Tariff Negotiations Under Free Trade Agreements: The Case of Mongolia and the Republic of Korea

Abstract

One of the principal reasons for the establishment of Free Trade Agreements (FTAs) between countries is to negotiate the reciprocal reduction and/or elimination of customs tariffs. According to Mongolian law, the Customs General Administration of Mongolia (CGAM) is responsible for determining the optimal rate and amounts of customs duties. As such, it plays a leading role in the negotiation of tariffs and the implementation of FTAs with partner countries. This paper examines the legal text of tariff negotiations and the modality of reducing tariffs, and determines specific goods of interest for tariff negotiations within the framework of the agreement between Mongolia and the Republic of Korea (ROK), based on analysis of the revealed comparative advantage (RCA) index. The results of the analysis show that, during the negotiation process, Mongolia should focus on textiles and apparel, as well as agricultural production, while the ROK should concentrate on automobiles, items of machinery and their parts, tobacco, cosmetics and noodles. This study should prove useful to Mongolian Customs experts and tariff negotiation team members, trade policy makers and domestic producers.