What benefits will Bangladesh get from EPA with Japan

Bangladesh is set to sign an Economic Partnership Agreement (EPA) with Japan just one week before the 13th parliamentary election, with the agreement scheduled to be signed on 6 February in Tokyo, Japan’s capital.

Commerce Adviser Sk Bashir Uddin and Commerce Secretary Mahbubur Rahman will be present at the signing ceremony. Sources at the Ministry of Commerce have confirmed this information.

Apart from a Preferential Trade Agreement (PTA) with Bhutan, Bangladesh does not have any bilateral economic or trade agreement with any other country. By signing the EPA with Japan, Bangladesh will begin this process.

The government believes that this will not only boost trade but also open up new possibilities for investment and employment. Dependence on the European Union (EU) and the United States will decrease, while Japan may emerge as a major market for Bangladesh. However, experts warn that some risks may also arise.

The initiative for a Bangladesh–Japan EPA was taken during the tenure of the now-ousted Awami League government. At that time, a joint research team was formed to lay the groundwork for negotiations. In its report published on 27 December 2023, the team identified 17 sectors and recommended integrated negotiations. Subsequent discussions progressed based on that report.

On 12 March 2024, both countries formally announced the launch of EPA negotiations, and the first round of talks began in Dhaka in May. After the political changeover on 5 August 2024, the discussions stalled. From November 2024, the interim government gave the issue priority and resumed talks, setting a target to sign the agreement within a year.

Subsequently, a total of seven rounds of meetings were held in the sequence Dhaka–Tokyo–Dhaka. The second round was held in Dhaka in November 2024, the third in Tokyo in December.

In 2025, the fourth round was held in Dhaka, the fifth in Tokyo, the sixth in Dhaka, and finally the seventh and final round in Tokyo in September, through which the draft agreement was finalised. On 22 December, the Ministry of Commerce officially announced the signing of the EPA with Japan at a press conference.

Commerce Secretary Mahbubur Rahman told Prothom Alo, “The EPA with Japan will be signed on 6 February. For this, I will travel to Tokyo with the commerce adviser. Along with trade and investment benefits, a major aspect of this EPA is that the services sector will be opened up for Bangladeshis in Japan.”

The EPA is essentially a plan to create a free trade area between the two countries. Under it, tariff and non-tariff barriers will be reduced, import quotas revised, trade in goods and services expanded, and a framework for investment cooperation established.

In 2026, Bangladesh will graduate from the list of Least Developed Countries (LDCs). After graduation, there are concerns that tariff benefits in developed-country markets may decline. Therefore, the EPA with Japan is being viewed as a long-term strategy to retain market access.

From the day the agreement is signed, 7,379 Bangladeshi products will receive immediate duty-free access to the Japanese market. On the other hand, 1,039 Japanese products will enjoy the same benefit in the Bangladeshi market.

Under the EPA, 97 Bangladeshi sub-sectors will be opened to Japan, while 120 Japanese sub-sectors will be opened to Bangladesh. Alongside goods, services, investment, and cooperation are also included.

The Ministry of Commerce says this will create a major opportunity for Bangladesh to export goods. In a notification to the World Trade Organization (WTO), Japan has stated that it will provide GSP facilities to LDCs and countries graduating from LDC status until 2029. Bangladesh sees the EPA as a long-term guarantee, because while GSP is temporary, the EPA is a binding agreement.

Experts say Bangladesh is often compared with Vietnam, but Vietnam has agreements with 30 countries, while Bangladesh is only just beginning. In the future, many more economic agreements can be signed, which will make it easier to address the challenges of LDC graduation.

Maria Howlader, secretary general of the Japan Bangladesh Chamber of Commerce and Industry (JBCCI), told Prothom Alo, “I do not fully know what is in the draft agreement. However, I understand that Bangladesh will benefit from it. We have always known about Japan’s concerns regarding Bangladesh’s customs procedures. We can assume that these concerns will no longer remain once the EPA is signed.”

The Ministry of Commerce says that although Bangladesh previously sought greater investment from Japan, the lack of a structural agreement hindered investment. The EPA will remove that obstacle. Japanese investment is expected to increase in infrastructure, manufacturing, automobile parts, and technology sectors. Opportunities will be created for Bangladeshi industries to join Japan’s regional and global value chains.

In addition, once the EPA takes effect, bilateral trade is expected to increase first. Ready-made garments, leather, light engineering products, agricultural goods, and processed foods will become more competitive in the Japanese market. Secondly, investment is likely to increase. Currently, Japanese investment in Bangladesh is around USD 500 million, which is very low on a global scale.

Furthermore, employment generation, technology transfer, and skill development opportunities will be created. In striving to meet Japan’s high standards, domestic industries will also improve their quality. After 2026, LDC-related benefits will decline, and the EPA with Japan may help absorb this shock.

However, the EPA is not entirely risk-free. As tariffs are reduced, technologically advanced Japanese products will enter the Bangladeshi market more easily. This may put pressure on some domestic industries, particularly small and medium enterprises.

There are also concerns that government revenue may decline due to lower import duties. In addition, strict quality, health, and environmental standards must be met to enter the Japanese market. Without adequate preparation, the expected export benefits may not be fully realised.

Experts said that strengthening industrial capacity and reforming the revenue structure are essential to maximise the benefits of the EPA, sector-specific preparation. With proper preparation, the first EPA with Japan could become a major support for Bangladesh in the post-LDC era.

When asked, Mustafizur Rahman, distinguished fellow of the private research organisation Centre for Policy Dialogue (CPD), told Prothom Alo that the EPA with Japan would be considered a significant step in making LDC graduation sustainable.

He said, this is because it opens not only market access but also the services sector. As for the revenue impact, it is not yet known, but it can be assumed that Bangladesh will receive some additional benefits from the EPA.

Japan is shifting investment away from China, and this can be leveraged. Bangladesh is creating a negotiation pool by signing an EPA with Japan, and that can later be used in bargaining with other countries or economic blocs, he added.