The effect of free trade agreements on foreign trade: The case of Mongolia

The outbreak of World War I slowed the development of international trade. After world war II, International trade began to recover. Since then, each country economic recovery has shaped the current trade structure. Today, international trade is developing rapidly. Foreign trade is the exchange of goods and services between countries. Foreign trade is the process of import and export. In many parts of the world, economic growth depends on foreign trade. That is why every ountry seeks to sign multilateral agreements, free trade agreements and regional trade agreements. Trade agreements are an important tool of foreign trade policy. In developed countries, multilateral and free trade agreements are widely used. However, it is rarely used in most developing countries. One of them is Mongolia. This study investigated impact of Mongolia& 2016 free trade agreement with Japan on the Mongolian economy. The comparative advantage index was used in the study. The index is a comparative advantage index based on the 2016-2020 average of the three years before and after the contract was signed. The conclusion is that the impact of this agreement on the Mongolian economy is not clear, as it has had a positive impact in the short term and was limited in the long run.