New Delhi, Feb 16 (NationPress) The recent reciprocal trade agreement between Bangladesh and the United States, celebrated initially, has come under scrutiny due to its intricate details—particularly the “cotton clause”—which has injected uncertainty into the nation's textile sector, as outlined by Bangladeshi media analyses.

According to The Daily Star, the core issue for Bangladesh’s $47 billion garment sector lies in the technical specifics of the trade deal signed on February 9. Initially viewed as a diplomatic breakthrough, this optimism has been overshadowed by concerns regarding the ‘cotton clause’—a vague stipulation that waives ‘reciprocal tariffs’ solely if garments are produced using American cotton.

The analysis highlights significant worries about the functionality of the new tariff framework. Under the bilateral agreement, Bangladesh is subjected to a 19 percent reciprocal tariff, in addition to the existing most-favored-nation (MFN) duty of approximately 16.50 percent.

This situation raises alarms since, without concessions, Bangladeshi garments entering the US market could face a cumulative duty of around 35.5 percent.

Experts have drawn comparisons with neighboring India, suggesting that if India benefits from similar “cotton clause” advantages, Bangladesh might lose its edge in the US market.

Moreover, according to the report, the relief is restricted to a limited “to-be-specified volume” of imports, contingent on how much raw material Bangladesh procures from the US.

Industry leaders contend that the deal's wording is ambiguous, causing uncertainty for exporters regarding the actual benefits they will receive.

Trade analysts have expressed concerns over the “unclear wording of the concession”. They emphasized that Article 5.3 of the agreement stipulates that the US will establish a system for “zero reciprocal tariffs”, but this only applies to a “to-be-specified volume” of imports.

In essence, the duty benefits are limited, directly linked to the quantity of US cotton and man-made fibers Bangladesh imports. Consequently, for every dollar of tariff eliminated by the US, the advantage primarily benefits its own cotton producers.

In summary, the trade deal is perceived as rushed, unequal, and risky, favoring US cotton producers over Bangladesh’s garment exporters.

Given that garments account for 86 percent of Bangladesh's total merchandise exports to the US, this agreement has introduced a level of uncertainty that undermines its anticipated advantages.

For Bangladesh, the road ahead is fraught with challenges. If the government can elucidate the textile clause, there is potential for benefit. However, if the system becomes too complex or if competing nations secure comparable agreements, this initially lauded deal might provide minimal real protection for Bangladesh’s garment sector, according to analysts.