Any bilateral trade-related step taken by the United States (US) has various critical implications for its trading partners. As the dimensions of trade as well as economic relations vary depending on the extent of partnership, different countries face different challenges to deal with the steps. And the trade relations are interlinked with the geo-political concerns.
Being the world's largest single-country importer, the US currently accounts for around 18 per cent of global imports of goods and services and 14 per cent of exports. For many countries, including Bangladesh, the US is one of the top trading partners and often their primary export market. Concerning foreign direct investment (FDI), the US is the leading provider and recipient. Moreover, the US is the most powerful country in the world. Be it economy, military might or geo-political manoeuvring, no other country has reached the level of the US. Only China has emerged as the potential competitor and still needs to go a long way.
The last review of the trade policies and practices of the country by the World Trade Organization (WTO) reflected the importance of trade and economic relations of the US with the rest of the world. The fifteenth trade policy review of the US took place on 14 and 16 December 2022 where the US had received over 2,000 written questions from the other members of the WTO. The importance of the US in multilateral trading also becomes clear from here.
The US usually designs and revises any bilateral trade and economic rapport according to its multilateral or global trade policy stance. The declared trade policy of the US provides many critical indications for the trading partners. That is why, for a country like Bangladesh, it is imperative to follow and decode the US trade policy regularly and adjust its approach accordingly to deepen the economic ties.
For reference, after a decline in bilateral trade by 12 per cent in 2020 due to the Covid-19 pandemic, it bounced back by 34 per cent and 32 per cent, respectively, in 2021 and 2022. Bangladesh-US bilateral trade in goods stood at US$14.10 billion in 2022, with the trade balance heavily tilted to Bangladesh. The country's exports to the US market reached $11.53, of which $8.3 billion came from clothing and textiles.
On average, Bangladesh received $266 million in FDI in net terms, which is around 11 per cent of the annual average net inflow of FDI in the country in the last ten years. Bangladesh Bank statistics also showed that the stock of US FDI in the country stood at $4.13 billion by the end of 2022.
The US has also emerged as one of the top five sources of private external borrowing in Bangladesh. In 2022, the outstanding amount of long-term private debt from the US stood at around $700 million. Again, the US is the second largest source of remittance earnings in Bangladesh. In the last fiscal year (FY23), some 16.30 per cent of the total annual remittance of $21.60 billion came from the non-resident Bangladeshis living in the US.
These are some of the core statistics that reflect the importance of Bangladesh's bilateral economic ties with the US.
Early this year, the United States Trade Representative (USTR) unveiled President Biden's 2023 Trade Policy Agenda and 2022 Annual Report to the Congress. Unlike many big countries, the US trade policy is generally clear and transparent. So, it is easy for the trading partners to understand the stance of the world's largest economy regarding trade-related priorities, plans and actions.
The US has made it clear that it will continue to advance the 'worker-cantered trade policy agenda', which applies to all the partner countries. It will also push for using trade as an indispensable tool to combat the climate crisis and promote environmentally sustainable practices. Supporting US agriculture is also another top agenda for the Biden administration.
In its 2022 annual report to Congress, USTR mentioned that the US continued to stress the importance of the Biden administration's worker-centrered trade policies in the "areas of workplace safety and worker rights in Bangladesh, which have been a focus of concern after Bangladesh's Generalized System of Preferences (GSP) eligibility was terminated in 2013." It also mentioned that the USTR will "continue to deepen engagement with the Government of Bangladesh on labor priorities through the TICFA and through the bilateral Labor Working Group established in 2022."
Thus, there will be persistent pressure from the US on Bangladesh regarding the workers' freedom of association, collective bargaining, child labour, and forced labour, as well as greater alignment between Bangladesh's domestic laws and practices and international labour standards.
Last year, the US pressed Bangladesh to provide market access for US agricultural products, policy developments affecting digital trade, ease of doing business, and intellectual property (IP) protection and enforcement. A similar thing will continue. In fact, in the last meeting of the Trade and Investment Cooperation Framework Agreement (TICFA) council, held in September this year, the US side raised the issues categorically along with the issue of labour reforms as it is a 'top priority for the Biden-Harris Administration.'
The US-led Indo-Pacific Economic Framework for Prosperity (IPEFP), launched last year and has 14 partners now, is another area where Bangladesh faces a growing challenge. Though the country is not a partner of the loaded deal, there is a persuasion from the US to align with the IPEFP. Bangladesh is trying to maintain a tricky balance in this regard.
The actions of the US to push ahead with its ongoing trade policy priorities will continue for the next couple of months until it declares a new annual policy. Nevertheless, it is unlikely that there will be a big change in the new policy especially for the trading partners like Bangladesh where the US requires more time to achieve the desired outcome on labour rights, IP rules and access to farm product. It, however, needs mutual cooperation and Bangladesh is aware of the issue.
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