Bangladesh and the United States have taken a major step toward deepening their bilateral economic relationship with the signing of a landmark Agreement on Reciprocal Trade (ART) that will see Dhaka commit to purchasing roughly $15 billion worth of U.S. energy products over the next 15 years.

The deal, agreed after more than nine months of negotiations, represents a strategic pivot in Bangladesh’s foreign trade policy. It not only opens access for U.S. goods in Bangladesh but also provides significant new opportunities for Bangladeshi products especially ready-made garments in the world’s largest economy.

Bangladesh will purchase $3.5 billion of US agricultural product.

What Is the Agreement on Reciprocal Trade?

The bilateral trade agreement designed to facilitate enhanced trade flows between Bangladesh and the United States. The pact was signed virtually by Bangladesh Commerce Adviser Sk Bashir Uddin and U.S. Trade Representative Ambassador Jamison Greer.

Under this agreement, both countries agreed to:

• Reduce tariffs on traded goods, making exports and imports smoother.

• Expand market access for a wide range of products.

• Strengthen trade standards and customs procedures.

• Address non-tariff barriers like regulatory hurdles.

The ART aims to boost trade, promote investment, and create more predictable trading conditions between the two nations.

$15 Billion Energy Import Commitment

One of the most significant elements of the deal is Bangladesh’s commitment to purchase U.S. energy products valued at about $15 billion over 15 years.

This provision is designed to:

• Strengthen Bangladesh’s energy security by diversifying energy import sources.

• Support U.S. energy exporters, including providers of liquefied natural gas (LNG) and other fuels.

• Enhance bilateral commerce by balancing Bangladesh’s export focus with major U.S. purchases.

While the agreement doesn’t specify exactly which energy products will be bought at this stage, it’s expected to include LNG, petroleum products, and other energy commodities where the U.S. has competitive global export strength.

Zero-Duty Export Benefits for Bangladesh

Under the ART, Bangladesh secured significant tariff reductions on its exports to the U.S.:

• About 85 %–86 % of Bangladeshi exports—primarily readymade garments (RMG)—will enter the U.S. market duty-free if certain conditions are met.

• The remaining 14 %–15 % of exports will pay a 19 % reciprocal tariff, which is a substantial improvement from earlier rates.

Bangladesh’s garment sector, a critical pillar of its economy, accounts for a majority of its export earnings, making this tariff concession extremely significant.

More specifically, garments and textile products made with U.S. cotton or man-made fibers will be eligible for zero duty under a special mechanism within the trade agreement. This condition promotes deeper supply-chain integration between the two countries.

Broader Market Access for U.S. Goods

In return for increased export benefits, Bangladesh pledged to expand market access for a range of U.S. industrial and agricultural products, including:

• Energy products

• Medical devices

• Machinery and motor vehicles

• Chemicals and ICT equipment

• Soy, dairy, beef, poultry, fruit, and nuts

“Bangladesh commits 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,” said a joint statement issued by the White House yesterday.

This means U.S. exporters could have an easier route into Bangladesh’s $400 billion+ consumer market, particularly in sectors including technology, food, and energy.

Customs and Regulatory Reforms

The ART also includes commitments by Bangladesh to modernize trade procedures and reduce technical barriers. These reforms include:

• Recognizing U.S. vehicle safety and emissions standards.

• Accepting U.S. Food and Drug Administration (FDA) certifications for medical devices and pharmaceuticals.

• Removing restrictions on remanufactured goods.

Bangladesh has also agreed to digitize its customs procedures and adopt good regulatory practices to facilitate faster and more transparent trade.

Labor and Environmental Standards

The agreement includes commitments beyond trade tariffs. Bangladesh pledged to uphold internationally recognized labor rights, including:

• Prohibiting imports of goods made with forced or compulsory labor.

• Strengthening freedom of association and collective bargaining rights.

The pact also touches on environmental protection, intellectual property rights, and anti-corruption laws demonstrating that modern trade agreements often include broader regulatory commitments.

Strategic Economic Implications

For Bangladesh

• Improved Export Competitiveness: The ART could boost Bangladeshi exports’ attractiveness in the U.S. market, especially for garment makers.

• Energy Security: Long-term commitments to U.S. energy imports help diversify Bangladesh’s fuel sources.

• FDI Attraction: By harmonizing market access and regulatory standards, the deal could draw more foreign direct investment (FDI) into Bangladesh.

For the U.S.

• Export Growth: U.S. energy producers, agricultural firms, and manufacturers stand to gain new demand.

• Supply-Chain Integration: U.S. cotton and textile inputs could become more embedded in the Bangladeshi garment supply chain.

Challenges and Considerations

While the ART offers many opportunities, it also carries some challenges:

• The requirement to source U.S. inputs to receive tariff benefits might increase production costs for some Bangladeshi exporters.

• Committing to long-term energy imports from a specific country could reduce flexibility in sourcing energy globally.

• Regulatory alignment with U.S. standards could require additional reforms in Bangladesh’s legal and industrial systems.

Critics have expressed concern that some obligations might constrain Bangladesh’s trade policy independence in the long term, especially regarding sourcing preferences and geopolitical considerations.

A Turning Point in Bangladesh–U.S. Trade Relations

The Agreement on Reciprocal Trade marks a significant milestone for Bangladesh’s economic engagement with one of the world’s largest markets. Through long-term energy procurement commitments, expanded market access, and tariff improvements for key exporters, the deal has the potential to reshape Bangladesh’s export dynamics while also deepening economic ties with the United States.

However, as with all major trade agreements, the ultimate impact will depend on effective implementation, transparency, and how well private sector players adapt to the new opportunities and requirements created by the pact.