In the first part I argued that the ART, the IMF program, and the coming loss of LDC status form an interlocking system of economic discipline. But the agreement is not only about trade. Buried in its clauses are provisions that reach into Bangladesh's foreign policy, its defense procurement, and its freedom to deal with other powers.
The Diplomat called it a litmus test for Dhaka's strategic autonomy. Read in terms of power, it is an instrument for pulling Bangladesh into the American orbit at the very moment the US-China rivalry is redrawing the map of South Asia.
The non-market economy clause
The most consequential provision has nothing to do with garments or wheat. It bars Bangladesh from signing trade or economic agreements with countries the United States designates as "non-market economies," a category that includes China and Russia. Break the rule, and Washington can reinstate the original 37% tariff, a penalty that would cripple the garment sector.
The trap is structural
China is Bangladesh's largest source of imports, supplying $16.6 billion in FY24, more than a quarter of the total; India is second, the US a distant 4%. The fabrics, machinery, and raw materials that keep the factories running are overwhelmingly Asian, but the market for the finished clothes is American.
Bangladesh depends on China to produce and on America to sell. The clause turns that dependence into a weapon, threatening the buyer's market if Bangladesh draws closer to its supplier.
And it has been drawing closer. In the year after Hasina fell, imports from China rose 25% and exports to China 44%. Beijing grants duty-free access to almost all Bangladeshi goods and has agreed to hold this open past LDC graduation.
During Muhammad Yunus's visit it pledged over $2 billion in loans, grants and investment, including $400 million to modernize Mongla Port. Since joining the Belt and Road Initiative in 2016, Bangladesh has seen China build roads, bridges, and power plants across the country.
The clause is designed to halt that trajectory. It does not order Bangladesh to cut ties with China; it makes deepening them potentially ruinous. Every future negotiation with Beijing now carries the shadow of American retaliation.
This is what Gramsci would have recognized as hegemony: Not raw coercion but the quiet shaping of what feels possible. Policy-makers are not forbidden to think about cooperation with China. They are taught to feel its danger. The discipline becomes internal.
The neighbour who won't let go
Relations with India have soured since the uprising that removed Sheikh Hasina, long New Delhi's closest ally in the region. India now shelters her despite extradition requests, and popular anger has hardened over water disputes on the Teesta and Ganges, border killings, restrictive visas, and a sense of constant interference.
India has answered Bangladesh's diplomatic diversification with punishment, revoking trans-shipment rights for its export cargo and tightening visas, widely read as retaliation for Dhaka's opening to Pakistan and China.
For India, this is the loss of primacy in its own neighbourhood. Under Hasina, Bangladesh was a dependable buffer against Chinese and Pakistani influence on its eastern flank. That is gone, and India's pressure has only pushed Dhaka further towards the powers Delhi fears.
The ART sharpens the bind. Its 19% tariff sits just one point above India's 18, and the two compete directly in the American market for garments and footwear. The thin margin means any rise in Bangladeshi costs could move orders to Indian factories, a competitive squeeze that keeps both dependent on American goodwill.
The return of the repressed
The most striking shift has been the rapid warming towards Pakistan, frozen for most of the past five decades. In January 2025, Pakistan's intelligence chief visited Dhaka, the first such visit since independence; its top military officer followed in October; foreign-secretary talks resumed after 15 years; and Foreign Minister Ishaq Dar arrived in August to sign agreements on visas, culture, and trade. None of this would have been imaginable two years ago.
It has gone beyond diplomacy. A Pakistani cargo ship docked in Chittagong for the first time since 1971, Bangladesh eased visa rules and dropped mandatory inspection of Pakistani goods, and the two are reportedly in advanced talks over JF-17 fighter jets, perhaps as many as 48, with a bilateral trade target of $3 billion.
The rapprochement makes sense in the light of India's decline. While Hasina ruled, ties were impossible: Her government's identity was bound to the memory of 1971, and warmth towards Pakistan was unthinkable. With her gone, the barrier fell.
Small-state autonomy and its limits
Bangladesh has long practised what its diplomats call friendship to all and hostility to none, hedging among great powers without committing to any. It buys from China and India, adds value at home, sells to Europe and America, takes remittances from the Gulf and loans from the multilaterals. That balancing act has been the basis of its model.
The ART threatens to end it. The agreement embeds a set of geopolitical conditions: The non-market economy clause, the demands on export controls, the commitments to buy American energy and arms, the limits on defence procurement.
With these, Washington is not just asking Bangladesh to buy American goods. It is asking it to choose a side. And the punishment for choosing wrong is not a cold shoulder but economic devastation, the return of the 37% tariff on the exports that earn four-fifths of the country's foreign exchange.
This is how to read the Boeing deal. It was not an airline weighing aircraft on their merits; it was a tribute payment, a visible act of compliance, made by an interim government days from an election and left as a multi-billion dollar bill for its successor. The European diplomats who had backed Airbus were brushed aside. The choice, Biman's own officials admitted, turned on "broader strategic considerations."
Who benefits?
The defense of deals like this is that they bring stability and market access, and it is true that 19% beats 37. But the question worth asking is who captures the surplus.
A shirt sewn in Gazipur for a few thousand taka a month sells in New York for $80. The gap is taken overwhelmingly by the brands, retailers, and logistics firms at the top, almost all American or European.
The factory owner keeps a thin margin and the state a little tax, while the worker earns one of the lowest wages in the global industry. The ART does not change this; it locks the conditions of that extraction into a treaty.
The IMF tightens the same screw. Its austerity holds wages down, and "exchange rate flexibility," in plain terms devaluation, cheapens Bangladeshi exports for foreign buyers rather than helping the people who make them.
The whole apparatus works to keep Bangladesh a low-cost platform for someone else's capital. Bangladesh has grown, but the shape of that growth, one export sector, cheap labour, conditions set abroad, has not changed. The cage is only being drawn tighter as its occupant begins to test the bars.
What Bangladesh needs is not a better bargain inside this framework but a different framework altogether, one that lets poorer economies build their capacities, diversify, protect their workers and choose their own foreign policy.
No such framework exists; the WTO, the World Bank, and the IMF answer to the powers the present order serves. That makes the struggle for an alternative political as much as economic, and it belongs to the workers, students, and movements who have already shown they can change how they are governed. Whether they can also change the terms on which they enter the world economy is the question that remains open.
Jamil Iqbal is a Bangladeshi-British researcher and writer based in London. His work focuses on political economy, migration, labour and development in South Asia. Views expressed are his own.