Bangladesh has opened a new chapter in its trade diplomacy by signing its first comprehensive economic agreement with a developed country.
On 6 February 2026, Bangladesh and Japan signed the Economic Partnership Agreement (EPA) in Tokyo.
The agreement was inked by Japan’s State Minister for Foreign Affairs HORII Iwao and Bangladesh’s Commerce Adviser Sk Bashir Uddin.
Economists and business leaders have described the EPA as a transformative step that will support Bangladesh’s transition in the post-LDC period.
The agreement is expected to expand bilateral trade, attract investment, and deepen cooperation in technology and supply chains.
Under the EPA, Japan will grant 100% duty-free access to 7,379 Bangladeshi products, including ready-made garments (RMG).
In return, Bangladesh will provide duty-free or preferential access to 1,039 Japanese products, facilitating the import of technology-intensive goods and industrial inputs.
Currently, Bangladesh exports garments worth US$1.41 billion to Japan, around 3% of its total garment exports, despite Japan being the world’s second-largest apparel importer after the United States.
With Bangladesh targeting $100 billion in garment exports by 2035, industry leaders aim to raise Japan’s share to at least 10%.
Calls for more trade deals with developed economies
Speaking to the media, Asif A Chowdhury, former president of the Japan Chamber of Commerce & Industry in Bangladesh (JBCCI), said the EPA would benefit both countries, particularly as Bangladesh faces the loss of duty-free access after graduating from LDC status.
“Without the EPA, Bangladesh would lose preferential access to the Japanese market in the post-LDC period. This agreement ensures continued duty-free access,” he said.
Asif, who is also CEO and managing director of Chowdhury Group, said the EPA would boost exports and investment, particularly in the Bangladesh Special Economic Zone, also known as the Japanese Economic Zone, in Araihazar, Narayanganj.
“We hope Japanese investors will invest around $1 billion in the Japanese Economic Zone in the near future,” he said.
He added that Bangladesh must accelerate negotiations on EPAs, FTAs and similar trade arrangements with other developed countries.
“Our global competitors, including neighbouring countries, are moving ahead by signing trade deals. Bangladesh cannot afford to fall behind,” he said, urging the new government to engage more closely with the business community.
Asif also stressed the need to prioritise trade agreements with the European Union, noting that India has already concluded an FTA with the EU. “Securing GSP Plus should be Bangladesh’s top priority,” he said.
Encouraging signal for future FTAs
Chairman of Policy Exchange Bangladesh (PEB) Dr Masrur Reaz said the EPA with Japan, one of the world’s advanced economies, would encourage other countries to pursue similar agreements with Bangladesh.
“Any EPA or free trade agreement helps boost trade and investment,” he said, adding that the Japan deal would help mitigate the loss of trade preferences following LDC graduation.
He also emphasised the need for domestic policy reforms, improved logistics and better trade facilitation to attract greater Japanese investment.
BGMEA calls EPA a historic milestone
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) described the Japan-Bangladesh EPA as a historic milestone in the country’s trade diplomacy.
In a statement signed by acting secretary Major (Retd) Md Saiful Islam, BGMEA also termed the upcoming US-Bangladesh trade talks scheduled for February 9 in Washington, DC, as another landmark development.
The association said the EPA is the outcome of seven rounds of negotiations covering trade in goods and services and reflects a shared commitment to deepen economic engagement.
From a trade perspective, BGMEA said the agreement would significantly improve market access for Bangladeshi exports, particularly RMG products, which dominate exports to Japan.
At present, Bangladesh enjoys duty-free access to Japan under the GSP scheme.
However, after LDC graduation, Bangladeshi garments would otherwise face Japan’s MFN tariffs ranging from 8% to 15% for knitwear and 10% to over 15% for woven garments.
Under the EPA, customs duties on garment products will be eliminated entirely from the date of entry into force.
BGMEA also welcomed Japan’s flexibility in rules of origin, noting that garments produced under single-stage processing will qualify for duty-free access, similar to existing GSP provisions and among the most favourable arrangements globally.
BGMEA said the EPA creates a predictable trade environment and called for a clear national roadmap to fully utilise its benefits in line with the $100 billion garment export target.
Bangladesh currently runs a trade deficit of about $456 million with Japan, and BGMEA believes the EPA will help narrow this gap while encouraging export diversification and deeper engagement from Japanese buyers, machinery suppliers and long-term investors.
Untapped trade potential
According to data from Bangladesh Bank and the Export Promotion Bureau (EPB), bilateral trade between Bangladesh and Japan stood at $3.12 billion in FY24, with exports accounting for $1.31 billion and imports $1.81 billion. Bilateral trade was higher at $3.93 billion in FY23.
Bangladesh received $47.84 million in Japanese foreign direct investment in FY24. Between 2001 and March 2025, cumulative Japanese FDI amounted to $507.14 million, representing 2.7% of Bangladesh’s total FDI inflows.
Bangladesh mainly exports T-shirts, jerseys, pullovers and handbags to Japan, while imports include vehicles, aircraft and transport equipment, machinery, electrical equipment and audio-visual devices.
Courtesy: The Daily Sun
Bd-Pratidin English/ AM
