Korea-Bangladesh CEPA: Background and Current Status
Pursuing a Comprehensive Economic Partnership Agreement (CEPA) between Korea and Bangladesh is a core policy objective that would elevate bilateral economic relations to the next level. As Bangladesh approaches its scheduled LDC (Least Developed Country) graduation in 2026 — which is expected to reduce existing tariff preferences (GSP, DFQF) — a CEPA would provide a new institutional foundation for lowering trade barriers and promoting investment between the two countries.
Korea has concluded FTAs and CEPAs with 59 countries, building one of the world's broadest FTA networks — yet no such agreement exists with Bangladesh. Given annual bilateral trade of approximately $3.6 billion and 180 Korean companies operating in Bangladesh, the economic rationale for a CEPA is compelling.
CEPA Negotiation Timeline
Korea-Bangladesh CEPA discussions began at the bilateral summit in 2019 and have since progressed through joint study, preliminary negotiations, and formal negotiation stages. Although a change of government in Bangladesh in 2024 caused a temporary delay, the new government has expressed a positive stance on CEPA, and negotiations are expected to resume.
Key Negotiation Issues
The core issues under discussion in Korea-Bangladesh CEPA negotiations fall into five major areas: rules of origin, tariff reduction schedules, services trade liberalization, investment protection, and trade facilitation. This section analyzes the intersecting interests of both countries across each area.
Bilateral Tariff Comparison and CEPA Scenarios
Korea's current average tariff on imports from Bangladesh is 8.7%, while Bangladesh's average tariff on Korean imports is 14.5%. This section analyzes tariff change scenarios for both countries under a CEPA.
| Product | Korea Tariff (Current) | Korea Tariff (CEPA) | BD Tariff (Current) | BD Tariff (CEPA) |
|---|---|---|---|---|
| Apparel (HS 61–62) | 13% | 5–8% | N/A | — |
| Textile raw materials (HS 52–55) | 8% | 3–5% | 10–15% | 3–5% |
| Machinery & equipment (HS 84) | 0–5% | 0% | 5–15% | 0–5% |
| Chemicals (HS 28–38) | 5–8% | 0–3% | 10–20% | 3–8% |
| Electronics & IT (HS 85) | 0–8% | 0% | 10–25% | 0–10% |
| Auto parts (HS 87) | 8% | 3–5% | 15–30% | 5–15% |
| Cosmetics (HS 33) | 8% | 3–5% | 25–45% | 10–20% |
| Food (HS 16–21) | 20–50% | Sensitive items excluded | 25–60% | Sensitive items excluded |
With vs Without CEPA: Expected Impact
A comparative analysis of how the bilateral trade environment would differ depending on whether a CEPA is concluded. In particular, as tariff preferences shrink following Bangladesh's 2026 LDC graduation, a CEPA would become the critical institutional mechanism for Bangladesh to maintain access to the Korean market.
| Indicator | Current | Post-CEPA (Within 5 Years) | Growth Rate |
|---|---|---|---|
| Bilateral trade volume | $3.6B | $4.1–4.5B | +15–25% |
| Korea → BD exports | $2.8B | $3.2–3.5B | +14–25% |
| BD → Korea imports | $0.8B | $0.9–1.0B | +13–25% |
| Korean investment in BD | $200M/yr | $300–400M/yr | +50–100% |
| Number of exporting companies | ~2,500 | ~3,000 | +20% |
Implications for Korean Companies
Regardless of the pace of CEPA negotiations, Korean companies need to take the following strategic steps. Since CEPA ratification is effectively a matter of when, not if, in the medium to long term, proactive preparation will be the key to securing competitive advantage.
The Korea-Bangladesh CEPA is more than a tariff reduction agreement — it is the key institutional mechanism that will drive a qualitative transformation in bilateral economic relations. If a CEPA is concluded in tandem with Bangladesh's structural transition of LDC graduation, a new win-win economic partnership will emerge for both countries. Korean companies must seize this opportunity to proactively strengthen their position in the Bangladesh market.