B Mirror Report: The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has described the Japan-Bangladesh Economic Partnership Agreement (EPA) as a historic and strategic breakthrough in the country’s trade diplomacy.

In a press release, BGMEA said the association, along with the entire ready-made garment (RMG) sector, is deeply appreciative of the Government of Japan for its longstanding cooperation and support in promoting sustainable economic development and strengthening bilateral ties between the two countries.

The Japan-Bangladesh EPA was signed on Friday in Tokyo, marking Bangladesh’s first-ever Economic Partnership Agreement. The agreement was signed by Adviser for Commerce, Textiles and Jute, and Civil Aviation and Tourism Sk. Bashir Uddin on behalf of Bangladesh, and State Minister for Foreign Affairs of Japan HORII Iwao.

The agreement is the result of seven rounds of negotiations covering trade in goods and services, reflecting the shared commitment of both nations to deepen economic cooperation in a mutually beneficial manner.

Japan has been Bangladesh’s largest development partner for many years and remains the country’s biggest provider of Official Development Assistance (ODA). Its contributions have played a vital role in Bangladesh’s infrastructure development, industrial growth, and overall economic transformation. BGMEA noted that the EPA represents not just a trade deal, but the natural evolution of a trusted and enduring partnership.

The association also expressed its sincere gratitude to the interim government of Bangladesh for taking this timely and forward-looking initiative. As Bangladesh moves towards graduation from Least Developed Country (LDC) status, securing predictable and stable market access through bilateral trade agreements has become a national priority. In this context, BGMEA termed the Japan-Bangladesh EPA both strategic and timely.

From a trade standpoint, the EPA is expected to substantially enhance market access for Bangladeshi exports, particularly ready-made garments, which dominate Bangladesh’s exports to Japan. In FY2024-25, Bangladesh exported garments worth US$1,411.6 million to Japan, while Japan’s total global garment imports amounted to around US$23 billion.

Japan is the world’s second-largest garment importing country after the United States when considered as a single market. Despite this, Japan currently accounts for only about 3 percent of Bangladesh’s total garment exports. BGMEA said that to achieve the country’s target of US$100 billion in garment exports by 2035, increasing Japan’s share to at least 10 percent should be a key strategic goal.

An initial review of the EPA indicates that it strongly favours Bangladesh’s RMG sector by ensuring uninterrupted duty-free market access and maintaining favourable rules of origin. Currently, Bangladesh enjoys duty-free access to Japan under the GSP scheme. However, after LDC graduation, Bangladeshi exports would otherwise face Japan’s MFN tariffs, ranging from 8 to 15 percent for knitwear and 10 percent to over 15 percent for woven garments. Under the EPA, customs duties on garment items will be completely eliminated from the date the agreement comes into force.

BGMEA also expressed deep appreciation for Japan’s exceptional flexibility regarding rules of origin. According to Chapter 3 and Annex 2 of the agreement, garments produced under single-stage processing will qualify for duty-free access to the Japanese market. This provision mirrors Japan’s current GSP rules of origin and is considered one of the most favourable arrangements for a garment-exporting country like Bangladesh.

As the EPA creates a stable and predictable trade environment, BGMEA stressed the need for Bangladesh to develop a clear roadmap to fully utilise the agreement in line with its long-term export ambitions.

Bangladesh currently faces a trade deficit of approximately US$456 million with Japan. BGMEA believes the EPA will contribute significantly to narrowing this gap by encouraging export diversification and increasing engagement from Japanese buyers, retailers, machinery suppliers, and long-term investors.

The association noted that the Japan-Bangladesh EPA should be viewed as the beginning of a broader shift in Bangladesh’s trade policy, particularly in the post-LDC period and in addressing future challenges such as EU GSP+. BGMEA suggested that the agreement could serve as a model for negotiating similar trade deals with other countries.

BGMEA also urged the Ministry of Commerce and relevant stakeholders engaged in negotiations with the United States Trade Representative (USTR) to complete discussions within the stipulated timeframe. This would allow Bangladesh to prepare for preferential market access by leveraging U.S. cotton to achieve zero-tariff benefits.