The Opportunity Analysis of FTA between Mongolia and South Korea

Free Trade Agreement / FTA / is a trade policy instrument followingmultilateral trading system, and the countries around the world have beenusing FTA intensively since 2000. Mongolia has not yet currently concludedFTAs with any countries of the world. In recent years Mongolia has paid a greatimportance to the issue of concluding agreements with its major tradingpartners and initiated some measures to conclude such an agreement withJapan . The establishment of the Free Trade Agreement with main partners is oneof the vital issues of a foreign trade vital policy of Mongolia, as such it attractsattention of policy makers, practitioners and scientists. Mongolia has pursued a policy of expanding its foreign relations with SouthKorea within the framework of multilateral cooperation. It seeks ways to expandeconomic and trade relations with South Korea, and build and enhance itsinternational competetiveness by attracting South Korean investment andtechnological support. Without doubt South Korea is interested to expand itsrelations with Mongolia because of geographical proximity and the country’srich natural resources. Taken into consideration the above factors, this research focuses onanalyzing opportunities for establishing FTA with South Korea, which is the 5thlargest trade partner of Mongolia. Balassa’s comparative advantage index(Balassa, 1965) and Gravity model has been used for the research.