Amid hope of signing FTA with Japan, Tipu Munshi warns of consequences after LDC graduation

Commerce Minister Tipu Munshi has said that a Free Trade Agreement (FTA) or an Economic Partnership Agreement (EPA) with Japan would be inked within the next four years. 

His observation was incorporated in a joint statement that was issued on the occasion of launching a feasibility study aimed at signing the Bangladesh Japan FTA.

The feasibility study inauguration took place in the conference room of the Ministry of Commerce at the Bangladesh Secretariat, on Monday.

A three-member Japan delegation led by outgoing Japanese ambassador to Bangladesh Ito Naoki and senior secretary to the Ministry of Commerce, Tapan Kanti Ghosh, and a few other officials were present in the meeting. Earlier, Japan’s Chief Cabinet Secretary Hirokazu Matsuno inaugurated the joint feasibility study programme from Tokyo via a videoconference.

The commerce minister said his ministry has already taken initiatives to conclude regional trade agreements with various commercially important countries and trade blocs to expand Bangladesh’s export market and obtain duty-free access as the country would face potential challenges of transitioning from a least developed country to a developing one.

Japan is the world’s third largest economy and is an important trading partner of Bangladesh. The eastern-most nation is a potential market for Bangladesh’s products in the years to come.

Munshi said apart from commerce, there is a possibility of developing Bangladesh’s relations with Japan in the service and investment sectors, as well.

In this context, signing an FTA or EPA would be the first step to this end.

He said as part of this initiative, Japan and Bangladesh are jointly conducting a joint feasibility study. Based on the study outcome, it will be possible to start negotiations towards concluding an FTA or EPA between the two nations.

He said, “Bangladesh’s real crisis may start from 2026 onwards because Bangladesh will lose duty facilities offered by the developed nations as it graduates economically, at that time,” the commerce minister added.

He said: “Our main target will be signing any business agreements, be it an FTA or an EPA, before 2026. Hence, exporters may not face any problem while shipping products.”

He said as the country graduates, in 2026, various problems may arise over duties and quotas.

Munshi said Bangladesh’s GSP Plus entitlement may continue until 2029. But, it will be a bit difficult. Referring to Prime Minister Sheikh Hasina, he said it is essential to get agreements signed by 2026. “We have to prepare ourselves for this.”

He said Bangladesh has signed an FTA with Bhutan and talks are underway on signing such an agreement with Indonesia. “Recently, we have signed an initial agreement with Australia. Papers are ready to do the same with Nepal and Sri Lanka.”

He also said, currently Bangladesh is negotiating for such deals with India and China, too. But, it is true that nothing can be done overnight.

Tapan Kanti Ghosh, Senior Secretary to the Ministry of Commerce said that Bangladesh’s transition from a least developed country to a developing one is a significant accomplishment for the incumbent government. This achievement will create a positive image of Bangladesh across the world and create new opportunities for investment and trade as well together with some challenges.

Japanese Ambassador to Bangladesh Ito Naoki said the governments of Japan and Bangladesh have decided to start a joint feasibility study with a view to signing an Economic Partnership Agreement (EPA). In 2026, Bangladesh will transit from the Least Developed Country (LDC) list. In Bangladesh, there has already been a development worth mentioning.

Bangladesh will need a lot of investment after its transition. If it is possible to do that, the supply of various products will continue. Recently there have been a lot of developments in Japan-Bangladesh relations, he added.