July 10, 2025, 1:34 am

Hidden Costs of America’s RVC Demand on Bangladesh

  • Update Time : Wednesday, July 9, 2025
Photo: Collected


—H M Nazmul Alam—



In recent years, Bangladesh has increasingly found itself walking a diplomatic tightrope— navigating geopolitical rivalries, regional instability and shifting economic alliances. But what has often slipped under the radar, buried beneath the headlines of summit-level visits and ceremonial photo ops, are the subtle, structural shifts in the global trading system that are quietly rewriting the rules of engagement for countries like ours.

The most recent chapter in this story unfolded during trade negotiations between Bangladesh and the United States. On the surface, the discussions aimed to modernise bilateral trade practices, make supply chains more transparent and ostensibly “align” trade with global standards. But buried in these seemingly benign objectives lies a troubling shift— a demand by the United States to replace Bangladesh’s existing domestic value-added criteria with a Regional Value Content (RVC) requirement for preferential tariff access.

For those unfamiliar with trade law jargon, RVC might sound like just another technical metric. But actually, it represents a fundamental transformation in how Bangladesh’s exports will be judged, taxed and, potentially, excluded from the world’s most lucrative markets. So, its implications are far-reaching.

Until now, Bangladeshi exports, especially garments, were largely evaluated based on the domestic value added within Bangladesh. It acknowledged the country’s internal labour input, indigenous sourcing and national economic footprint. But the new RVC standard, if enforced, would require a significant portion of an exported product’s value to be derived from within a “regional” bloc, such as ASEAN or South Asia. This seemingly cooperative policy is, in effect, a Trojan horse for multinational restructuring— compelling Bangladeshi producers to outsource parts of their production to “partner” countries in the region in order to maintain eligibility for US market access.

At first glance, this may appear as a strategic push towards regional integration. But for Bangladesh’s economy, where small and medium-sized enterprises (SMEs) drive employment and innovation, this is a severe blow. Most of these SMEs lack the capital, logistics networks and multinational affiliations required to orchestrate a complex regional supply chain. They operate on razor-thin margins, with just enough working capital to source raw materials, pay daily wages and meet production deadlines. The introduction of RVC requirements would place an impossible burden on these manufacturers, forcing them either to shut down or be swallowed whole by larger, regionally connected competitors. In other words, it is not cooperation, but rather it is consolidation. And in that consolidation, Bangladesh stands to lose more than just market share. It risks losing autonomy.

This policy shift also reveals a broader and more disturbing trend: the weaponisation of trade in the service of geopolitical agendas. Alongside the RVC demand, reports suggest that the United States is pushing for Bangladesh to align its trade preferences with a “values-based alliance”. Beneath the polished language of democracy, rule of law and ethical supply chains lies an implicit demand: Bangladesh must adopt the West’s geopolitical enemies as its own, even when our own national interests dictate neutrality.

Washington has reportedly sought clauses that would tie Bangladesh’s trade privileges to targeted sanctions against specific nations like China, Iran and possibly even Russia. Such clauses amount to geopolitical coercion, turning trade from a tool of economic cooperation into a leash of ideological control.

It is worth noting that Bangladesh has long prided itself on pursuing a non-aligned foreign policy. Our economic partnerships span Beijing and Brussels, Delhi and Doha, Washington and Warsaw. We engage based on development needs, not ideological litmus tests. To tether our economy to one axis of global power would not only invite retaliation from the others but fundamentally undermine our sovereign decision-making.

It is difficult to overlook the irony between the lines. For years, the United States has lectured developing countries about the virtues of a rules-based international order, where fairness, transparency and mutual respect govern economic relations. Yet in this instance, Washington appears eager to discard those principles when it suits its interests.

There is also a deep hypocrisy in the rhetoric. The US frequently extols the virtues of “inclusive growth” and “empowerment” in its foreign aid strategies. But what could be more exclusionary than setting up trade rules that marginalise our smallest producers, destabilise our most critical sectors, and bind our policies to a foreign power’s agenda?

To understand the gravity of this moment, one must consider the broader context. Bangladesh is not merely a garment exporter; it is one of the few post-colonial nations that have charted a path from famine to food security, from aid-dependency to export-led growth. In just three decades, the country has slashed poverty rates, increased female labour force participation and built a vibrant, though fragile, industrial base. The RMG sector alone employs over four million workers, most of them are women. It is not just an industry but a social transformation engine.

To jeopardise this engine in pursuit of complex supply chain mandates and geopolitical signalling is, frankly, irresponsible. Especially from a country that, on paper, claims to be an ally and development partner. And it must be said that these are not just theoretical risks. Similar policies have had devastating effects elsewhere. In Central America and Africa, RVC-like provisions tied to US or EU market access have led to large-scale job losses, capital flight and the domination of local markets by transnational firms. In Kenya, farmers were forced to abandon local seed varieties in favour of imported ones to meet export standards.

In Honduras, textile plants closed overnight when they failed to meet revised RVC thresholds, rendering thousands jobless. The blueprint is clear. And it is chilling.

Bangladesh must learn from these precedents. Our economic diplomacy must be informed not just by immediate trade benefits but by long-term sovereignty. Yes, access to the US market is important, but not at any cost. We must not trade our independence for conditional access. And we must not mistake asymmetric negotiations for partnership.

SO WHAT CAN BE DONE?

First, the government must take a firm and transparent stance. Trade deals that affect millions of lives cannot be negotiated in secret or signed under pressure. Stakeholders, especially SMEs and labour representatives, must be involved in these discussions. Second, there is an urgent need to diversify our export base, both in terms of products and destinations. Third, Bangladesh should consider championing a coalition of like-minded developing nations to resist unfair trade practices.

If Bangladesh, Vietnam, Ethiopia and others jointly push back against extractive trade demands, the global system will have no choice but to listen. And finally, we must invest in strengthening our domestic capacity, not just in manufacturing but in policy research, trade negotiation and economic diplomacy.

In the end, this is not merely a story about tariffs or textile quotas. It is about who gets to write the rules of the global economy and who gets written out. If Bangladesh bows to coercion today, it will set a dangerous precedent for tomorrow. But if we stand firm, guided by a vision of equitable growth and sovereign agency, we can chart a path that others may one day follow.

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The writer is an academic, journalist and political analyst. He can be reached at [email protected]

 

 

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