The First CEPA Round: A Historic Starting Point
In the first half of 2025, Korea and Bangladesh held the first official round of CEPA (Comprehensive Economic Partnership Agreement) negotiations. As the first formal round following the declaration to launch talks in October 2024, the two negotiating teams exchanged initial positions on 15 agendas, including tariff concessions, trade in services, investment protection, and trade rules. The talks are strategically significant because this would become Korea's first comprehensive trade agreement with a South Asian country.
This article examines the key outcomes of the first round, major differences in position between the two sides, the direction of the initial tariff concession offer, the main issues in the services and investment chapters, and the advance-response strategies Korean exporters should begin preparing now.
Negotiation Structure and Agendas
| Area | Agenda | Progress in Round 1 | Key Issue |
|---|---|---|---|
| Trade in Goods | Tariff concessions and TRQ | Initial offers exchanged | Scope of sensitive items |
| Trade in Goods | Rules of origin | Principles broadly aligned | Value-added criteria |
| Trade in Goods | Customs and trade facilitation | Principles broadly aligned | Mutual recognition of e-clearance |
| Trade in Goods | SPS and TBT | Discussions launched | Mutual recognition of certification |
| Services | IT and software | Offers exchanged | Market-opening scope and licensing |
| Services | Financial services | Offers exchanged | Foreign ownership limits |
| Services | Logistics and transport | Offers exchanged | Cabotage restrictions |
| Services | Construction and engineering | Offers exchanged | Local procurement ratio |
| Services | Education and professional services | Discussions launched | Qualification recognition |
| Investment | Investment protection | Principles broadly aligned | ISDS mechanism |
| Investment | Investment liberalization | Discussions launched | Negative list approach |
| Rules | Intellectual property | Principles broadly aligned | Patent and trademark protection |
| Rules | Competition policy | Discussions launched | Anti-dumping and subsidies |
| Rules | E-commerce | Offers exchanged | Cross-border data transfer |
| Cooperation | Economic cooperation | Principles broadly aligned | ODA and technology transfer |
Tariff Concession Negotiations
The most closely watched issue in the first round was the initial tariff concession offer. The two sides exchanged opening positions on tariff reduction or elimination schedules for more than 3,000 HS 6-digit items. Korea signaled willingness to lower tariffs broadly on Bangladeshi products, while Bangladesh is reviewing phased reductions for most Korean goods except selected sensitive products such as agricultural items and consumer goods.
| Product Group | Current Tariff | Expected Concession | Implementation Period | Impact on Korean Firms |
|---|---|---|---|---|
| Textile machinery (HS 84) | 5-15% | 0-3% | Immediate to 3 years | Improved price competitiveness |
| Chemicals and resins (HS 28-39) | 10-25% | 3-10% | 3 to 5 years | Export expansion potential |
| Steel (HS 72-73) | 10-20% | 5-10% | 5 to 7 years | Stronger edge versus Indian suppliers |
| Electronics and IT (HS 85) | 10-25% | 0-5% | Immediate to 5 years | Potential gains for firms such as Korea Corp |
| Auto parts (HS 87) | 25-45% | 10-20% | 5 to 10 years | Large tariff-cut effect |
| Food products (HS 16-22) | 25-45% | 15-25% | 7 to 10 years | Limited due to sensitivity |
| Garment imports (HS 61-63) | Current 0-8% | Maintained | Immediate | Minimal change |
Core Issues in the Services Chapter
Trade in services is the most innovative part of this CEPA. Whereas Korea-Bangladesh trade has historically been centered on goods, the agreement would include market opening in IT, finance, logistics, construction, education, and other service segments. That creates new opportunities for Korean IT companies, logistics firms, and contractors.
The Investment Chapter and ISDS
The investment chapter is the key legal safeguard for Korean companies investing in Bangladesh. It is expected to include stronger protections than the current bilateral investment treaty, including compensation for expropriation, guarantees on profit remittance, and an investor-state dispute settlement mechanism. ISDS is particularly important because it would allow Korean investors to seek international arbitration if they face unreasonable measures in the Bangladeshi market.
Expected Negotiation Timeline
Business Response Strategy: What to Start Now
The first CEPA round marks the beginning of a new phase in Korea-Bangladesh economic relations. Negotiations may take another two to three years, but preparation for first- mover advantage needs to start now. Companies that map tariff scenarios, review origin requirements, and build market networks early will be in the strongest position to capture benefits once the agreement takes effect.