Japan's Economic Partnership Agreement (EPA) with Bangladesh has sparked a wave of reactions, with businesses and trade experts weighing in on its implications. The agreement, signed on Friday, promises strategic gains but also carries significant long-term risks as Bangladesh nears graduation from least developed country status.
Welcomed by Business Leaders:
Business leaders have generally embraced the deal, highlighting its potential to secure duty-free access for Bangladeshi garments and other products in Japan, a major market. This is a significant relief for exporters, who had been concerned about post-LDC graduation.
The agreement includes a trade facilitation chapter, requiring the government to streamline the business environment. It also addresses anti-corruption measures, with provisions for fines on traders misdeclaring imported goods, potentially curbing arbitrary harassment.
Potential Challenges and Concerns:
However, trade analysts point out several challenges. Bangladesh grants Japan duty-free access to a wide range of products, including garments, fabrics, motor parts, and more. This includes a commitment to gradually eliminate tariffs on Japanese car imports over 12 years, threatening revenue and domestic industries.
Former director general Mohammad Hafizur Rahman highlights potential harm to sectors like plastics, glass, and light engineering, where Japanese products will enter duty-free. He also warns about the impact on pharmaceuticals, where Japanese medicines and devices will enter duty-free, while Bangladeshi leather products, a major export, are not reciprocated.
Intellectual Property Rights:
The agreement's intellectual property rights chapter poses a significant concern. Bangladesh must accede to protocols like the Patent Cooperation Treaty (PCT), which could disrupt local industries. Delayed LDC graduation might lead to lost benefits, despite retaining formal status. The widespread use of copied foreign books and software could be disrupted, impacting employment and costs.
Subsidies and E-commerce:
The agreement restricts subsidies in transportation, logistics, and computer services, potentially favoring Japanese firms. This could hinder local companies' ability to compete. Additionally, e-commerce rules may impact cross-border data transfers, an area where Bangladesh needs regulatory and technical capacity.
Garments, Cars, and Agriculture:
In garments, Japan maintains duty-free access, but Bangladesh offers reciprocal treatment. This could affect the local textile sector. The EPA mandates duty-free Japanese vehicle imports, threatening government revenue. Japan didn't offer zero tariffs on leather products or all agricultural products, despite strong lobbying.
Business Voices on Capacity Building:
Business leaders emphasize the need for capacity building and logistics reforms. Syed Ershad Ahmed highlights the lack of focus on reducing logistics costs and developing skills, impacting productivity. Diversification and research & development are also crucial, with regulatory bottlenecks and customs hassles adding to the challenges.
Conclusion:
The EPA presents both opportunities and challenges. While it secures market access, it also requires careful consideration of intellectual property, subsidies, and capacity building. Balancing these aspects is key to ensuring a successful transition for Bangladesh's economy.
