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Bangladesh Prepares for First Free Trade Deal with Japan, Eyes Four More Countries and RCEP Entry

Bangladesh Prepares for First Free Trade Deal with Japan, Eyes Four More Countries and RCEP Entry

Published: 2025-08-30 02:19:31 | Source: Tahirul Islam, Special Correspondent, Dhaka.
Dhaka, Aug 30, 2025 — Bangladesh is set to sign its first-ever free trade agreement (FTA) in history with Japan this December under an Economic Partnership Agreement (EPA), as part of a broader strategy to secure market access after the country’s graduation from the Least Developed Countries (LDC) category in November 2026.

Commerce Secretary Mahbubur Rahman confirmed that negotiations with Japan are in the final stage, with the last round scheduled in Tokyo from September 3 to 13. “Japan has shown great interest and commitment in this deal. The process has reached its concluding phase, and we expect to finalize the EPA within the government’s set timeframe,” Rahman told reporters.

The EPA is expected to ensure duty-free access for Bangladeshi exports, particularly in the apparel sector, which currently enjoys tariff exemptions under the LDC scheme. Without the EPA, Bangladeshi garments would face tariffs of over 18% in Japan after 2026. Every year, Bangladesh exports apparel worth around $1.6 billion to Japan. The deal also covers 17 broad areas, including goods and services trade, customs procedures, e-commerce, investment, government procurement, intellectual property, labor, environment, and dispute settlement.

The Ministry of Commerce revealed that five rounds of negotiations have already been completed, with 21 working groups holding 55 sessions on sectoral issues. Japan has reportedly made several concessions in favor of Bangladesh, signaling strong commitment to the agreement.

Business leaders have welcomed the move. Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Administrator Md. Hafizur Rahman said, “FTAs will boost trust, investment, and trade. Alongside bilateral deals, Bangladesh should also pursue regional trade agreements to overcome post-LDC challenges.”

Along with Japan, Bangladesh is preparing to sign FTAs or EPAs with at least four more countries by November 2026. These include South Korea, Singapore, Malaysia, and the United Arab Emirates (UAE). A Bangladeshi delegation is currently visiting South Korea for the first round of talks on an EPA. Negotiations with Singapore have also entered the formal stage.

Officials clarified that FTAs do not automatically mean zero tariffs on all products. Sensitive sectors, such as automobiles in the case of Japan, will remain under protective tariffs to safeguard domestic industries. In some cases, tariffs are reduced gradually, while governments also reserve the right to impose duties on luxury goods in times of foreign exchange crises.

Meanwhile, Bangladesh is planning to join the China-led Regional Comprehensive Economic Partnership (RCEP), the world’s largest trade bloc covering 15 Asia-Pacific countries with a combined market size of $26.3 trillion and 2.3 billion people. A feasibility study suggests Bangladesh’s exports could rise by $5 billion annually if it joins RCEP.

The government also has long-term plans to pursue trade deals with the United States, European Union, Canada, China, Indonesia, Sri Lanka, Brazil, Thailand, Argentina, Australia, Saudi Arabia, and through regional forums such as BIMSTEC.

Progress, however, has been slow with India. Following the August 2024 political transition, talks on a Comprehensive Economic Partnership Agreement (CEPA) with India have stalled, though a feasibility study previously estimated that Bangladesh’s exports could grow by $3–5 billion within a decade of signing such a deal.

So far, Bangladesh has signed only one preferential trade agreement (PTA) — with Bhutan. The upcoming EPA with Japan will mark a milestone as the country’s first comprehensive free trade pact, expected to create jobs, diversify exports, attract Japanese investment in automobiles and ICT, and strengthen Bangladesh’s position in global trade networks.
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