Trade and Investment Agreements

May 11, 2007 at 10:40 am Leave a comment

FDI is protected by the Constitution of Mongolia and the Foreign Investment Law and complemented by relevant legislation and regulations, as well as international treaties and agreements to which Mongolia is bound. Since the loss of COMECON markets, Mongolia has been active in concluding a range of trade and investment agreements.

Mongolia respectively signed the “Agreement on Mutual Protection and Encouragement of Investment” with 39 countries: Belgium, Bulgaria, China, Cuba, the Czech Republic, Denmark, France, Germany, Hungary, Indonesia, Italy, Kazakhstan, Republic of Korea, Kuwait, Kyrgyz Republic, Laos, Luxembourg, Malaysia, Philippines, India, Japan, Arabian Emirates, Austria, Belarus, Latvia, Sweden, North Korea, the Netherlands, Poland, Romania, the Russian Federation, Singapore, Switzerland, Turkey, Ukraine, the United Kingdom, the United States and Vietnam. These treaties contain provisions on compensation for damage and losses, nationalization, expropriation and repatriation of profit and income, subrogation and settlement of dispute. Mongolia is a member of the New York Convention of 1958 on Recognition and Enforcement of Foreign Arbitral Awards effective 23 January 1995.

Mongolia respectively signed the “Agreement on Avoidance of Double Taxation” with 33 countries. Mongolia acceded to the “Washington Convention on Investment Dispute Settlement of 1965” in 1996, joined up the World Trade Organization in 1997, and adhered to the “Seoul Convention on Investment Insurance of 1985” in 1999.

Preferential and Concessional Trade

Under the General System of Preferences Schemes, imports to the number of foreign countries from Mongolia are relieved of customs duties (if items are 100% produced in Mongolia), or preferential tariffs are set if certain parts of the raw materials are brought in from abroad.

Since July, 2005, Mongolia became eligible for importing to the EU market without any duties or quantitative restrictions under the GSP Plus scheme, which would assist in attracting more FDI, to diversify Mongolia’s industrial structure into manufacturing and services and to ensure macroeconomic stability. Mongolia has become one of 13 countries which have been granted such a status. As a result, there is an opportunity to supply over 7200 product items to all the 25 EU member countries (for instance, all types of textiles and knitted products, skin and hides, wool and cashmere, beverages, spirits, wooden items, electronic goods, shoes, carpets, copper and copper products, iron and iron products, just to name a few).

The eligibility to the above status reflects an improved external environment for both foreign and domestic investors in Mongolia. Considering the fact that Mongolia has rather limited types of export items, there is no doubt that in order to fully utilize such a status, there will be a need for the Government to support through its policy initiatives towards increasing the types of export goods and products.

It is worth noting that part of the support being offered by the Government can be reflected through the tax incentives that are currently being offered to investors.


Entry filed under: Trade and Investment Agreements.

Sources of Information on Foreign Investment Legal Framework on Foreign Investment

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Information contained in this web site are partly derived from a CD-ROM "Guide to Investment and Trade-Mongolia", produced by Foreign Investment and Foreign Trade Agency (FIFTA). All trademarks are properties of their own respective owners.

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