(News Credit en.prothomalo.com) Bangladeshi businesses have begun increasing imports from the United States in line with the commitments made in July to help reduce reciprocal tariffs imposed by the US.
Just two months on, shipments of US products are already arriving at Chittagong Port.
A consignment of soybean seeds has recently docked at the port aboard the vessel MV Yangtze Impression. Unloading operations are currently under way, with at least two more ships expected to arrive next month.
Importers say vessels carrying US goods will now call regularly at the port.
On 31 July, the US administration announced a reduction in reciprocal tariffs on Bangladeshi exports, cutting the rate from 35 per cent to 20 per cent.
The decision was made following formal discussions between a government delegation and officials of the Office of the United States Trade Representative (USTR), as well as engagements with visiting private-sector entrepreneurs.
As part of efforts to ease Bangladesh-US trade imbalance, businesses pledged to boost imports from the US, signing memoranda of understanding and making binding commitments.
Traders believe that narrowing the trade deficit could pave the way for further reductions in reciprocal tariffs in the future. If competitive prices are secured, they expect imports to expand significantly.
Soybean seeds arrive
Discussions with several leading business groups confirm that at the end of July an immediate understanding was reached to import around 400,000 tonnes of soybean seeds from the United States.
Mostafa Kamal, Chairman of Meghna Group of Industries (MGI), committed to import 300,000 tonnes, worth US $130 million.
Bangladesh enjoys a surplus in its trade balance with the United States, exporting more than it imports. However, businesses believe that increasing imports will help reduce the bilateral trade gap, potentially lowering tariff pressures in the long run.
Since his return from the US, the group has opened letters of credit for a further 200,000 tonnes, bringing its total US imports to 500,000 tonnes of soybean seeds.
The commodity is a crucial raw material for producing soybean oil and animal feed.
Reciprocal tariff may decrease further if imports from the US increase
MGI confirmed that one of its ships carrying 57,000 tonnes of soybean seed is currently being unloaded at Chattogram Port. It cost $24 million. Two more vessels, with a combined cargo of 110,000 tonnes, are due by the end of next month. In all, 10 ships are expected to carry soybean seed consignments from the US.
Speaking to Prothom Alo on Saturday, Mostafa Kamal said, “In total, we are importing 500,000 tonnes of soybean seeds from the United States. In addition, we have committed to increase imports of maize, LPG and wheat. The emphasis on imports from the US is intended to help reduce the trade deficit.”
Apart from Meghna Group, Delta Agro Food Industries also signed an agreement to import soybean seeds worth nearly $100 million. A vessel carrying its consignment is due to reach Chittagong Port next month, senior company officials confirmed.
Increasing imports from the US requires government policy support. With sector-specific policy support, it would be possible to raise imports from the US to $5 billion.Amirul Haque, President, LPG Operators Association of Bangladesh
According to the National Board of Revenue (NBR), Bangladesh sources soybean seeds primarily from Brazil and the US. In the last fiscal year, the country imported 1.735 million tonnes of soybean seeds worth $780 million. Of those, $350 million came from the US. Traders expect imports from the US to increase further this year.
Cotton imports on the horizon
In July, Bangladesh’s textile sector also concluded agreements to import 19,000 tonnes of cotton worth $38 million from the US. Three companies were involved.
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Salma Group contracted with Cargill Inc. for 6,000 tonnes of cotton, worth $12 million, while Asia Composite signed a similar deal.
Besides the two, Mosharraf Composite Textile Mills agreed with Louis Dreyfus Company to import 7,000 tonnes, worth $14 million. It has already opened a letter of credit for importing 1,000 tonnes of cotton.
During their US visit, leaders of the Bangladesh Textile Mills Association (BTMA) pledged to import $1 billion worth of cotton annually from the United States. They also demanded preferential treatment for exports of clothes made with US cotton.
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However, the traders are seeking policy support from the government as US cotton is pricier than that from other countries.
NBR figures show that raw cotton imports in the last fiscal year amounted to $3.44 billion, including $235 million from the US.
Hoping to narrow deficit
Bangladesh enjoys a surplus in its trade balance with the United States, exporting more than it imports. However, businesses believe that increasing imports will help reduce the bilateral trade gap, potentially lowering tariff pressures in the long run.
Speaking about this, Amirul Haque, president of the LPG Operators Association of Bangladesh (LOAB), told Prothom Alo, “Increasing imports from the US requires government policy support. With sector-specific policy support, it would be possible to raise imports from the US to $5 billion.”