South Korea CEPA and the next agenda

Every stage of economic development demands a different policy mindset. For Bangladesh, graduation from the LDC category is one such defining moment. It is recognition of steady progress over the past five decades, but also the beginning of a more competitive era. The preferential market access that has long supported the country’s export growth will gradually diminish, requiring Bangladesh to compete increasingly on productivity, innovation and investment rather than preferential treatment.

It is in this context that Bangladesh’s Comprehensive Economic Partnership Agreement (CEPA) with South Korea deserves attention. This is not simply another trade agreement. It reflects a broader transition in Bangladesh’s economic strategy -- from depending on unilateral trade preferences to building long-term partnerships centred on investment, technology, services and industrial collaboration.

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South Korea is among the world’s most advanced industrial economies, importing over $600 billion worth of goods annually. Yet Bangladesh exports only around $600 million to this market, with nearly 90 percent consisting of RMG. That figure speaks not only of the strength of Bangladesh’s apparel industry but also of the limited diversification of its exports.

The significance of CEPA therefore lies in its ability to reshape that relationship. Once implemented, 8,428 Bangladeshi products will enjoy preferential access to the Korean market. Besides garments, sectors such as leather and footwear, pharmaceuticals, home textiles, processed food, jute-based sustainable products, engineering goods and ICT-enabled services are well positioned to expand.

Yet reducing tariffs is only one dimension of the agreement. Unlike a traditional Free Trade Agreement, CEPA extends to investment, trade in services, digital commerce, customs cooperation, intellectual property and the movement of professionals. South Korea is already one of Bangladesh’s largest foreign investors, with more than 200 Korean companies operating across manufacturing, ICT, infrastructure and other sectors. Vietnam’s experience offers a telling example. Its emergence as a manufacturing powerhouse was driven not merely by market access but by sustained Korean investment, technology transfer and integration into global supply chains. Bangladesh possesses many of the same fundamentals -- a young workforce, competitive production costs and growing industrial capability. Whether these advantages translate into higher investment will depend less on the agreement itself than on the country’s investment climate.

That brings the discussion back to domestic reforms. Trade agreements can open markets, but they cannot eliminate structural bottlenecks at home. Investors continue to assess Bangladesh through the reliability of its energy supply, the efficiency of its ports, the predictability of regulations and the speed of customs clearance. These challenges have been discussed for years. Bangladesh can no longer afford to postpone addressing them if it wants to remain competitive. Export diversification is an imperative.

Equally important is the need to rethink Bangladesh’s export strategy. The next phase of development will require greater investment in technology, skills, research and higher-value manufacturing. Export diversification is no longer a desirable objective. It has become an economic imperative.

Viewed through this lens, the Bangladesh-South Korea CEPA is not the destination but the beginning of a new chapter. Agreements can create opportunities, but they cannot guarantee outcomes. Whether this partnership becomes a milestone in Bangladesh’s economic transformation or merely another signed document will ultimately depend on the choices made at home. Competitiveness, not concessions, will define the country’s next stage of development.

While we thank the commerce ministry for its efforts in this process, we also urge it to pursue possible free trade agreements with large trading partners, including the European Union.

The writer is an economic analyst