In the history of global trade, it has often been observed that major powers often use the language of principles to manage their own economic crises.
The US has launched an investigation against Bangladesh over ‘overproduction’ and ‘forced labour’, which is not just a question of labor rights or fair competition; Rather, there is an important political-economic context behind it.
Particularly given the US’s long-standing and growing trade deficit, the pressure to reduce this deficit is now becoming more clearly manifested in their policymaking. This has created a situation where the ‘overcapacity’ of countries like Bangladesh has become a hindrance to America’s trade competitiveness.
Over the past few decades, US imports have grown rapidly, yet exports have not kept pace, resulting in a significant trade deficit. Although they have a surplus in services exports, policymakers in Washington are exploring ways to reduce imports and protect domestic production.
Issues such as ‘overproduction,’ ‘dumping,’ ‘forced labour’ and supply chain ethics are increasingly becoming part of trade policy.
Bangladeshi garment exports to the US market have increased significantly in the last two decades. As a result, as part of broader strategies to reduce the trade deficit, the US has begun to question Bangladesh’s production and labor systems through investigations.
Many analysts see this as a defensive economic measure. Along with this, the US has started investigating whether products are being produced using forced labor in about 60 countries, including Bangladesh.
The main reason is that the US Supreme Court has declared Trump’s counter tariffs illegal and ordered the return of the amount collected. It is estimated that the Supreme Court may issue many such decisions, due to which the Trump administration is in dire need of ordering such an investigation.
The reality is that despite criticisms regarding Bangladesh’s labor conditions and wages, there have never been any allegations that products are manufactured using forced labour. Furthermore, the definition of overproduction is vague. Analysts believe that Bangladesh has strong arguments in favor of its position on these matters.
In this context, viewing the US investigation solely as a labor rights or human rights issue does not reveal the full picture; This is part of larger trends in global trade politics. Not only the Trump administration, but before also, they have done contradictory things by making free trade agreements. When they saw that developing countries were benefiting more, they tried to pull the plug. They have used various policy and ethical arguments as trading tools.
America has engaged itself in overproduction
Historically, the US was also accused of overproduction, especially during its dominance in agriculture and certain industry sectors. Although these allegations were most prevalent after World War II, the kind of formal investigation seen today (against 16 countries, including Bangladesh) did not occur then. Instead, there is a connection between the Great Depression of the 1930s and America’s overproduction.
In the 1920s, mechanization and expanded production led to significant overproduction in the American agricultural sector. Due to excess production, the prices of agricultural products fell by 50 to 70 percent.
Additionally, rapid industrialization resulted in excess supply in sectors such as automobiles and consumer goods. In this context, the US passed the Smoot-Hawley Tariff Act in 1930, which increased import duties by up to 60 percent with the aim of protecting the domestic market in times of overproduction. It is said that the imposition of retaliatory tariffs affected international trade and deepened the Great Depression.
During the Great Depression, the US government adopted a policy of destroying some agricultural products to reduce supply and stabilize prices in the market. In response to the Depression, Franklin D. Roosevelt’s administration enacted the Agricultural Adjustment Act in 1933, which included measures such as destroying some cotton farms, slaughtering livestock, and preventing excess grain from entering the market with the goal of increasing agricultural product prices by reducing production.
In the post-World War II period, Europe and Japan accused the US of using subsidies to overproduce wheat, corn, and chicken meat, putting pressure on local markets abroad. These complaints began to intensify, especially after the introduction of the food assistance program under the Agricultural Business Development and Assistance Act (PL-480). A well-known example was the Chicken War, where after a rapid increase in American chicken meat exports, Europe imposed a 25 percent tariff on imports of that chicken meat.
Additionally, in the steel and machinery sectors, various complaints emerged about overproduction under the General Agreement on Tariffs and Trade. In the 1950s and 1960s, the capacity of American manufacturing factories exceeded 90 percent in many cases, at a time when Europe was still undergoing post-war reconstruction.
This was not the end; After the 1973 oil crisis, the US took the initiative to increase its own energy production. When oil overproduction later put pressure on global market prices, discontent arose among OPEC member countries. In the 1980s, similar market pressures arose for a period in the textile sector. In many cases the US imposed high tariffs to limit imports. As a result, domestic production increased, leading to oversupply in the market – a parallel to the criticism currently leveled at China.
However, since 1975, the US gradually faced a larger trade deficit. By 2025 this deficit will reach approximately $1.2 trillion. As a result, in today’s global economy, the US is no longer considered a ‘country of overproduction’ in the traditional sense. It is not an economy dependent on production; Rather, the US is now dependent on sectors such as services, technology and high-value innovations.
While the US has a deficit in goods trade, there is a substantial surplus in services trade. According to Xinhua News, America’s service trade surplus will increase to $339.47 billion i.e. $33,947 crore in 2025. CNBC reports that despite imposing several counter tariffs to reduce the trade deficit, it is effectively reduced by only 0.2 percent in 2025.
Deficit is not necessarily negative
The question arises: does a trade deficit automatically mean that a country is a loser? Is there any reason to believe so? Economists who study it never say this. This happens due to structural reasons. If this deficit is used judiciously and profitably for the economic development of the country, it can be positive for the economy. However, persistent and uncontrolled trade deficits can certainly be a cause for concern.
Furthermore, at different stages of development, countries depend on different sectors. Initially, there is dependence on agriculture; Then industrial dependence; And when a country reaches the pinnacle of development, it becomes dependent on services or technology. America has also gone through this phase.
Almost all the technologies used in the world today have been developed by him. Now China is following the same path. Some economists argue that India has become dependent on services or technology for some time. They argue that it has moved towards the service sector before fully developing its manufacturing sector.
On April 2, 2025, Donald Trump declared this day as American Independence Day. In his words, practically every country in the world, whether America’s friend or foe, has ‘chewed up’ America economically in the last 50 years. As a result, factories in America closed, and people lost their jobs; But he will not let this continue. This is the logic behind their mutual tariffs.
Free trade is not really free
When discussions begin about globalization, the concept of free trade comes to the forefront. Theoretically, it is said that when markets are open, goods, services and capital will flow freely, leading to global growth.
In fact, it has been observed that after the 1990s, with rapid globalization, countries like China, India and Bangladesh have achieved high growth rates. However, along with this success comes a paradox, where despite advocating free trade, strong economies often adopt different policies to protect their industries and agriculture.
Nobel Prize-winning economist Joseph E. Stiglitz (“Making Globalization Work”) reminds us that trade liberalization is one of the most controversial aspects of globalization. International trade has never been completely free. In many cases, markets of developing countries were opened to the products of developed countries, but mutual benefits were not ensured to the same extent. Small countries have not developed the capacity to take advantage of these opportunities. It was observed that even when tariffs were reduced, non-tariff barriers such as quality controls, anti-dumping measures, subsidies or various administrative complexities remained intact. As a result, not all countries benefit equally from trade liberalization.
An important example that illustrates this paradox is the North American Free Trade Agreement (NAFTA). This agreement created a large free trade area between the US, Canada and Mexico. Theoretically, it was expected that this would be an important opportunity for Mexico. However, in practice, Mexican small farmers faced enormous pressures competing against subsidized American agricultural products. Additionally, although tariff barriers were reduced, various non-tariff measures often limited the entry of Mexican products. As a result, Mexico’s economy became increasingly dependent on the US economy.
From this experience it is understandable that countries like the US, despite promoting themselves as advocates of free trade, sometimes take protective measures to protect domestic markets. Agricultural subsidies, anti-dumping duties, strict quality control conditions, or questions surrounding labor standards – all too often become political tools of trade policy. When the US makes allegations and initiates investigations against various countries regarding overproduction or labor standards, many analysts argue that this is a new form of a long-standing protective trade policy.
Developing countries are eligible for special benefits
Joseph Stiglitz believes that developing countries should be viewed separately. But in the present system this matter has been left to the discretion of the developed countries. If these developing countries do not listen to the developed countries, then the developed countries can withdraw the preferential benefits given by them. This issue has now become a political weapon in the hands of developed countries.
Stiglitz argues that a single reform could solve this. Developed countries should open their markets to under-developed countries without any expectation of reciprocity or political and economic conditions. There should also be provisions allowing these under-developed countries to extend similar benefits to other under-developed countries.
However, they should not be required to extend these benefits to other developed countries. Middle-income countries should also do so, but they should not be required to give these benefits to other developed countries, thereby protecting their industries from harm. In other words, there should be an equitable approach, not just equality but also providing preferential benefits.
*This article, which was originally published in Prothom Alo online edition, has been rewritten in English by Rabiul Islam