In a major milestone for Bangladesh’s international trade architecture, Bangladesh and South Korea officially signed a Comprehensive Economic Partnership Agreement (Cepa) on Wednesday, August 4.
Commerce Minister Khandakar Abdul Muktadir and South Korean Trade Minister Han-Koo Yeo announced the signing at a press conference at the Commerce Ministry in the capital.
The historic deal grants 97% of Bangladeshi exports preferential, duty-free entry into South Korea’s high-value market, while granting 87% of South Korean goods similar access in Bangladesh.
The deal follows the previous interim government's EPA with Japan in Tokyo in February this year as part of its efforts to retain the country's competitiveness after its graduation from the Least Developed Country category.
The signing arrives at a critical operational moment. According to Export Promotion Bureau (EPB) metrics, Bangladeshi exports to South Korea contracted by nearly 9% year-on-year in FY26, signaling a plateau in bilateral commerce.
Cepa is poised to serve not only as an expansionary vehicle, but also as a strategic mechanism to reclaim lost market share.
Currently, Bangladesh’s export basket to South Korea stands at approximately $421.6 million, heavily dominated by ready-made garments, which account for nearly 87% of total shipments.
Woven garments represent $199.95 million (47.49%), while knitwear contributes $167.13 million (39.69%).
Beyond apparel, non-RMG sectors maintain a modest presence: tobacco and manufactured substitutes account for $12.44 million, footwear and parts contribute $12.24 million, vegetable textile fibers and paper yarn total $5.71 million, and leather goods and saddlery stand at $4.63 million, with home textiles and miscellaneous manufactured items making up the remainder.
Bridging the market gap in high-value apparel
World Trade Organization (WTO) data reveals that South Korea imports roughly $12.98 billion in apparel annually, accounting for nearly 3% of total global garment imports.
Despite this substantial volume, Bangladesh’s historical penetration into the South Korean retail space has remained marginal due to several structural impediments.
South Korean consumers show a strong preference for high-value, fast-fashion, and design-intensive apparel, whereas Bangladeshi manufacturers have historically concentrated on high-volume basic items.
Furthermore, regional competitors such as China and Vietnam have long maintained entrenched, low-lead-time supply chains into Seoul.
The absence of a formal bilateral framework previously subjected Bangladeshi exporters to restrictive tariffs and administrative barriers.
By eliminating tariff walls across primary product lines—including ready-made garments, footwear, leather items, and light engineering goods—Cepa enhances the price competitiveness of Bangladeshi merchandise, positioning local manufacturers as viable long-term supply partners for major South Korean retail brands.
"The signing of Cepa between Bangladesh and South Korea is undoubtedly a landmark step forward," stated Mohiuddin Rubel, founder & CEO of Bangladesh Apparel Voice and former BGMEA director.
"In the post-LDC era, bilateral trade agreements of this scale are essential to maintaining export competitiveness. Securing 97% preferential market access in a premium market like South Korea opens immense possibilities for our apparel, leather, footwear, and emerging manufacturing sectors."
"Tariff elimination alone will not guarantee market dominance," Rubel cautioned.
"To fully capture this market, manufacturers must adapt to South Korea's fast-moving consumer demands by prioritizing fashion design, product quality, rapid lead times, and sustainable production processes. Furthermore, this is the ideal window to attract Korean Foreign Direct Investment (FDI) and integrate our manufacturers into global high-tech supply chains."
FDI, industrial diversification, and next steps
Beyond immediate merchandise trade, Cepa is structured to encourage cross-border investment and technology transfer.
The framework paves the way for joint ventures and Foreign Direct Investment (FDI) from South Korea into Bangladesh’s high-value industrial sectors, particularly consumer electronics, automotive component manufacturing, shipbuilding, information technology, and high-tech manufacturing.
Realizing the full commercial potential of Cepa will require domestic supply-side upgrades.
Industry analysts emphasize that maximizing the agreement's benefits requires parallel structural reforms: boosting factory-floor productivity, expanding product design capabilities, streamlining customs operations, improving port infrastructure, and building a skilled workforce.
