Japan EPA to cost Bangladesh Tk 20cr annually

The newly signed Economic Partnership Agreement (EPA) with Japan will cost Bangladesh less than Tk 20 crore annually in forgone import duties on Japanese goods, while potentially delivering substantial benefits through expanded exports and labour mobility to the world’s fifth-largest economy.

The February 6 agreement, signed in Tokyo, creates a heavily asymmetric arrangement that favours Bangladesh, according to a briefing by Commerce Adviser Sk Bashir Uddin held at the commerce ministry office in Dhaka yesterday.

Under the deal, Japan will provide immediate duty-free access to 7,379 Bangladeshi products while Bangladesh will grant the same privilege to just 1,039 Japanese items, a ratio of more than seven to one.

The number of duty-free Japanese products will increase gradually over 18 years. Bangladesh’s garment industry, the crown jewel of the export sector, stands to gain significantly from favourable terms that could enhance its competitiveness in the Japanese market.

Bangladesh’s garment industry stands to gain significantly from favourable terms that could enhance its competitiveness in the Japanese market

The agreement permits single-stage transformation, allowing manufacturers to enjoy zero-duty benefits even when using imported fabrics, Commerce Secretary Mahbubur Rahman said at the conference.

This provision addresses a key constraint for Bangladeshi exporters, who often rely on imported textiles due to limited domestic fabric production capacity.

The secretary also noted that Bangladesh, being a least developed country (LDC), enjoyed a privilege in some areas in the deal with Japan, a developed nation.

For instance, he said Bangladesh has been given 10 years of relaxation in the intellectual property rights which means Japan will not ask for the patent right of the goods in next 10 years from the date of enforcement of the EPA.

Beyond trade in goods, the EPA creates significant opportunities for Bangladeshi professionals in Japan’s ageing, labour-constrained economy.

The agreement enables skilled workers, including doctors, nurses, caregivers, and domestic helpers, to access Japanese employment markets, Adviser Bashir Uddin said.

Japanese investors are already establishing language training centers in Bangladesh to prepare workers for these opportunities.

The commerce adviser expressed optimism that students and professionals will be able to access opportunities in the G-7 nation, potentially creating a new avenue for foreign remittances.

The services component of the agreement also tilts in Bangladesh’s favour. Bangladesh secured access to 120 Japanese sub-sectors while opening 98 sub-sectors across 12 sectors to Japanese investment.

The EPA’s timing proves crucial as Bangladesh prepares to graduate from LDC status later this year, which typically triggers loss of preferential trade terms. While Japan has separately extended existing LDC benefits for Bangladeshi goods until 2029, the EPA provides a more permanent framework for market access.

The deal represents Bangladesh’s first comprehensive bilateral trade agreement with a major developed economy, following a more limited preferential trade arrangement with Bhutan in December 2020. It reflects the government’s strategy to secure preferential access with key trading partners before losing LDC privileges, with similar negotiations underway with other major economies to maintain export competitiveness in the post-LDC era.

The agreement awaits ratification by Japan’s parliament, the Diet, which is expected within the next few days as the general election in Japan was held February 8, said the commerce adviser. The adviser also said seven rounds of negotiation were held to sign the agreement between the two countries.

State Minister for Foreign Affairs in Japan HORII Iwao signed the agreement on behalf of Japan while Bashir Uddin from Bangladesh on behalf of Bangladesh.