“We are still waiting for our Congress to authorize GSP to any country. We are working very closely with the government. So, when it is authorized, the first country on the list will be Bangladesh”
– Donald Lu US – Assistant Secretary of State for South and Central Asian Affairs
The remark alone demonstrates Bangladesh’s importance to the United States in these critical economic times. On January 14 – 15, US Assistant Secretary of State for South and Central Asian Affairs Donald Lu visited with key Bangladeshi authorities and civil society representatives to explore ways to deepen the bilateral relationship. Moreover, the visit of Donald Lu to Dhaka marks the beginning of a new era of long-term, two-way economic partnership. To acquire a comprehensive and beneficial picture of Donald Lu’s visit, stressing the economic dimensions of Bangladesh and the United States is critical. Because the United States is Bangladesh’s third biggest trading partner, and the continual rise in trade volume in recent years demonstrates the significance of Bangladesh-United States economic ties for both nations. Aside from trade, Bangladesh and the United States have a significant connection in terms of FDI inflows, refugee relief, climate aid, and other important socioeconomic areas.
Why the visit of Donald Lu is significant?
To comprehend the significance of Donald Lu’s visit, we must first grasp the global political and economic landscape. Without a shadow of a doubt, the current economic crisis is the worst in history, and it has had a profound impact on almost all bilateral and multilateral economic connections throughout the world. On the other side, the US-led developed world has begun a new strategic initiative in the Indo-Pacific to guarantee that the US-led west is at the core of emerging Asian nations’ future economic brilliance.
To attain such economic dominance, the United States need a reliable partner that can serve as an important local market component, has a phenomenal economic growth rate, and has a valuable strategic position that can assure security and a smooth trade route. Bangladesh, on the other hand, have the capacity and capability to meet all “needs.” Furthermore, Donald Lu’s tour includes not only Bangladesh but also India, the regional giant, with whom both nations have strong ties. So, it’s evident that the US wants to use the India-Bangladesh relationship to promote an economic voyage in the area.
When the US Assistant Secretary of State arrived in Bangladesh, he went straight to the foreign minister’s residence. The strategy is straightforward: he wants to meet with every possible actor and discuss all bilateral concerns. However, there are certain patterns to the visit that show the US’s emphasis in the economic aspects. One of the important instances that immediately represented the US interest in investments and trade was Donald Lu’s meeting with Prime Minister’s private industry and investment advisor, Salman F. Rahman. Because, before to Bangladesh, the assistant secretary attended the India-US Forum and spoke with key Indian officials to explore ways for the United States and India to enhance trade and investment. As a consequence, Donald Lu’s side discussions are mostly aimed at strengthening business connections.
The outcomes; strengthening the economic relationship
The visit had several very important outcomes for both nations in terms of the economy. Most importantly, the US took a cooperative approach toward Bangladesh in order to contribute more to the magical race of economic development.
To begin, the remark by the US Assistant Secretary of State on GSP is the most optimistic statement from the US since 2013. The US Trade Act of 1974 established the GSP in 1976. However, given the US’s encouraging comments, the likelihood of restoring the GSP system appears quite good. As a consequence, Bangladesh will be allowed to export over 5,000 commodities to the US and enjoy a commercial advantage.
Second, as stated by the US, the visit would improve current Bangladesh-US commercial connections. Furthermore, despite global economic issues, continuous Bangladesh-US trade has been fantastic, and current bilateral trade is growing and hit USD 13 billion in 2022. Bangladesh’s garment exports to the United States increased by 62.23% between January and March 2022. The surge continued in the following months, and Bangladesh’s garment exports to the United States attained a historic milestone in 2022: for the first time ever, the country’s apparel exports exceeded $1 billion in a single month, with a stunning 96.10% year-on-year growth. The visit emphasized the two nations’ great trade and RMG exports, and both have committed to integrating their partnerships.
Furthermore, the two nations discussed concerns of digital commerce. Participants examined how inclusive economic development, innovation, and investment may be promoted by digital policy. The method is the result of a prior collaborative US-Bangladesh approach to the establishment of digital trade regulations that enhance MSME participation in the digital economy, improve trust for customers, enterprises, and employees, and allow safe cross-border data flows.
Third, during the visit, the US and Bangladesh achieved progress on lowering market access obstacles for certain agricultural items and agreed to examine further expert-level involvement on future subjects. Furthermore, both parties emphasized the significance of Bangladesh’s attempts to modernize its labor regulations. The US also indicated an interest in working with Bangladesh on innovative ways to strengthen labor protections.
Last but not least, the visit emphasized the United States’ FDI investment into Bangladesh, which is already the largest of all players ($695million and total share of 15%) and it’s indicated an increase in FDI inflows in 2023. Furthermore, Bangladesh and the United States collaborate on issues such as socioeconomic development, refugee help, and climate change. In practically every discussion, both countries underlined the need of preserving ongoing incentives for economic links and boosting trade and investment.
To summarize, although Donald Lu’s visit is not fully focused on economic issues, positive achievements in the security, strategic, and political spheres undoubtedly boost the prospect for successful economic efforts in the coming years. On the other hand, analysts were taken aback by Bangladesh’s spectacular economic development during the last decade, and the country has become a model for other developing nations as a result. Bangladesh has managed to attain a GDP of 415 billion in only 12 years, having grown from a GDP of 115 billion. Furthermore, the United States acknowledged the critical role that investments play in furthering Bangladesh’s development objectives as the country moves to middle-income status. However, the short trip covered a wide range of themes relevant to Bangladesh’s present economic initiatives and paved the way for Bangladesh to build the “post-2026 Bangladesh-USA economic relationship.”
– S. M. Saifee Islam is a Research Associate at the KRF Center for Bangladesh and Global Affairs (CBGA).
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