BGMEA offers to help US define cotton use rules

Bangladesh’s top garment exporters association has offered to help the United States define the rules governing a zero-tariff benefit tied to the use of US cotton and man-made fibre (MMF).

The offer was made as US officials are yet to clarify how the facilities -- stated in the bilateral trade deal signed in February amid reciprocal tariff pressure -- will work in practice.

Members of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) made the proposal at a meeting in Dhaka yesterday with a delegation from the United States Trade Representative’s (USTR) office, led by Assistant USTR for South and Central Asia Brendan Lynch.

The delegation arrived on May 5 and is holding meetings through May 7.

Under Article 5.3 of the Agreement on Reciprocal Trade (ART), the US committed to a mechanism allowing certain Bangladeshi textile and apparel goods to enter the American market at a zero reciprocal tariff rate, provided they are made from imported US cotton or MMF.

“We sought clarity on the whole issue of using American cotton and its benefits from the USTR officials at the meeting,” said Faisal Samad, a BGMEA director who attended the meeting.

According to industry insiders, two interpretations are currently circulating among exporters.

One holds that the zero tariff would apply only to the portion of a garment’s value attributable to US-sourced inputs. Since fabric and fibre typically account for 70 to 80 percent of a finished garment’s cost, that would mean the remaining tariff -- either the 10 percent universal rate or the 19 percent reciprocal rate set for Bangladesh -- would apply only to the rest.

The other reading is that duty-free access would cover the entire garment if US cotton or MMF were used in production.

Exporters also raised questions about traceability -- how authorities would verify that a garment was made using US inputs -- and about whether tariff treatment would differ depending on whether raw cotton or processed fibre and fabric were sourced from the US.

The USTR delegation said they are working on the modalities and will share updates, Samad said. BGMEA offered to cooperate in developing those rules.

Around 40 percent of Bangladeshi garment exporters currently use US upland cotton, primarily for high value-added products.

After a separate meeting with the USTR team yesterday, Rashed Al Mahmud Titumir, the prime minister’s finance and planning adviser, said Bangladesh’s priority is expanding its market concentration in the US and developing new export categories beyond garments.

He noted Bangladesh wants further consultation meetings with the US on the agreement.

Stating that currently, Bangladeshi garment items are dominating in the US market, he said, “Commercial, health and education and humanity issues may also be discussed with the US when the bilateral discussions take place between the two countries.”

Bangladesh also wants expansion of strategic assistance from the US in agricultural cooperation and science research, he added.

Earlier on Tuesday, speaking after a meeting with the USTR team, Commerce Minister Khandaker Abdul Muktadir said the government intends to make full use of the agreement.

“It is a reality, and we want to make the best use of it to expand the country’s trade and investment,” he said.

US goods trade with Bangladesh totalled an estimated $11.8 billion in 2025.

American imports from Bangladesh reached $9.5 billion -- up 13.3 percent from 2024 -- while US exports to Bangladesh were $2.3 billion.

The resulting trade deficit stood at $7.1 billion, a 17.9 percent increase from the previous year. Garments account for 86 percent of Bangladesh’s exports to the US.