Bangladesh-US Trade Deal Triggers Severe Revenue Concerns

The Center for Policy Dialogue (CPD), a leading civil society think-tank in Bangladesh, has voiced significant concerns regarding a recent reciprocal trade agreement between Bangladesh and the United States. According to the organization, the implementation of this deal could lead to a substantial loss of customs revenue, amounting to approximately BDT 13.27 billion within the current fiscal year alone.

During a roundtable discussion titled “Budget Recommendations for FY 2026–27,” held on Tuesday at the CPD office in Dhanmondi, Executive Director Dr Fahmida Khatun presented the keynote paper. She highlighted that under the terms of this new agreement, Bangladesh is obligated to provide duty-free access to approximately 4,500 products imported from the US. Furthermore, the treaty mandates additional tariff concessions on another 2,210 types of goods over the next five to ten years.

Dr Khatun argued that providing such unilateral duty-free market access to the United States might conflict with the core principles of the World Trade Organization (WTO). “This decision could set a precedent where other WTO member states demand similar preferential treatment, posing a long-term economic risk to Bangladesh’s sovereign trade policy,” she remarked.

Fiscal Implications and Revenue Shortfalls

The timing of this revenue loss is particularly critical. The CPD noted that revenue collection remains the most formidable challenge for the upcoming budget. While the government set a target growth of 34.5% for the current fiscal year, the actual growth recorded until January was a mere 12.9%. To meet the year-end target, an improbable growth rate of 59.4% would be required in the remaining months.

Key Economic Indicators (Current Fiscal Year)

Sovereignty and Private Sector Challenges

Professor Mustafizur Rahman, a Distinguished Fellow at the CPD, emphasized that global trade is increasingly being used as a political and strategic tool, which weakens the multilateral WTO framework. He questioned the logic of forcing the private sector to source goods specifically from the US. “Unless the government provides subsidies, why would private entities choose US imports over more cost-effective alternatives? This involvement touches upon the very sovereignty of our trade relations,” he stated.

Macroeconomic Strains

The report further highlighted a worrying trend in government spending. The Annual Development Programme (ADP) implementation rate stood at only 20.3% as of January—the lowest in 15 years. With exports declining by 3.2% and imports rising by 3.9%, the trade balance is under pressure. Consequently, the government has turned heavily to bank borrowing, which risks crowding out credit for the private sector and further fueling inflation.

In conclusion, the CPD urged the government to move away from overly ambitious targets in the next budget. With the tax-to-GDP ratio currently at a meager 6.8%—far below the 15% election pledge—the think-tank called for urgent fiscal reforms, a reassessment of the US trade deal, and a reduction in unnecessary public expenditure to ensure economic stability.