A new proxy war? How the US-Bangladesh trade deal could alienate China

Ahead of the national elections, Bangladesh is set to sign a trade deal with the United States on February 9. The rushed move by the Muhammad Yunus government to ink the agreement just 72 hours before the elections has raised several questions. Due to the secrecy of the terms of the deal, the interim government is facing severe criticism from all quarters. 

Why the rushed 'secret' deal? 

The move comes after the United States has reduced India's tariffs to 18 per cent.  Bangladesh fears losing its market share to India, as it cannot secure equally competitive or better terms. Dhaka's economy relies heavily on ready-made garment (RMG) exports to the US, which make up nearly 90 per cent of its American exports. 

Dhaka was slapped by the US with a 37 per cent tariff in April last year. Though the tariffs were negotiated and brought down to 20 per cent in August, the upcoming trade deal is expected to reduce the tariffs to 15 per cent. 

Also, it is said that it is unusual for a trade deal to be protected by a formal Non-Disclosure Agreement (NDA). There are rumours that the deal includes a moratorium on e-commerce tariffs, strict new intellectual property laws that could hike medicine prices, and even the removal of vehicle inspections for American cars entering Bangladesh. 

Due to the NDA, no draft of the agreement has been shared with the public or key industry stakeholders. 

Commerce Adviser, Sk Bashir Uddin, earlier said that there will be nothing in the agreement that goes against the country's interest. He also added that the US deal will be made public. 

The new trade deal is also viewed as the US's move to reduce Bangladesh's imports from China and increase military imports from the US. Is Bangladesh becoming a new "Proxy War" ground? While the deal lowers the 20% reciprocal tariff to 15%, it may come at the cost of alienating China, Bangladesh’s largest supplier of industrial raw materials.

It also forces Dhaka to allow US imports to enter its market freely by accepting the US standards and certifications without raising questions. Washington also wants easy access for its vehicles in the Bangladesh market. 

The trade deal is not transparent, as there has been no opportunity to weigh its advantages and disadvantages. "Had the tariff agreement been signed after the election, political parties could have discussed it. It is also worth considering whether the hands of the incoming elected government are being tied," Devpriya Bhattacharya, a distinguished fellow of the private research organisation Centre for Policy Dialogue (CPD), told Prothom Alo. 

Since the signing of the agreement is before three days of the election, the implementation would fall on the newly elected government.