It's hard to find another country willing to sign such an agreement with the US

At a high-level dialogue organised by the American Chamber of Commerce in Bangladesh (AmCham) at the Sheraton Hotel in Dhaka on 28 April, US Ambassador to Bangladesh Brent T. Christensen spoke about the recently signed “Agreement on Reciprocal Trade” (ART) between Bangladesh and the United States. Notable excerpts from his remarks were published in Prothom Alo on 20 May under the headline, “The new agreement is beneficial for both the United States and Bangladesh.” Economist Anu Muhammad has written this opinion on the ambassador’s remarks.

At a recent programme organised by the American Chamber of Commerce (AmCham) in Dhaka, US Ambassador to Bangladesh Brent T. Christensen defended the so-called trade agreement signed between Bangladesh and the United States. Prothom Alo published a translation of his remarks on 20 May. His statement contains several inaccuracies and unclear arguments. I will briefly mention some of them here.

The ambassador claimed that this agreement is a very positive development for Bangladesh because “it will help Bangladesh maintain access to the important US market at a competitive tariff rate of 19 per cent. Without the agreement, this rate could have risen to as high as 35 per cent.”

There are two serious inaccuracies here.

First, the 19 per cent tariff is not a competitively determined tariff rate. It is a tariff arbitrarily imposed by the United States on Bangladesh in violation of the normal rules of the market economy and World Trade Organization principles.

Second, it is also incorrect to say that without this agreement the tariff rate “could have risen to 35 per cent.” The ambassador concealed the fact that courts in New York, as well as Federal and Supreme Court-level courts in the United States, have declared Trump’s imposition of such high tariffs on different countries to be unlawful. Under US law, Trump can now impose tariffs ranging from 10 to a maximum of 15 per cent.

There are some basic principles governing imports and exports in economics. Even common sense makes them understandable. Ignoring these principles, the ambassador argued that if a country exports to the United States but imports very little from the US while importing more from other countries, then sustainable economic prosperity becomes impossible.

This claim is also incorrect.

Bangladesh’s exports to the United States are not an act of American generosity. These exports occur because there is demand for these products in the US market, and because American brands earn enormous profits by importing from Bangladesh.

Bangladeshi garment exports already face high tariffs in the US market. Now, under this agreement, Bangladesh is also being compelled to import cotton from the United States.

The reason Bangladesh imports relatively little from the US is that the United States does not produce many goods that our economy significantly demands. If such products existed, coercion would not have been necessary. The market itself would have brought more American goods into Bangladesh.

If the United States genuinely wants to ensure “sustainable economic prosperity,” then it should move away from war-driven activities and develop the ability to compete economically with the rest of the world. It should diversify its products. We see no indication of this happening.

Under this agreement, the United States is imposing high tariffs on Bangladesh, while at the same time its ambassador tells Bangladesh, “You should not impose such high tariffs.” As though imposing high tariffs is an exclusive right reserved only for the United States.

The ambassador also said imported products from the US should not be subjected to quality-control testing because, according to him, the US itself is sufficient in determining quality standards.

2.

According to the ambassador’s own description of the agreement, Bangladesh has committed to purchasing $3.5 billion worth of agricultural products from the United States, including wheat, soybeans, cotton and corn.

But the question is this: if these products are competitively priced and of good quality, then Bangladeshi importers would naturally be interested in importing them anyway. So why is the Trump administration resorting to coercive agreements? Is it because these products cannot compete otherwise?

The ambassador also stated that Bangladesh “will purchase $15 billion worth of energy products from the United States over the next 15 years.”

This is good news for large American corporations, not for Bangladesh.

Bangladesh needs to move away from import dependence. Instead, this agreement will force the country into long-term dependence on imports and block efforts to achieve energy self-reliance.

The ambassador claimed that “American companies follow strict compliance standards,” that “American companies operate under the rule of law,” that “we bring advanced technology,” and that “we prioritise capacity building.”

In reality, Bangladesh has not seen evidence of these claims.

In Bangladesh, national institutions have been far more successful in gas exploration and extraction, and no major disaster has ever occurred under their operations.

The country’s first major gas-field explosion occurred in Magurchhara in 1997 at the hands of the large American oil company Occidental.

Investigations revealed that, in an attempt to reduce costs and maximise profits, the company cut corners in using proper technology and skilled personnel. As a result, the explosion occurred.

Beyond the environmental disaster it caused, the incident completely destroyed a gas field containing nearly 300 billion cubic feet of gas.

Without paying compensation, Occidental sold its business to another major American oil company, Unocal, and left the country.

After arriving in Bangladesh, Unocal created major controversy by pushing for the export of Bangladeshi gas to India. Failing in the face of public resistance, it too sold its business to Chevron and departed.

But the compensation owed to Bangladesh was never paid.

Nor did any Bangladeshi government raise the issue seriously, apparently in an effort to keep those companies satisfied.

The ambassador said, “Chevron supplies half of Bangladesh’s natural gas.”

But the statement is incomplete.

These gas blocks were originally discovered by Bangladeshi institutions, yet extraction rights were handed over to American companies instead of national entities.

Had Bangladeshi institutions been allowed to extract the gas themselves, we could have purchased it at lower cost and in local currency. Pressure on foreign exchange reserves and budget deficits would have been lower. Repeated increases in gas and electricity prices would also have been less likely.

Moreover, the compensation still owed to Bangladesh is now Chevron’s responsibility, and it has yet to pay it.

The ambassador also stated in his speech: “My team is working with the Bangladesh government to create new and flexible arrangements for doing business with US energy companies.”

We can clearly see that happening.

After retiring, former US ambassador Peter Haas reportedly acted as a lobbyist for American oil companies and negotiated with both Sheikh Hasina and Professor Muhammad Yunus.

The process of altering oil and gas contract frameworks in line with corporate demands began from that period. Bangladesh’s share was reduced, profit margins and prices for foreign companies were increased, and provisions for exports were added.

The current trade agreement also includes obligations related to mineral-resource exports.

All of these measures will become major obstacles to ensuring sustainable energy security for Bangladesh.

3.

The ambassador spoke about banning “the import of goods produced through forced labour” into the United States.

Certainly, we do not want forced labour used either for exports or for products sold in our domestic market.

In the same way, we also do not want coercive agreements imposed upon us.

In April last year, the Trump administration imposed unprecedentedly high tariffs across the world in an arbitrary manner. With the exception of only a handful of countries, most nations rejected those measures.

Even the European Union, one of America’s closest allies, postponed matters related to such agreements.

Eventually, the United States itself was forced to significantly reduce and revise those tariff rates.

To understand why the Trump administration created such a situation, one must look at the economic crisis facing the United States.

The US is now the most indebted country in the world, with debt standing at nearly one and a half times its GDP.

Almost every year, Congress engages in major bargaining over raising the debt ceiling, while various institutions face shutdowns due to financial shortages.

Why is the world’s wealthiest and most powerful country in such a condition?

Because policies adopted in the interests of large corporate houses — along with subsidies and tax waivers — place enormous pressure on the economy.

On top of that, the administration borrows heavily to spend vast sums on war and military industries.

The United States alone accounts for nearly half of total global military expenditure.

The consequences are military aggression, occupation and mass killings across the world.

Debt continues to rise in order to sustain these expenses.

And it does not stop there.

This year, Donald Trump has asked Congress for a further two-thirds increase in military spending, which would raise the amount to $1.5 trillion.

While sectors essential to ordinary people — such as education and healthcare — are deprived, the single largest budget allocation continues to go toward destruction.

As a result, budget deficits keep growing, and this madness stems from the desire to shift the burden onto weaker countries.

Because of this model of resource allocation, despite all its power, the United States can never proudly say: “We have the world’s best healthcare system.”

Cuba — despite enduring six decades of US sanctions — can say that.

Nor can the US claim to have the world’s best education system or best public security system, claims many comparatively weaker countries can make.

Instead, Trump boasts that the United States possesses the world’s most powerful weapons of destruction and mass killing.

4.

The ambassador claimed this agreement would benefit both Bangladesh and the United States.

That is only partially true.

There is no doubt the agreement will greatly serve the interests of large American corporations and US military-strategic objectives.

But what exactly will Bangladesh gain from it?

If Bangladesh complies page after page with Trump’s directives disguised as a “trade agreement,” the country will be forced to import large quantities of additional goods.

To ensure these imported products are sold in the domestic market, subsidies will likely be required, while questions regarding food safety and health risks will not even be allowed to be raised.

Uncontrolled imports could put millions of jobs in Bangladesh’s poultry, dairy, pharmaceutical, e-commerce and agricultural sectors at risk.

Duty-free imports would further deepen the country’s already strained revenue crisis.

Bangladesh would also have to bear enormous financial burdens by being compelled to import unnecessary items such as weapons and aircraft.

Import dependence in the energy sector would increase. The development of national capabilities would face further obstacles. The transition toward renewable energy would become more difficult, while the risk of exporting Bangladesh’s limited gas reserves would grow.

Bangladesh would also lose the freedom to independently negotiate agreements with other countries.

It is difficult to find another country willing to sign such a subordinate agreement with the United States.

Many countries economically weaker than Bangladesh have refused to go down this path.

After US court rulings, even the threat of enforcement behind many of these obligations has effectively weakened.

Yet some individuals currently holding state power in Bangladesh have still carried out this disastrous act.

But why should the people of Bangladesh accept an agreement that threatens both present and future generations?

● Anu Muhammad is an economist and editor of Sarbojonkotha. 

● The views expressed are the writer’s own.

● This article appeared in Bangla in Prothom Alo online and print, and has been translated here by Farjana Liaqat