Further US tariff cut likely under deal being negotiated

Bangladesh has negotiated an agreement with the US that allows its next elected government to amend or cancel it, if necessary, and that may yield further tariff cuts.

Disclosing major provisions of the deal to businesses in Dhaka on Monday, National Security Adviser of the interim government Dr Khalilur Rahman left a broad hint that the US 'reciprocal tariff' might go down further for Bangladesh from the already-pared-down rate of 20 per cent.

"We are negotiating with President Trump's government an agreement that is revocable," he said at a reception arranged by Bangladesh Textile Mills Association (BTMA) Sunday at Gulshan Club.

The textile millers -- a major stakeholder in Bangladesh's export-centric clothing industry -- hosted the reception to congratulate the Bangladesh team led by Commerce Adviser of the post-uprising government Sk Bashir Uddin that is negotiating the US reciprocal tariffs with the success in the steep rate of 35 per cent cut to 20 per cent.

"...We have negotiated on three principles," Mr Rahman said, explaining the first thing that they are not an elected government and they are not going to obligate the next government.

"The next government must have the power to make changes or modifications or cancellation."

Secondly, they take the responsibility they can fulfill. If they fail to meet any commitments, the US will cancel this agreement and charge 37-percent tariffs.

Third, this is a bilateral agreement having no third-country name mentioned as they do not want to get into any "geopolitical trap".

The government began work on the issue in February, when other countries were not yet prepared, he said in an implicit response to critics, adding: "If this were only a tariff-rate adjustment, we could have done it in two phases. But this is not just about tariffs-it involves non-tariff barriers, national policy, and security concerns, making it a complex process."

Speaking there, Commerce Adviser Sk Bashir Uddin said they committed to the US authority that trade deficit would be reduced by 75 per cent in a year.

He said they would go, if needed, to the United States after two or three weeks as the negotiation is still ongoing.

Terming Bangladesh's graduation from least-developed country (LDC) status "time bomb" left behind by the last 'fascist government', the businessman-turned government functionary in the interregnum, said: "Next challenge is LDC graduation which is bigger than Trump's tariff."

On a note of surprise, he said almost everyone is silent and all are eyeing US$8 billion in exports to the US while the greater challenge lies in the remaining $42 billion worth of exports to the European Union as duty-free market access will be lost after graduation.

He calls on all businesses, stakeholders to sit together to devise action plan to face the challenges with strong leadership.

Speaking at the welcoming function, BTMA President Showkat Aziz Russell said following the successful negotiation with the United States regarding reciprocal tariffs, Bangladesh is now in a stronger position.

As a result, the exporters are receiving more queries from buyers, he said, adding: "We want to invest further... now is the high time to invest in the textile sector."

President of BGMEA -- the apex chamber of apparel sector -- Mahmud Hasan Khan said they were worried at one stage of the tariff negotiations because they could lose business if Bangladesh's tariff rate were higher than competitors'.

So businesses expressed concern and made recommendations which might have created some misunderstanding, he said in an apologetical tune while reiterating their gratitude to the tariff-negotiating team.

He, however, stressed the need for clarifying as to whether duty waiver be given on use of US cotton, which process be followed in this regard.

In response, Mr Rahman said if at least 20-percent US raw material is used, reciprocal tariff would be applicable to the rest of the exportable goods.

Commerce secretary Mahbubur Rahman and BKMEA president Mohammad Hatem, among others, also spoke.

munni_fe@yahoo.com