Bangladesh will continue to enjoy duty-free market access to Japan for three more years after graduating from the least-developed country (LDC) status as Tokyo has amended its tariff system to extend preferential treatment for LDCs.
Japan formally notified the World Trade Organisation (WTO) on November 5 of the reform in its Temporary Tariff Measures Law, allowing graduated LDCs to retain trade privileges for an additional three years.
The WTO's Committee on Trade and Development acknowledged Japan's measure on November 7, according to an official notification obtained by The Financial Express.
Japan's notification explained that its Generalised System of Preferences (GSP) aims to promote exports from developing economies by applying reduced tariffs on designated goods to help them expand export income, industrialise, and foster economic growth.
The reform states: "Japan reformed its tariff system to allow least developed countries to receive preferential tariff treatment up to three years after they graduate from the least developed countries category. The respective provision is mentioned in the Temporary Tariff Measures Law, Article 8-2, paragraph 3."
It further clarified: "Only countries determined as least developed countries (LDCs) in the General Assembly of the United Nations, or up to three years after they graduate from the LDC category, are eligible for special preferential treatment for LDCs."
Commenting on the development, Dr Mohammad Abdur Razzaque, Chairman of Research and Policy Integration for Development (RAPID), told The Financial Express that Bangladesh will continue to receive the same duty-free benefits in Japan as it currently enjoys under LDC terms, similar to the European Union (EU) arrangement.
Calling the move a positive one for Bangladesh's exporters, he noted that Australia has announced a similar three-year facility, while China will extend LDC privileges for two years after graduation.
Bangladesh's key export destinations include the EU, United States, United Kingdom, Canada, India, and Japan. The country is scheduled to graduate to the developing nation category in November 2026.
At the 2023 WTO Ministerial Conference held in Abu Dhabi, member countries agreed that trade benefits for LDCs would continue for three years after graduation to ensure a smooth transition.
Once the new status takes effect, Bangladeshi garments could face tariffs ranging from 9.0 per cent to 20 per cent, depending on the market. The rate is 12 per cent in the EU, 11.5 per cent in the UK, 16.2 per cent in Canada, 9.0 per cent in Japan, 20 per cent in India, and 6.7 per cent in China.
Apparel manufacturers have been urging for a delayed graduation, citing the need for extended trade benefits to maintain competitiveness.
The EU, UK, Canada, and Australia have already confirmed continuation of LDC preferences for Bangladesh until 2029, providing a three-year grace period.
Fazlul Hoque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), described Japan's decision as "a welcome and expected move" that will help sustain the country's export growth.
He added that the industry and the government must use the transition period to boost port efficiency, reduce production costs, and lower utility and borrowing rates to remain competitive.
"The industry also needs to focus on enhancing productivity," he said.
Exporters stressed that duty-free market access remains one of the main incentives for international buyers to source from Bangladesh.
They urged the government to take timely measures to extend the transition period, which would also help buyers adjust their strategic sourcing plans.
According to Export Promotion Bureau (EPB) data, Bangladesh earned US$1.18 billion from garment exports to Japan in FY2024-25, up from $478.48 million in FY2012-13.
Munni_fe@yahoo.com
