TOKYO (Kyodo) — Japanese Prime Minister Shinzo Abe and his Mongolian counterpart Chimed Saikhanbileg signed a free trade agreement at a summit meeting Tuesday, aiming to boost bilateral economic and political relations.
Japan also offered some 36.85 billion yen ($310.6 million) in low-interest loans to Mongolia for a new international airport being built in the suburbs of Ulan Bator.
Mongolia’s economy, heavily dependent on the mining industry, is currently facing difficulties due partly to falling natural resource prices, but is expected to achieve further growth over the long term. Resource-poor Japan looks to expand imports of coal, rare metals and other mineral resources from Mongolia under the FTA.
“Relations between Japan and Mongolia have never been this close,” Abe said at a joint press conference after signing the deal. “I am certain (the FTA) will become an important foundation” for further deepening bilateral ties and promoting Mongolia’s economic growth, Abe said.
Saikhanbileg, who is visiting Japan on his first overseas trip since taking office in November, said the FTA will “greatly contribute” to the two countries’ strategic partnership.
The deal will position Tokyo as Ulan Bator’s first free trade partner. A post-summit joint statement said it is a “high-standard agreement” that covers wide areas including goods and services trade, investment and intellectual property rights.
Each government will seek to obtain parliamentary approval and put the deal into effect as early as this year.
The agreement features Mongolia’s immediate abolition of its 5 percent tariffs on some Japanese automobiles with engine displacement of 4500 cc or smaller, while tariffs on most other automobiles and auto parts will be scrapped within 10 years, according to the Japanese government.
Tokyo will introduce the tariff-quota system on some processed beef products imported from Mongolia. It will also abolish tariffs on almost all manufactured products, including cashmere goods, within 10 years.
In 2013, Japan’s exports to Mongolia were valued at 29.3 billion yen and Mongolia’s exports to Japan at 1.9 billion yen. Japan’s main exports to Mongolia are automobiles and automotive parts, which account for some 70 percent of total exports. Mongolia mainly exports coal and other natural resources to Japan.
The two countries had reached a substantive agreement on free trade last July during Mongolian President Tsakhiagiin Elbegdorj’s visit to Tokyo.
At Tuesday’s summit, Abe conveyed Tokyo’s plan to send economic experts to Mongolia to support its economic policymaking process, at a time when the country is struggling to turn its economy around.
Abe also said he and Saikhanbileg agreed to “further promote strategic dialogue over diplomacy and security” in the Asia-Pacific region. A Japanese Foreign Ministry official said they discussed issues related to North Korea among other topics, without elaborating.
By strengthening bilateral ties, Japan apparently hopes to gain greater support from Ulan Bator in negotiating with North Korea over the abduction of Japanese nationals in the 1970s and 1980s.
Mongolia has diplomatic ties with North Korea and provided venues for contact between Japanese and North Korean officials to discuss the abduction issue, which has prevented Japan and North Korea from normalizing bilateral relations.