- Bangladesh imposes tariffs of 5-10% on HR and CR steel
- Import tariffs on construction equipment, machinery to be removed
Bangladesh and South Korea have reached a deal on the Comprehensive Economic Partnership Agreement (CEPA). As a result, tariffs imposed on hot-rolled and cold-rolled steel plates Partner made in South Korea will be phased out, and opportunities for steel exports and construction and engineering in connection with the development of large-scale infrastructure in Bangladesh will be expanded.
The Ministry of Industry and Trade said that the head of Yeohan District’s Trade and Negotiation Division and the Minister of Commerce of Bangladesh, Kandaqer Abdul Muktadir, jointly declared the conclusion of the Korea-Bangladesh CEPA negotiations in Dhaka, Bangladesh, on 4 August.
The principle is to agree on the main content of the agreement and in effect to end the negotiations. The two countries will confirm the remaining technical matters through practical consultation, and then enter into force through formal signing and domestic procedures.
The agreement is the second CEPA that South Korea has concluded in South-South Asia. South Korea has previously signed a CEPA with India.
Steel tariffs abolished
The industry’s focus is on the abolition of tariffs on steel products from South Korea. Bangladesh currently imposes tariffs of 5-10% on steel products such as hot-rolled steel and cold-rolled steel. Under this CEPA, the tariffs will be phased out.
With the growth of the population and urbanisation and industrialisation, Bangladesh is expanding its investment in indirect social capital such as roads, railways, ports, airports, and power grids. As a result, the demand for steel, including plate materials used in construction, civil and manufacturing, is also likely to increase in the medium and long term.
When the tariffs are lifted, Korean steel products are expected to enjoy increased price competitiveness and make them more stable in Bangladesh’s local infrastructure and manufacturing market.
South Korea’s exports of steel to Bangladesh in 2025 totalled about $5 million, including its main export items following petroleum products and pesticides.
The Ministry of Industry explained that the agreement applies flexible standards of origin to Korea’s main exports such as steel, petroleum, chemical, electronics, electrical equipment, and machinery.
Therefore, even if domestic companies use some offshore raw materials or parts in the production process, if they meet certain requirements, they will be able to receive tariff benefits according to CEPA.
Construction equipment tariff waived
The construction equipment tariff was immediately eliminated. Along with steel, the export conditions of equipment and machinery necessary for infrastructure construction also improved.
The two countries agreed to immediately abolish tariffs on construction heavy equipment such as excavators and bulldozers, as well as agricultural and textile machinery. Bangladesh currently imposes a 1% tariff on major construction heavy machinery.
The infrastructure for Korean companies to enter the infrastructure-related services market such as construction and engineering was also reflected in the agreement.
As a result, it is expected that domestic companies will not only export steel and construction machinery, but will also be able to expand into the fields of design, construction, and engineering of local infrastructure projects such as roads, railways, ports, and power plants.
The two countries also included cooperation in a wide range of fields such as infrastructure, industry, textiles, halal, digital transformation, energy and resources, supply chains, and clean economy.
Bangladesh largest market in recent new FTAs
Bangladesh has the world’s eighth largest population of about 170 million people. It has recorded an average annual growth rate of about 6% in the last 10 years, and is expected to increase the demand for consumer goods, automobiles, energy and infrastructure due to urbanisation, industrialisation, and the expansion of the middle class.
The trade volume of South Korea-Bangladesh was $2.37 billion in 2025, up about 20% from the previous year.
Bangladesh is the largest market among the new free trade agreement reached by the South Korean government in accordance with the recent trade diversification strategy.
The provisional liberalisation rate of goods between the two countries is 81.7% in South Korea and 81.4% in Bangladesh on the basis of the number of items. On an import basis, South Korea will open 97.5% of goods and Bangladesh will open 87.5% of its goods.
The export conditions of automobile and petroleum products also improved. The current 6% tariff on South Korea’s first export item will also be eliminated. Lubrication base oil will be subject to a 28% tariff.
CKD passenger cars, freight cars, and all automobile parts, which are semi-assembled, were also included in the abolition of tariffs. Bangladesh currently imposes tariffs of 53.6-220% on CKD cars and 28% on auto parts and lithium-ion batteries, respectively.
As for finished cars, it was decided to apply unfavorable treatment compared to other FTA signatories. The tariffs on household appliances and consumer goods such as air conditioners, washing machines, ramen, coffee products, seasoned kim, and confectionery will also be eliminated.
In the services field, companies have gained a market entry base in more than 90 areas with promising expansion of audio-visual content, e-learning, medical, telecommunications, construction, and distribution.
Digital trade norms have also been established, including allowing cross-border information, banning the localisation of computer equipment, and prohibiting the requirement for the transfer of source code. Investment safeguards have also been strengthened, including the introduction of investor-state dispute resolution procedures and the guarantee of free remittances.
The head of the Yeohan District Trade and Negotiation Division said, “The Korea-Bangladesh CEPA will be an institutional basis for connecting our enterprises with a promising market of 17 million people and expanding the relationship between the two countries to comprehensive economic cooperation such as infrastructure and industry beyond trade in goods.”
The Ministry of Industry will conclude consultations on the remaining technical matters and proceed with the formal signing of the agreement and the follow-up procedures necessary for its entry into force.
The article is published as part of a content sharing agreement between Steel Daily and BigMint
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