Reciprocal trade deal with US limits Bangladesh’s energy options: Debapriya

The reciprocal trade agreement signed with the US may severely limit Bangladesh’s energy options, said Debapriya Bhattacharya, convener of Citizen’s Platform for SDGs, Bangladesh, today.

The agreement, signed early last month, includes clauses that curb Bangladesh’s scope to trade with countries sanctioned by the US.

It also lists a number of countries as "non-market" economies, referring to those that do not follow free market principles.

“These legal ambiguities make a formal US waiver a prerequisite for cheaper Russian oil, directly constraining multilateral trade flexibility during the crisis,” said Debapriya.

He made the remark in a paper presented at a media briefing organised to share thoughts on the first budget of the new government at the Centre for Policy Dialogue (CPD) in Dhaka.

It is now a matter of concern for the government whether economic engagement with economies such as China and Russia will be impeded, he said.

“Now, foreign policy has become linked with the economy. So we have a geopolitical limitation in front of us,” he said.

Bangladesh wants to import 600,000 tonnes of oil from Russia and seeks clearance from the US.

Bhattacharya, also a distinguished fellow of CPD, said Bangladesh faces triple macro effects—rising subsidy pressure for power, increased import bills for energy, and a higher requirement for dollars to clear import payments to foreign suppliers.

Surging prices are projected to cause a $4.8B rise in annual energy costs, which is 1.1 percent of gross domestic product, widening deficits in the country’s external accounts, he said.

“Increased dollar demand for fuel will further devalue the taka, while regional instability puts pressure on the primary stabiliser of the Balance of Payments,” he said, adding that the war has put remittance inflows at risk as Gulf countries account for about half of total remittances.

He said the full pass-through of increased energy import costs risks fuelling high inflation.