EPA with Japan: What Bangladesh Gains from Trade Agreement

Dhaka, August 1, 2026 — Bangladesh has signed an Economic Partnership Agreement (EPA) with Japan, marking a significant milestone in bilateral trade relations. The agreement was signed in Tokyo by Bangladesh's Trade Advisor Sheikh Bashir Uddin and Japan's State Minister for Foreign Affairs HORII Iwao, after seven rounds of negotiations conducted in Dhaka and Tokyo.

The 1,272-page agreement contains 22 chapters covering trade in goods and services, investment, and economic cooperation. The Ministry of Commerce stated that the goal is to facilitate cooperation and make markets more transparent and competitive in fields such as trade, investment, services, intellectual property, labour, and the environment between the two countries.

📊 Key Benefits of the EPA

✅ Tariff elimination:

• Approximately 7,379 Bangladeshi products will receive 100 percent duty-free access to the Japanese market
• Conversely, 1,039 Japanese products will receive duty-free or preferential treatment in the Bangladeshi market
• The agreement covers trade in goods, services, investment, and economic cooperation
• It includes provisions on intellectual property, labour rights, and environmental protection

The government has stated that this agreement will serve as an important framework to strengthen the "strategic partnership" between both parties. The agreement will act as an integrated and sustainable guide for the economic, business, investment, and social development of both countries, strengthening not only commercial ties but also political and diplomatic relations.

👕 RMG Sector: The Biggest Winner

Japan is a high-value, quality-conscious market that aligns well with Bangladesh's move toward higher-value RMG products. Japanese buyers typically pay 10-15 percent more than EU buyers for comparable products, reflecting their emphasis on quality and long-term supplier relationships. With the EPA reducing tariff barriers, Bangladeshi exporters have a significant opportunity to expand market share in Japan.

The EPA's tariff elimination on garment lines directly benefits:

• 👕 Knitwear exporters: Previously faced 5-10% tariffs in Japan
• 👕 Woven garment manufacturers: Tariffs of 8-12% now eliminated
• 👢 Footwear and leather: Preferential access opens new growth avenue
• 🦢 Jute products: Duty-free access enhances competitiveness

👥 Industry Response

Maria Howlader, General Secretary of the Japan-Bangladesh Chamber of Commerce and Industry (JBCCI), welcomed the agreement. She told Prothom Alo: "As a result of this agreement, we are gaining duty-free access to the Japanese market, and secondly, investment from Japan in Bangladesh is likely to increase."

Maria Howlader believes that this agreement will increase Bangladesh's productivity, efficiency, and the capacity to produce high-quality products. She noted: "An opportunity has been created. Whether we can fully capitalise on it will determine what ultimately this agreement brings us."

💰 Investment and Economic Cooperation

Beyond tariff elimination, the EPA includes significant provisions for investment promotion and economic cooperation. Japanese companies are expected to increase investment in Bangladesh, particularly in sectors such as:

• 🔧 Manufacturing: Automotive parts, electronics, and machinery
• 💡 Technology: IT services, software development, and digital infrastructure
• 🌾 Agriculture: Food processing and agricultural technology
• 🛢️ Energy: Renewable energy and power sector investment

The agreement establishes a framework for protecting Japanese investments in Bangladesh, including provisions for dispute resolution, intellectual property protection, and technology transfer. This is expected to attract more Japanese FDI, which has historically been modest compared to Chinese or US investment.

📋 Strategic Significance for LDC Graduation

The EPA is particularly important as Bangladesh prepares for LDC graduation. Japan's GSP scheme for LDCs previously provided some preferential access, but the EPA ensures this access continues regardless of LDC status — a critical safeguard. The agreement also sends a positive signal to other trading partners, demonstrating Bangladesh's capacity for complex trade diplomacy.

If Bangladesh can successfully negotiate an EPA with Japan — Asia's third-largest economy — it strengthens the country's position in future FTA negotiations with the EU and UK. The Japan EPA serves as a template for how Bangladesh can maintain market access post-LDC graduation through bilateral agreements rather than relying solely on multilateral preferences.

🌏 Market Diversification Potential

With the EPA reducing tariff barriers, Bangladeshi exporters have a significant opportunity to expand market share in Japan, potentially increasing exports from the current $1.5 billion to $3-5 billion within 3-5 years. The agreement also opens doors for Japanese buyers to source more diverse products from Bangladesh, beyond the traditional RMG focus, including leather goods, jute products, and agricultural items.

🏛️ Rules of Origin and Compliance

The EPA includes updated rules of origin that are more flexible than Japan's previous GSP scheme for LDCs. Under the new provisions, Bangladeshi products can use inputs from Japan and still qualify for duty-free access, as long as sufficient value addition occurs in Bangladesh. This is particularly beneficial for the RMG sector, which imports significant quantities of raw materials including fabric, dyes, and accessories.

The agreement also simplifies documentation requirements, reducing the administrative burden on exporters. Japanese customs authorities will accept self-certification of origin by approved Bangladeshi exporters, streamlining the clearance process and reducing delays at Japanese ports. This is a significant improvement over the previous system that required third-party certification.

However, exporters must still comply with Japanese technical standards and SPS requirements. While the EPA includes provisions for mutual recognition of standards in certain areas, full harmonisation will take time. Bangladeshi exporters are advised to invest in understanding Japanese market requirements, including packaging standards, labeling regulations, and quality expectations that may differ from EU or US markets.