Bangladesh Garment Manufacturers and Exporters Association has offered to assist the United States in defining rules governing the use of American cotton and man-made fibres, as uncertainty clouds a key zero-tariff provision under a newly signed bilateral trade deal.
The proposal came during meetings in Dhaka between Bangladeshi garment exporters and a visiting delegation from the Office of the United States Trade Representative, led by Assistant USTR for South and Central Asia Brendan Lynch, who is in the country from May 5 to May 7.
At the centre of discussions is Article 5.3 of the Agreement on Reciprocal Trade (ART), signed in February, which commits Washington to a mechanism allowing certain Bangladeshi apparel exports to enter the US market at a zero reciprocal tariff rate — provided they are produced using US-origin cotton or man-made fibre (MMF).
However, exporters say the lack of clarity on how the benefit will be applied has prevented them from utilising the facility, prompting BGMEA to step in and offer technical cooperation in shaping the rules.
“We sought clarity on the whole issue of using American cotton and its benefits,” a BGMEA director said following the meeting.
The ambiguity has given rise to competing interpretations within the industry. One suggests that duty-free treatment would apply only to the portion of a garment’s value derived from US-sourced inputs, typically accounting for 70–80 percent of production costs. Under this view, the remaining value would still be subject to tariffs of up to 19 percent.
Another interpretation holds that garments incorporating US cotton or MMF could qualify for full duty-free access, covering the entire product.
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The uncertainty has significant implications for pricing and competitiveness in the United States, Bangladesh’s largest export destination, where garments account for the bulk of shipments.
Exporters also raised concerns over traceability requirements, questioning how US authorities would verify the origin of raw materials and whether rules would differ between raw cotton and processed inputs such as yarn or fabric.
US officials indicated that implementation modalities are still under development and would be shared in due course, according to participants at the meeting. BGMEA said it is ready to collaborate in designing a practical and transparent framework.
The issue is particularly critical as around 40 percent of Bangladeshi exporters already use US upland cotton, mainly in higher value-added garments, suggesting potential for rapid uptake if rules are clarified.
The cotton-linked tariff benefit forms part of a broader effort by both countries to deepen trade ties, with Bangladesh seeking to expand its footprint in the US market and diversify beyond traditional product segments.
Following separate discussions with the USTR delegation, government advisers said Dhaka would pursue further consultations to ensure effective implementation of the agreement and maximise export gains.
For now, industry leaders say the success of the deal hinges not on the promise of tariff relief, but on the clarity and feasibility of the rules that will determine access to it.
