Ulaanbaatar: South Korea and Mongolia reached an agreement in principle on a Comprehensive Economic Partnership Agreement (CEPA), laying the foundation for broader economic cooperation, including expanded trade and investment, Seoul's industry ministry announced.
According to Yonhap News Agency, President Lee Jae Myung of South Korea, currently on a state visit to Mongolia, held a summit with Mongolian President Ukhnaa Khurelsukh in Ulaanbaatar to announce the agreement in principle. A CEPA is a type of free trade agreement that emphasizes a broad scope of economic cooperation and exchanges beyond market opening.
The Ministry of Trade, Industry and Resources stated that the two countries have effectively concluded negotiations after agreeing on key provisions of the pact, including market access for goods and rules of origin. Discussions on certain technical matters will continue through working-level consultations.
The ministry expects the CEPA to accelerate cooperation on critical mineral supply chains, strengthen cooperation in the retail sector to facilitate the entry of Korean consumer goods into Mongolia, and diversify bilateral industrial and investment cooperation. Under the agreement, South Korea will eliminate tariffs of 2 to 5 percent on imports of Mongolian minerals, such as copper and rare earths. Meanwhile, Mongolia will phase out tariffs on imported South Korean consumer goods, including cosmetics, ramyeon, and dried seaweed, known as "gim" in Korean. Both countries will open their markets to more than 90 percent of bilateral imports.
The agreement also codifies cooperation in various industries, including infrastructure, finance, and healthcare, extending beyond trade in goods. The CEPA is Mongolia's second bilateral free trade agreement following its Economic Partnership Agreement with Japan, which took effect in 2016. Seoul and Ulaanbaatar have been negotiating since December 2023.
In conjunction with the agreement, the industry ministry, the Korea Chamber of Commerce and Industry (KCCI), and the Korea Trade-Investment Promotion Agency (KOTRA) hosted a business forum in Ulaanbaatar, which gathered about 300 business leaders from both countries. During the forum, 21 memorandums of understanding (MOUs) were signed among companies and institutions in sectors such as critical minerals, energy, consumer goods, retail, digital technology, and artificial intelligence (AI).
Industry Minister Kim Jung-kwan stated, "We will actively support companies from both countries in identifying new business opportunities and achieving tangible results, particularly in the distribution and consumer goods sectors and in critical mineral supply chains."