Bangladesh’s signing of an economic partnership agreement with Japan has drawn a mixed response from businesses and trade experts, who see both strategic gains and significant long-term risks for the economy as the country approaches graduation from least developed country status.
Business leaders have broadly welcomed the deal, saying it secures continued duty-free access for Bangladeshi garments and several other products in the world’s third-largest economy. The Bangladesh Garment Manufacturers and Exporters Association said the deal ensures duty-free access for Bangladeshi garments and maintains favorable rules of origin, allowing garments to enter Japan tariff-free even after graduation.
However, trade analysts warn that under the agreement, Bangladesh will grant Japan duty-free access for a wide range of products, including garments, fabrics, accessories, motor parts, light engineering goods, chemicals, glass, metals, jewelry, and pharmaceuticals. This could undermine domestic producers that lack comparable scale and technology.
Mohammad Hafizur Rahman, former director general of the WTO Cell at the Ministry of Commerce and a member of Bangladesh’s EPA negotiation team, noted that duty-free imports of Japanese light engineering goods could undermine domestic producers. He also warned that strict intellectual property rules under the EPA could erode LDC benefits and jobs, as well as disrupt local manufacturing activities, raising costs and reducing employment.
The agreement also mandates the complete elimination of all import-related duties on Japanese vehicles over 12 years, potentially eroding government revenue. Despite strong lobbying, Japan did not offer zero tariffs on Bangladeshi leather products, deferring the issue to future negotiations.
Business voices stress the need for capacity building, logistics reforms, and diversification beyond agreements. Syed Ershad Ahmed, president of the American Chamber of Commerce in Bangladesh, emphasized the importance of reducing logistics costs, developing skills, and making the workforce more productive. He also highlighted regulatory bottlenecks and customs hassles, demanding full automation of customs clearance for raw material imports and enhancement of cargo handling capacity at Chattogram Port to reduce export lead time.
“Otherwise, only signing of EPA or FTA won’t bring any results,” Ahmed said.