Bangladesh and Japan are set to sign a memorandum of understanding on trade cooperation between them, which officials say will serve as a precursor to a free trade agreement (FTA).
The signing will take place during Prime Minister Sheikh Hasina’s visit to Japan on November 29-30, they also said.
Dhaka had long pursued a joint feasibility study to strike an FTA or Preferential Trade Agreement (PTA) to boost Bangladeshi exports to the developed Asian country.
However, Japan had been reluctant to move the proposal forward because such a request had not been made by its local business community.
As a Least Developed Country (LDC), Bangladeshi products enjoy duty-free and quota-free market access for almost all products. In the financial year 2021-22, Bangladesh’s exports to Japan amounted to $1.35 billion, up slightly from $1.18 billion the previous year.
On the other hand, in the financial year 2020-2021, Bangladesh’s imports from Japan cost the country $2.02 billion.
The Japan-Bangladesh Chamber of Commerce and Industry (JBCCI) recently conducted a survey of 300 companies, local companies and Japanese companies operating in Bangladesh, and found that the majority of them expected two nations sign a free trade agreement.
Japan’s Ambassador to Bangladesh Ito Naoki at a recent event in Dhaka hoped that bilateral trade between the two countries could reach $20 billion by 2030 from a current volume of over $3 billion. dollars, as apparel exports to the East Asian country are growing rapidly.
He said most companies that trade between the two countries want the two nations to sign an FTA to retain customs privileges after Bangladesh leaves the global club of poor countries in 2026.
However, Naoki said that Bangladesh would need to improve the business environment to sign any FTA, PTA or economic partnership agreement with Japan.
The Bangladesh Trade and Tariff Commission (BTTC) had previously studied the pros and cons of signing such an agreement with Japan, which concluded that an FTA with Japan would be extremely beneficial for Bangladesh in the post-PMA era.