Bangladesh-USA Relations: A Dynamic and Flourishing Partnership Anchored in Shared Values
Dr. A. K. Abdul Momen, MP
The writer is a Bangladeshi economist, diplomat, politician and the Minister of Foreign Affairs of Bangladesh.
Anchored in our shared values of democracy, human rights and rule of law, the relations between Bangladesh and the USA have evolved over the past 52 years into a robust partnership characterised as dynamic, multifaceted and forward-looking. Like in any matured relationship, we collaborate on areas where we have alignment in our views and agree to disagree where you don’t. Peace and security have always remained as fundamental pillars of USA-Bangladesh relations. We partner with the United States, among others, in four core areas of democracy and governance, human rights, peace and security, and trade and development.
The people-to-people ties have been a cornerstone of our relationship. The freedom-loving people of the USA wholeheartedly supported Bangladesh’s struggle for independence in 1971. When Senator Edward M Kennedy visited newly independent Bangladesh in 1972, he said, “I have come to Bangladesh to bring you the prayers and hopes of millions of people of the United States of America. We are brothers in liberty, and no man, no policy, no government can change that fact.”
Although the then US administration had prioritised their relations with Pakistan over creation of Bangladesh, the US government has been supportive of the country ever since we won the War on 16 December 1971. They have also supported Bangladesh’s bid for the membership of the United Nations. The foundation of Bangladesh-US bilateral relations got its strong footing when the Father of the Nation Bangabandhu Sheikh Mujibur Rahman visited the United States to attend the UN General Assembly in 1974 and subsequently met the US President Gerald R. Ford in Washington on 01 October 1974. Since then, we have converged in an expanding collaboration in the pursuit of our aspired goals of democracy, human rights rule of law, justice, women rights, religious freedom, countering terrorism and violent extremism, combatting transnational crimes and non-traditional security issues.
The diplomatic presence of the United States in Bangladesh predates our independence. United States established a consulate in Dhaka (then referred to as “Dacca”) in 1949, shortly after Pakistan emerged as a new country. The United States recognised Bangladesh on April 4, 1972, within few months of Bangladesh’s independence. The US Embassy in Dhaka was established on May 18, 1972. Bangladesh also opened its Embassy in Washington DC in following months. This demonstrates keenness from both countries to forward their relationship.
The relations between the two countries entered a new phase after Hon’ble Prime Minister Sheikh Hasina formed the government in 2009. Formal dialogue mechanisms were established between Bangladesh and the US in various areas during the visit of the then US Secretary of State, Ms. Hilary Clinton to Bangladesh in 2012. Since then, both countries have been holding regular annual dialogues i.e. Partnership Dialogue, Security Dialogue, Defense Dialogue, and TICFA (Trade and Investment Cooperation Forum Agreement) Council Meetings (since 2013).
Economic cooperation is one of the most important dimensions in our bilateral relations. We have established an ‘Economic Partnership Consultation Mechanism’ to further consolidate the economic ties. Bilateral High-Level Economic Consultations (HLEC) are being held since 2020.
The USA has gradually emerged from a source of food and development aid of Bangladesh in the early years to the largest single-country destination of our exports, largest source of our foreign direct investment (FDI), home to over half a million expatriate Bangladeshis and the most popular destination of higher education of our students.
Our ever-expanding trade volume with the US surpassed US$14 billion last year. Bangladesh’s major exports include woven apparel, knit apparel, miscellaneous textile products, cap, headgear, footwear, tobacco, snacks foods, furniture, ceramic, toys, plastic item and artificial flowers etc. The major imports include raw cotton, chemicals, machinery and equipment, pharmaceuticals, aircraft, electrical equipment, iron, and steel etc.
Despite high import tariffs, the apparels from Bangladesh have made successful inroad in the US. However, the 10.42 billion US dollar worth of goods that we had exported to USA in 2021-22, could be more, in case we had the GSP facilities that USA extends in different areas to more than hundred countries. Though we had limited GSP facilities from USA till 2013, our biggest export item, RMG, which constitutes 84% of our export, historically remained out of the scope of the US GSP.
Besides trade and investment, as a steadfast ally, the United States stood by us during the testing times. In our combat against the COVID-19 Pandemic, the US emerged as the most important partner. We were the largest recipient of COVID-vaccine from the US. Those vaccines saved many lives in Bangladesh.
The USA is also our largest partner in the humanitarian efforts towards the temporarily sheltered Rohingyas. The United States extends nearly $2.1 billion in humanitarian response to the protracted Rohingya Crisis. They have also been active in the accountability measures against the perpetrators of the atrocities committed to the Rohingyas. The US Government has announced the violence committed against the Rohingya by Myanmar as Genocide and crime against humanity.
Bangladesh’s rapid economic development under the passionate and visionary leadership of the Hon’ble Prime Minister Sheikh Hasina is rewriting our relations with our international partners, including the US, as trade replaces aid and strategic partnership gains prominence. Bangladesh has emerged as a role model of development. We have been able to pull over 40 million people out of poverty since 2009. Already 35th largest economy of the world and growing, Bangladesh has rapidly transformed into a lucrative consumer market with 40 million people with significant purchasing power, which is expected to grow by some estimates to 60 million by 2030. Bangladesh has become global leader in many areas. We are the 2nd largest RMG exporter, 3rd largest producer of vegetables; 3rd largest in inland fish production, 4th largest producer of rice; and 5th largest producer of close pond cultured fish in the world.
We have achieved a remarkable growth in socio-economic sectors. Bangladesh features among the top 10 countries of the globe in political empowerment of women. The stability and continuity of the political regime, the forward-looking policies of the government, continued investment in rural economy and women empowerment – these are some of the factors that played major role in our success. Our government has been pivoting digital technology for development and poverty reduction. Mobile Financial Services (MFS), which is posting an astronomical growth, is creating incredible changes in the economy by bringing the unbanked population into the formal Banking system. Various public and private essential and non-essential services are increasingly being provided through online platforms, which is making people’s life easy, businesses more efficient and ensuring transparency and accountability. Thousands of small and medium IT companies and hundreds of thousands of IT professionals and freelancers have been part of this amazing journey. Buoyed by such success, we are hopeful to achieve the dream of a smart Bangladesh by 2041.
In all our development endeavours, we remained environmentally responsible. Bangladesh is one of the least emitters of greenhouse gas of the world. Our per capita carbon emission was only 0.5 tonne in 2019 as opposed to 14.7 tonne in USA and 8.5 tonne in OECD countries. Yet, Bangladesh is actively pursuing a path of green growth. We have pledged to reduce carbon emission by 22% by 2030. We have lately cancelled at least ten big coal fired power plant projects although they would have meant cheaper power for our consumers and industries. The Bangladesh Solar Home Systems (SHS) Program is the largest national program in the world for off-grid electrification. Eight out of the top ten LEED certified green garments are in Bangladesh. Doing business with Bangladesh will give the foreign companies leverage when it comes to carbon footprint. Moreover, clean tech is becoming a lucrative sector for investors to invest in Bangladesh.
I am sanguine to see that the US government and businesses have been noticing Bangladesh’s transformation and coming forward to forge deeper ties in trade and investment. The 1st Bangladesh-US High Level Economic Partnership Consultations was held (virtually due to COVID) on 30 September 2020 and the 2nd round in June 2022. Recently the US-Bangladesh Business Council has been formed within the US Chamber of Commerce (launched on 6 April 2021) to further strengthen bilateral trade and investment ties. The Business Council delegation has already visited twice to Bangladesh showing signs of heightened interests of the US businesses to expand their presence in Bangladesh.
Bangladesh with its very friendly foreign investment regime, welcomes the US investors to invest in competitive sectors in Bangladesh, including in renewable energy, shipbuilding, automobile, pharmaceuticals, heavy machineries, chemical fertilizers, ICT, marine resources exploration, medical equipment, green technology, and vaccine manufacturing. A liberal investment policy, robust investment protection regime, unrestricted exit policy, full repatriation of dividends and capital on exit, large domestic consumer pool, regional connectivity, preferential market access to OECD countries, China and India make investing in Bangladesh all the more attractive. Supply chain disruptions during the Covid-19 pandemic was a wake-up call for the countries to diversify their supply chain. Bangladesh is well poised to become a major source of supply chain diversification for the US and other large economies.
Bangladesh is setting up 100 ‘Special Economic Zones’ (SEZs) and 38 Hi-tech Parks in the different parts of the country. Skilled and easily retrainable human resource at a competitive wage makes investment in Bangladesh even more attractive. More than six hundred thousand (600,000) free-lancing IT professionals of Bangladesh testify the depth of human resource pool of Bangladesh. The ICT industry of Bangladesh is fully ready for the US businesses to collaborate and benefit from.
Although not so big, the market capitalization of the portfolio market of Bangladesh is about US$ 40 billion and growing, with an attractive price earning (P/E) ratio of about 14.5. I call upon you to take advantage of the growing portfolio market of Bangladesh. With the economy on the march, the bond market, which has only started to grow, can be a goldmine for the US financial investors.
Apart from trade and investment, peace and security occupy significant space in Bangladesh-US relations. Security cooperation is based on four pillars i.e., 1) Peace and Development, 2) Defence Cooperation, 3) Counter Terrorism and Security including maritime and border security, and 4) Human Security. Over the years, security cooperation has not remained merely military centric, but has gained a holistic nature. Food security, energy security and disaster management & relief constitute key strategic priorities for Bangladesh, where the US has been an important partner.
Non-traditional security challenge such as climate change poses existential threat to Bangladesh. We have been actively working together with the US, both bilaterally and multilaterally, to reverse climate degradation and to combat the adverse impacts of climate change. The USAID has been working with the Government of Bangladesh in various areas of climate change, including strengthening resilience of the communities to climate change, protecting biodiversity, promoting sustainable energy and prioritising climate-smart agriculture.
Being a littoral State of the Bay of Bengal, Bangladesh considers stability, security and prosperity of the Indo-Pacific region is crucial in realizing the ‘Vision 2041’ of becoming a developed smart Bangladesh by 2041. We believe that mutual understanding, cooperation and collaboration among the Indo-Pacific countries are essential for stability, peace, and prosperity. Our increasing focus on the Indo-Pacific region is demonstrated in our announcement of the ‘Indo-Pacific Outlook’ during April this year. The outlook reflects Bangladesh’s vision for a free, open, peaceful, secure, and inclusive Indo-Pacific and aims to promote transparent, multilateral systems that would enable equitable and sustainable development in the Indo-Pacific region and beyond through inclusive economic growth, right to development and shared prosperity for all. Through the announcement, Bangladesh reaffirmed her commitment to freedom of navigation and over-flight in the Indo-Pacific for unimpeded trade and human mobility.
The US Indo-Pacific Strategy, which reaffirms the US’s growing interest in this global growth center speaks of similar values and aspiration in the region and provides a newer platform for Bangladesh and the US to work together on achieving shared goals. The Bay of Bengal is an area rich in untapped natural resources, including significant reserves of gas and other seabed minerals, and possibly rare-earth minerals. Fish population of our territorial water remains broadly unprotected and exposed to IUU fishing as our domain awareness capability remains limited. Capacity of our fishermen in deep sea fishing is also limited. We see broader scope of partnership with the US in the Bay of Bengal in terms of investment, research collaboration, technology transfer, enhancing maritime domain awareness capability and security to unleash the potential of blue economy.
Our diaspora in the USA plays a crucial role in bridging between our peoples and countries. Their efforts towards enhancing people-to-people contact and advancing economic and cultural ties of the two countries deserve due recognition. As the second-generation Bangladeshi Americans keep assuming prominent positions in the US economy and society, we expect their role to grow further to forge a deeper Bangladesh-US relationship.
The government led by the Hon’ble Prime Minister Sheikh Hasina is committed to creating a stronger, more durable and ever-flourishing friendship with the USA. Bangladesh’s fast-growing economy, strong commitment to ensure freedom and democracy, dedication to peace and security, keenness to engage in addressing global challenges, and leadership role towards enhanced connectivity with its friends and neighbours make Bangladesh an ideal partner for the US in the Indo-Pacific region.