Bangladesh-Japan economic partnership
Saume Saptaparna Nath and Muhammad Estiak Hussain :
Bangladesh and Japan are set to finalize the Economic Partnership Agreement (EPA) to bolster bilateral trade and investment between the two nations.
The relationship between the two nations has grown rapidly over the years and Japan is now one of Bangladesh’s most important strategic partners.
The relationship underwent a significant shift with the visit of Prime Minister Sheikh Hasina to Japan in April, which helped both countries strengthen their bilateral ties from a comprehensive partnership to a “strategic” one that will guard their economic prospects in the region.
Japan has developed as an important economic partner for Bangladesh, with Bangladesh’s principal exports being ready-made clothing and leather items.
Over the last decade, Japan has courted Bangladesh for signing an EPA to increase economic interaction.
The EPA is wider than a free trade agreement since it involves investment and services as well as tariff regimes.
The Bangladesh-Japan Economic Partnership ushers in a new age of economic development and collaboration among Asian nations.
The EPA is expected to be signed by the end of 2025 or early 2026.
The EPA between Bangladesh and Japan has the potential to benefit both countries.
The EPA corresponds with Bangladesh’s desire to maintain duty-free export benefits after exiting the group of least-developed nations (LDCs) in 2026.
Should it successfully surpass the LDC evaluation, Bangladesh’s capacity to retain its manifold existing lawful privileges, including preferential duty benefits, stands challenged.
As a result, if an EPA is not struck to maintain existing zero-duty privileges to Japanese markets, Bangladesh may incur duties ranging from 8 percent to 10 percent on commodities shipped to Japan.
In this scenario, Bangladesh would lose USD $7 billion in commerce each year compared to pre-2026.
Japan has shown an interest in providing duty-free trade facilities to Bangladesh throughout the post-LDC phase.
For Bangladesh, the EPA can open the door to the enormous Japanese market for medicines, agricultural, and fisheries goods, enabling export diversification and trade imbalance reduction.
Improved economic connections with Japan can also attract more foreign direct investment (FDI), encouraging industrial output and fostering economic growth.
Furthermore, because Japan is advanced in technology, Bangladesh will gain from the transfer of expertise in this field from Japan.
Bangladesh should seek additional FDI from Japan while also diversifying its export items, as the country’s export basket diversity remains low in comparison to Japan’s.
Due to its diverse product basket, Japan can easily supply at least 15 items for export.
The absence of an EPA between Bangladesh and Japan has engendered a milieu rife with challenges, which have predominantly manifested in the form of non-tariff barriers and procedural intricacies.
These impediments, arising from the dearth of a structured framework for economic cooperation, have acted as a deterrent for Japanese investors seeking to engage with the Bangladeshi market.
Under the EPA, these restrictions will be removed, so that Japanese enterprises may spend more and show greater interest in the country’s economic growth.
Bangladesh has a lot of potential in terms of supply chain diversification and developing high-quality human resources.
Japan can profit from increased access to Bangladesh’s competitive garment and leather sectors, therefore promoting trade and economic growth.
Despite these advantages, negotiating and signing an EPA between Bangladesh and Japan is likely to encounter a set of intricate challenges.
Addressing non-tariff barriers requires cooperation in aligning standards and procedures.
(Saptaparna is currently working as a Research Associate and Muhammad Estiak Hussain is a Research Assistant at The KRF Center for Bangladesh and Global Affairs. Abridged from southasianvoices.org).
