, facilitation of digital trade, and even in economic and national security areas. It appears that for the sake of securing zero percent tariffs on several lines of apparels, garments, and clothing items, Bangladesh allegedly agreed to wide-ranging concessions demanded by the US that are rarely committed to in trade agreements, said analysts familiar with the bilateral agreement. Following the US-Bangladesh Trade and Investment Cooperation Forum Agreement (TICFA), signed in 2013, the two sides claimed that the latest reciprocal trade agreement will substantially elevate two-way trade – estimated at around $11 billion last year – to a new high. Bangladesh exports close to $8 billion worth of textiles and clothing products to the American market, making it the second largest exporter of these items after China. KEY TERMS OF TRADE PACT Concerning tariffs, according to the White House fact sheet, Bangladesh has committed “to provide significant preferential market access for US industrial and agricultural goods, including: chemicals; medical devices; machinery and motor vehicles and parts; information and communication technology (ICT) equipment; energy products; soy products; dairy products; beef; poultry; and tree nuts and fruit.” In the tariff schedule attached to the agreement by the Office of the US Trade Representative, it is suggested that there will be a staging of tariffs from zero percent for a range of American meat products (barring pork), cotton, and several other products to varying levels of duties for other items. In Annex I to the agreement, as posted on the USTR’s website, customs duties on originating American goods provided for in the items in staging category EIF shall be eliminated entirely, and these goods shall be duty-free on the date of entry into force of this Agreement; customs duties on originating goods provided for in the items in staging category B5 shall be reduced by 50 percent at entry into force of this Agreement, with the remaining 50 percent eliminated in four equal annual stages, and such goods shall be duty-free effective January 1 of year five (by 2031). The United States will reduce the reciprocal tariff rate, as initially set forth in Executive Order 14257 of April 2, 2025, to 19 percent on originating goods of Bangladesh, and will identify products from the list set out in Annex III (Potential Tariff Adjustments for Aligned Partners) to Executive Order 14346 of September 5, 2025 (Modifying the Scope of Reciprocal Tariffs and Establishing Procedures for Implementing Trade and Security Agreements) to receive a zero percent reciprocal tariff rate. The United States commits to establish a mechanism that will allow for certain textile and apparel goods from Bangladesh to receive a zero reciprocal tariff rate. This mechanism will provide that a to-be-specified volume of apparel and textile imports from Bangladesh can enter the United States at this reduced tariff rate, but this volume shall be determined in relation to the quantity of exports of textiles, e.g., US produced cotton and man- made fiber textile inputs, from the United States. On non-tariff barriers, the United States and Bangladesh commit to address Bangladesh’s non-tariff barriers that affect bilateral trade and investment in priority areas, including by Bangladesh: accepting vehicles built to US Federal motor vehicle safety and emissions standards; accepting US Food and Drug Administration certificates and prior marketing authorizations for medical devices and pharmaceuticals; and removing any import restrictions or licensing requirement on US re-manufactured goods or their parts. On digital trade, Bangladesh commits to permit the free transfer of data across trusted borders. The commitments also include that Bangladesh shall not impose digital services taxes, or similar taxes, that discriminate against US companies in law or in fact. Bangladesh shall facilitate digital trade with the United States, including by refraining from measures that discriminate against US digital products; ensuring the free transfer of data across trusted borders for the conduct of business [no data localization commitment]; and collaborating with the United States to address cybersecurity challenges. For example, “If Bangladesh enters into a new digital trade agreement with a country that jeopardizes essential US interests, the United States may, if consultations with Bangladesh fail to resolve its concerns, terminate this Agreement and reimpose the applicable reciprocal tariff rate set forth in Executive Order 14257 of April 2, 2025.” Furthermore, “Bangladesh shall not impose customs duties on electronic transmissions, including content transmitted electronically, and shall support multilateral adoption of a permanent moratorium on customs duties on electronic transmissions at the WTO.” Enabling free access for GMOs, the White House fact sheet states that Bangladesh will follow science and risk- based processes to allow the import of safe US food and agricultural goods [including genetically-modified products]. Under the sub-title of “Agricultural Biotechnology” in Annex III, the agreement states that “Bangladesh shall maintain, for products of agricultural biotechnology, science- and risk-based regulatory frameworks and efficient authorization processes, in order to facilitate increased trade in such products.” It states that recognizing the “efficacy of the US regulatory system to assess the safety of products of agricultural biotechnology, within 24 months of entry into force of this Agreement, Bangladesh shall develop and implement a policy whereby a product of agricultural biotechnology that can be legally sold in the United States and has completed all relevant US pre-market processes, whether voluntary or mandatory, shall be allowed to be imported and marketed in Bangladesh for the same purposes without requiring a pre-market review, deregulation, additional labeling requirements, or approval by Bangladesh.” Further, Bangladesh shall, within 24 months of entry into force of this Agreement, develop and implement a policy to ensure that Bangladesh addresses any low-level presence (LLP) occurrence affecting a US agricultural export, without unnecessary delay. Dhaka shall do so “by taking into account any relevant risk or safety assessment provided, and authorization granted, by the United States or any third country.” In a footnote, it states that “for greater certainty, products of agricultural biotechnology do not include products for industrial use.” Also, Bangladesh shall not adopt or maintain any measure related to importation of live poultry, poultry genetics, poultry products, and eggs and egg products, that is inconsistent with the World Organization for Animal Health (WOAH) Terrestrial Animal Health Code Chapter (TAHC) 10.4 (Infection with High Pathogenicity Avian Influenza Viruses) or any successor thereto. Specifically, Bangladesh shall align the import regulation definition for poultry with the WOAH TAHC definition for poultry. Bangladesh shall recognize the USDA Animal and Plant Health Inspection Service (APHIS) as the competent animal health authority to determine if a 10km zone is considered free of HPAI, as defined by the WOAH TAHC Chapter 10.4, or any successor thereto. On insurance and services, Bangladesh has agreed to “remove barriers in the insurance market.” It is further clarified that “Bangladesh shall remove mandatory reinsurance cession requirements, including obligations for US insurers to reinsure at least 50% of their business with Sadharan Bima Corporation (SBC).” On domestic regulation, the agreement requires Bangladesh to join the Joint Statement Initiative on services domestic regulation. It states, “Within three years of entry into force of this Agreement, Bangladesh shall join and take effective actions to implement the Joint Initiative on Services Domestic Regulation, including submitting its revised Specific Commitments for certification by the WTO.” On investment, the US has inserted significant commitments in the bilateral agreement on reciprocal trade. It states that “Bangladesh shall liberalize its foreign equity caps for US investment in oil and gas, insurance, and telecommunications.” Further, “Bangladesh shall facilitate US investors receiving No Objection Certificates where they are required”. “Bangladesh shall enhance the transparency and efficiency of approval processes for US investors to transfer investment-related capital into and out of its territory in freely usable currency at the prevailing market rate of exchange, including by establishing and effectively implementing clear regulatory guidelines regarding the timelines for approvals.” The agreement requires Bangladesh to settle outstanding arrears to US firms “without delay and in line with its International Monetary Fund financing program commitments.” On the issue of labor, the agreement requires Bangladesh to protect internationally recognized labor rights, including by adopting and implementing a prohibition on the importation of goods produced by forced or compulsory labor; amending its labor laws to ensure that workers’ rights to freedom of association and collective bargaining are fully protected; and strengthening enforcement of its labor laws. On environment, according to the White House fact sheet, Bangladesh “commits to adopt and maintain high levels of environmental protection and effectively enforce its environmental laws.” It is further clarified that “Bangladesh shall ensure that its environmental laws and policies provide for, and encourage, high levels of environmental protection,” including taking “measures to combat, and cooperate with the United States to prevent trade in illegally harvested forest products.” Bangladesh shall “implement, and enforce comprehensive anti-corruption laws and regulations applicable to officials responsible for the administration and control of forest resources.” The agreement requires Dhaka to “take actions to improve transparency in the forest sector by requiring a participatory process and public disclosure of forest management plans and logging permits through an accessible online platform.” The US has also forced Bangladesh to take measures to promote a more resource-efficient economy. “Such measures may include addressing trade barriers that inhibit more resource-efficient economies; encouraging innovation that promotes circularity, for example, through improving resource efficiency in product design; and promoting trade facilitative approaches.” Bangladesh has further agreed to “improve customs and trade facilitation; and address distortions caused by subsidies and state-owned enterprises.” On intellectual property rights, Bangladesh has committed to “a robust standard for intellectual property protection and enforcement, including ratifying or acceding to and fully implementing certain international intellectual property treaties.” Dhaka has agreed to “groundbreaking provisions on geographical indications that will preserve US market access, particularly for US cheese and meat producers who rely on the use of common names.” On unfair trade practices, the White House fact sheet states: “the United States and Bangladesh are committed to strengthening economic and national security alignment to enhance supply chain resilience and innovation through complementary actions to address unfair trade practices worldwide, as well as by combatting duty evasion, cooperating on export controls, and sharing information on inbound investment in our respective territories.” In short, the US and Bangladesh have agreed that consistent with their respective internal procedures, they will promptly finalize the Agreement on Reciprocal Trade, and undertake domestic formalities in advance of the Agreement entering into force. +
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