Japan is one of Bangladesh’s key development partners. The two countries have been engaged in negotiations for more than two and a half years to finalize a bilateral Economic Partnership Agreement (EPA) aimed at deepening their economic ties. Officials expect the agreement to be completed by 2025. However, progress has been slowed by Bangladesh’s proposed reciprocal tariff agreement with the United States.
According to sources in the Ministry of Commerce and among business leaders involved in the discussions, during the final stage of the EPA negotiations, Japan has been citing the tariff concessions Bangladesh pledged to the U.S. as a benchmark. In other words, Japan is now seeking similar tariff privileges under the new trade deal.
Talks on the EPA between Bangladesh and Japan, a free trade agreement, began following a joint announcement by the two governments on December 12, 2022, to launch a “Joint Study Group on the Possibility of a Japan-Bangladesh EPA.” The study, which continued for over a year, concluded with a final report published on December 27, 2023. Since then, multiple rounds of negotiations have taken place, and stakeholders now expect the agreement to be finalized by 2025.
Bangladeshi businesspeople with trade links to Japan, as well as officials at the Ministry of Commerce, said EPA negotiations are nearing completion. However, since the beginning of 2025, a new element has entered the discussions—Bangladesh’s commitments under the proposed “Reciprocal Tariff Agreement” with the United States. Japan has reportedly urged that it be granted the same trade benefits Bangladesh has promised to the U.S., particularly focusing on the reduction of high import tariffs on Japanese automobiles. A senior official at the Ministry of Commerce, speaking on condition of anonymity, told Bonik Barta, “During the EPA negotiations, Japan is bringing the trade benefits Bangladesh has pledged to the United States as a reference point.”
When contacted about the progress of the Bangladesh-Japan EPA, Commerce Secretary Mahbubur Rahman told Bonik Barta, “We expect the Bangladesh-Japan EPA to be finalized within this year.”
Asked whether Japan has raised or referred to Bangladesh’s trade commitments to the U.S. in connection with tariff concessions, the Commerce Secretary said, “Under the rules of the World Trade Organization (WTO), if Bangladesh grants tariff concessions on specific products through unilateral, bilateral, or multilateral trade agreements, then any country with which Bangladesh later signs an FTA or EPA may seek similar benefits.”
The U.S. reciprocal tariff agreement has led Bangladesh to make several import commitments to secure tariff benefits from the United States. Among the most significant is the pledge to increase the country’s agricultural imports from the United States.
Under a memorandum of understanding (MoU) signed on July 20 with U.S.-based organization U.S. Wheat Associates, Bangladesh committed to importing 700,000 tons of wheat annually. As part of that pledge, the government has already approved the purchase of 220,000 tons.
Beyond wheat, Bangladesh has also promised to import more cotton and other agricultural products from the United States. According to government and trade officials, Bangladesh’s import of American goods and services is expected to rise by around $1.5 billion over the next 18 months, alongside growth in U.S.-bound exports.
The Bangladeshi government has also made major purchasing commitments, including Boeing aircraft, liquefied natural gas (LNG), and various industrial raw materials. Discussions have also focused on simplifying customs procedures and expanding the use of special bonded warehouses to increase cotton imports.
A source at the Commerce Ministry says Japan now expects the same trade advantages that Bangladesh has extended to the United States. A Bangladeshi businessman familiar with the matter noted that Japan’s key demand centers on reducing the high import duty on Japanese automobiles.
Abdul Haque, former president of the Japan-Bangladesh Chamber of Commerce and Industry (JBCCI), told Bonik Barta, “Our main priority in the EPA with Japan should be protecting national interests. Japan may seek tariff reductions on automobile imports. But that shouldn’t be allowed. Instead, we want the agreement to help increase Japanese investment in Bangladesh.”
Anwar Shahid, Vice President of the Japan-Bangladesh Chamber of Commerce and Industry (JBCCI), told Bonik Barta, “The negotiation phase with Japan has already ended. The reason for mentioning the commitments made to the United States now is ensuring benefits. Whether we grant such benefits or not will be our decision. Since we are entering into a bilateral agreement with Japan, I don’t think any clause or provision of the WTO is relevant here. Japan will try to secure the maximum advantage in the negotiations over the EPA, that’s natural. They are referencing Bangladesh’s commitments to the U.S. as a negotiation tactic. We will move forward based on what we can afford to offer. Japan will act in its national interest, just as we will protect ours.”
Bangladesh’s key imports from Japan include machinery and mechanical devices, electrical machines and equipment, iron and steel products, chemicals, plastics and plastic goods, as well as automobiles and auto parts. Major Bangladeshi exports to Japan consist of ready-made garments, leather goods, seafood (fish and shrimp), home textiles, jute goods, and agricultural products such as fresh vegetables and fruits.
According to the central bank’s data, Bangladesh imported goods worth $1.81 billion from Japan in FY 2023–24. Data from the Export Promotion Bureau (EPB) shows that during the same period, Bangladesh exported $1.31 billion worth of products to Japan. As of March 2025, Japan’s cumulative foreign direct investment (FDI) stock in Bangladesh stood at $507.1 million. Meanwhile, according to the Economic Relations Division (ERD), Japan’s total committed loans to Bangladesh reached $32.32 billion by the end of FY 2023–24, with $22.36 billion already disbursed.
The final report by the Joint Study Group formed to assess the possibility of signing an Economic Partnership Agreement (EPA) between Bangladesh and Japan stated that the agreement would bring a new dimension to bilateral economic relations. However, it also identified several structural challenges for Bangladesh. The report noted that Japan is advanced in technology and investment capacity, while Bangladesh holds significance as a labor-intensive economy with a rapidly growing market. In this sense, the two economies are complementary. A comprehensive EPA, therefore, would greatly expand bilateral trade and investment.
The report further mentioned, “Bangladesh is now preparing to face the post Least Developed Country (LDC) graduation challenges, including trade-related challenges, and has decided to conclude regional trade agreements with existing and potential trade partners to retain its market access and expansion.” In this context, an EPA would serve as a vital tool to help Bangladesh’s export sector remain competitive.
The Joint Study Group identified a total of 17 areas for negotiation. These include Trade in Goods, including Trade Remedies; Rules of Origin; Customs Procedures and Trade Facilitation (CPTF); Sanitary and Phytosanitary Measures (SPS); Technical Barriers to Trade (TBT); Trade in Services; Investment; Electronic Commerce; Government Procurement; Intellectual Property; Competition/Subsidies/State-owned Enterprises; Improvement of the Business Environment; Labor; Environment; Transparency; Cooperation; and Dispute Settlement.
The report identified Bangladesh’s main challenges as political and policy uncertainty, infrastructure deficiencies, bureaucratic complexity, and weaknesses in international standards and certification systems. Japan, on the other hand, emphasized the importance of investment protection, a stable market environment, and transparency in business practices. According to the Joint Study Group, signing the agreement would bring the two countries closer, increase trade and investment flows, and contribute to sustainable development. However, Bangladesh will need to implement reforms and improvements in domestic policy, legal frameworks, and trade-supporting infrastructure to realize these benefits.
A series of discussions has been held between Bangladesh and Japan to implement the Economic Partnership Agreement (EPA). The fifth round of meetings took place in Tokyo from April 20-26, 2025. According to a statement from Japan’s Ministry of Foreign Affairs, “both sides had a fruitful discussion on the way forward for future negotiations and on negotiating areas such as Trade in Goods, Rules of Origin, Customs Procedures and Trade Facilitation, Trade in Services, Investment, Electronic Commerce, and Intellectual Property.”
The statement also mentioned that both sides decided to work on scheduling the dates for the sixth round of negotiations through diplomatic channels. The statement also mentioned that both sides exchanged draft documents during the meeting.
The sixth round of talks was held in Dhaka from June 21 to 26 in a hybrid format, combining in-person and online sessions. A statement from Japan’s Ministry of Foreign Affairs said that both sides had fruitful discussions on the way forward for future negotiations and on negotiating areas such as Trade in Goods, Rules of Origin, Customs Procedures and Trade Facilitation, Trade in Services, Investment, Electronic Commerce, and Intellectual Property.
The seventh round of meetings was held in Tokyo from September 3 to 12, also in a hybrid format. In its statement on the meeting, Japan’s Ministry of Foreign Affairs said the discussions covered multiple areas such as Trade in Goods, Rules of Origin, Trade in Services, Investment, Electronic Commerce, and Intellectual Property. The statement further noted that both parties agreed to maintain the momentum of the negotiations and move toward finalizing the agreement at the next meeting.
Explaining what kinds of benefits Bangladesh and Japan could offer each other under the Economic Partnership Agreement (EPA), experts said Bangladesh could gradually reduce tariffs on Japanese industrial products such as machinery, vehicles, and electronics. It could also offer investment incentives in Special Economic Zones. In addition, Bangladesh could extend limited benefits in selected service sectors, such as logistics, banking, and ICT, allow restricted access to public procurement, harmonize its technical and phytosanitary standards, and create opportunities for joint ventures in green energy, digital trade, and technology transfer.
In return, Japan could provide duty-free or preferential market access for Bangladeshi goods such as garments, textiles, leather, jute, and processed agricultural products, as well as for service sectors like home care and elderly care. Japan could also ease work permits and introduce pathways for residency or citizenship for Bangladeshi professionals, innovators, and students pursuing higher education in Japan. Additionally, Japan could enhance investment in Bangladesh’s industrial sector, facilitate the transfer of advanced technologies and skills, and help integrate Bangladeshi companies more effectively into global supply chains.
Experts also noted that Japanese companies could produce in Japanese Economic Zones within Bangladesh and export goods to Japan duty-free, creating substantial employment opportunities. A framework built on gradual liberalization or a negative list for sensitive sectors could attract high-value investments, strengthen industrial and technological capacity, ensure long-term market access, and promote trade diversification and deepening between Bangladesh and Japan.
In the context of Bangladesh’s trade surplus with the United States and trade deficit with Japan, a Bangladesh–Japan Free Trade Agreement (FTA) can be designed to ensure a balance of mutual benefits, said Professor Dr. Suborna Barua, Chairman of the Department of International Business at the University of Dhaka (DU). Speaking to Bonik Barta, he added, “With reference to the commitments Bangladesh has made to the United States in exchange for reciprocal tariff reductions, similar preferential arrangements can be extended to Japan, given the historical trade relationship and future potential between the two nations. This could make Bangladesh relatively more advantageous overall. However, the nature of benefits would differ significantly, as Bangladesh maintains opposite trade dynamics with the two countries—a substantial surplus with the U.S. (exports exceeding imports by around $6 billion on average in 2024) and a deficit with Japan (imports exceeding exports by nearly $0.5 billion on average). Such arrangements would not only benefit Japan but also help Bangladesh greatly expand its export destinations.”