Bangladesh is on the cusp of signing its first-ever Economic Partnership Agreement (EPA) with Japan. a historic milestone that officials say will “open doors of possibilities” for trade, investment and industrial transformation as the country prepares to graduate from Least Developed Country (LDC) status in 2026.
The Ministry of Commerce confirmed that negotiations concluded successfully during a 10-day round in Tokyo from September 3-12, marking the end of nearly a decade of talks that began with a joint feasibility study in 2015. With only internal procedural steps remaining, the agreement is expected to be formally signed before the end of 2025.
“This EPA is not just a trade deal, it’s a strategic lifeline,” said Firoz Uddin Ahmed, Joint Secretary of the FTA Division at the Ministry of Commerce. “It will secure Bangladesh’s access to the Japanese market beyond LDC graduation and position us as a credible partner in global value chains.”
Why the EPA matters now
Bangladesh currently enjoys duty-free, quota-free access to many developed markets under LDC preferences. But once it transitions to developing country status in 2026, it risks losing these benefits, facing tariffs of over 18% on key exports like ready-made garments (RMG), textiles and leather goods to Japan.
Without an EPA, analysts warn, Bangladesh’s exports could become uncompetitive overnight. The agreement would lock in preferential tariff rates, ensuring continuity for exporters and shielding consumers from price hikes caused by increased import duties.
In the 2023–24 fiscal year, bilateral trade stood at $3.12 billion, with Bangladesh exporting $1.31 billion (mainly RMG, jute and leather) and importing $1.81 billion (machinery, electronics, vehicles). While a modest trade deficit exists, stakeholders believe the EPA will help balance trade flows through export diversification and enhanced market access.
Beyond tariffs: A comprehensive framework
The EPA goes far beyond traditional free trade, with finalised outlines spanning 17 key areas—including trade in goods and rules of origin, customs procedures and trade facilitation, investment protection and promotion, e-commerce and digital trade, intellectual property rights, labour standards and environmental safeguards, as well as technical cooperation in agriculture, information technology, and infrastructure—reflecting a comprehensive, 21st-century approach to economic partnership.
“This is a 21st-century agreement,” said Dr Md Jahangir Alam, Associate Professor of Japanese Studies at the University of Dhaka. “It’s not just about lowering tariffs, it’s about technology transfer, skills development, and integration into high-value supply chains. It will accelerate industrialisation and create quality jobs.”
Investment and strategic opportunities
Japan has already invested $507 million in Bangladesh across sectors like energy, textiles, fertilisers and infrastructure. But with Japan’s global foreign direct investment (FDI) stock exceeding $184 billion, officials see vast untapped potential.
“Japanese firms are looking for stable, ethical partners in Asia,” said Taskin Ahmed, President of the Dhaka Chamber of Commerce and Industry (DCCI). “This EPA signals Bangladesh’s readiness for high-standard investment—and could unlock billions in new capital.”
Key opportunities include export expansion for ready-made garments, pharmaceuticals, processed foods and agro-products; technology transfer in machinery, logistics and smart manufacturing; human resource development and potential pathways for skilled labour migration; and collaboration in green energy and infrastructure under Japan’s Quality Infrastructure Initiative.
Political momentum
The push for the EPA gained fresh impetus during Chief Adviser Dr Muhammad Yunus’s visit to Japan in May 2025, where he signed six memoranda of understanding on economic cooperation and held talks with Prime Minister Shigeru Ishiba.
“The Prime Minister explicitly affirmed Japan’s commitment to concluding the EPA by year-end,” a government source confirmed. “He praised Bangladesh’s reform trajectory under Dr Yunus’s leadership and called the agreement a ‘cornerstone of a new era’ in bilateral ties.”
A pivotal step for post-LDC Bangladesh
With no existing free trade or economic partnership agreements in place, the Japan EPA would be Bangladesh’s first—setting a precedent for future deals with the EU, UK, ASEAN and others.
As Dr Alam notes: “This isn’t just about Japan. It’s about proving Bangladesh can negotiate and implement high-standard trade agreements. That credibility will attract global partners and fuel sustainable growth in the Fourth Industrial Revolution era.”
For a nation standing at the threshold of economic transformation, the Japan EPA may well be the key that unlocks its next chapter.