Mongolia and the Eurasian Economic Union (EAEU) have reached a key agreement during their third round of negotiations. The agreement focuses on the “Concluding the Interim Free Trade” Agreement, which will allow Mongolia to export goods tariff-free or at reduced tariffs to the five EAEU member states: Russia, Kazakhstan, Belarus, Armenia, and Kyrgyzstan.
A total of 367 types of Mongolian goods will now be eligible for tariff-free exports. These products include 29 types of meat and meat products, 60 types of leather goods, 204 wool and cashmere products, and 73 agricultural items. This breakthrough will exempt Mongolia’s exporting entities from customs duties worth an estimated USD 16.6 million annually.
Gantumur Luvsannyam, First Deputy Prime Minister and Minister of Economy and Development of Mongolia, expressed his optimism about the deal. He stated, “This agreement allows us to increase meat exports with the EAEU, potentially earning USD 500 million.” He also highlighted the potential for exporting sheep and goat meat, which Mongolia has not been able to send to EAEU countries before.
Furthermore, Luvsannyam discussed the opportunity to establish new cashmere and knitted goods brands for export to the Eurasian market, which could also generate significant revenue.
A study conducted by the Policy Research Laboratory of the National University of Mongolia examined the economic effects of this free trade agreement. It revealed that while the total number of goods exported under the agreement is relatively small, imports from EAEU countries could surpass Mongolia’s domestic production. The study predicts a rise in imports by 4.7 percent and a 3.8 percent increase in exports.
N. Otgonsaikhan, a professor from the National University of Mongolia, warned that the increased imports could affect the country’s industrial sector, which is focused on revitalization through state policies. However, he acknowledged opportunities in textile and knitting exports, projecting an increase in revenue by USD 200-300 thousand.
Otgonsaikhan emphasized the importance of meeting the rules of origin requirements, stressing that preferential tariffs are ineffective without compliance. Manufacturers must prepare well to capitalize on the benefits of this new agreement.
