USTR Flags Digital Trade, Tariff Concerns in Bangladesh

High tariffs, investment hurdles and entrenched corruption continue to undermine American businesses operating in Bangladesh, according to the latest report by the Office of the United States Trade Representative (USTR).

The 2025 report on foreign trade barriers, released last month, also raised concerns about Bangladesh’s data localisation efforts and restrictive digital laws, warning that such policies could stifle cross-border digital trade.

The annual report, which highlights significant foreign barriers to US exports, foreign direct investment, and e-commerce, was published shortly before the Trump administration imposed new tariffs on imports from 60 countries, including Bangladesh, in an effort to reduce the US trade deficit.

Bangladeshi goods entering the US market are now subject to a 37 percent tariff, a development that has raised alarm among garment and other exporters, as the US remains Bangladesh’s largest export destination.

In 2024, US exports to Bangladesh were valued at $2.2 billion, while imports from Bangladesh stood at $8.3 billion — showing a trade relationship that strongly favours Dhaka.

The report said that Bangladesh’s Most-Favoured-Nation (MFN) average tariff rate stood at 14.1 percent in 2023. The average applied tariff was 17.7 percent for agricultural products and 13.5 percent for non-agricultural goods.

Besides, only 17.6 percent of Bangladesh’s tariff lines are bound under World Trade Organization (WTO) commitments, with an average bound rate of 155.1 percent.

Apart from this, the USTR flagged non-tariff barriers related to customs procedures and trade facilitation.

Although Bangladesh ratified the WTO’s Trade Facilitation Agreement in 2016, it has yet to submit key transparency notifications on import, export, and transit regulations, which were due by 31 December 2023.

The report also said Bangladesh had not notified the WTO of its customs valuation laws.

INVESTMENT BARRIERS PERSIST

The report said that Bangladesh allows 100 percent foreign ownership in most sectors. However, equity caps remain in place for petroleum, gas, and telecommunications.

Moreover, investors in 22 sectors must obtain no-objection certificates from the relevant ministries.

While profit repatriation is legally permitted, American investors frequently report lengthy delays and opaque procedures — in some cases, taking over a year, according to the report. 

The USTR noted that the interim government had agreed to formal repayment arrangements with US firms and pledged improvements to repatriation processes.

GOVT PROCUREMENT LACKS TRANSPARENCY

On public procurement, the report criticised widespread corruption and a lack of transparency, despite Bangladesh’s support for international competitive bidding.

“Bangladesh has launched a national electronic government procurement portal, but US stakeholders have raised concerns about the use of outdated technical specifications, the structuring of specifications to favour preferred bidders, and a lack of overall transparency in public tenders.”

The report said several American companies alleged that foreign competitors have used local partners to influence the procurement process, blocking otherwise competitive US bids.

The report also cited claims of bid rigging, bribery, anticompetitive practices and chronic delays, putting US firms seeking government contracts at a disadvantage.

Also See: Chinese Investment in Bangladesh Reaches $2.67 Billion

CORRUPTION ‘PERVASIVE AND LONG-STANDING’

Bribery and corruption remain systemic problems, the USTR said, adding that anti-corruption laws are poorly enforced.

While Bangladeshi legislation criminalises extortion, bribery (both active and passive), and abuse of public resources, these practices remain widespread in commercial dealings.

“There have also been efforts to water down anti-corruption safeguards of government procurement rules,” the report said. US companies continue to report lengthy delays in securing licences and contract approvals, often linked to demands for bribes.

INTELLECTUAL PROPERTY PROTECTION LACKING

On intellectual property (IP) rights, the USTR said enforcement remains weak due to limited government capacity.

US stakeholders reported rising violations across sectors including consumer goods, apparel, pharmaceuticals and software.

The report also flagged Bangladesh’s growing role as a source country for counterfeit goods entering global markets. Weak investigations and doubts over judicial impartiality further impede enforcement efforts.

Though recent legislative reforms have been introduced, the absence of implementing rules casts doubt on their effectiveness.

DIGITAL TRADE RESTRICTED BY REGULATIONS

The report expressed concerns over Bangladesh’s digital and data governance framework. The ICT Act of 2006, amended in 2013, allows government access to computer systems and communication networks.

Regulations issued in 2021 on digital, social media, and over-the-top (OTT) platforms were criticised for enabling government control over online content and exposing users to criminal liability.

The draft Personal Data Protection Act includes data localisation requirements and law enforcement access clauses, with minimal stakeholder input.

The Cyber Security Act 2023, which replaced the widely criticised Digital Security Act, still permits prosecution for online expression.

Since 2015, the report said, Bangladesh has experienced repeated internet shutdowns that disrupted access to digital services and hampered trade — the most recent of which occurred without judicial or administrative authorisation.

LABOUR RIGHTS STILL IN QUESTION

The USTR said that Bangladesh remains suspended from the US Generalized System of Preferences (GSP) due to failure to meet international labour standards.

The suspension, first imposed in 2013, was still in effect as of December 2024.

In 2024, the US proposed an 11-point Labour Action Plan, focusing on union rights, accountability for violence against workers and strengthening labour inspections.

The interim government has identified labour reform as a key priority, and Washington has pledged continued engagement on the issue.

This news is sourced from The Daily Star and is intended for informational purposes only.