"Japan-Bangladesh EPA", a landmark step in Bangladesh's trade diplomacy
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has said that the Japan-Bangladesh Economic Partnership Agreement (EPA) is a landmark step in Bangladesh's trade diplomacy. The BGMEA said the association and the entire ready-made garment family of Bangladesh remain deeply grateful to the government of Japan for its continued support in fostering sustainable economic growth and strengthening bilateral relations.
It said the Japan-Bangladesh Economic Partnership Agreement (EPA), signing on Friday in Tokyo, Japan marks a historic milestone in Bangladesh's trade diplomacy. This is Bangladesh's first-ever EPA, signed by Sk. Bashir Uddin, adviser for Commerce, Textiles and Jute, and Civil Aviation and Tourism of the government of Bangladesh, and HORII Iwao, state minister for Foreign Affairs of Japan. The agreement is the outcome of seven rounds of negotiations covering trade in goods and services and reflects a shared commitment to deepen economic engagement in a mutually beneficial manner.
Japan has long been Bangladesh's largest development partner, and as the country's largest ODA provider, its contributions have been instrumental in supporting Bangladesh's infrastructure development, industrial expansion, and overall economic transformation, said a press release. This agreement therefore represents not only a trade arrangement, but also the natural progression of a trusted and long-standing partnership. BGMEA also expressed its deepest appreciation to the interim government of Bangladesh for this timely and forward-looking initiative. As Bangladesh prepares for LDC graduation, securing stable and predictable market access through bilateral trade agreements has become an urgent national priority. In this context, the Japan-Bangladesh EPA is both strategic and timely.
From a trade perspective, the EPA is expected to significantly improve market access for Bangladesh's exports, particularly ready-made garments, which dominate Bangladesh's export basket to Japan. In FY2024-25, Bangladesh exported US$1,411.6 million worth of garments to Japan, while Japan's total global imports stood at approximately US$23 billion. Japan is the world's second largest garment importing country after the United States when considered as a single market. Despite this scale, Japan currently accounts for only about 3 percent of Bangladesh's total garment exports. As Bangladesh aspires to reach US$100 billion in garment exports by 2035, having the EPA in effect, increasing Japan's share to at least 10 percent should be a clear strategic objective. An initial assessment of the EPA shows that it favors the ready-made garment sector of Bangladesh by ensuring uninterrupted duty-free market access, and maintaining favorable rules of origin. At present, Bangladesh enjoys duty- free access to Japan under the GSP scheme. However, post LDC graduation, Bangladesh would otherwise face Japan's general MFN tariffs, which range from 8 to 15 percent for knitwear and from 10 percent to more than 15 percent for woven garments.
Under the EPA, customs duties on garment items will be eliminated entirely from the date of entry into force. Furthermore, Bangladesh is deeply thankful to Japan for the extraordinary flexibility extended in the rules of origin, particularly for garment products. Chapter 3 and Annex 2 of the agreement specify that garments produced under a single-stage processing will qualify for duty-free access in Japan under the EPA. This is similar to the current Japan GSP rules of origin and is among the most favourable arrangements for a garment-exporting country like Bangladesh. As the EPA creates a favourable and predictable trade environment, it is now imperative for Bangladesh to develop a clear roadmap to fully utilise its benefits and potential in line with the country's 100 billion dollar garment export vision. Bangladesh currently runs a trade deficit of approximately US$ 456 million with Japan; while the BGMEA believe the EPA will also play a significant role in reducing this gap.
It presents an opportunity to diversify exports beyond garments, while encouraging greater engagement from Japanese garment importers, retailers, machinery suppliers, and long-term investors. The Japan-Bangladesh EPA should be seen as the beginning of a broader and much-needed shift in Bangladesh's trade policy direction. The EPA should serve as a guiding light for further such agreements that will be required in the post-LDC period, along with the challenges of EU GSP+. Therefore, the EPA with Japan can be used as a negotiating guideline across other countries for the Ministry of Commerce and the government to fast- tracking negotiations and move forward without delay. The BGMEA also urged the Ministry of Commerce and all parties negotiating with the USTR to ensure that the signing is completed within this timeframe so that Bangladesh can start preparing itself with the preferential deal of utilizing U.S. cotton to attain zero tariff access.
