South Korea places a high value on safety, sanitation, and technical standards. However, Bangladesh\u2019s small firms, which account for approximately 90% of the country\u2019s industrial units, may struggle to fulfill these demands
\nMehedi Hasan
\nBangladesh is poised to graduate from its status as a least-developed country (LDC), creating a \u201cpost-LDC dilemma\u201d for its trade due to the expiration of duty-free, quota-free (DFQF) access to approximately 95% of its products in South Korea. Both nations are eager to sign an Economic Partnership Agreement (EPA) that will offer tariff cuts in a wide range of areas, including goods, services, investment, and labor, helping to overcome post-LDC challenges. However, Bangladesh must be strategic in safeguarding its interests.
\nAccording to the notes of Commerce Secretary Mahbubur Rahman, this EPA covers duty rationalization, investment, regional value addition, trade in services, and other components, presenting it as a \u201ctrade and investment promotion framework.\u201d Hence, in practical implementations, Bangladesh can bargain for not only zero tariffs but also binding rules on investment protection, service-sector market access, and cooperation clauses. Korean delegates are eager to foster infrastructure and industry projects in Bangladesh for Korean firms. They also emphasized the electronics and digital industries. South Korean Ambassador Park Young-sik is expected to increase Bangladesh\u2019s RMG-related imports to South Korea and hopes to spur Korean FDI in Bangladesh during the EPA period.
\nNow it\u2019s time to witness a data snapshot of South Korea-Bangladesh trade relations. In 2022, bilateral trade reached $3.035 billion, which is 38.7% higher than in 2021. By 2023, Bangladesh had imported $1.62 billion from Korea and exported $649 million, resulting in a significant trade deficit. Bangladesh places a high emphasis on the textiles and RMG sectors for its exports. Yet, Bangladesh\u2019s RMG market share in Korea remains low (around 5%), indicating room for expansion. In addition, demand persists for non-leather footwear, home textiles (e.g., sheets, towels), and jute and jute goods.
\nSouth Korea offers machinery, electronics, petrochemicals, and refined oil products to Bangladesh. In 2022, South Korea\u2019s diesel exports to Bangladesh surged alongside exports of steel, pesticides, cars, textile machinery, and electronic components. South Korean Ambassador Park advised that the EPA should tap into untapped potential and increase Bangladesh\u2019s exports to South Korea. From 2008 to 2024, about 34,000 Bangladeshi workers (primarily low-skilled labor) have gone to South Korea, unlocking new opportunities for skilled nurses and IT engineers through a successful EPA. This partnership should serve as a model for conceptualizing practical outcomes for Bangladesh from economic agreements.
\nLet\u2019s examine Vietnam to gauge the potential outcome for Bangladesh. Vietnam is a striking example of the possible results of a successful agreement. Vietnam\u2019s bilateral FTA with Korea streamlined duties on approximately 11,679 Vietnamese products, resulting in a significant surge in trade. Their bilateral trade rose from $2 billion in 2010 to $86.5 billion in 2022, during which Vietnam exported $15.8 billion worth of goods to Korea and imported over $70 billion from Korea. Bangladesh\u2019s mere 5% share in South Korea\u2019s garments market is far below that of Vietnam.
\nThough we have potential chances to turn this EPA into a tangible benefit, we must concentrate on several issues and urge South Korea to consider. Firstly, rules of origin (ROO) are a critical risk factor for Bangladesh. For example, under the APTA, Bangladesh must ensure that at least 35% of the value of products is domestic. Authorities should recognize mutual lab testing or simplified documentation for originating goods. Bangladesh should also negotiate to impose easy rules for garments and footwear that allow a high share of third-country inputs.
\nSecondly, non-tariff barriers and regulations present another hurdle. South Korea places a high value on safety, sanitation, and technical standards. However, Bangladesh\u2019s small firms, which account for approximately 90% of the country\u2019s industrial units and 80% of industrial employment, contributing nearly 30% to 32% of Bangladesh\u2019s GDP, may struggle to fulfill these demands.
\nThirdly, not only do Bangladeshis confront customs delays and roadblocks to conducting business, but Korean investors also face these challenges, which require immediate measures.
\nLastly, asymmetric pressures may produce critical hurdles between Bangladesh and South Korea due to an imbalance in trade. Bangladesh should seek protection for its emerging and sensitive sectors through sensitive lists or a safeguard clause. Bangladesh needs to scale up its potential through Korea\u2019s technical support, joint venture business collaboration, capacity building, technology transfer, and human capital development. Without addressing these issues, the EPA can only guarantee equitable market access in theory.
\nThe writer is a researcher and strategic and economic affairs analyst basedd in Dhaka, Bangladesh.<\/p>\n","protected":false},"excerpt":{"rendered":"
South Korea places a high value on safety, sanitation, and technical standards. However, Bangladesh\u2019s small firms, which account for approximately 90% of the country\u2019s industrial units, may struggle to fulfill these demands Mehedi Hasan Bangladesh is poised to graduate from its status as a least-developed country (LDC), creating a \u201cpost-LDC dilemma\u201d for its trade due […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-491784","post","type-post","status-publish","format-standard","category-article"],"yoast_head":"\n