After failing to restore the Generalized System of Preferences (GSP) facility in the US, Bangladesh is currently looking forward to signing a Free Trade Area (FTA) to deal with the country. According to a recent study conducted by the Bangladesh Tariff Commission, an FTA with the United States to trade in goods will be beneficial for Bangladesh.
RMG products made in Bangladesh currently pays a 15% duty on average in order to enter the US market. It can be possible to ensure a duty-free entry for the products by signing an FTA deal which will be hugely beneficial for Bangladesh. Because Bangladesh only imports capital machinery from the US whose duty are comparatively low. So, by signing an FTA, the benefits which BD will be gaining will be obviously more.
Currently, this FTA process is under a comprehensive study stage where it is properly being analyzed whether it will be worth it or not. Once the research is completed, a formal proposal will be sent to the USA to start negotiations.
It should be noted, Bangladesh failed to restore the GSP facility for export products in the USA which was suspended in 2013 during the Rana Plaza collapse. After that, various human rights and safety issues have become the barrier between the relationship between Bangladesh and the USA.
According to officials, a letter from the Bangladesh Ambassador in Washington, Mohammad Ziauddin to the commerce ministry indicated the possibility of an FTA. After that, the tariff commission researched the advantages and disadvantages of such a deal.
It was found that US energy and power-based companies have invested about $2.1bn in Bangladesh in 2018. Whereas, Bangladesh exported goods to the US worth of $6.87bn in 2018-19.
However, Bangladesh Knitwear Manufacturers & Exporters Association (BKMEA) said that such a deal will unlikely take place due to political reasons. Although, if such a deal is made, it will be a safeguard for Bangladesh to prevent any unethical pressure from the USA.