Bangladesh and South Korea agreed in principle Tuesday to a comprehensive economic agreement aimed at boosting bilateral trade as they work through remaining technical issues.

Reached during talks between South Korean Trade Minister Yeo Han-koo and Bangladeshi Trade Minister Khandaker Abdul Muktadir in Dhaka, the agreement will give 97 percent of Bangladesh’s goods preferential market access to South Korea, with 87 percent of Korean goods receiving the same treatment in Bangladesh.

The timing of the Bangladesh-South Korea CEPA is significant, with Bangladesh moving to lock in trade advantages ahead of its least-developed-country graduation and South Korea looking to broaden its South Asia trade footprint.

Because Bangladesh’s exports to South Korea fell 9 percent year on year in fiscal 2025-26, according to Export Promotion Bureau data, the CEPA is also “less a bonus on steady growth and more a deliberate course correction,” according to Mohiuddin Rubel, a former BGMEA director and additional managing director at Denim Expert.

“South Korea imports roughly $12.98 billion worth of apparel annually—about 2.98 percent of world imports, per WTO data—of which Bangladesh captures only a sliver,” he wrote on LinkedIn, using an acronym for the World Trade Organization. “Korea’s high-end, trend-driven fashion market sits at odds with Bangladesh’s basics-focused reputation, while China and Vietnam’s proximity and deeper supply-chain integration have crowded out Bangladeshi suppliers.”

With most of Bangladesh’s goods, including garments, footwear and leather, now receiving preferential duties, the CEPA “strips out the biggest cost disadvantage Bangladeshi exporters faced, positioning the country to reverse last year’s decline rather than simply build on it,” Rubel added.

The two countries launched CEPA negotiations in November 2024 and reached the deal after five rounds of formal talks. A CEPA differs from a free trade agreement in that it goes beyond traditional tariff reductions on goods to establish a deeper, wider economic partnership involving trade in non-tangibles such as services, cross-border investment protections, intellectual property rights and regulatory cooperation.

The agreement comes after Bangladesh signed an economic partnership agreement with Japan in February, its first bilateral free trade deal. Bangladesh is the second South Asian country, after India, with which Korea has concluded a CEPA.

Mohammad Abdur Razzaque, chairman of the nonprofit Research and Policy Integration for Development, told The Business Standard that inking the South Korea CEPA soon after the Japan agreement would send “a very positive signal” to other countries and improve investor confidence.

“It will show that Bangladesh is ready to expand investment and trade through bilateral trade agreements,” he said.