Donald Trump was elected as the president of the United States in 2016 with the slogan “Make America great again.” Hundreds of thousands of supporters donned red caps at his swearing-in ceremony in January 2017. However, it was revealed later that the caps were manufactured by some other countries, including Bangladesh.
The use of foreign-manufactured caps in the oath-taking event of the ‘America first’ policy campaigner, Donald Trump, drew widespread criticism. Still, Bangladesh managed to solidify its foothold further in the US market in the following years and become the third-largest garment product supplier in the country.
A statistical analysis revealed that, on average, American buyers and brands allocate around $10 out of each $100 spent on importing garments for products sourced from Bangladesh.
The import quota in the US played a significant role in the emergence of the readymade garment sector in Bangladesh, as the industrialists here did not have to hesitate given the certain market.
Following the withdrawal of the quota system, the garment businesses here managed to thrive with their own capacity.
Bangladesh developed a multidimensional economic relationship with the US, taking a cue from the latter’s development cooperation after the liberation war. The country has now become an integral part of the US economy and maintains deep economic ties, with a trade volume of $13 billion.
Bangladesh was the 46th largest trade partner of the US in 2021.
Biggest export destination
The US stands as the largest market for exports from Bangladesh. In the fiscal year 2021-22, Bangladesh exported goods worth $52.08 billion to different countries, with the US accounting for $10.42 billion. The export volume to the US dropped slightly to $9.70 billion in the fiscal year 2022-23, but it retained the status of the top export destination.
However, garment factory owners fear that despite the probability of a rise, exports to the US may tumble against the backdrop of prevailing global reality.
Shahidullah Azim, vice-president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said Bangladesh is now heading towards a national election, while the world is going through a war-like situation. It would be too tough to increase exports if the global market does not become stable.
Bangladesh registered a robust growth in garment exports to the US market in the last stage of the Covid-19 pandemic. However, the situation has now taken a different turn as Bangladesh is failing to maintain its good performance in the most significant market.
Exports to the US market amounted to $2.17 billion in the October-December quarter in 2022, but it dropped to $1.85 billion in the January-March quarter this year due to a significant fall in garment exports.
The exports of garment products to the US market fell by 3.5 per cent in the July-October quarter in FY23.
Experts said the US market may become more significant following Bangladesh’s graduation from the group of least developed countries (LDC).
Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD), said there might be concerns over exports to the key markets following LDC graduation. However, it is not applicable to the US market. This is why the significance of the US market is poised to increase further after LDC graduation.
He suggested attaching importance to the recently adopted labour policy of the United States and resolving any issues related to labour rights.
He added, “We need to understand that the issue of labour rights arose after US concerns regarding the political situation here.”
Diverse imports
In the list of countries from which Bangladesh imports goods or services, the United States holds the sixth position. According to Bangladesh Bank's data, China is the country's largest source of imports, followed by India, Singapore, Malaysia, and Indonesia. Bangladesh imported goods worth $19.35 billion from China in the last fiscal year. In comparison, the amount of imports from the United States was significantly lower at $2.83 billion.
This import-to-export income ratio indicates that the balance of bilateral trade favours Bangladesh, which analysts consider an important aspect of trade relations with the US.
While Bangladesh's exports to the United States are largely focused on a single category, imports from the US cover a diverse range of products. Some of the products imported from the US last year include mineral fuels ($790 million), iron and steel ($730 million), oilseeds and fruits ($440 million), cotton ($290 million), and machinery ($130 million). Additionally, various types of technology and service products are also part of the import portfolio.
The biggest investor
The main source of foreign direct investment (FDI) for Bangladesh is still the United States. As of June 2023, FDI status in Bangladesh stands at $20.24 billion. Among them, the largest investment is in the United States – $3.5 billion. Sectors and services that have these investments include gas and petroleum, textile industry, banking, power, financial institutions and insurance. Among the major US investors in Bangladesh are Chevron and Accelerate Energy in the energy sector, MetLife in the insurance sector, and Citibank NA in the banking sector.
Development aide
The United States has been a significant development partner for Bangladesh since its independence. According to the US State Department, over the last 50 years, the country has provided approximately $8 billion in development assistance to Bangladesh. Presently, the United States stands as the largest donour to Bangladesh among South Asian countries. However, recent times have witnessed a qualitative shift in the bilateral relations between Bangladesh and the United States, with the focal points being trade and investment.
Despite the emphasis on trade and investment, the United States continues to offer development assistance to Bangladesh across various sectors. During the Covid-19 pandemic, more than two-thirds of the vaccines received by Bangladesh as international donations originated from the US. As per the US Embassy in Dhaka, the US government has supplied around 115 million doses of the vaccine free of charge, aiming to protect individuals aged five and above from the coronavirus in Bangladesh.
Second in remittance
In terms of immigration, the United States was once the preferred destination for highly educated Bangladeshis. However, a substantial number of average individuals also get the opportunity to immigrate to the US through the DV lottery. Later, the influx of Bangladeshis into the country increased due to family visas.
According to the US Census Bureau's 2018 American Community Survey, there were 213,372 people of Bangladeshi origin living in the United States at that time. In recent times, the number of Bangladeshi students has been on the rise, and many of them are securing good jobs after completing their study and contributing to remittances sent back to the country.
The US has now become the second-largest source of remittances for Bangladesh. According to Bangladesh Bank data for the fiscal 2021-22, expatriate income of $21.03 billion flowed into the country. Among these, the highest contributors, providing $4.54 billion, were expatriates working in Saudi Arabia. The United States came in second, contributing $3.44 billion. This trend continued into the financial year 2022-23, with the country receiving $3.77 billion from Saudi Arabia compared to $3.52 billion from the United States.
More students going to the US
A large number of students from Bangladesh are currently choosing the United States as their destination for higher education. According to the US Embassy in Dhaka, there has been a significant increase in the number of Bangladeshi students studying in the US during the 2022-23 academic year. The figure reached a record-breaking 13,563 students, marking a 28 per cent increase compared to the previous academic year.
Citing the 2023 Open Doors Report from the Bureau of Education and Cultural Affairs of the US Department of State, the US Embassy highlights that Bangladesh is among the countries that sent the most students to US educational institutions in the 2022-23 academic year, securing the 13th position in the ranking.
Future of economic relations
Business leaders in Dhaka are optimistic about the potential for further growth in bilateral economic relations between Bangladesh and the US. Syed Ershad Ahmed, the president of the American Chamber of Commerce in Bangladesh (AmCham), expressed the belief that deeper trade and investment relations are achievable. He highlighted opportunities to increase US investment and trade in sectors such as technology, information technology, and energy, particularly in deep-sea gas and oil exploration and production.
However, Ahmed also acknowledged challenges in this regard, emphasising the importance of compliance with various regulations when doing business with the US. Additionally, he noted that addressing issues related to logistics, automation, customs, and infrastructure development in Bangladesh is essential to facilitate and enhance economic ties with the United States.
Several analysts express concern about the recent strain in Bangladesh-US relations. Ahsan H Mansur, executive director of the Policy Research Institute (PRI), noted that tensions between the two countries have deepened over time, with economic issues becoming intertwined with politics. He highlighted that labour and human rights issues have been added to the existing challenges.
Mansur also said, "It must be ensured that Bangladesh is not identified as a democratically elected dictatorial government in any way. We don't want anything harmful to happen to us. We have to avoid such a situation."