What is the GSP+?

The GSP+ is a special incentive arrangement for Sustainable Development and Good Governance that supports vulnerable developing countries. Next to fulfilling the eligibility requirements of the Standard GSP, GSP+ countries are required to ratify 27 international conventions on human rights, labour rights, environmental protection and climate change, and good governance. In order to ensure effective implementation of the conventions as well as compliance with reporting obligations, the EU engages in monitoring activities with the GSP+ countries. GSP+ beneficiaries can benefit from complete duty suspensions for products across approximately 66% of all EU tariff lines.

At a glance: GSP+ beneficiaries' preferential imports to the EU

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3,40 M

Population

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Semi-Presidential Republic

Government

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5.00%

GDP Growth

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12.20%

Inflation

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$ 17,15 B

GDP

Facts about the Mongolian economy

Landlocked Economy

Mongolia is a landlocked economy where agriculture and herding are traditionally of high importance.

Extractive industries

Foreign direct investment particularly in extractive industries such as mining of copper, gold and coal led to a significant increase in exports after the financial crisis in 2008. Today, mineral products account for over 90% of Mongolia’s exports, which leaves the Mongolian economy vulnerable to international price fluctuations with regard to these commodities.

Trade with China and Russia

Mongolia is highly dependent on a small number of trading partners. Trade with China and Russia accounts for over 80% of the country’s total trade, leaving it vulnerable to economic fluctuations in these two countries.

Economic Structure

Services (39.6%) and industry (37%) account for the largest shares in Mongolia’s GDP. In the last ten years, the share of agriculture has halved to about 11%. Industrial production in Mongolia concentrates on construction and mining.

Usage of GSP+ Preferences

Mongolia uses GSP+ preferences for around 21% of its total EU exports. The preference utilisation rate is high and most recently stood at 83% (2022).

Trade with the EU

The total trade between the EU and Mongolia summed up to € 927 million in 2022. The EU accounts for a share of 10% of Mongolia’s total trade and ranks third in Mongolia's trading partners behind China and Russia.

Mongolia and the EU (2022)

Imports from Mongolia by product section

Imports from Mongolia over time (in € m)

MONGOLIA AND THE EU’s GSP

Economic Impact

Mongolia can be considered a highly vulnerable economy and is noticeably below the threshold of 7.4%, indeed its vulnerability ratio for 2019 stood at zero. Mongolia’s export is highly concentrated in few products. The minimum export diversification threshold stands at 75% whereas Mongolia’s percentage was 92.3% in 2019.

31%

A relatively small share of Mongolia’s current exports is eligible for tariff reductions under the GSP.

83%

Mongolia currently has a high preference utilisation rate of 91%.

Preference utilisation and export diversification

Mongolia's imports to the EU

Preference Utilisation vs. total eligible imports

Over the years, the preference utilisation rate has shown considerable fluctuations, especially between 2011 and 2016. The decrease in preference utilisation during this period can be traced back to an increase in GSP eligible exports that were traded under most favoured nation rates. The preference utilisation increased 8 percentage points between 2016 and 2018, although total GSP eligible imports decreased. Likewise, preference utilisation has increased for individual product sections for example for fish and footwear imports. The value of EU imports from Mongolia using GSP+ has remained relatively steady, at around 28% of total imports. Overall, Mongolia currently makes notable use of GSP+ preferences, allowing the country to benefit from the arrangement.

The largest product sections under the GSP+

In recent years, Mongolia experienced some changes with regard to its export diversification. In 2021 edible vegetables and roots became eligible for export, and in 2022 the utilisation rate is 100%. Aside from this new category, Mongolia’s GSP+ preferential exports to the EU mainly consist of apparel and clothing, furniture and toys, wool and fish. Apparel, however, is by far the most dominating export good, accounting for 84% of the exports using GSP+ preferences. GSP+ preferences for plastic articles (S-07a) remain underutilised with utilisation rate of 0% , despite being eligible.

SUSTAINABLE DEVELOPMENT AND MONITORING PRIORITIES

Mongolia shows a strong engagement in the monitoring process of GSP+ compliance, despite challenges in taking more commercial advantage of the unilateral tariff preferences of the EU. During the reporting period (2020-2022), progress was made in the area of children’s rights, fight against domestic violence, as well as labour rights. Yet the country should make more effort to effectively implement the related legislation. With regard to human rights, the key issue is the effective implementation of the ratified human rights conventions. The draft laws on civil society organisations which might restrict civil space are issues of concern.

Monitoring priorities during the reporting period 2024-2025

Freedom of expression

Human rights defenders

Strengthening the judiciary

Anti-discrimination

Addressing violence against women and vulnerable groups

Labour rights

Eliminating child labour

Environment and climate conventions implementation

Anti-corruption

Drug control

For the reporting period 2024-2025, the EU has identified ten focus areas for its monitoring activities. Mongolia is showing commitment regarding the implementation of international labour conventions, also through the new Labour Law. The country faces many challenges in the field of environment, also related to pollution, which the EU is helping to address through its development cooperation. Finally, with regard to the international conventions on good governance, challenges remain especially in the area of corruption. This is an area where further work should be done.

EU-Mongolia Bilateral Development Assistance

DG INTPA

Access all info about EU-Mongolia relations on the International Partnerships website: https://international-partnerships.ec.europa.eu/countries/mongolia_en

Opportunities in Mongolia

Young population with an average age of 28 years
High potential for renewable energies and related sectors as the government aims to increase the share of renewables to 30% until 2030 and follows a national green development policy
Government shows continuous efforts to improve business and investment climate through e.g. anti corruption initiatives
Important products in the manufacturing sector: processed foods, shoes, cashmere, yak hair, sheep and camel wool