The US tariff impositions on Bangladesh go beyond economic considerations and also involve geopolitical interests. A key focus has been on Rules of Origin (RoO), mandating a 40 percent local value addition for products to access American markets. This requirement stems from concerns over the heavy reliance on Chinese inputs in Bangladeshi exports to the US, reflecting Washington’s broader strategy to counter China’s economic sway.
The proposed RoO poses a significant challenge for Bangladesh, particularly impacting the woven garment sector, a major component of the country’s apparel exports to the US. Approximately 70 percent of the woven fabric essential for items like trousers and shirts, destined for American consumers, is sourced from China. This contrasts sharply with the knitwear sector, where local spinners can provide up to 90 percent of the required fabric, reducing dependency on Chinese imports. Bangladesh faces constraints in swiftly reducing its reliance on Chinese products, especially in the woven sector, where fabric supplies predominantly originate from China due to the underdeveloped local base.
The US also seeks assurances on American investments’ security and expresses concerns about increasing Chinese capital inflow and ownership in local industries with all other trade barriers mentioned earlier.
Author: Mohiuddin Rubel, Former Director of BGMEA
