[🇧🇩] Strategic Aspect of Bangla-Japan Relation

[Saif]

Japan-Bangladesh EPA: A strategic blueprint for trade and investment promotion

The historic execution of the Japan-Bangladesh Economic Partnership Agreement (EPA) on February 6, 2026, represents a structural watershed in bilateral relations. As Bangladesh prepares for its formal graduation from Least Developed Country (LDC) status in November this year, the prevailing economi

thefinancialexpress.com.bd

Japan-Bangladesh EPA: A strategic blueprint for trade and investment promotion

Mohammed Forrukh Rahman

Published :
May 05, 2026 00:27
Updated :
May 05, 2026 00:27

The historic execution of the Japan-Bangladesh Economic Partnership Agreement (EPA) on February 6, 2026, represents a structural watershed in bilateral relations. As Bangladesh prepares for its formal graduation from Least Developed Country (LDC) status in November this year, the prevailing economic discourse has understandably centred on tariff reduction schedules and projected trade volumes. However, from a legal practitioner's perspective, the 290-page treaty text is much more than a reciprocal trade pact. It is a binding regulatory architecture that fundamentally redefines state sovereignty, agency mandates, and private commercial rights. The EPA is a complex ecosystem of platinum-tier investment protections, sovereign flexibilities, and stringent compliance traps that will reshape the operational landscape for all stakeholders.

BALANCING SOVEREIGN REGULATORY SPACE WITH INVESTMENT PROTECTION: The cornerstone of the EPA is its modernised investment regime, which officially supersedes the outdated 1998 Bilateral Investment Agreement under Article 9.21. For multinational corporations and foreign investors, Chapter 9 establishes a formidable new baseline of operational security. The treaty expressly prohibits host government from imposing "Performance Requirements" (Article 9.8). This dictates that the state can no longer legally mandate forced domestic content quotas, restrict sales based on export volumes, or demand the forced transfer of proprietary technology as a condition of market entry. Furthermore, Article 9.18 establishes a robust Investor-State Dispute Settlement (ISDS) mechanism, granting investors the right to bypass local courts and submit claims directly to binding international arbitration-such as ICSID or UNCITRAL-for treaty breaches, including indirect expropriation.

While this ISDS mechanism heavily exposes the state to international arbitration, the treaty carefully preserves essential sovereign policy space. For governments and state agencies, provisions like Article 9.15 provide a critical "Temporary Safeguard Measure." This grants the state the legal right to restrict cross-border capital transactions and profit repatriation during serious balance-of-payments and external financial difficulties. Additionally, Article 12.9 explicitly safeguards the state's right to utilise TRIPS flexibilities, such as compulsory licensing, to protect public health. This ensures the government's ability to regulate for the public good and maintain a domestic generic pharmaceutical industry is not paralysed by foreign intellectual property claims.

TRADE MECHANICS, CUSTOMS MODERNISATION, AND THE DIGITAL FRONTIER: On the trade front, the EPA grants reciprocal duty-free entry, but this benefit is strictly conditional upon satisfying the complex legal definitions of "Originating Goods." For local businesses and the Ready-Made Garment (RMG) sector, the treaty secures a highly coveted "single-stage processing" rule, allowing domestic manufacturers to utilise imported fabrics and still legally qualify for zero-tariff entry into Japan. Yet, the compliance burden is rigorous. Under Article 3.26, exporters and importers are legally mandated to maintain verifiable origin records for five years, exposing non-compliant supply chains to retroactive penalties and the forfeiture of preferential status.

This compliance mandate forces a concurrent modernisation of the domestic customs bureaucracy. The National Board of Revenue (NBR) is now required under Article 4.10 to issue binding "Advance Rulings" on tariff classifications before goods are imported. Recognising the profound administrative weight of this obligation, the EPA grants Bangladesh a 10-year transition period to fully implement advance rulings specifically for customs valuation. This transitional window demands massive capacity building within state agencies to align local port-level practices with binding treaty obligations.

This regulatory balancing act extends deeply into the digital economy. For tech multinationals, Chapter 10 acts as a specialised governing law (lex specialis). Article 10.11 strictly prohibits forced "Data Localisation," meaning the government cannot mandate that a foreign tech firm builds or uses local servers in Bangladesh as a condition of operation. Furthermore, Article 10.14 expressly forbids the state from demanding access to a company's software source code or algorithms. Consequently, state cybre agencies and telecom regulators must urgently audit domestic legislation-such as the Cybre Security Act and data protection guidelines-to ensure they do not inadvertently conflict with these binding EPA commitments, which could easily trigger state-to-state disputes.

COMPETITIVE NEUTRALITY AND THE ESG COMPLIANCE BASELINE: The EPA aggressively tackles market distortions caused by state intervention, opening new avenues for foreign and local businesses while driving cost-efficiency for the government. Chapter 11 introduces enforceable rights to transparent, impartial, and non-discriminatory public tendering, explicitly outlawing the use of "offsets," or mandatory local development conditions. For State-Owned Enterprises (SOEs), Chapter 15 enforces "Competitive Neutrality," legally binding them to act strictly in accordance with commercial considerations regarding price, quality, and availability. This prevents state-subsidized domestic monopolies from utilizing anti-competitive practices, ensuring a fair, level playing field for private enterprises.

Beyond traditional commerce, the EPA incorporates rigorous Environmental, Social, and Governance (ESG) standards for Labor (Chapter 17) and Environment (Chapter 18), legally binding both nations to core ILO conventions and the Paris Agreement. A sharp legal review, however, reveals a critical structural parameter: under Articles 17.6 and 18.7, these specific chapters are explicitly excluded from the binding State-to-State Dispute Settlement mechanism.

For the government, this exclusion protects state sovereignty, ensuring that international tribunals cannot impose punitive trade sanctions over domestic labor or environmental enforcement disputes. However, for local and foreign businesses, these treaty-level commitments establish a strict compliance baseline. With intersecting global regulations like the EU Corporate Sustainability Due Diligence Directive (CSDDD), corporate counsel must ensure that all local vendor agreements, supplier codes of conduct, and M&A due diligence protocols are legally aligned with these standards via private contracts to mitigate severe civil liability abroad.

THE STRATEGIC MANDATE: The 2026 Japan-Bangladesh EPA is a masterpiece of economic diplomacy, but an international treaty is not self-executing.

For sovereign states and regulatory agencies, the immediate mandate is regulatory coherence: auditing domestic laws, upgrading customs capacity, and establishing the inter-ministerial frameworks required to defend the state's actions under the treaty. For multinational and local enterprises, the mandate is corporate alignment: auditing supply chains for Rules of Origin compliance, restructuring joint ventures to leverage bans on performance requirements, and updating IP protocols to utilize newly available statutory shields.

By comprehensively understanding and operationalising the specific legal mechanics embedded within this EPA, governments can safely attract transformative capital, while enterprises can secure a legally fortified, highly predictable operational footprint in the region.

Mohammed Forrukh Rahman, Barrister-at-Law, is an Advocate of the Appellate Division of the Supreme Court of Bangladesh. His areas of practice include treaty law, international arbitration, and cross-border transactions.​

 

[Saif]

Red tape hobbles Japanese investment in Bangladesh

Says Akiko Okumura, executive vice-president of Jetro

www.thedailystar.net

Red tape hobbles Japanese investment in Bangladesh
Says Akiko Okumura, executive vice-president of Jetro

Rashidul Hasan and Jagaran Chakma

​

• Investment in Bangladesh trails peers like Vietnam​
• Bureaucracy and policy hurdles deter Japanese investors​
• Jetro urges reforms to existing business environment​

Despite decades of development ties, Japanese investment in Bangladesh has yet to match the scale seen in Vietnam or other peer economies. Official figures put direct Japanese investment in Bangladesh at around $350 million, compared to $79 billion in Vietnam.

The gap is less about a lack of interest and more about bureaucratic hurdles, policy inconsistencies and a shortage of mid-level managerial talent, according to Akiko Okumura, executive vice-president of the Japan External Trade Organization (Jetro).

Speaking to The Daily Star in an interview, she said the core challenge lies in Bangladesh’s business environment. “It needs improvement -- especially in tax systems, customs clearance and work permits.”

These issues, she explained, consistently feature in inquiries received by Jetro from both existing and prospective investors.

Her colleague Kazuiki Kataoka, country representative of Jetro’s Dhaka office, echoed the concern, adding that investors also face difficulties repatriating profits. “Many of these problems are related to bureaucracy.”

While logistics and energy shortages also persist, administrative inefficiencies and regulatory unpredictability weigh more heavily on investment decisions, the officials suggested.

They pointed to the complexity of Bangladesh’s administrative structure -- with 47 ministries compared to Japan’s 13 -- as a source of inefficiency.

Akiko Okumura

“This creates a lot of red tape,” said Okumura. “Simplifying the government structure could significantly improve the business environment.”

Rather than chasing new investors, Jetro recommends that Bangladesh prioritise resolving the concerns of companies already operating in the country.

“If existing problems are solved, new investors will automatically become interested,” Kataoka said. “The first step is to focus on the existing Japanese companies.”

This approach, the Jetro official added, would strengthen Bangladesh’s reputation as a reliable investment destination.

Okumura also noted that official figures do not capture the full picture, as many multinational Japanese firms channel investments into Bangladesh through third countries such as Singapore or Switzerland.

Beyond policy, human capital poses a challenge, according to the Jetro officials.

“Bangladesh does not lack skilled workers,” Okumura said. “But there is a shortage of middle managers.”

This gap limits companies’ ability to scale, as mid-level managers play a critical role in bridging operational and strategic functions. Addressing it will require sustained investment in training and leadership development, she added.

She said Jetro sees a positive signal in Bangladesh’s current political trajectory. “With the new government in place and elections not due for another five years, there is an opportunity to ensure political and social stability. This allows companies to plan long-term strategies.”

Such stability, Okumura believes, could serve as a catalyst for increased foreign investment, provided it is accompanied by meaningful reforms. Among the most pressing expectations from the government is institutional reform.

The Jetro officials welcomed recent moves toward ministerial consolidation but emphasised the need for deeper reform.

Meanwhile, Okumura said talks over Japanese involvement in operating the third terminal at Hazrat Shahjalal International Airport have resumed after nearly one and a half years.

Jetro views the development as a positive signal for bilateral cooperation. Talks were halted during the interim government period due to disagreements on service charges, operational control and revenue-sharing issues.

Following the formation of the new government, two rounds of discussions have taken place — one in March and another in April.

“We are hopeful. The fact that negotiations have restarted indicates a willingness to move forward,” Okumura said, adding that she expects progress to emerge in the coming months.

On trade, Bangladesh’s exports to Japan remain heavily concentrated in ready-made garments (RMG), accounting for roughly 80 percent of shipments.

Ando Yuji, Jetro’s senior director for global strategy in Southwest Asia, sees scope to diversify, but said it will require a shift in industrial policy.

“Bangladesh has built its competitiveness on abundant and low-cost labour,” he said. “To diversify, it needs to gradually move towards more capital-intensive industries.”

At the same time, labour-intensive sectors such as leather goods, footwear, home appliances and food processing could offer immediate opportunities, leveraging the country’s existing strengths, he added.

The recently signed Economic Partnership Agreement (EPA) between Bangladesh and Japan is expected to open new avenues for trade and investment, the Jetro officials noted.

While they refrained from detailing specific benefits, they indicated that the agreement would support broader economic cooperation and help address some of the structural issues highlighted by investors.​

 

[Saif]

What the Bangladesh-Japan trade agreement means for our bio-cultural resources

Just like the Bangladesh-US trade deal, the signing of the Bangladesh-Japan Economic Partnership Agreement (EPA) at the end of the interim government’s tenure has sparked much debate.

www.thedailystar.net

What the Bangladesh-Japan trade agreement means for our bio-cultural resources

Pavel Partha

VISUAL: ANWAR SOHEL

Just like the Bangladesh-US trade deal, the signing of the Bangladesh-Japan Economic Partnership Agreement (EPA) at the end of the interim government’s tenure has sparked much debate. There are concerns that this agreement could put the country’s sovereignty, agriculture and food systems, traditional knowledge, economy, and intellectual property rights at risk.

To ensure a stable and rules-based trade framework, Bangladesh has entered into this economic partnership agreement with a developed country for the first time. The 1,272-page agreement, consisting of 22 chapters and nine annexes, covers tariff reduction or elimination on goods, liberalisation of services, investment protection and promotion, customs and trade facilitation, and the protection of intellectual property rights. The EPA includes provisions about protecting genetic resources, geographical indications (GI), and intellectual property rights (IPR) in line with the World Trade Organization’s (WTO’s) Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.

However, Article 27.3(b) of TRIPS remains highly controversial for allowing patents on inventions derived from genetic resources and traditional knowledge. If implemented without adequate safeguards, this could threaten the rights of farmers, rural communities, and Indigenous peoples over their traditional knowledge, bio-cultural resources, and intellectual property. Therefore, this agreement should not be implemented without full public consent, meaningful participation, and a strong public framework to protect national interests.

Local genetic resources, traditional knowledge, and the biopiracy debate

Across the world, in the name of research, development, bioprospecting, or innovation, numerous cases of biopiracy have taken place without the consent of local and Indigenous communities. Vandana Shiva’s Biopiracy: The Plunder of Nature and Knowledge (1997) and Graham Dutfield’s Intellectual Property, Biogenetic Resources and Traditional Knowledge (2004) both highlight these dangers and call for stronger protection of community rights over traditional knowledge.

Beyond Ayurveda, Unani, and Chakma traditions, numerous medicinal plants are used in traditional healing practices among Bangalee and indigenous communities in Bangladesh. The EPA could put these local herbal resources, their traditional uses, and local markets at risk. Foreign companies may isolate specific pharmacological properties, create new formulations, patent them, and engage in unilateral commercialisation. There is no strong public framework or registry in Bangladesh to prevent biopiracy or protect traditional intellectual property.

Authoritarian patents and IPR

Philosophically, Bangladesh’s subaltern communities have long opposed the patenting of life. Yet, under the global patent regime, both biological and intellectual resources are increasingly appropriated. Several plants widely used in Bangladeshi traditional medicine have already been patented abroad. In 1990, the US company W.R. Grace patented Neem; in 1995, the University of Mississippi Medical Center patented turmeric; and in 1997, RiceTec attempted to patent Basmati rice—sparking global debates on intellectual property rights. Japan holds patents related to the Berela plant (Sida cordifolia), commonly used in Bangladesh. Japanese companies, including Fujifilm Corporation, Morishita Jintan Co. Ltd., and Kobayashi Pharmaceutical Co. Ltd., have patented applications involving Salacia reticulata, traditionally used in diabetes treatment.

Under the Bangladesh-Japan EPA, intellectual property includes copyright, trademarks, GI, industrial designs, patents, plant variety protection, integrated circuit layout designs, and the protection of undisclosed information. Article 12 of the EPA states that Japan and Bangladesh will work together to ensure effective and balanced protection of intellectual property in line with international agreements. But how can Bangladesh, with its still fragile institutional framework, build capacity equal to that of a wealthy and technologically advanced country like Japan?

According to the Bangladesh Patent Act, 2022, only technological inventions that are novel, involve an inventive step, and are industrially applicable are patentable. Natural objects, agricultural methods, literature, performing arts, music, artworks, and innovations derived from traditional knowledge are excluded from patentability.

On the other hand, under Article 12.33 of the EPA, any new, inventive, and industrially applicable product or process is patentable without discrimination. However, inventions against the interest of humans, plants, animals, or the environment cannot be patented, while plants, animals, and essentially biological processes are also excluded. However, microorganisms and microbiological processes may still be patented. This has serious implications. Traditional fermented foods, drinks, and many heritage agricultural products rely on microbial processes. The commercial patenting of such microorganisms, techniques, or preparations could undermine the collective ownership embedded in the cultural practices.

Will local innovators receive recognition?

While the EPA permits Bangladesh to develop its own unique (sui generis) laws for plant protection, it requires that these laws be “effective.” Because the TRIPS agreement fails to define “effectiveness,” the term often functions as a legal loophole. In practice, international trade pressure typically forces developing nations to abandon local protections in favour of rigid, corporate-friendly standards—such as Union for the Protection of New Varieties of Plants (UPOV)—effectively neutralising any laws designed to protect traditional farming practices.

In light of the Convention on Biological Diversity (1992) and TRIPS, Bangladesh enacted the Plant Variety Protection Act in 2019 as its sui generis system. However, this law has yet to become fully effective in protecting crop varieties. Many locally developed rice varieties created by farmers and breeders still await formal recognition. A local variety from Jashore known as Khaskhani was later refined through pure-line selection and released as BRRI Dhan-34. Through the EPA, will Japan recognise this rice as Khaskhani or simply as BRRI Dhan-34? Will the farmer who preserved and developed the original variety receive any share of the benefits? Bangladesh still lacks a national benefit-sharing guideline and policy for traditional knowledge and genetic resources. Through the EPA, foreign companies or institutions could use aromatic local rice varieties like Kalijira, Kataribhog, Chinigura, or Tulshimala, and develop innovations and patent them. This would violate farmers’ age-old seed rights.

If Bangladesh is required to join the International UPOV under the EPA, farmers could lose their traditional ownership of crop varieties, as UPOV recognises only breeders’ rights. This would strengthen the multinational seed companies and erode farmers’ rights to save and exchange seeds.

GI and Nakshikantha rights

Bangladesh enacted the Geographical Indications of Goods (Registration and Protection) Act in 2013. Although Nakshikantha is woven across the country, on April 24, 2024, it was granted GI of Jamalpur (GI-35). According to the Department of Patents, Designs and Trademarks, Bangladesh has 62 GI products. The EPA states that each country must protect GI under its own laws in a manner consistent with TRIPS (Article 12.25). This is intended to prevent misuse of names and the marketing of counterfeit or misleading products.

Since 1985, the Bangladesh-Japan Cultural Exchange Association has supported a Nakshikantha project involving rural women in Jashore’s Sharsha upazila, and Nakshikanthas collected from various sources have been exported to Japan. If GI protection is to be enforced under the EPA, will Nakshikantha be branded solely as Jamalpuri Nakshikantha, or will versions from other regions also receive GI recognition?

According to the agreement, the two countries will, through a sub-committee, regularly discuss and coordinate on the protection of intellectual property and will seek to recognise each other’s GIs. However, the agreement does not explain how the representation of farmers, cottage industry workers, artisans, weavers, and rural craftspeople will be ensured in this sub-committee.

Let citizens unite to protect public resources

The resources included within the EPA’s framework are part of the living heritage of both countries. Shaped by the complex interplay of nature and culture, they embody history, heritage, existence, identity, and pride. The commercialisation, degradation, appropriation, or control of these public resources without consent through any agreement will not be accepted. For a comprehensive public review, the agreement should be made accessible to people of all classes and groups in the country.

Pavel Partha, an ecology and biodiversity conservation researcher, is director at Bangladesh Resource Centre for Indigenous Knowledge (BARCIK).​