Bangladesh has secured exemptions for some clothes and textiles that are made with US-produced materials, as part of a new agreement announced on Monday.
As part of the deal, Washington will also cut its tariffs on Bangladesh from 20% to 19%, in exchange for Dhaka to open its markets to a wider range of American goods.
The apparel industry forms the backbone of Bangladesh, which is the world's second largest exporter of clothes after China.
The South Asian country has been in long-drawn talks with the White House after President Donald Trump imposed sweeping tariffs on global trading partners in April last year.
The White House said in a joint statement between the sides that the agreement will strengthen the countries' economic ties and offer both unprecedented access to each market.
In addition to tariff reductions, the US will allow certain clothing and textile goods from Bangladesh to enter the US free of tariffs. The exempted goods include those produced with American cotton and man-made textiles, with the amounts determined by US textile exports.
This agreement is crucial as clothing accounts for over 80% of Bangladesh's total export revenue, employing around four million individuals.
In exchange for the tariff exemptions, Bangladesh has agreed to provide preferential market access to a range of American agricultural and industrial products, including chemicals, medical devices, car parts, and meat, as per the White House's statement.
Moreover, Dhaka will recognize US safety and emission standards in food, drugs, and vehicles, easing US imports into Bangladesh.
Bangladesh has also committed to adhering to internationally recognized labor rights and enhancing environmental protections amid this trade exchange.
As Bangladesh heads towards its general elections, this trade agreement places it on a more competitive footing with neighboring India, which currently faces an 18% US tariff.
