Bangladesh’s costly trade fallacy

Bangladesh is committing billions of dollars to US goods under a trade pact designed to ward off American tariffs, even after US courts twice weakened the legal basis for those tariff threats since February. Dhaka, however, has continued with what the article describes as an extraordinary US shopping spree.

The latest addition came on August 12, when a cabinet committee approved a decade-long liquefied natural gas agreement with Gunvor USA LLC, the Texas arm of Swiss trading company Gunvor Group. The deal covers 117 LNG cargoes through 2038, totaling about 7.5 million tonnes.

The agreement forms part of the $15 billion in US energy purchases Bangladesh signalled over 15 years under the February trade pact. It also bypassed an open tender and ties Bangladesh's gas bill to the United States through an unusual state-to-state formula negotiated with a private trading company.

The government presents the Gunvor agreement as prudent hedging and commercial common sense. Qatar, Bangladesh's historically largest LNG supplier, has invoked force majeure on several contracts and warned that it may deliver only half of its promised 2026 volumes. The article links that disruption to geopolitical tensions around the Strait of Hormuz and US-Israeli attacks on Iran.

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We considered that to be a good offer, so we approved it.

Commerce Minister Khandakar Abdul Muktadir defended the purchase at a press conference, saying the cabinet approved it on economic merit. He said the average price of the 117 cargoes, based on the index price on the approval date, was about $9 per MMBtu. “We considered that to be a good offer, so we approved it,” he said.

The LNG contract is only one major item on the growing US procurement list. Bangladesh has begun receiving wheat under a five-year commitment for 3.5 million tonnes, with 660,000 tonnes already secured. Muktadir said US wheat could prove cheaper overall because it produces less waste than wheat from other sources.

Biman Bangladesh Airlines also abandoned a planned Airbus purchase in April and signed a $3.7 billion deal for 14 Boeing aircraft. The article ends while turning to another commitment in the trade pact, leaving the broader procurement list unfinished.

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Compared with wheat that we import from other sources, the percentage of waste in US wheat is much lower. If you translate that into monetary value, it becomes more cost-effective.