Trade Scenario Between Bangladesh and USA

Trade Scenario Between Bangladesh and USA

• Trade and Investment Cooperation Forum Agreements ( TICFA ) between USA and Bangladesh was signed on 25^th September 2013 at the aim to monitor trade and investment relations between the Parties and identify opportunities for expanding trade and investment. Consider specific trade and investment matters of interest to the Parties and identify and work to remove impediments to trade and investment between the Parties. Gist of the TICFA Agreement are :
• Fostering an open and predictable environment for trade and investment
• Reducing trade distorting investment measures
• Role of private investment in furthering growth, creating jobs, expanding trade, improving technology and enhancing economic development
• Importance of trade in services between these two economies
• Desirability of reducing non-tariff trade barriers in order to facilitate increased trade
• Protecting and preserving the environment in accordance with each party’s environmental laws, and desiring to ensure that trade and environmental policies are mutually supportive in the furtherance of sustainable development

Both Bangladesh and the USA have maintained excellent and active bilateral trade relations for long. The USA is the largest export market for Bangladeshi products despite the suspension of GSP facilities since 2013. The total amount of US$ 5983.31million was earned through exporting to the USA during FY 2017-18, whereas import from the USA was US$ 1703.66 million in the same period.

Bangladesh main export item to the USA was RMG, the contribution of which was worth US$ 5204.01 million and share of which in Bangladesh export to the USA was 89.34%. Other major exportable to the USA were Shrimps, Fish, Tobacco, Leather & Hides, Footwear, Ceramic ware, Jute & Jute goods, Pharmaceuticals etc. But the contribution of these items to our export earnings from the USA is very negligible. So we have a tremendous opportunity to increase our export to the USA.

Major imports from the USA into Bangladesh are Vegetable products, Prepared Food- Stuffs, Animal or Vegetable fats and oils, Mineral products, Chemical products, Plastic and Rubber articles, Articles of wood, Pulp of wood, Textile & Textile articles, Cotton, Footwear, Articles of stone, Base metals, Vehicles, Machinery and Mechanical appliances, Optical, Arms and Ammunition and Works of art etc. The trade balance between Bangladesh and USA is shown below :

Export and Import Statistics ( Value in milliom US$)

It appears that the export figure of Bangladesh to the USA has registered an increase till 2015-2016 but it declined a little bit in 2017-2018. In case of imports, share of imports from USA in total imports of Bangladesh is increasing around 51%in the last FY and it crossed one and half billion.

With regards to structure of export to the US, five categories of products: woven and knit apparel, home textiles, Cap and Fish account for 97 percent of Bangladesh’s export to the US. Thus, Bangladesh’s export to the US is highly concentrated to a very few products, which makes the Bangladesh’s export to the US highly vulnerable. It is noteworthy to mention that woven and knit apparels which constitute around 90 percent of Bangladesh’s export to the US face 16.6 and 17.1 percent duty respectively in the US.

06. Evidence shows that although bilateral trade between the two countries have been increasing gradually; share of export earnings from USA in total exports of Bangladesh has been declining. Therefore, special attention is to be given for taking positive measures in order to enhance bilateral trade. The TICFA Forum provides a good platform for this purpose.

The export from Bangladesh to the USA can be expected to increase substantially in the years to come owing to the worldwide trade liberalization and also the comparative advantage that Bangladesh will continue to enjoy for some time.

Bangladesh, despite being an LDC, has been facing highest duty among other trading partners of the US. This is a significant trade barrier imposed on the Bangladeshi products. Following the Rana plaza collapse, US Government Suspended the GSP facilities provided earlier to Bangladesh. Since then Bangladesh Government has taken various steps including legal reforms to comply with the ‘Bangladesh Action Plan’ put forward by the US as a precondition for reinstatement of GSP for Bangladesh’s products. Although most of the LDC countries have been provided with GSP market access to the US market, Bangladesh has been kept outside of that preview.

In this context, Bangladesh urges USA to provide duty-free & quota-free market access through full implementation of the Hong Kong Ministerial decision and Bali decision of the WTO. Bangladesh also expects that the preference given to the LDCs should be commercially meaningful

Bangladesh has enormous potential in service sector. Service sectors account for around 56% of GDP of Bangladesh. However, trade in services, particularly exports of services is still insignificant. In order to increase trade in services, Bangladesh along with other LDCs have been negotiating for mechanism to get preferential market access for LDCs.

Bangladesh considers USA as one of the potential destinations for exporting various services. Bangladesh has a large pool of young population, which is capable of providing various services to the rest of the world.

In this context, Bangladesh urges USA to revisit their preferential scheme and include sectors and modes, particularly human resource-based sectors, like nurses, midwives under Mode-4 in the preferential scheme so that Bangladesh can take advantage of preferences and enhance export of services to USA.

Potential sectors for investment

Bangladesh offers the most congenial and investors friendly investment climate in Bangladesh. almost all the sectors are allowed for investment without any capping on amount or percentage of equity.

The following sectors have the highest potential for :

Apparels, Pharmaceuticals, Electronics, Information Technology, Frozen Food, Leather, Light engineering, Automobiles, Agro-based Industry,Steel Plant, Ship Building, Energy, Power.

Bangladesh’s goal is to establish 100 Economic Zones (EZ) in the country to create structured and balanced investment . US may take this opportunities.

The export potential of Bangladesh’s current export commodities to the UK (top ten items)

Top 20 Exported Item in United States for the year 2020-2021:

Total Export Amount in United States:  6,974,008,653.33USD