Bangladesh, Japan finalise EPA draft; signing expected next month

The draft of the Economic Partnership Agreement (EPA) between Bangladesh and Japan has been finalised, and the agreement is set to be signed next month, Commerce Adviser Sk Bashiruddin said on Monday.

He shared the information at a press conference on the Bangladesh–Japan EPA negotiations held at the Secretariat.

According to the commerce ministry, once the agreement comes into force, 7,379 Bangladeshi products will enjoy duty-free access to the Japanese market from the very first day of signing. In return, 1,039 Japanese products will receive duty-free access to the Bangladeshi market. Following approval from the cabinets of both countries and completion of the necessary legal procedures, the agreement is scheduled to be signed next month.

This will be Bangladesh's first comprehensive economic partnership agreement with another country. The EPA has no fixed duration and will remain in force indefinitely unless either side withdraws.

An EPA is a framework for establishing a free-trade arrangement, aimed at removing trade barriers, reducing tariffs, and expanding trade in goods and services, alongside long-term economic cooperation.

Commerce Secretary Mahbubur Rahman said negotiations began at the end of 2024 and concluded after eight formal rounds.

Garments included, leather excluded for now

Commerce ministry sources said readymade garments, Bangladesh's largest export item, are included in the duty-free list. However, leather, leather goods, and footwear will not benefit immediately as they are currently excluded.

The draft agreement, however, leaves scope for future discussions on including leather products, despite the sector accounting for more than 10% of Japan's export earnings, officials said.

At the briefing, Bashiruddin said the EPA would bring "significant commercial and economic benefits", helping expand trade, attract investment, and generate employment, while opening a new chapter in bilateral economic relations.

Safeguarding market access after LDC graduation

Former Bangladesh Trade and Tariff Commission member Mostafa Abid Khan said Bangladesh currently enjoys duty-free access to Japan as a least developed country—a facility that will continue until 2029.

"The EPA is crucial to retaining Bangladesh's export competitiveness in Japan after LDC graduation," he said, noting that tariff benefits would be phased in, meaning not all products would gain immediately.

He added that Bangladeshi exporters already supply global brands operating in Japan, reducing the risk of export decline. The agreement could also encourage greater Japanese investment, provided existing investment barriers are addressed.

Khan said Japan's exports of steel and raw materials to Bangladesh could rise initially. Imports of new and hybrid vehicles may also increase if included, potentially lowering prices in a market dominated by Japanese cars.

Trade flows: imports fall, exports rise

Data from Bangladesh Bank show that Bangladesh imported goods worth $1.81 billion from Japan in FY2023–24, down from $2.02 billion a year earlier. Major imports included iron and steel, vehicles, industrial machinery, raw materials, medical equipment, boards, eyewear, and photographic and cinematographic equipment.

On the export side, Bangladesh shipped goods worth Tk13,689 crore ($1.12 billion) to Japan in FY2023–24, up from Tk12,616 crore ($1.03 billion) the previous year. Garments dominated export earnings, followed by leather and leather goods, agricultural products, and jute goods.
(Japan export data are published by Bangladesh Bank in taka terms; dollar values calculated using the current exchange rate.)

Exporters welcome deal, urge swift implementation

Inamul Haq Khan Bablu, senior vice president of BGMEA, told TBS that Bangladesh must enter preferential and free trade agreements to remain competitive in global markets after graduating from LDC status. He described the Japan EPA as a precursor to such agreements and a positive development for the export sector.

"Japan is already an important market for Bangladesh, with strong potential. Products from brands such as H&M and Gap are exported there, and Japanese buyers are known for reliable payments and strict quality standards," he said.

Inamul Haq added that exporters who meet Japanese requirements are generally capable of supplying any global market.

Md Nasir Khan, chairman of Janice Shoes and vice president of the Leather Goods and Footwear Manufacturers and Exporters Association, told TBS that without bilateral agreements, it would be difficult for Bangladesh to survive in global markets after LDC graduation. 

He said reciprocal tariffs imposed by the United States have created new challenges, making such agreements a necessity. In that context, the Japan EPA is positive for Bangladesh's exports.

He cautioned that although Bangladesh has duty-free access to the Chinese market, exports remain limited due to unfinished procedural requirements. He expressed hope that implementation of the Japan EPA would not face similar delays.

Investment boost expected

Chief adviser's special envoy for international affairs Lutfey Siddiqi said Bangladesh initially lacked experience in negotiating such agreements but credited the current government for concluding the process.

Chowdhury Ashik Mahmud Bin Harun, executive chairman of BIDA, said Japanese investment in Bangladesh stands at around $500 million, far below Japan's global footprint.

"The absence of a structured agreement previously discouraged investment," he said, adding that the EPA could unlock investment in logistics, electronics, IT, and automobiles, accelerating technology transfer.

He noted that while countries like Vietnam have trade agreements with around 30 partners, Bangladesh is only beginning—a gap the EPA helps address ahead of LDC graduation.

Services trade liberalisation

Under the agreement, Bangladesh will open 97 services sub-sectors to Japan, while Japan will open 120 sub-sectors to Bangladesh across four modes of supply, expected to further stimulate investment and technology inflows.

A 2023 survey by Japan External Trade Organization (JETRO) found 214 Japanese firms operating in Bangladesh, with 72% planning expansion, citing low production costs. The survey noted that goods costing $100 to manufacture in Japan could be produced in Bangladesh at about 60% lower cost.

The negotiations have concluded at the negotiator level, with legal scrubbing and final approvals remaining before formal signing.