The signing of the Bangladesh–Japan Economic Partnership Agreement (EPA) on 6th February 2026 is being viewed as a significant development for Bangladesh’s textile and ready-made garment (RMG) sector, as the country prepares to graduate from Least Developed Country (LDC) status.
The agreement follows seven rounds of negotiations held alternately in Dhaka and Tokyo, with the final round concluded in September 2025. The Ministry of Commerce formally announced the decision to sign the EPA on 22nd December 2025.
Under the agreement, 7,379 Bangladeshi products will receive immediate duty-free access to the Japanese market, while 1,039 Japanese products will be granted similar access to Bangladesh, according to officials from the Ministry of Commerce.
Commerce Secretary Mahbubur Rahman has said the agreement’s significance lies not only in expanded trade and investment cooperation, but also in the opening of Japan’s services sector to Bangladeshi professionals, which is expected to create new opportunities beyond goods exports.
A major feature of the EPA is the shift in rules of origin for garments from a “double stage” to a “single stage” transformation requirement. This change allows Bangladeshi exporters to qualify for duty-free access to Japan by undertaking only the final assembly or sewing process domestically, rather than producing both the fabric and the finished garment within the country.
Industry participants say this change provides manufacturers with greater flexibility to source high-end, synthetic and specialised fabrics from global suppliers, including Japan, without facing the 10%–11% tariffs typically imposed on non-LDC developing countries. The increased sourcing flexibility is expected to enhance pricing competitiveness and support a move towards higher-value fashion segments while strengthening Bangladesh’s position in the Japanese market.
Without the EPA, Bangladesh’s graduation from LDC status in 2026 would have led to the loss of duty-free access currently available under the Generalised System of Preferences (GSP), potentially resulting in tariffs of between 10% and 18%. The EPA makes duty-free access to Japan legally binding and permanent, providing greater certainty for exporters and helping Bangladesh compete with regional rivals such as Vietnam and Cambodia.
The agreement also aligns with Japan’s efforts to diversify supply chains away from China. Policymakers and industry observers say the EPA positions Bangladesh as a key beneficiary of this “China Plus One” strategy. The deal is expected to encourage increased Japanese foreign direct investment into Bangladesh’s primary textile sector, including spinning, weaving and dyeing, which has traditionally been a weak link in the country’s value chain.
Japanese companies such as NICCA Chemical and Sumitomo are already expanding operations in the Bangladesh Special Economic Zone, introducing advanced textile chemicals and high-speed machinery. The EPA is also expected to support a gradual shift from basic cotton garments towards man-made fibres, technical textiles and high-performance apparel.
In addition, the opening of 120 Japanese sub-sectors under the agreement is expected to facilitate greater access for Bangladeshi textile engineers and fashion designers to training, collaboration and technology exchange in Japan.
While Japan has extended GSP benefits for graduating countries until 2029, policymakers view the EPA as a more durable and legally secure framework to safeguard long-term market access as preferential trade arrangements begin to phase out following LDC graduation.
