Bangladesh’s apparel sector is closely watching the implementation of the US-Bangladesh reciprocal trade agreement, particularly a provision that could allow duty-free access to the American market for garments made using US cotton and other textile inputs. While the deal signals opportunity, exporters say its benefits remain uncertain without clear guidelines.
At the center of the discussion is Article 5.3 of the agreement, which commits the United States to introduce a mechanism enabling certain Bangladeshi apparel and textile products to enter the US at zero reciprocal tariff. However, this facility is conditional. The volume of duty-free exports will be linked to the quantity of US-origin cotton and man-made fiber inputs imported by Bangladesh.
For Bangladesh, this creates both an incentive and a structural shift. Increased imports of US cotton could strengthen bilateral trade ties and potentially reduce the country’s $7.1 billion trade deficit with the US. It may also diversify Bangladesh’s raw material sourcing, which is currently heavily dependent on other global suppliers.
However, industry leaders, including BGMEA, argue that the absence of clarity on eligibility criteria, volume caps, and compliance procedures has so far prevented exporters from utilizing the zero-duty benefit. With garments accounting for around 86% of Bangladesh’s exports to the US, the stakes are significant.
Another key issue is competitiveness. If implemented effectively, the zero-tariff facility could improve Bangladesh’s price advantage in the US market, especially against competitors like Vietnam and India. Given that Bangladesh already holds over 10% share in US apparel imports, even a marginal tariff benefit could translate into substantial export gains.
Yet, challenges remain. The conditional nature of the deal means exporters may need to adjust sourcing strategies, potentially increasing dependence on US cotton, which can be costlier or logistically complex compared to existing sources. Smaller manufacturers, in particular, may struggle to adapt quickly.
The agreement also comes at a time when Bangladesh is under scrutiny from US authorities on issues such as forced labor and industrial overcapacity. While industry leaders have strongly denied such concerns, these investigations could influence how smoothly the agreement is implemented.
In broader terms, the deal reflects a strategic alignment—linking market access with supply chain integration. For Bangladesh, success will depend on how effectively it can balance cost competitiveness with compliance and sourcing requirements.
As discussions between Bangladeshi stakeholders and US trade officials continue, the cotton-linked tariff benefit could become a turning point. But until operational details are clarified, the promise of duty-free access remains more potential than reality.
