In December 2024, an interim trade agreement between the Eurasian Economic Union (EAEU) and Mongolia is expected to be signed, with the draft finalized in record time. This milestone reflects the growing business ties between Russia and Mongolia and the dialogue between their government agencies, as well as broader trends of Eurasian integration and Russia’s pivot to the East.

The need to revitalize trade and economic relations has long been at the forefront of official negotiations between Russia and Mongolia. Although Russia currently ranks as Mongolia’s second-largest foreign trade partner, it accounts for only 10.2% of Mongolia’s total foreign trade, with China’s share at 72.4%. While Russia’s role in Mongolia’s imports is large (25.8%), its share in exports is under 1%.

The main pressing issue is the significant imbalance in mutual trade. Russia’s trade turnover with Mongolia has fluctuated over time, but Russia consistently runs a large surplus—Russian exports currently make up 95% of the trade volume, while supplies from Mongolia account for just 5%. This trade gap is partly due to high customs duties, non-tariff barriers and stringent veterinary sanitary requirements for Mongolian livestock products, which have export potential.

The commodity structure of Russian exports to Mongolia is traditionally dominated by three main categories: petroleum products (accounting for over half of exports), engineering products and food products (each making up 10–20% of exports). At the same time, Russia supplies a quarter of Mongolia’s imports, with a strong presence in certain commodities: more than 90% of petroleum products, 27% of food products and 30% of electric power.

In general, the conditions for increasing Russian exports to Mongolia are quite favorable. On the one hand, businesses are provided with state support through the International Cooperation and Export national project, with regional offices of the Russian Export Center offering free consultations, transaction support, marketing research, and access to preferential loans and export insurance for interested companies. On the other hand, Mongolia pursues a fairly liberal trade policy, which avoids non-tariff barriers for Russian goods and services.

Russia and Mongolia began discussions on developing preferential trade cooperation within the EAEU several years ago. On September 24, 2024, the Council of the Eurasian Economic Commission (EEC) finally approved the draft interim trade agreement with Mongolia. Under the draft, the EAEU and Mongolia have each drawn up lists of tariff commitments covering 375 commodity items (based on the six-digit Harmonized System codes). For these products, “in no case a rate of a customs duty … shall be higher than the respective agreed bound rate,” set at 0%. This arrangement effectively means a full exemption from customs duties for a fairly wide range of goods.

The trade agreement is expected to help boost mutual trade, foster a more transparent and equitable trade environment and create new supply chains and cooperation projects in the Eurasian region. This aligns with the EAEU’s efforts to diversify its foreign ties and cultivate flexible, diverse formats of interaction that take into account the unique characteristics of Eurasian nations, the interests of Russia and its partners in the regional integration on the one hand, and third countries on the other.

The signing of the interim trade agreement within the Eurasian partnership framework comes amid a massive transformation of transport and logistics flows in the new geopolitical reality and rising interest in the Mongolian direction. Favorable conditions are now emerging for infrastructural connectivity in the region where Russian, Mongolian and Chinese borders meet.

Strengthening cross-border cooperation largely relies on Russian regions bordering Mongolia, and their role in forging stable ties and creating new logistics across Eurasia is growing. A major and long-awaited development came in October 2024 with the opening of the Kyakhta customs and logistics terminal on the Russia–Mongolia border in Buryatia. The facility offers customs services, as well as storage, transportation and sorting services for a broad range of products, with a daily capacity of over 300 vehicles. The implementation of transport and logistics solutions, coupled with the renovation of border checkpoints, will undoubtedly have a major impact not only on the local scale—bringing benefits to the regions involved—but also in enhancing trade and economic relations between Russia and Mongolia and promoting economic connectivity in Eurasia.