Feasibility study initiated for trade deal with Japan

Bangladesh and Japan yesterday initiated a joint feasibility study on exploring the possibility of signing either a free trade agreement (FTA) or an economic partnership agreement (EPA) before the country becomes a developing nation in 2026.  

Commerce Minister Tipu Munshi and Japanese Ambassador to Bangladesh ITO Naoki announced this at a joint press conference at the ministry in Dhaka. The cabinet division of Japan announced the same at a press conference in Tokyo.

Under the study, 13 sectors bearing potential will primarily be explored by teams from Bangladesh and Japan, said Munshi, adding that both countries agreed on signing the agreement to explore trade potentials.

Bangladesh has been negotiating with some major trading partners to sign preferential trade deals with countries like Japan, Indonesia, India, China, Nepal and Sri Lanka.

The aim is to retain duty benefits once the country graduates from its current United Nations-established status of a least developed country (LDC).

Under the study, 13 sectors bearing potential will primarily be explored by teams from Bangladesh and Japan

Japan is a country with a lot of potential for Bangladesh as both investment and exports are on the rise. As a result, businesspeople of both countries are also demanding signing the trade deal, Munshi said.

The local exporters may face 5.5 per cent to 18 per cent duty on merchandise shipment to Japan when the LDC duty preference for Bangladesh is withdrawn for the graduation, said the minister.

The growth of apparel shipments indicate that its amount will cross $4 billion to $5 billion within the next five years from the $1.1 billion attained last fiscal year, said Munshi.

The total value of exports from Bangladesh to Japan was $1.35 billion while imports $2.41 billion, said the commerce ministry data.

The relationship between Bangladesh and Japan has become wider and deeper, said the minister.

Citing a historic relation between Bangladesh and Japan, he said Japan was going to turn into one of the major trading partners if the trade deal was signed.

A Japanese special economic zone was inaugurated at Araihazar in Narayangnaj on December 6 where some $1.5 billion will be invested and more than one lakh jobs can be created.

The EPA is a concept wider that an FTA as it includes investment, customs procedures, intellectual property rights, services and small and medium enterprises, not only tariff issues, said ITO Naoki.

The economic partnership of Bangladesh and Japan has been going forward despite the pandemic's effects. Bangladesh was really bouncing back from the pandemic, he said, lauding the country's economic growth over the years.

If an FTA or EPA is signed, it will add a new framework to bilateral relations, he added. Japan will coordinate with Bangladesh to hold the first meeting of the joint study group, he said.

In recent years trade between Bangladesh and Japan has grown significantly.

By 2030, there is a possibility that export of locally made garment items to Japan may cross the $10 billion mark and the amount of bilateral trade may also cross $20 billion, he said.

Some 85 per cent of companies which engage in trade with both Bangladesh and Japan want a deal to be signed, he said.

He said the local garment exporters may face duty of 8 per cent to 11 per cent on export to Japan after 2026.

The Japanese side also demanded that the Bangladesh government lower and waive tariff on import of Japanese goods to Bangladesh.

Senior Commerce Secretary Tapan Kanti Ghosh also spoke.