South Korea and Bangladesh have reached a preliminary agreement on a Comprehensive Economic Partnership Agreement (CEPA). This agreement will lower tariff barriers on key exports, including K-food items like ramen and seasoned seaweed, as well as diesel, automobiles, and home appliances, paving the way for access to Bangladesh's market of 170 million people.
The Ministry of Trade, Industry and Energy announced that Yeo Han-goo, head of the Trade Negotiation Headquarters, and Khandaker Abdul Muktadir, Bangladesh's Minister of Commerce, jointly declared the preliminary agreement in Dhaka on August 4.
The preliminary agreement signifies that the two countries have agreed on the main contents of the accord, effectively concluding negotiations, with only technical details remaining to be finalized through practical discussions. The two nations began negotiations in November 2024 and have held five official rounds of talks along with interim discussions.
Bangladesh, the eighth most populous country in the world, has recorded an average economic growth rate of about 6% over the past decade. Last year, trade between the two countries reached $2.37 billion, a nearly 20% increase from the previous year. This agreement marks the second CEPA that South Korea has concluded with a South Asian country, following India.
Under the agreement, both countries will open their markets to 81.7% of South Korean goods and 81.4% of Bangladeshi goods. Bangladesh will eliminate the 6% tariff on diesel, South Korea's top export item. Tariffs on completely knocked down (CKD) passenger cars, cargo trucks, and all automotive parts will also be removed. Currently, the tariff rate on CKD vehicles ranges from 53.6% to 220%, while automotive parts face a 28% tariff.
Other items included in the tariff elimination are lubricating oils, lithium-ion batteries, air conditioners, and washing machines. For complete vehicles, Bangladesh has agreed to ensure that they will not be treated less favorably than vehicles from other countries in the future.
The price competitiveness of K-consumer goods is also expected to improve. Tariffs on ramen, coffee products, and seasoned seaweed, which currently face a 53.6% tariff, will be eliminated, as will the 85.6% tariff on snack foods. For petroleum and chemical products, steel, electrical and electronic devices, machinery, and K-beauty products, a relatively flexible origin criterion will be applied, allowing for some use of non-origin materials and parts to qualify for preferential tariffs.
In the services market, the agreement secures a foundation for entry into over 90 sectors, including K-content, e-learning, healthcare, telecommunications, construction, and distribution. It also includes digital trade norms that allow cross-border information transfer and prohibit localizing computer equipment and source code transfer requirements. An investor-state dispute settlement (ISDS) procedure will be introduced to strengthen protections for local investors.
There are expectations for expanded exports linked to Bangladesh's high infrastructure demand. Tariffs on steel will be gradually eliminated, and tariffs on construction machinery such as excavators and bulldozers, as well as agricultural and textile machinery, will be removed immediately. The construction and engineering services market will also be opened, broadening opportunities for domestic companies to participate in road, rail, port, and power plant projects.
The Ministry plans to proceed with domestic procedures for the formal signing and implementation of the agreement as soon as the remaining technical discussions are completed.
Yeo stated, “The Korea-Bangladesh CEPA will connect our businesses with a promising market of 170 million people and serve as a institutional foundation to expand bilateral relations from trade in goods to economic cooperation encompassing infrastructure and industry.”
* This article has been translated by AI.
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