US Launches Trade Probe Into Bangladesh Exports Over Capacity Concerns

The investigation was initiated on March 11 by the Office of the United States Trade Representative (USTR) under Section 301 of the Trade Act of 1974, a powerful trade enforcement tool used to challenge what Washington considers unfair foreign practices.

The report cites the USTR as saying that evidence of structural excess capacity and production exists in Bangladesh, which has a goods trade surplus of $6.15 billion with the US.

The bilateral surplus is led by exports in the textiles sector, with the government providing cash incentives for exports across 43 sectors, including domestic textiles and leather products.

Besides, Bangladesh's cement industry has significant excess capacity amid the industry's worst downturn in years, the USTR said.

In 2024, Bangladesh's national consumption of cement dropped to 38 million tonnes, which is less than 40 per cent of total capacity, and it declined further the following year, the USTR added.

"It is not a comforting sight to see the country's name in the list for investigation," said Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association.

But, the subject matters that will be investigated -- such as production capacity, intellectual property rights and incentives -- are unlikely to affect Bangladesh to any great extent. For instance, Bangladesh's production is based on receiving work orders from international buyers, so excessive production is not possible, the report states.

Moreover, Bangladesh has already amended the labour law last year as per the recommendations of the International Labour Organisation (ILO) and ratified three important ILO Conventions. The government has also already started phasing out incentives on export receipts as part of the preparations for smooth graduation from the least-developed country (LDC) bracket in November this year, the report added.

- IANS