Yunus govt's lack of experience laid bare in tariff negotiations with US

Dhaka: Bangladesh, a country wherein nearly three million people are out of work, the economic growth remains sluggish at about 3.5 per cent per annum and investments - both domestic and external - have not gone up, is currently stuck in a precarious situation as far as the tariff negotiations with the United States is concerned.

The interim administration of Muhammad Yunus has not revealed yet what was discussed or agreed upon during the signing of the Non-Disclosure Agreement (NDA) with the US as part of the tariff negotiations.

"The type of NDA signed during tariff negotiations with the US is the first of its kind in Bangladesh's history. No partner country has ever provided an NDA document in Bangladesh's history. Instead, a non-paper could have been issued which is a position without requiring a formal signature," Bangladesh's eminent economist Debapriya Bhattacharya said during a discussion on 'US Counter Tariffs: Which Way for Bangladesh' held in Dhaka, on Sunday.

However, it has been revealed that Bangladesh has been asked to accept various US standards in the NDA. In cases where Bangladesh has not yet been able to enact laws or establish standards, it has been asked to replace the US standards so that the US products can freely enter Bangladesh. It is relevant to mention that Bangladesh has been asked to reduce three types of tariffs on US exports: Customs Duty (CD), Supplementary Duty (SD), and Regulatory Duty (RD), collectively referred to as Customs Duties.

Bangladesh shall protect proprietary data submitted to Bangladesh Customs (National Board Of Revenue-NBR) by US traders from unauthorised disclosures. Also, Bangladesh shall allow carriers or their agents to amend their own Import General Manifest (IGM) data in Automated System for Customs Data (ASYCUDA) World even after the IGM is registered.

Bangladesh shall also screen and share its customs and transaction data related to US-origin or US-controlled items to identify transactions of concerns to US authorities, including BIS or its surrogate, and shall adopt and implement measures to prevent and address violations of US export controls.

The US has identified non-tariff barriers in 13 sectors, including medicine, agriculture, and the environment, and has set nearly half a dozen conditions for effective action.

The US has paid close attention to Bangladesh’s pharmaceutical sector. USTR has made it a condition to accept FDA certification without question to expand the US pharmaceutical market. Bangladesh will not be able to supervise any manufacturing facility manufactured or FDA-approved within US territory.

Bangladesh has to remove all discriminatory measures to ensure access to US vehicles. Any automotive product manufactured under the US Motor Vehicle Regulatory Agency’s Federal Motor Vehicle Safety Standards (FMVSS) must be allowed access. That is, no additional inspections and conditions can be imposed on the import of US vehicles and parts.

The US has taken a tough stance on removing non-tariff barriers in the agricultural sector and has asked Bangladesh for the implementation of several conditions in various agricultural sub-sectors like Living Modified Organisms, Highly Pathogenic Avian Influenza (HPAI)-Live Poultry and Poultry Product Commodities, Halal Certification and Aquatic Products. Bangladesh has to accept the certificates of various US regulatory agencies in these sub-sectors. Further, Bangladesh shall accept any bilateral export certification documents or electronic data elements agreed upon between the US and Bangladesh or other official US government certification of compliance with US requirements, for imports of food and agricultural products into Bangladesh.

Bangladesh shall recognise the US dairy-safety system as providing at least the same level of protection as Bangladesh’s dairy-safety system. Similarly, the US Department of Agriculture (USDA) Food Safety and Inspection Service (FSIS) has an oversight of meat and poultry (including Offal), meat and poultry products, processed meat and poultry, Siluriformes (catfish) and Egg products.

On the investment front, the NDA states that Bangladesh shall remove foreign ownership restrictions that pose barriers to US investment, or exempt US investment from such restrictions, including foreign equity caps in oil and gas, insurance and telecommunications. Additionally, Bangladesh shall facilitate 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

Bhattacharya stated that as the Yunus administration is inexperienced, it should have involved experts and stakeholders in compensating for its weakness in the tariff negotiations. Yunus’s interim administration has come to understand that USTR does not have the authority to reduce tariffs, only the Trump administration can do so. The US has announced that the new reciprocal tariffs will come into effect from August1 2025. With two rounds of negotiations, little progress has been made in lowering the 35 per cent reciprocal tariff imposed on Bangladeshi products by the US. Now, Bangladesh's Trade Adviser Sheikh Bashir Uddin, a businessman and the Managing Director of Akij-Bashir Group has advised the private sector to hire lobbyists and initiate talks with the Trump administration.

Bangladesh's Gross Domestic Product (GDP) is projected to grow by 3.9 per cent in fiscal year (FY) 2025, before increasing to 5.1 per cent in FY2026, according to the Asian Development Bank’s (ADB) latest report released in April this year. Presently, about 88 per cent of people in low-income groups cannot afford rice in both meals of the day in Bangladesh. Rice prices have not come down yet. With multiple economic challenges, high inflation there is no relief in sight.

For more than a decade under former Prime Minister Sheikh Hasina, the economy grew at a blistering pace, even crossing seven per cent. During Hasina's time, the economy quadrupled from USD $102 billion in 2009 to USD $437 billion in 2023, making Bangladesh the second largest economy in South Asia, next only to India. Its per capita GDP of USD$ 2,529 was highest in entire South Asia. It was probably the neo-liberal economic order that felled her.

The US-China tariff rivalry is looming over Bangladesh. The US, in its bid to alter the global trade structure, would like Bangladesh to step back from its current military cooperation with China. The unfortunate reality is the sabotage regime of Yunus immobilizing Bangladesh’s economy with more and more socio-political-unrest, with no real benefit to the common citizens of Bangladesh.

(The writer is an expert on South Asia and Eurasia. He was formerly with Manohar Parrikar Institute for Defence Studies and Analyses. Views expressed are personal)

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor