Bangladesh is working towards signing a Free Trade Agreement (FTA) or Economic Partnership Agreement (EPA) with Japan, Asia’s most promising export market, with the Ministry of Commerce having already prepared a relevant Memorandum of Cooperation (MoC).
“Bangladesh and Japan are both expected to sign the MoU in November this year,” Chief Commerce Secretary Tapan Kanti Ghosh told the Daily Star by phone yesterday.
For all the latest news, follow the Daily Star’s Google News channel.
This is the first step towards signing a trade agreement with Japan to maintain zero-duty benefits once Bangladesh upgrades from least-developed country (LDC) to developing country status in 2026.
Prime Minister Sheikh Hasina is due to visit Japan next month when negotiations for an FTA could begin, Ghosh said.
He said senior officials from Bangladesh and Japan had already discussed the issue in a videoconference recently.
Enjoying preferential trade benefits as an LDC, Bangladesh’s exports to the East Asian island nation have been growing rapidly, especially clothing items, due to strong demand.
Enjoying preferential trade benefits as an LDC, Bangladesh’s exports to Japan, especially clothing items, have been growing rapidly due to strong demand
Last year, it was worth $1.35 billion, a year-on-year increase of 14.40 percent, according to data from the Export Promotion Bureau (EPB). Of this amount, $1.10 billion came from clothing.
Japan is the only Asian country where Bangladeshi garment exports have crossed the $1 billion mark in the past few years.
Shipments of clothing items to Japan from Bangladesh have started to surge since April 2011, when Japan relaxed its rules of origin for LDCs and for the knitwear sector.
Previously, Japan did not allow zero duty on knitwear shipments to protect its domestic knitwear industry.
Last week, Japan’s Ambassador to Bangladesh, Ito Naoki, said garment shipments are expected to increase tenfold to $10 billion by 2030.
He said, however, that Bangladesh should improve its investment and business climate to sign an FTA or EPA and attract more Japanese investment.
Addressing an annual general meeting of the Japan-Bangladesh Chamber of Commerce and Industry in Dhaka, he said the number of Japanese companies in Bangladesh had tripled over the past decade, reaching 338 in 2022. .
Most are desperate to expand their businesses and want an FTA to be signed, he said.
Many Japanese companies have relocated their operations to other countries from Japan and China, Naoki pointed out.
A Japanese special economic zone at Araihazar in Nayaranganj will be the best in Asia in terms of facilities, infrastructure, labor relations and business environment, the ambassador said.
Japan is implementing mega-projects in Bangladesh, including a deep-sea port in Matarbari, a metro in Dhaka and a third terminal at Hazrat Shahjalal International Airport in Dhaka, which are expected to be completed in the next few years, it said. he declares.
According to Japan’s Ministry of Foreign Affairs, the country currently has 21 operational FTAs or EPAs.
They are with Singapore, Mexico, Malaysia, Chile, Thailand, Indonesia, Brunei, Association of Southeast Asian Nations (ASEAN), Philippines, Switzerland, Vietnam, India, Peru, Australia, Mongolia, TPP12 (Trans-Pacific Partnership), TPP11, European Union, United States, United Kingdom and Regional Comprehensive Economic Partnership.
Three other FTAs are underway with Turkey, Colombia, Japan-China-Republic of Korea, the foreign ministry also said.
In contrast, Bangladesh just signed a preferential trade agreement with Bhutan in December 2020.
Efforts to sign a Comprehensive Economic Partnership Agreement (CEPA) with India were taken last month.
Experts said that Bangladesh would benefit a lot from the proposed FTA or EPA because Japan was a major export destination and there was no possibility of losing as much tariff revenue as Bangladesh imposes on the import of Japanese goods.
However, it was the opposite in the case of China and India.
Economic giants are the major sources of Bangladesh’s imports. Bangladesh will lose a significant share of revenue from import duties if an FTA with China and CEPA with India are signed.
Bangladesh imported goods worth over $20 billion from China and earned nearly Tk 30,000 crore from import duties in the previous fiscal year.
Another Tk 20,000 crore was levied as customs duty on goods worth over $16 billion imported from India.