US textile bodies question reciprocal trade pact clause

Bangladesh’s apparel exporters are facing fresh uncertainty over the textile clause in the Bangladesh-US Agreement on Reciprocal Trade (ART), after leading US textile trade bodies argued that the mechanism is unlikely to achieve American industrial goals and called for an alternative framework.

Bangladesh and the United States signed the ART in February. One part of the agreement is a textile clause, but the US has not yet explained how it will work.

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The understanding is that the provision could allow a certain volume of garments made in Bangladesh using US cotton or US-made man-made fibres to enter the US market duty-free, potentially benefiting Bangladesh’s garment exporters.

However, in a recent letter to the United States Trade Representative (USTR), the National Council of Textile Organizations, American Apparel & Footwear Association, United States Fashion Industry Association and US Industrial and Narrow Fabrics Institute questioned the effectiveness of the mechanism.

“We note that USTR has proposed a tariff rate quota (TRQ) that we believe was modelled in part on what it previously negotiated with Bangladesh and Indonesia,” the leaders of the trade bodies wrote in the letter.

They said the textile clause was unlikely to create significant or immediate jobs or business opportunities in the United States and would not provide companies with the certainty needed for long-term investment and sourcing decisions.

Instead of relying on the ART, the bodies suggested that the USTR introduce a new textile mechanism under its Section 301 investigation. They also called on the USTR to focus on reopening closed textile factories in the United States, saying this would bring greater benefits to American clothing retailers.

Section 301 is a US trade investigation into imports made with forced labour. Following the investigation in April, the USTR proposed tariffs of 10 percent and 12.5 percent on exports from economies that fail to prove their products do not contain raw materials made with forced labour.

The trade bodies said any textile incentive should be linked to this new system, provided it is designed properly.

Mohammad Abdur Razzaque, chairman of Research and Policy Integration for Development (RAPID), said Bangladesh could face challenges if the Section 301 measures are enforced because its exports rely on raw materials imported from countries where forced labour may be used.

“The United States may be using the Section 301 investigation as a geopolitical tool. At this stage, there is no meaningful commercial benefit. It is a matter for further discussion,” Razzaque said, referring to the potential benefits of the textile mechanism in the ART.

Although the agreement was signed five months ago, the USTR has yet to explain how the textile clause will operate. Leaders of Bangladesh’s textile and garment sectors have repeatedly sought clarification, including during the visit of a USTR delegation and in meetings with officials at the US embassy in Dhaka.

Among all the provisions in the ART, the textile clause is seen as the only one that could directly benefit Bangladesh, although its impact depends on how the USTR implements it.

“We have asked the USTR and US embassy officials in Dhaka to explain the textile clause of the ART at several meetings, but we have yet to receive a response,” said Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

“We are frustrated because we still do not have an explanation of the textile clause. Our buyers keep asking about it, and the delay is affecting our business decisions,” he added.