Bangladesh–U.S. Trade Pact Raises Concerns For Textile And Cotton Sectors

A newly concluded ‘Reciprocal Trade Agreement’ between Bangladesh and the United States has sparked widespread debate, particularly over its implications for the country’s textile and apparel industry.

Announced in February, the agreement covers a broad range of areas, including tariffs, non-tariff barriers, digital trade, labour and environmental standards. However, many industry stakeholders believe the terms tilt in favour of the United States, placing significant obligations on Bangladesh while offering conditional benefits in return.

A key provision for the textile sector introduces a mechanism for duty-free access for select Bangladeshi apparel exports to the U.S. market. This benefit, however, is tied to the use of U.S.-origin cotton and man-made fibres, potentially reshaping sourcing strategies for Bangladesh’s export-driven apparel industry.

The agreement also outlines a potential US$ 3.5 billion commitment for Bangladesh to increase imports of U.S. cotton and agricultural products. While this could improve traceability and strengthen supply chain ties, it may reduce sourcing flexibility and impact cost competitiveness for mills and manufacturers reliant on global raw material markets.

In addition to textile-related provisions, the pact introduces stricter requirements on labour rights, environmental compliance, and intellectual property protections. Bangladesh is expected to strengthen labour laws, enhance enforcement mechanisms, and align more closely with international standards areas that are closely tied to the global apparel supply chain.

The agreement further encourages regulatory alignment with U.S. systems across multiple sectors, raising concerns about policy flexibility and implementation challenges. While it offers a pathway to improved market access, its conditional structure and broad commitments have led to questions about the overall balance of benefits.

For Bangladesh’s textile sector, the deal presents a complex trade-off between potential export gains and increased dependency on specific raw material sources, alongside tighter compliance obligations. Industry stakeholders are now closely assessing how these changes will influence cotton sourcing, production costs, and long-term competitiveness in global apparel markets.