Bangladesh, South Korea to sign Cepa today

Bangladesh and South Korea are set to formally sign a Comprehensive Economic Partnership Agreement (Cepa) today (4 August), having recently wrapped up negotiations on the bilateral trade deal.

Commerce Ministry Public Relations Officer Md Kamal Hossain confirmed the development to The Business Standard yesterday (3 August).

Once signed, the agreement will become Bangladesh's second bilateral free trade agreement after its Economic Partnership Agreement (EPA) with Japan, bringing the country closer to strengthening trade and investment ties with one of Asia's fastest-growing economies.

The agreement comes as the country steps up efforts to preserve preferential market access and expand bilateral trade and investment ahead of its LDC graduation. Bangladesh will gradually lose preferential access in many export markets after graduating, making bilateral trade agreements increasingly important to maintaining its competitiveness.

The breakthrough followed five days of negotiations involving around 60 representatives during the fifth and final round of bilateral talks, held in Seoul from 27 to 31 July.

Commerce Minister Khandaker Abdul Muktadir is scheduled to brief the media today following a Cepa Negotiation Conclusion Ceremony at the Ministry of Commerce. 

Meanwhile, South Korea's Trade Minister Yeo Han-koo, who arrived in Bangladesh yesterday to attend the ceremony, paid a courtesy call on Prime Minister Tarique Rahman at his office in the Cabinet Division of the Secretariat, according to the Prime Minister's Deputy Press Secretary Shahadat Hossain Shadhin.

During the meeting, the South Korean minister briefed the prime minister on the proposed Cepa, saying the agreement would significantly expand bilateral trade and economic cooperation while encouraging greater South Korean investment in Bangladesh.

Tarique urged South Korean companies to invest in Bangladesh's toy manufacturing, electronics, telecommunications, automobile, semiconductor and shipbuilding sectors. He also assured them that the Bangladesh government would provide the necessary support for investment in the shipbuilding sector.

During the meeting, Tarique also invited the South Korean president to visit Bangladesh.

Broader market access

Under the proposed agreement, South Korea has agreed to open 111 specialised services sub-sectors to Bangladesh.

According to officials, this is the first time in the history of the World Trade Organization (WTO) that a graduating or least developed country has been granted market access across such a large number of services sub-sectors.

In return, Bangladesh has agreed to open 95 services sectors to South Korean investors while protecting sensitive domestic industries and small and medium-sized enterprises (SMEs).

Commerce ministry officials said the proposed agreement could secure duty-free access for Bangladeshi RMG, leather and leather goods, pharmaceuticals, jute and jute products in the South Korean market. Some trade preferences may also continue after Bangladesh graduates from LDC status.

The agreement is also expected to include provisions on rules of origin for selected products, improve market access for information technology, engineering, financial services and education, simplify customs procedures through digital customs systems, strengthen intellectual property protection, promote technical cooperation, skills development, industrialisation and infrastructure development, and establish an effective dispute settlement mechanism.

Officials said the Cepa would also make it easier for Bangladeshi IT professionals, civil, mechanical and shipbuilding engineers, and marine technicians to obtain temporary visas and work permits in South Korea. 

Bangladeshi software firms would also be able to provide data processing and cloud services directly.

The agreement is also expected to create employment opportunities for Bangladeshi nurses, physiotherapists and skilled caregivers in South Korea under the country's legal employment framework.

Trade, investment opportunities

On the investment front, globally recognised South Korean engineering and technology companies are expected to gain greater opportunities to participate in Bangladesh's mega power plant projects, metro rail schemes, operations at the Matarbari deep-sea port and the expansion of 5G technology.

Bangladesh currently enjoys duty-free and quota-free (DFQF) market access for about 95% of its products in South Korea under the Asia-Pacific Trade Agreement (APTA) and WTO arrangements introduced in 2008, according to the Embassy of Bangladesh in Seoul.

Bilateral trade between the two countries currently stands at $1.39 billion, with Bangladesh exporting goods worth $491 million and importing $902 million from South Korea.

Bangladesh's major exports to South Korea include woven garments, knitwear, home textiles, leather and leather products, including footwear, frozen food, ceramic products, pharmaceuticals, jute and jute goods, tents and synthetic ropes.

Its main imports from South Korea include iron and steel, plastics and plastic products, machinery, mechanical appliances and boilers, paper and paperboard, and tanning and dyeing extracts.