Govt to sign trade deals with US, Japan before polls

The interim government is preparing to finalise two significant trade agreements with the United States and Japan before the national polls, aimed at securing greater market access and protecting export revenue following its upcoming graduation from least developed country (LDC) status.

Speaking to The Daily Star yesterday, Commerce Secretary Mahbubur Rahman confirmed that the Economic Partnership Agreement (EPA) with Japan will be signed on February 6 in Tokyo, while discussions continue regarding the format of the US trade deal originally scheduled for February 9 in Washington.

Given that the 13th general election is set for February 12, leaving minimal working days, the US agreement may proceed virtually instead.

The anticipated US deal centres on duty-free market access for Bangladeshi garments manufactured using American cotton. Under the proposed terms, garment exporters who can demonstrate that 60-70 percent of their products are made with US-sourced materials such as cotton will be exempt from the 20 percent tariff on those components.

Secretary Rahman also suggested that the Donald Trump administration is considering reducing the reciprocal tariff rate from its current 20 percent level, though the exact reduction percentage remains undetermined. This concession follows months of bilateral negotiations.

Meanwhile, Commerce Adviser Sk Bashir Uddin and the ministry’s trade negotiation team are travelling to Tokyo this week to sign what will be Bangladesh’s first full-fledged trade agreement with a major partner.

The advisory council approved the EPA on January 22, establishing a framework for preferential trade benefits after Bangladesh transitions from LDC status in November.

“We are ready to sign the EPA with Japan on February 6, according to our previous announcement,” Rahman said.

The agreement provides substantial market access benefits. Once it comes into effect, Japan will grant duty-free entry to 7,379 products representing 97 percent of Bangladesh’s export basket, including key garment items. Bangladesh will reciprocate by offering duty-free access to 1,039 Japanese products, phased in over 18 years.

Beyond goods, the EPA includes provisions for trade in services. Bangladesh has committed to opening 97 sub-sectors across 12 service categories to Japan, while Japan will open 120 sub-sectors to Bangladesh. This framework is expected to encourage Japanese investment and facilitate technology transfer.

Japan currently stands as Bangladesh’s largest Asian export market, with shipments approaching $2 billion annually, predominantly driven by garment demand. Last month, Japan confirmed it would extend duty-free market access for Bangladesh for three additional years through 2029.

These trade agreements represent critical components of Bangladesh’s strategy to maintain export competitiveness after losing LDC privileges.

Research estimates suggest the country could face export losses of up to $8 billion annually once LDC-related benefits expire, making preferential trade arrangements with major partners essential for sustaining economic growth.