Mongolia
Draft MINUTES
of the Meeting* held on 24
and 26 September 2014
Delegations are invited to
submit factual corrections, if any, on their own statement to the Secretariat (Mrs
Barbara Blanquart: barbara.blanquart@wto.org, or to tprd@wto.org)
no later than 23 October 2014.
Organe d'examen des politiques commerciales
Mongolie
Projet de compte rendu de la réunion*
tenue les 24 et 26 septembre 2014
Les
délégations sont invitées à soumettre leurs éventuelles corrections factuelles
concernant leurs propres déclarations au Secrétariat (Mme Barbara Blanquart: barbara.blanquart@wto.org, ou tprd@wto.org) le 23 octobre 2014 au plus tard.
Órgano de Examen de las Políticas Comerciales
Mongolia
Proyecto de acta de la reunión*
celebrada los días 24 y 26 de septiembre de 2014
Las
delegaciones pueden enviar a la Secretaría (Sra. Barbara Blanquart: barbara.blanquart@wto.org, o tprd@wto.org) a más tardar el 23 de octubre de 2014
las correcciones fácticas que deseen introducir en sus propias declaraciones.
_______________
Trade Policy Review
Mongolia
DRAFT Minutes of the Meeting
Chairperson:
H.E. Mrs Mariam MD Salleh
CONTENTS
1
INTRODUCTORY REMARKS BY THE CHAIRPERSON.. 3
2 OPENING STATEMENT BY THE REPRESENTATIVE OF mongolia. 4
3 STATEMENT BY THE DISCUSSANT. 7
4 STATEMENTS BY MEMBERS. 10
5 REPLIES BY THE REPRESENTATIVE OF mongolia AND ADDITIONAL COMMENTS. 24
6 CONCLUDING REMARKS BY THE CHAIRPERSON.. 28
Note: Advance written questions
and additional questions by WTO Members, and the replies provided by Mongolia are
reproduced in document WT/TPR/M/297/Add.1 and will be available online at
http://www.wto.org/english/tratop_e/tpr_e/tp_rep_e.htm.
1.1. The second Trade Policy Review of Mongolia was held on 24 and 26
September 2014. The Chairperson H.E. Mrs Mariam MD Salleh (Malaysia) welcomed the delegation of Mongolia headed by Mr Ochirbat Chuluunbat,
Deputy Minister for Economic Development; the rest of the delegation from Ulaanbaatar; H.E. Mr. Vaanchig Purevdorj, Permanent
Representative of Mongolia
to the WTO and his colleagues from the mission in Geneva;
and the discussant, H.E. Mr Francisco Pirez Gordillo (Uruguay).
1.2. The Chairperson recalled the purpose of the Trade Policy Reviews and
the main elements of the procedures for the meeting. The report by Mongolia was
contained in document WT/TPR/G/297 and that of the WTO Secretariat in
WT/TPR/S/297.
1.3. Mongolia adopted the alternative timeframe for its TPRB meeting. Questions
by the following delegations had been submitted in writing at least four weeks
in advance and had been transmitted to the delegation of Mongolia: China;
Canada; the EU; Australia; Colombia; the United States; Turkey; Chinese Taipei;
Brazil; Thailand; Japan; and Korea. The following delegation submitted written
questions after the four-week deadline: the Russian Federation.
1.4. The last review of Mongolia
took place in 2005 and much had happened since then. That Review had noted
relatively modest economic growth of around 4% in the early 2000s based on
agriculture and services. However, this Review noted that, in the past few
years, Mongolia
had been one of the fastest growing economies in the world. Driven by increased
production and exports of minerals, growth in GDP had been over 10% for the
past three years as the economy quickly recovered from a recession in 2009 that
required an IMF supported stand-by arrangement. Mongolia successfully exited that
stand-by arrangement in October 2010.
1.5. Growth was likely to continue, although at a slower rate. While
existing mines increased production and new ones come on stream brought many
benefits, rapid growth also posed problems. Bringing the mineral deposits into
production required a lot of investment and the 2012 law on foreign investments
in strategic sectors had caused some uncertainty and had contributed to a
decline in investment. A new law on investment had been introduced in 2013
which was intended to address concerns relating to the 2012 law, as well as
concerns about earlier legislation. However, the Chairperson had noted that
many questions had been raised about the new and related laws and about
investment generally. Hopefully, these questions were indicative of the
interest of many countries to invest in Mongolia.
1.6. Investment in mining also depended on investment in transport
infrastructure as well as in the mines themselves. With a low population
density and harsh climate such investment was expensive for Mongolia.
However, it already had a good telecommunications system and there were
ambitious plans for rail and road development. The realization of these plans
could benefit from foreign investment and could help development in mining and
other sectors. But getting value for money for the cost investment in
infrastructure required an efficient and open Government system.
1.7. The reports and several delegations' questions had noted that, in
general, Mongolia
had low applied tariffs but import duties on some products were higher than the
bound rates. Although this affected relatively few tariff lines, Members were
interested to know the plans by Mongolia
in addressing this discrepancy between applied and bound tariffs as well as its
import prohibitions. Members would also like to hear from Mongolia about
its import and export regimes and the steps taken to improve their efficiency
and reduce trading costs, as well as about any duties and charges applied to
exports and imports.
1.8. The reports and questions from Members and the replies from Mongolia
covered many issues. The Chairperson was sure that these would be touched upon
in greater detail at their deliberations on the first and second day of the
meeting.
2.1. At the outset, let me put on record my appreciation to all the
delegates present here for showing an interest in Mongolia's trade policy through the
questions submitted and we hope for a constructive exchange of views.
2.2. I would like to thank you Madam Chair, for your kind words of
welcome and introduction to Mongolia's
second Trade Policy Review. Special thanks to H.E. Mr. Fransisco Pirez
Gordillo, Ambassador of Uruguay for accepting to be the discussant for our
review. I would also like to thank the WTO Secretariat's team for their hard
work in producing the report which provides a basis for our discussion.
2.3. I must mention that our government officials worked hard to prepare
the responses to all the questions posed by the Members. The responses were
circulated to Members. Like other Members going through the Trade Policy
Review, we were engaged in a lot of coordination work as questions cut across
Ministries and agencies, despite the many constraints, not least of which is of
course, time. We assure you that we put the necessary effort in providing the
written answers.
Mongolia and the multilateral trading
system
2.4. Mongolia strongly believes in the principles and benefits of rules-based
multilateral trading system in which the World Trade Organization plays a
central role in ensuring transparency, inclusiveness and predictability. Mongolia
remains fully committed to the goals and mission of the WTO.
2.5. Mongolia looks forward to the successful conclusion of the Doha Round and
considers that it is important to move forward to achieve successful
implementation of the issues that were agreed during the 9th Ministerial
Conference in Bali. The implementation of the
Bali Package would make a contribution to consolidating the multilateral trade
regime thus supporting the expansion of global economy.
2.6. As a landlocked developing country, Mongolia continues to be committed
to freer trade and trade liberalization and, as such, she strives to find the
right balance while improving the necessary legal basis.
2.7. As a Member of the WTO, Mongolia shares the view that the
Trade Policy Review is an important process in promoting greater awareness and
understanding of each Member's trade policies and practices, and the legitimate
reasons behind them. These reviews provide a platform for Member to share
policy initiatives and measures that are being taken to meet obligations under
the Agreements.
2.8. For the second Trade Policy Review, Mongolia received close to 200
questions from 12 Members. The queries covered investment policy and its
reform, competition policy, domestic legal changes, government procurement,
services liberalization, and tariff-related issues.
Current economic overview
2.9. In 2013, the economy grew by 11.7% over the previous year; the
inflation rate accounted for 12.5%, the unemployment rate was 7.6%.
2.10. GDP per capita, as of last year, has seen a five-fold increase
compared to the year of our first trade policy review (2005). Foreign trade
turnover has substantially increased compared to 2005, by about five times and
accounted for US$11 billion; however, trade deficit has also increased reaching
US$2.1 billion. Our exports make around 40% of GDP and imports-around 60%. The
trade sector absorbs 12% of total workforce and is considered as high workforce
absorbing sector playing a significant role in employment.
2.11. The Government of Mongolia is attributing great importance to
intensifying the economic development, including through increasing public
investment in major projects with government bonds and the Development Bank. It
is expected to support economic growth in coming years.
2.12. Promoting development of the private sector has been one of the key
objectives of the Government of Mongolia. In order to improve the legal environment,
to direct public and private partnerships for economic development, the
Concession Law was adopted in 2010. The Government implemented actions such as
promoting private investment in infrastructure projects, transfer some of the
government functions to the non-governmental organizations and professional
associations. A particular attention was paid to privatization of state-owned
enterprises and privatization plans are adopted for four years.
2.13. In 2013, Mongolia
traded with 135 countries. The PR of China, the Russian
Federation, the United
States, Canada,
the EU, Japan, and the Republic of Korea are our main trading partners,
accounting for 90% of total trade.
2.14. Some of the Mongolian export items enjoy preferential tariffs under
the GSP schemes of the U.S, the EU, Canada,
Japan and the Russian Federation.
From 2014, Mongolia
is eligible to "GSP Plus" of European Commission on sustainable
development and good governance. These enhance the possibilities to improve the
access to these markets.
2.15. Most of the questions we received were regarding our investment
environment and a New Investment Law, which was approved in 2013. This law
replaced the controversial Law on the Regulation of Foreign Investment in
Business Entities Operating in Sectors of Strategic Importance. The Government
has made its best efforts to improve the investment environment.
2.16. Mining is one of the major sectors that plays an important role in
the economy of the country. As of 2013, the share of the sector in the GDP
accounted for 28%. To develop private sector driven, transparent, responsible
mining sector and in order to create balanced and diversified economy in short
and medium term, the Policy in the Mining Sector until 2025 was adopted by the
Parliament this year.
2.17. The main foundation of Mongolia's
economy is livestock husbandry; it plays an important role in the economy,
employment and export revenues of Mongolia. As of the end of 2013,
close to 28% of GDP were produced by the agricultural sector, of which 77.5%
account for livestock husbandry. As well, 35% of the total labour force is
engaged in the agricultural sector and 7% of export income is contributed by
the agricultural sector. In 2013, we counted the total of 45 million heads of
livestock.
2.18. The Government of Mongolia continues to believe that trade
liberalization plays and should play a vital role in improving the living
standards of all people. From this point of view, the Government is working to
make the necessary contribution to successful completion of the Doha Round in the
near future.
2.19. The Government of Mongolia is of the view that all Members, large
and small, should make a contribution to move the negotiations forward. Mongolia shares
the view of and actively participates in the groups such as G-33, Small and
Vulnerable Economies (SVEs), Recently Acceded Members (RAMs), and Net Food
Importing Developing Countries.
2.20. Trade facilitation is an issue that has a particular importance in
increasing trade especially for landlocked developing countries with small
economies. The Government of Mongolia is pleased that an agreement is underway,
waiting for a consensus. Mongolia
is of the position to conclude the agreement at the earliest.
2.21. Taking this opportunity let me inform the Members that an
International Think-Tank of LLDCs was established in Mongolia and high-level events took
place recently.
2.22. Mongolia is also working hard to integrate into the regional economy. Until
now, it remained the only country that did not belong to any of the regional
trade arrangements. We see regional trade agreements as useful complements to
the multilateral trading system. Our first free trade agreement is being
negotiated with Japan,
and we are also working to accede to the Asia-Pacific Trade Agreement. The
Government attentively follows the activities of the ASEAN, the APEC, the PECC,
as well as the economic cooperation in the North-East and Central
Asia. In the future, it is intended to ensure a more active
participation in APEC through acceding to it.
2.23. In summary, during the period under the review, Mongolia had
continued to pursue a generally liberal trade and economic policy through
consolidating the accomplishments and promoting fair competition and creating a
new structure of the economy, which rests on the pillars of competitive
industries. The economic policies of the country and its WTO compliance efforts
were complementary. Mongolia
continues to hope that its legitimate interests are heard and treated with due
consideration and understanding.
3.1. Para comenzar quiero darle la bienvenida,
a esta importante ocasión, a la delegación de Mongolia encabezada por su
Excelencia, el Sr. Ochirbat Chuluunbat, Vice Ministro de Desarrollo Económico.
3.2. También quiero agradecer a Mongolia y a la
Secretaría por los informes de alta calidad que nos fueran presentados que
serán una base muy importante para los intercambios que se darán durante estos
dos días de examen.
3.3. Es un honor y un privilegio tener la
oportunidad de ser el Ponente en este Segundo Examen de las Políticas
Comerciales de Mongolia. Mis comentarios estarán enfocados en dos partes, la
primera relacionada con el entorno económico, mientras que la segunda hará
referencia al marco de las políticas comerciales y, en particular, en el
análisis de algunas políticas sectoriales. Mi intención es contribuir de manera
constructiva con la discusión en esta sección de alto nivel.
3.4. Debo expresar que la preparación de esta
intervención ha sido muy enriquecedora por cuanto he podido conocer y apreciar
más de cerca los diferentes avances de Mongolia, también me ayudaron a
comprender de mejor manera algunos de los desafíos pasados y futuros que
enfrenta este interesante país de aproximadamente 2.800.000 (dos millones
ochocientas mil) personas.
Entorno Económico
3.5. En cuanto al entorno económico corresponde
destacar, tal como lo señala el Informe de la Secretaría, que el país examinado
se ha resistido a aplicar medidas proteccionistas manteniendo a la vez y en
términos generales un régimen abierto del comercio y las inversiones.
3.6. El crecimiento del PBI de Mongolia fue
superior al 10% durante los últimos tres años, impulsado por el aumento de la
producción y las exportaciones de minerales. Es probable que continúe el rápido
desarrollo al aumentarse la producción de las minas existentes y cuando las nuevas
se pongan en funcionamiento. Sobre este punto, el Informe de la Secretaría
reitera que pueden surgir problemas por la dependencia en una estrecha base
económica apoyada en minerales.
3.7. Es evidente que para hacer producir los
depósitos de minerales se requiere de mucha inversión. La Ley del 2012 sobre
las inversiones extranjeras en los sectores estratégicos causó cierta
incertidumbre y contribuyó a una disminución de la inversión. Sin embargo, una
nueva ley sobre la inversión introducida en el 2013 tiene como objetivo abordar
las preocupaciones relacionadas con la ley del 2012, así como abordar las
preocupaciones planteadas sobre la legislación anterior.
3.8. De los informes se destaca una serie de
cambios que el Gobierno viene adoptando de manera de lograr una mejora
sustancial en la competitividad de sus diferentes sectores económicos. La
inversión extranjera directa ha contribuido en gran medida al crecimiento del
país, por tal motivo el hecho de que las autoridades sigan trabajando de manera
intensa para mejorar el régimen económico-comercial existente, es muy positivo.
Como consecuencia, el país recibirá mayores beneficios y transferencia de
tecnología a través de dichas inversiones, contribuyendo a los esfuerzos de
seguir mejorando la calidad de vida de sus habitantes. En este contexto de
apertura económica, la inversión extranjera ha jugado un rol crítico. Por lo
tanto, sería interesante saber cuáles son las medidas que Mongolia está
considerando para atraer mayor inversión extranjera.
3.9. Respecto a la necesidad de diversificar la
base económica, algunos Miembros ya habían presentado sus comentarios y
preguntas durante el Primer examen de las políticas comerciales de Mongolia en
2005, mientras que otras delegaciones reiteraron preguntas sobre el punto para
este nuevo examen. En este sentido, es importante destacar que las autoridades
están conscientes de esta dificultad que se puede plantear, tal es así que en
el Informe del Gobierno de Mongolia se señala que una diversificación de sus
exportaciones ayudará al país a tener un mejor desempeño de su economía.
3.10. En esta línea, sería interesante escuchar
a las autoridades los resultados que ha venido teniendo la implementación de la
estrategia nacional de desarrollo integral de Mongolia establecida en el año
2008.
3.11. Otro aspecto de relevancia en el entorno
económico es que el país ha venido adoptando una serie de leyes para lograr el
fortalecimiento del marco de la política fiscal y la promoción de la
consolidación fiscal, por lo que sería interesante conocer si dichas acciones
que vienen siendo adoptadas han alcanzado los resultados esperados al día de la
fecha.
3.12. En lo que respecta a los aranceles, el
Informe de la Secretaría indica que Mongolia ha consolidado casi todas sus
líneas al 20% siendo el promedio consolidado NMF de 17,7% comparado con el
promedio aplicado NMF que es del 5%. Asimismo, se destaca que el país examinado
aplica un tipo arancelario ad valorem de
un 5% a casi todos los bienes importados. Casi todas sus líneas arancelarias
tienen aranceles aplicados bajos y los derechos de importación en algunos
productos son mayores que los tipos consolidados, hecho que afecta a un
reducido número de líneas arancelarias.
3.13. A pesar de ser una economía esencialmente
impulsada por el mercado y que ha sido privatizada, había en Mongolia cerca de
100 empresas total o parcialmente de propiedad del Estado. Sin embargo, entre
2005 y 2011, cerca de 90 entidades fueron privatizadas, mientras que el proceso
de privatización de varias compañías, entre ellas la línea aérea nacional (MIAT)
y algunas plantas de energía, fue postergada.
3.14. Es de gran relevancia mencionar la
importancia que Mongolia le atribuye al sistema multilateral como elemento de
trascendencia en su vinculación con el comercio exterior del cual depende gran
parte de su economía. En este sentido, Mongolia es un activo participante
dentro del grupo de países sin litoral marítimo, además integra otros grupos
como por ejemplo el de economías pequeñas y vulnerables, la coalición del G-33
en materia de agricultura, miembros en desarrollo de Asia, Miembros de Reciente
adhesión (RAMs) y ha sido uno de los 40 Miembros que ha realizado la
notificación de sus compromisos en Categoría A en materia de facilitación del
comercio.
3.15. Por otra parte, Mongolia participa como
observador en el Acuerdo Plurilateral de Contratación Pública de la OMC.
3.16. Finalmente, se comparte con el país
examinado lo expresado respecto a la importancia de poder alcanzar de manera
exitosa la culminación de la Ronda de Doha, asimismo se entiende que esto puede
llegar a generar un impacto positivo de los Miembros de la OMC en sus esfuerzos
para mejorar las condiciones de vida de las personas. En particular, las
reformas en el sector agrícola mundial.
Régimen de la Política Comercial – Políticas Sectoriales
3.17. Con respecto a la segunda parte de mi
intervención relacionada con el marco de las políticas comerciales, y al
análisis de algunos de los diferentes sectores de la economía de Mongolia,
corresponde señalar que el Gobierno ha identificado como áreas prioritarias
para su desarrollo y para la captación de inversión extranjera directa, a la
minería; la información y tecnología; la producción agrícola y el turismo, para
los cuales describe en su informe una serie de leyes que apuntan a su promoción
y desarrollo.
3.18. En cuanto a la agricultura, representa un
tercio del empleo y cerca del 15% del PBI de Mongolia, siendo la cachemira, el
pelo de cabra peinado y el cuero (de cabras y ovejas), sus principales
productos agrícolas de exportación. Por otro lado se desprende del Informe de la
Secretaría la existencia de un déficit comercial para productos agrícolas.
3.19. Es de mencionar que si bien Mongolia
cuenta con tierras arables, el clima duro y difícil impide por el momento un
mejor provecho de las mismas. Por lo que se ve con agrado las distintas medidas
que se vienen implementando en orden de reducir el impacto negativo sobre la
agricultura que produce el severo clima de Mongolia. En esta línea, la
asistencia técnica que el país pueda recibir seguramente contribuirá a mejorar
la productividad de manera sostenible superando los obstáculos que hoy el clima
interpone.
3.20. Dada la importancia del sector y la
población del país, sería interesante conocer por parte de las autoridades
mongolas algunos comentarios respecto a los objetivos de mejorar la seguridad
alimentaria así como el desarrollo del medio rural, planes estos que están
enmarcados en la estrategia de desarrollo del sector de la agricultura
(2006-2015), el programa nacional para la seguridad alimentaria (2009-2016), la
tercera campaña de cultivos (2008-2010) y el programa de ganadería (2010-2021).
3.21. En relación a los sectores minería y
energía, es de mencionar que conforme al Informe de la Secretaría la minería
representó en el 2012 más del 18% del PBI mientras que ese mismo año las
exportaciones de minerales representaron cerca del 89% del total de productos
exportados, siendo además uno de los mayores productores de varios minerales
como carbón, cobre, minerales metálicos y fluorita. Con las explotaciones de
nuevos depósitos de minerales el país espera que el sector siga creciendo.
3.22. De acuerdo al Informe de la Secretaría, la
minería ilegal ha aumentado, esto tiene como consecuencia que se evita el pago
de regalías así como el cumplimiento de leyes medioambientales. Sobre este
punto, sería interesante conocer las medidas que han sido tomadas o
planificadas por las autoridades para reducir esta práctica que afecta la
economía del país.
3.23. Hay otros sectores como el de energía, el
sector industrial y el desarrollo de zonas francas así como en el sector de los
servicios en particular turismo y transporte que a los Miembros les gustaría
abordar con más detalles.
3.24. Con respecto a la propiedad intelectual,
es importante destacar los avances que Mongolia viene realizando, conforme al
Índice Mundial de Innovación 2014 se ubica en el lugar 56 entre 143 países. En
esta área, sería interesante escuchar la experiencia de Mongolia en el
desarrollo y protección de la propiedad intelectual.
Conclusiones
3.25. Entrando en la parte final de mi
intervención en este primer día, quiero señalar algunos puntos que pueden ser
considerados en un análisis futuro por las autoridades.
3.26. De todo el material analizado en esta
ocasión se puede concluir que Mongolia ha realizado enormes avances desde el
último examen de sus políticas comerciales en 2005. Como todo en la vida y a
pesar de los éxitos, también hay desafíos que enfrentar y resolver en un futuro
de manera a mantener y mejorar el porcentaje de crecimiento anual que el país
viene teniendo, aumentar la competitividad de sus sectores comerciales y lograr
una mejora del desarrollo inclusivo de toda la sociedad. En este sentido, es
positivo ver las diferentes reformas que Mongolia ha venido realizando desde
2005 hasta el día de la fecha, que apuntan a resolver y fortalecer aquellas áreas
que hoy en día podrían ser identificadas como menos fuertes.
3.27. Por ejemplo: la diversificación de la
economía, los problemas generados por la falta de infraestructura, la necesidad
de reducir los altos costos del transporte (aquí se beneficiaría de alcanzarse
acuerdos con los países linderos), y captar mayores inversiones que provean al
país de transferencia de tecnología y mejores beneficios para el país.
3.28. Ha sido un gran privilegio compartir con
ustedes mis comentarios como Ponente en este primer día del segundo examen de
las políticas comerciales de Mongolia.
3.29. Desgraciadamente, el escaso tiempo no es
suficiente para analizar con mayor profundidad el proceso de apertura,
integración y participación en el comercio internacional que Mongolia viene
realizando desde un tiempo a esta parte.
3.30. Estoy convencido de que estos días de
ejercicio serán de suma importancia para familiarizarnos aún más con la
dinámica de este increíble país. Al mismo tiempo, considero será una instancia
de gran utilidad para las autoridades mongolas en su proceso interno de
reformas.
3.31. Agradezco una vez más esta oportunidad y
le deseo a Mongolia un exitoso ejercicio.
CHINA
4.1. China
is glad to see that Mongolia,
as our important neighbour, has achieved remarkable economic and social
development since its last review in 2005. We are even more pleased to witness
that the economic growth has benefitted the people of Mongolia, by
raising their living standards and reducing the unemployment rate. We commend Mongolia for
taking its WTO commitments seriously and its continuous effort to liberalize
its trade and investment environment. For example, Mongolia has kept most of the
applied tariff rates lower than the bond rates, and has upgraded the customs
information system which has greatly enhanced trade facilitation during the
period under review. We encourage the Government of Mongolia to continue in
this direction.
4.2. Turning to the bilateral front, Mongolia
and China,
with geographical proximity, cultural affinity and economic complementarity,
always enjoy close relationships in all aspects including trade and investment.
We are currently the largest trading partner and investor of Mongolia, and notably, our investment outflow to
Mongolia
is accelerating. Looking ahead, we are willing to deepen and extend our
cooperation in boarder areas, and actively engage in Mongolia's efforts to diverse from
its resource-dependent economy. Just last month, H.E. President Xi Jinping of China visited Mongolia. During his visit, both
sides decided to upgrade the China-Mongolia relations to a comprehensive
strategic partnership which surely will bring our bilateral relations to a new
level.
4.3. At this occasion, China
would encourage Mongolia
to further facilitate foreign investment in areas of agriculture, mining,
transportation, electric power, and renewable energy. In particular, we look
forward to working closely with the Mongolian Government on their
infrastructure to improve connectivity and facilitate trade. We also believe
that it would be in the interests of the Government of Mongolia to simplify
approval procedures for foreign investment and further improve transparency of
its investment regime so as to protect the legitimate rights and interests of
foreign investors.
CANADA
4.4. Allow me to begin by saying a few words about Canada and Mongolia's bilateral relationship,
before moving on to the broader trade and economic environment.
4.5. Canada
and Mongolia
have built a strong and dynamic partnership based on shared values, including
mutual recognition of the importance of open and fair trade to economic growth
and prosperity. This understanding underscores our important bilateral
relationship and extends to the WTO.
4.6. Our bilateral relationship has its roots in trade and investment. Canada was one of the first "Third
Neighbour" countries to participate in exploration of Mongolia's
mineral resources and today we are one of the top foreign investors in the
country. Canada accounted
for the third highest FDI inflows by a single country to Mongolia
between 1990 and 2012, increasing by 22% over the previous year to reach US$1.9
billion in 2012.
4.7. I would like to commend the efforts of Mongolia in transitioning to a
market-oriented democracy in a peaceful fashion in just over 20 years. This is
particularly remarkable given Mongolia's
geographic challenges such as a lack of access to open seas, vast distances and
a harsh climate, the latter a challenge Canada can certainly relate to.
4.8. The Canada-Mongolia bilateral relationship could move to a new level
with the successful conclusion of a bilateral Foreign Investment Promotion and
Protection Agreement. Our negotiating teams have re-engaged recently and we
thank Mongolia
for their latest communication on the outstanding issues regarding the
Agreement. We hope to bring negotiations to conclusion in the near future.
4.9. Canada
is committed to the growth of our relationship with Mongolia and we welcome the
constructive dialogue in which our Governments have engaged over the years. It
is in the spirit of this dialogue that I would like to highlight three broad
themes, addressing issues which I believe could foster greater economic
participation by Mongolia
in the global economy.
4.10. First, I would like to commend the efforts of Mongolia to
liberalize the foreign investment approval regime by repealing the
"Strategic Entities Foreign Investment Law 2012" and replacing it
with "Investment Law 2013". This should ease the approval process for
foreign investments in Mongolia
in two key respects. First, the law provides for a consistent application of
rules across industry sectors and outlines a consistent role for Government in
the decision-making process. Second, the law includes a supermajority clause as
a prerequisite for any amendment or repeal, which provides considerable and
much sought after stability in Mongolia's
legislative framework governing investment. However, the new Law, which has
also repealed the previous "Investment Law 1993", has significantly
narrowed the number and range of stabilized and domestic investors through
minimum paid-in capital requirements. Moreover, other pieces of legislation
provide for a margin of preference for domestic suppliers of goods and
services. In light of slumping economic growth and a drop in foreign
investment, increased stability for private investment, both foreign and
domestic, will help Mongolia
to return to a robust growth path.
4.11. Second, Canada
recognizes and supports the need for Mongolia to diversify its economy
to promote sustainable growth. One way to do so would be to further open areas
of the economy to private sector participation by reducing Government
participation, including with respect to mineral exploration and production,
power generation, and railway transportation. In the last 18 months, there has
been notable increase in State's role in the economy of Mongolia with 14 new
state‑owned enterprises created since 2012. According to some estimates, the
assets of state‑owned enterprises reached 33% of GDP at the end of 2012, while
their combined profitability is reported to be near zero. Canadian market
participants report that Mongolian legislation and regulations governing trade
and investment often lack clear definitions, allowing for subjective and
inconsistent interpretation by the authorities. Diminishing the State's role in
the economy through reduction of the State ownership of assets, as well as
increasing clarity and transparency in legislation and regulation, will help
reverse the outflow of foreign investment as well as free up the important
macroeconomic levers in order for the Government to advance its "Action
Plan 2012‑2016".
4.12. Third, as Mongolia seeks to modernize its hard infrastructure,
particularly in rail transport, Canadian companies have reported a rather
unorthodox treatment in regards to participation in public tenders. I cannot
underscore enough the importance of predictability, transparency and fairness
in government procurement procedures. These help ensure best value for
Government resources, increase the confidence of suppliers and underline the
importance of the rule of law. Further, a fair and transparent process is
likely to attract better and more technologically advanced suppliers to
Mongolia, thereby contributing to the effective development of the country's
infrastructure.
4.13. Canada has submitted written questions that reflect our concerns
regarding a number of trade-policy related measures that may impede market
access or otherwise constrain mutually beneficial growth in trade and
investment between our two countries. We look forward to Mongolia's responses,
and more generally to a constructive exchange of views on all aspects of
Mongolia's trade policy.
EUROPEAN UNION
4.14. This is the second review for Mongolia. During the years under
review, Mongolia has continued its progress towards free market, free trade and
diversification of its economy. Certainly there is still room for improvement
and we have seen some difficulties in the investment environment particularly
in the last two years but, considered in perspective, we should commend
Mongolia for its efforts.
4.15. While the Russian Federation and the People's Republic of China are
the main trade partners for Mongolia accounting for more than 70% of Mongolian
total foreign trade, the EU represents, nevertheless, an important trading
partner accounting for about 9.3% of Mongolia total trade.
4.16. A word on the EU's bilateral relationship with Mongolia. Formal
relations between the EU and Mongolia are overall positive and, in 2013, we
signed the EU-Mongolia Partnership Agreement that provides a comprehensive
framework for enhancing relations in political, economic and sectoral areas
such as agriculture people-to-people, research and innovation, environment,
culture and education. In the field of trade, the EU and Mongolia have agreed
to cooperate in the following priority areas: (1) diversification of the
economy and of its export base; (2) stable and predictable business and
investment environment; and (3) raw materials.
4.17. Regarding the diversification of its economy, Mongolia became
eligible to GSP+ in 2006 already. The EU congratulates Mongolia on qualifying
for the GSP+ also under the reformed EU‑GSP as from 1 January 2014 and invites
the country to ensure effective implementation of the relevant international
conventions in order to keep those preferences. Part of the EU development
assistance (€65 million for 2014-2020) is in support of SMEs and approximation
of EU standards which, in the end, should help strengthen Mongolia's production
and export capabilities.
4.18. At a multilateral level, the EU praises the positive recognitions that
Mongolia attributes to the Trade Facilitation Agreement reached in Bali and
congratulates Mongolia for having notified its Category A commitments in July.
4.19. Turning now to Mongolia's request to receive additional technical
assistance to ensure the full implementation of the agreements, the EU would
like to underline that it stands ready to support the Government in
trade-related capacity areas and considers it as a priority of our relations.
However, we are concerned by the fact that the existing organizational
structure of the Ministry of Economic Development makes it very difficult to
"absorb" additional technical assistance programmes. We understand
that the trade portfolio is managed by the department of economic cooperation,
loan and aid policy which seems to be understaffed. Therefore, we would invite
Mongolia to indicate whether it intends to "strengthen" the
operational resources allocated to trade in the Ministry of Economic
Development and to clarify its overarching trade policy strategy so that the EU
and other donors could more easily earmark funds in this area.
4.20. Coming now to our second priority with Mongolia, that is to reach a
stable and predictable business and investment environment, I would like to
underline first of all the need of an increased transparency of the import
procedures put in place. This is an issue that the EU has been trying to
clarify for a long time but unfortunately we have not yet received the
necessary answers. We would recall Mongolia that replies are an important aspect
of any TPR and that, more broadly, it is in the interest of Mongolia to set up
a business environment that is transparent and stable enough. In some areas, it
seems that the environment still raises questions from companies and we would
encourage Mongolia to work with us in the coming months to provide more
detailed and reassuring answers, for instant on issues like import licensing or
water services.
4.21. The EU welcomes the improvement brought to the investment framework
in 2013; it should contribute to reassure and bring back investors. The EU
believes that the steps taken to approve the largest public-private partnership
globally in the energy sector, the so-called combined heat and power plant
CHP5, represent a visible and positive decision that will help Mongolia restore
the confidence of the international investors.
4.22. Regarding our third priority with Mongolia, we are interested in
receiving more clarity on the new Mineral Law and we stand ready to exchange
expertise on environment and safety regulations in the mining sector.
4.23. Concluding, the EU is confident that this TPR will help Mongolia in
reviewing its policies so as to ensure that they are most favourable for
attaining its economic objectives while respecting their international
commitments in this forum.
AUSTRALIA
4.24. We have been pleased to witness Mongolia's rapid development of
recent years, powered by strong economic growth which we hope to see continue
for the benefit of all Mongolia's people.
4.25. Australia's bilateral relationship with Mongolia is strong,
particularly in the area of mining investment, development cooperation,
education, and people-to-people links.
4.26. Education has been an important part of our development assistance
programme in Mongolia, it is important in promoting and sustaining economic growth
and reducing poverty. Since 1995, the Australian Government has supported over
350 Mongolians and their families to study in Australia on postgraduate
scholarships, with many graduates going on to achieve success in government and
business in Mongolia. In recognition of the success of this programme,
Australia announced in March that, from this year, it would be increasing the
number of postgraduate scholarships it provided to Mongolians each year from 38
to 43.
4.27. Like Mongolia, Australia is a resource-rich country whose mining
industry has undergone rapid expansion in recent years. Australia is assisting
the Mongolian Government to help ensure that the benefits of the timing sector
are realized for the entire population.
4.28. If any country wants to make the most out of its resources, good
governance and a stable regulatory and investment climate are crucial.
Australia was pleased to announce earlier this year the Australia-Mongolia
Extractives Program, which will help the Mongolian Government to strengthen governance
and transparency in the mining sector, level the playing field for both
domestic and foreign investors, and improve access for Mongolians to technical
and vocational education, training and jobs.
4.29. Foreign investment has played an important role in Australia's own
economic growth, particularly in the mining industry. Australia welcomes recent
efforts by the Mongolian Government to improve Mongolia's foreign investment
climate, particularly the repeal of the Strategic Entities Foreign Investment
Law and the passing of the new investment law and minerals policy at the end of
2013. Noting the importance of maintaining transparent and predictable rules,
we encourage Mongolia to take further steps to support foreign investment and
promote investor confidence. This could include improving the speed and
transparency of decision-making as well as enhanced consultation with investors
on draft legislation. In this regard, we welcome the establishment of Invest
Mongolia as a separate agency to promote foreign investment.
4.30. Australian investors have a significant stake, alongside the
Government of Mongolia, in the US$6.5 billion Oyu Tolgoi copper and gold mine,
the largest single investment in Mongolia's history. A joint venture between
Rio Tinto and the Mongolian Government, Oyu Tolgoi is expected to account for
between 20 and 30% of Mongolia's GDP once it starts full commercial ore
production. Australia encourages the Mongolian Government to exercise every
effort to reach an agreement on financing of Stage 2 of Oyu Tolgoi.
4.31. Australia thanks Mongolia for its notification of Category A
commitments under the Agreement on Trade Facilitation. Achieving progress on
the WTO Agreement on Trade Facilitation and development of a post-Bali work
programme in these areas is of utmost importance to the ongoing success of the
multilateral trading system. We also encourage the Mongolian Government to
address the concerns of foreign businesses around restrictions on freedom of
movement of foreign nationals, and the use of the criminal justice system to
resolve commercial disputes.
4.32. Australia notes that high levels of inflation can diminish
investment returns and negatively affect investor confidence. Australia
recognizes the step taken by the Bank of Mongolia to raise interest rates in 2012,
which brought down inflation. Noting the continued persistence of high levels
of inflation in the economy, we encourage the Bank of Mongolia and the
Mongolian Government to work together to bring inflation down further,
including by undertaking further regulatory reform to free up markets and
increase the capacity of the Mongolian economy.
COLOMBIA
4.33. Mongolia realiza su segundo examen de
política comercial en medio de resultados económicos favorables: alto
crecimiento económico, aumentos sustanciales en el PIB per cápita, bajo
desempleo y mejoras en el nivel de vida. Todo esto impulsado por la inversión y
el comercio en el sector de los minerales y en el marco de grandes reformas
estructurales y de un régimen de comercio abierto.
4.34. La continuidad de estos positivos
resultados dependerá en gran medida de cómo Mongolia enfrente importantes
desafíos estructurales: diversificar su economía altamente dependiente del
sector de explotación de minas y diversificar igualmente sus socios
comerciales: en 2012, el 84% de sus exportaciones estaban relacionadas con un
solo sector, el de la minería y con un solo mercado, China, que adquiría el 92%
de esas exportaciones; y mejorar la infraestructura, particularmente en el
sector de transporte por carretera y ferrocarril. La Estrategia Global de
Desarrollo Nacional de 2008 y el amplio proceso de reformas acometido durante
el proceso de examen son importantes iniciativas que contribuyen a hacer frente
a estos desafíos.
4.35. Durante el período objeto de examen,
Mongolia ha adoptado medidas que facilitan el comercio. Destacamos y celebramos
el establecimiento del Sistema Automatizado de Información Aduanera (CASI) y el
pago en línea de los derechos de aduana, medida que permitió disminuir el plazo
para el despacho de 3,06 horas a 23 minutos. Estas medidas, así como la
implementación a futuro del Acuerdo de Facilitación al Comercio tendrán un
positivo impacto para Mongolia, como quiera que al ser país sin litoral sus
costos comerciales son más elevados.
4.36. A pesar de los avances respecto al
anterior examen de política comercial realizado en 2005, persisten algunas
medidas restrictivas al comercio que consideramos pertinente mencionar en este
examen:
·
A nivel arancelario, la persistencia de 60 líneas arancelarias con un tipo
aplicado superior al consolidado.
·
La prohibición de importaciones de varios productos como el alcohol etílico
y las licencias no automáticas para algunos productos como los animales
reproductores.
· Al alto número de normas técnicas
obligatorias, alrededor de 3 000, que no se ajustan a las normas
internacionales.
4.37. De otra parte, nos llama la atención que
Mongolia sea el único país de la OMC que no participe en ningún acuerdo
comercial regional con otros países. Ya lo mencionaba el informe sobre comercio
mundial de 2011 de la OMC, indicado que Mongolia era la excepción en una
tendencia cada vez más creciente a negociar acuerdos comerciales bilaterales,
regionales, plurilaterales. Nos preguntamos si el explorar estas esferas de la
política comercial, podrían contribuir a una mayor integración de Mongolia a la
economía mundial. En el marco de la OMC, encontramos a su vez que Mongolia no
ha sido parte ni tercero en ninguna diferencia examinada en el marco del
mecanismo de solución de diferencias; no ha adoptado ninguna medida antidumping,
ni de salvaguardia y no ha establecido una autoridad investigadora para aplicar
medidas de defensa comercial.
4.38. Para concluir, deseamos a Mongolia éxitos
en su examen de política comercial y los alentamos a proseguir en sus esfuerzos
por reducir la dependencia del sector de explotación de minas, por lograr un
desarrollo sostenible a largo plazo y por crear una economía competitiva y
diversificada. En el logro de estos objetivos serán fundamentales los programas
gubernamentales relacionados con la creación de infraestructura, el aumento en
el número de productos de exportación y la creación de un entorno favorable a
la IED.
UNITED STATES
4.39. In the 17 years since it acceded to the WTO, Mongolia has recognized
the importance of market-oriented economic development, as evidenced by its
focused efforts to promote economic growth, as well as its recognition of the
need for increased transparency. Open and transparent trade and investment
regimes will further enhance the business environment in Mongolia and improve
Mongolia's attractiveness to its trading partners and foreign investors. We
recognize the particular challenges that landlocked developing countries
(LLDCs) face in participating in international trade and note that the United
States is committed to close cooperation with LLDCs to address such challenges
and, specifically, to continuing to work hard to advance trade and economic
ties with Mongolia.
4.40. We took particular note of Mongolia's discussion of the importance
of trade facilitation to landlocked developing countries. We hope that the
actions of a few will not continue to block the benefits of the Trade
Facilitation Agreement to the many, including many developing countries. With
regard to the Trade Facilitation Agreement, we also thank Mongolia for its hard
work and commitment in submitting its Category A notification.
4.41. Trade between Mongolia and the United States has grown in recent
years. In 2005, when Mongolia's first Trade Policy Review took place, total
two-way trade in goods stood at US$166 million. By 2012, this figure had
increased to a high of US$707 million before declining in 2013. In the coming
years, further growth in trade with Mongolia will likely be affected
significantly by how well Mongolia handles its economic engine and its biggest
economic challenge – the mining sector. We encourage Mongolia to figure out how
to manage the development of its mineral resources in a manner that will ensure
steady growth. It is well-known that the mining sector is the key driver of
Mongolia's economy. It is Mongolia's major source of exports and foreign direct
investment, and many of Mongolia's imports also feed the mining sector. Since
2010, Mongolia has experienced double-digit GDP growth, led by higher commodity
prices for copper, gold, zinc, coal and other minerals and by large capital
inflows supporting Mongolia's pursuit of world-class mining development
projects.
4.42. Mongolia's economy has achieved this growth despite a number of
problematic challenges that impede economic development. These include inadequate
transparency in regulatory and legislative processes, weak rule of law,
corruption and frequent abuse of inspection, and permitting and licensing
regimes to protect existing state and private sector interests. The Mongolian
government's economic policymaking has often been unpredictable, and almost
always, it has lacked the transparency that foreign investors and traders need
and expect in today's global trading system.
4.43. For example, in May 2012, Mongolia's Parliament hastily passed the
Strategic Entities Foreign Investment Law, apparently in reaction to an attempt
by a foreign state-owned enterprise to gain a majority interest in a coal
company. Unfortunately, this law created a great deal of uncertainty about
Mongolia's investment climate. In the aftermath, implementing regulations were
delayed, companies reported that they could neither register nor complete
permitting actions, and investors openly questioned whether or not Mongolia was
serious about attracting foreign direct investment (FDI). Following a
significant downturn in FDI in 2012 and 2013, Mongolia's Parliament passed a
new investment law in October 2013, which has started to win back investor
confidence. While it is hoped that some vague language in the new investment
law will soon be clarified, key provisions in this law include its equal
treatment of domestic and foreign investors and its provisions regarding tax
stability.
4.44. Another example involves the ongoing amendment process to Mongolia's
2006 Minerals Law, which, among other things, sets forth the regime for issuing
exploration and mining licenses. In 2010, after the President of Mongolia
criticized the existing minerals licensing regime, Mongolia embarked on a
process to amend the entire law. This process has produced numerous proposed
amendments. While changes to important laws often take time, in this case the
lengthy amendment process has adversely affected the mining sector. Even though
the Minerals Law remains in force, officials at all levels of Government now
delay or even refuse to process normal requests for extending or issuing
exploration and mining licenses, ostensibly out of concern that actions taken
under the current law might eventually become invalid or require alteration
under the new law being considered. The effect has been to generate long and
costly bureaucratic delays in several commercial sectors, which has increased
investment risk. Many investors are hopeful that Parliament's January 2014
adoption of a new State Minerals Policy will lead to greater stability in the
mining sector and sound amendments to the Minerals Law.
4.45. Another problematic area involves the tendering process under
Mongolia's Public Procurement Law. Recently, companies from a number of
countries, including the United States, have expressed serious concerns about
inadequate transparency and lack of fairness in this process.
4.46. We are encouraged that the Mongolian Government took an important
step toward addressing transparency and corruption concerns in September 2013
when it signed an agreement with the United States promoting legislative and
regulatory transparency in matters affecting trade and investment and calling
for adherence to anti-bribery and anti-corruption principles. While the
Mongolian Parliament still must ratify this agreement, once it is in effect and
has been implemented, it should enhance not only trade and investment but also
create an even more attractive business environment in Mongolia.
4.47. In conclusion, we look forward to continuing our work with Mongolia
to expand the U.S.‑Mongolia trade and investment relationship.
TURKEY
4.48. We observe that since its last trade review, Mongolia has achieved
successful GDP and trade growth as well as macroeconomic performance. According
to the data of 2013, its capita per GDP has more than doubled in the last five
years. Unemployment also fell from 11.6% in 2009 to 7.6% in 2013. Despite the
sluggish performance of its trade volume in 2013, exports of Mongolia reached
US$4.27 billion, representing 37.1% of its GDP, while its imports reached
US$6.36 billion. Furthermore, trade deficit decreased by 13% in 2013
compared to 2012.
4.49. In this context, although its economic growth is highly dependent on
the exports of minerals, and it is subject to the fluctuations in the global
mineral markets, Mongolia recently managed to minimize the negative outcomes of
global economic crisis and put into place a rapid recovery and continued
substantial economic growth since 2010.
4.50. Although being a small economy, Mongolia is a country in favour of
an open trade and investment regime with a trade volume more than 90% of its
GDP. The country has a rather simple tariff regime having no tariff escalation
or tariff peak, and for most of the lines the applied rates are lower than the
bound rates. To diversify its economy and to minimize the effects of
fluctuations of the price and export volume of the minerals, Mongolia is also
well aware of the importance of a private sector-led, high-tech manufacturing
and services sector.
4.51. In this regard, the Comprehensive National Development Strategy of
Mongolia aims at increasing exports of processed products rather than minerals
and raw materials of animal origin. Establishment of the Development Bank of
Mongolia in 2011 will also be helpful in diversifying its exports.
4.52. We are also of the view that the Government's recent legislative
steps such as the new Foreign Investment Law, the newly introduced Fiscal
Stability Law, the Integrated Budget Law, the Social Welfare Law are also
important instruments in improving its overall trade and economic performance
and in restoring confidence to its investment environment.
4.53. We are also happy to see that Mongolia is also dedicated to review
its business environment, to reduce red tape, to simplify its customs
procedures such as the post clearance customs control and the submission of
electronic documents and electronic payments system.
4.54. Mongolia's recent regional trade initiatives such as the
Asia-Pacific Trade Agreement and the negotiation of an economic partnership
agreement with Japan are important steps in further liberalizing its overall
trade regime.
4.55. That being said, we wish to mention that, as for all Members, there
is still room for improvement in its trade and economic policy framework. In
this respect, the Secretariat report underlines the high dependency on minerals
of exports to a single market and its application of non-aligned standards such
as mandatory technical requirements and the diminishing number of inspections
conducted in recent years regarding intellectual property rights and the unnecessary
licences applied in foreign trade.
4.56. As also stated in the Government report, Mongolia can also improve
its institutional trade policy making capacity and enhance its transparency by
publishing the necessary legislation of the WTO Agreements.
4.57. When it comes to bilateral relations, Turkey has been one of the
strong supporter of Mongolia since the collapse of the planning system more
than two decades ago and Turkey is helping its transition from planning to the
market system. We currently enjoy excellent political and economic relations
with Mongolia although our economic relations are under our potential.
4.58. Turkish technical cooperation and development of agencies is quite
active in Mongolia and is actively cooperating with the Mongolian Government in
several social and economic sectors.
CHINESE TAPEI
4.59. Looking back at Mongolia's economic performance over the last few
years, we see that it recovered well after the 2008 global financial crisis,
and it has enjoyed a high level of economic growth at an average of 14%
annually since 2011. Furthermore, several new laws have been introduced in 2013 in the areas of investment, fiscal
stability, integrated budget, social welfare and customs reform, which could
produce greater transparency in law enforcement and help to attract more
foreign investment in the future.
4.60. Mongolia's main exports are products of natural resources such as
mining, which account for 28% of its GDP. The second largest exporting sector
is livestock agriculture, with a similar share of GDP. We also note that the
main destination for these exports is its closest neighbour, China. We would
suggest, therefore, that Mongolia might like to encourage its industries to
widen the scope of their export product lines and reach out to new export
markets in order to increase the potential for expansion.
4.61. It would appear that the main challenges facing Mongolia's economy
today are the external imbalances caused by a rapid decline in the amount of
inward foreign direct investment and the weakening of some of its mineral
exports. And, as I mentioned before, Mongolia's export market is very
concentrated and reliant at present on just one particular country. Aside from
these concerns, the latest forecasts are for economic growth to moderate in
2014 and remain broadly stable in 2015, for inflation to decline, and for the
current account balance to improve over the next two years, assuming
appropriate policies are applied. This all suggests that Mongolia's main policy
priorities should be to address pressures on its balance of payments and
foreign exchange reserves, and to generally tighten fiscal and monetary
policies towards gaining economic stability.
4.62. Regarding bilateral relationship between Mongolia and the Separate
Customs Territory of Taiwan, Penghu, Kinmen and Matsu, the total value of
two-way trade between us amounted to around US$23 million in 2013. The total
amount of investment from our private sectors into Mongolia stands cumulatively
at about US$20 million. We have a trade and economic representative office in Ulaanbaatar
and Mongolia has the same in Taipei. All-in-all, a good relationship exists
between us in terms of trade and economic affairs.
4.63. My delegation has already submitted several written questions to
Mongolia in advance, on such topics as the economic environment, FDI, regional
and bilateral trade agreements, government procurement, and rail transport. We
are grateful to Mongolia for preparing the answers to these questions. We would
also like to encourage it to continue to maintain an open trade regime and to
further tighten fiscal and monetary policies in its Action Plan for 2012-2016.
And, last but not least, we look forward to Mongolia joining the GPA as it
promised at the time of its WTO accession.
BRAZIL
4.64. It is a matter of great satisfaction for Brazil to participate in
this Trade Policy Review of Mongolia. Brazil's commitment to Mongolia may be
observed by the number of cooperation instruments, comprising different fields,
which have been negotiated by the countries over the last years.
4.65. Since Mongolian first Trade Policy Review in 2005, its economy has
grown substantially, despite some growth fluctuation during this period. There
was also a considerable progress towards improving living standards.
4.66. According to the Secretariat report, Mongolia has resisted
protectionist pressures and continued to maintain a generally open trade and
investment regime. We see it as a clear commitment of Mongolia to the
multilateral trading system.
4.67. Trade flows between Brazil and Mongolia have also intensified since
Mongolia's first Trade Policy Review in 2005. Despite this, it remains at
relatively unstable and modest levels. In this sense, we believe that bilateral
trade is well below its potential and could be further expanded, both in terms
of value and diversification.
4.68. In what concerns direct investment between our countries, it is
still a field to be strongly developed, and we hope that Mongolia's new
Investment Law of 2013 will help our countries achieve this goal.
4.69. As regards non-tariff measures, although Mongolia has the objective
of increasing the number of national standards that are identical to
international standards, we note that currently only 14.6% of its agricultural
standards are aligned with international standards. In this sense, we recall
that domestic standards shall only be applied when in conformity with WTO
rules.
4.70. Brazil has submitted a few questions to Mongolia in connection with
its investment and mining policies and agricultural standards, to which we
expect to receive the corresponding answers during this exercise.
4.71. Let me conclude by reiterating that Brazil stands ready to further
enhance its cooperation and trade with Mongolia.
JAPAN
4.72. Recently, Mongolia has recorded its economic growth by more than 10%
a year. In addition, the Mongolian Government is promoting diversification of
its economy, recognizing that fluctuation of commodity prices are likely to
affect the Mongolian economic growth rate due to the economic structure
depending on the commodity. Japan, which has continuously supported Mongolian economic
growth since Mongolia began its transition to democracy and a market economy,
welcomes efforts of the Government of Mongolia for its economic
diversification.
4.73. Now let me move to trade policies. We have two points here: the WTO
and RTAs.
4.74. As for the WTO, Mongolia has reformed its domestic regulations in
order to implement the WTO Agreement since its accession in 1997. Japan
encourages Mongolia to continue its endeavour for reforming the regulations in
consistency with the WTO Agreement.
4.75. Concerning RTAs, Mongolia does not have any RTAs with other
countries. However, it has finished negotiation of the Asia-Pacific Trade
Agreement and reached an agreement in principle on the Japan-Mongolia EPA this
July. Japan expects that these efforts will be complementary to the
multilateral trading system as long as they are implemented consistently with
the WTO Agreements.
4.76. Let me turn to specific points. We have four points here: investment
and business environment, procedures for licenses and permissions, telecommunications,
and excise tax.
4.77. To begin with, Japan welcomes Mongolian measures to reform its
legislation to realize a better environment for investment and business. In
particular, Japan commends that the new Investment Law of 2013 improved its
foreign investment and business environment removing discrimination on foreign
investment. Japan also stresses that the transparency is the key element in the
implementation of the laws on investment and business environment.
4.78. On the other hand, we think Mongolia still has some issues to
address with respect to the investment and business environment. First, the
minimum threshold of investment required to foreigners, which is an obstacle to
attract a small amount of investment, is at US$100,000. This could interrupt
the activity of foreign investors. Second, Mongolia does not permit acquisition
of land by foreigners thus far. Third, there is a complicated license system in
the construction services sector subject to types of construction. Japan
requests Mongolian efforts to tackle these obstacles in order to improve the
investment and business environment.
4.79. Next, procedures for licenses or permissions, such as renewal of
licenses of telecommunication services. They often take a long time because of
a lack of legal provisions on the clear deadline for administrative decisions.
Even in the case that there is a legal provision on the deadline, some
procedures are delayed without any reasonable backgrounds. We would like to
know whether domestic enterprises in Mongolia are struggling with this problem
as well and how the Mongolian Government addresses, for example, reforming laws
and improving its operation. We emphasizes that discriminatory treatment to
foreigner is very harmful for Mongolian investment and business environment.
4.80. On telecommunications, we understand that resale related to
telecommunications service suppliers providing MVNOs, ISPs, and so on are
actively implemented in many countries in order to expand the market. We would
like to know whether Mongolia has some regulations on such resale and hopes
that the Mongolian Government will promote it in a proper manner, including
relaxing the regulations.
4.81. Finally, excise tax. Considering the answer about excise tax on
alcohol to our written question, Japan requests Mongolian efforts to improve
the current situation by an appropriate measure. We emphasize that imposing the
excise tax in a discriminatory manner would not be consistent with the WTO
Agreement, in particular GATT.
4.82. Mongolia also mentioned in the written answer that "there is no
intention to differentiate domestic and imported goods" on the excise tax
on passenger vehicles and so forth. However, according to the Mongolian
domestic law on the excise tax, the provision can be considered as the excise
tax is imposed only on imported automobiles. Japan requests Mongolian efforts
to make the provision consistent with the WTO Agreements.
KOREA
4.83. As the Secretariat report noted, the Mongolian economy has grown
substantially thanks to its large mineral exports and inflow of FDI during the
period under review. But Mongolia has faced fluctuations of growth rates caused
by its high dependence on mineral exports. In this regard, it is worthwhile to
note that the Mongolia has actively pursued economic diversification under the
Comprehensive National Development Strategy of 2008, and along similar lines,
has improved its investment climate by introducing the Investment Law of 2013.
4.84. As for trade policy, it is quite pleased to note that Mongolia
maintains an open trade regime with its bound tariffs of around 20%, although
the applied rate is, in most cases, much lower. It has also taken measures to
improve customs procedures, including a revision of Customs Law and the Law on
Customs Duties and Tariffs of 2008, as well as the introduction of the Customs
Automated Information System. We also welcome the notification of Mongolia to
the WTO with its Category A commitments under the Agreement on Trade
Facilitation
4.85. We certainly recognize that the mining industry has been the driving
force of Mongolian economic growth. The FDI inflow has turned Mongolian mining
into a competitive modern industry and has created the possibility to expand
into related up and down stream industries, including heavy manufacturing such
as copper, iron, and steel production.
4.86. Taking into account such positive aspects, we would like to put
forward suggestions as follows.
4.87. First, Mongolia is encouraged to continue to diversify its export
products and mitigate its dependence on the mining industry. In this regard, we
would like to say that as mineral resources are hidden and invisible ones,
Mongolia is encouraged to cultivate invisible capacity of determined Mongolian
people which can lead to development of various industries including high-tech
industry.
4.88. Second, while doing so, Mongolia should make further efforts in
improving its infrastructure in the areas of railroads, electricity and
transportation systems, and draw FDI into these areas to make economic growth
more sustainable. In this regard, Korea wishes to express its willingness to be
consulted when needed, and participate in Mongolia's ongoing endeavours as well
as share our expertise.
4.89. Third, while we note that Mongolia has maintained quite an open
trade regime, and has diligently introduced relevant law and related customs
procedures, the lack of WTO notifications needs to be improved. As the
Secretariat noted, applied tariff rates that are above WTO bound rates would
need to be solved in a prompt manner.
4.90. Last but not least, as the Secretariat report pointed out, Mongolia
applies higher excise tax rates on certain imported goods than like domestic
products, particularly on alcoholic beverages as well as passenger vehicles,
gasoline and diesel fuel. We believe that applying higher excise tax rates on
certain imported goods is not consistent with Article III:2 of the GATT.
4.91. On the bilateral front, Korea and Mongolia have maintained close
economic ties. The bilateral trade volume has grown 75 times since the
establishment of diplomatic relations between the two countries in 1990,
reaching US$426 million in 2013 and Korea's total stock of investment in
Mongolia amounted to US$719 million in 2013, making Korea the 4th largest
trader as well as investor. Taking this opportunity, Korea would like to
express its sincere hope to further expand our already strong bilateral
relations on all fronts.
4.92. My delegation submitted some written questions to Mongolia on
certain aspects of its trade and trade-related policies and measures. We would
like to thank Mongolia for providing us with written answers. We will look into
them carefully and come back later, if necessary.
4.93. In closing, we very much hope that today's TPR will provide a good
opportunity for both Mongolia and its trading partners, including Korea, to
assess the progress as well as to help identify further ways forward.
THE RUSSIAN FEDERATION
4.94. The Russian Federation and Mongolia have a long history of friendly
relations and develop broad, deep and robust bilateral cooperation spanning
vast economic, trade and investment areas. Russia for long has been keeping the
status of one of the major trade partner of Mongolia in terms of Mongolia's
import. It is noteworthy that during the recent official visit of the President
of the Russian Federation to Mongolia, both sides have arranged to further
expand and intensify economic and commercial ties. During the visit, a number
of documents were signed enhancing cooperation in such spheres as transport
infrastructure modernization, energy supply, power generation, border-crossing
facilitation. All these enable us to affirm that Mongolian-Russian relationship
does enjoy a promotion to a new level.
4.95. We highly appreciate current economic reforms ongoing in Mongolia
aiming at promoting exports and imports, fiscal stabilization as well as trade
in minerals. Moreover, we are pleased to note recent considerable improvements
in the country's investment climate, taxation policy, banking regulations,
infrastructural development, all this despite restrained economic base,
unfavourable geographic location and other given constraints.
4.96. Nevertheless, we would like to highlight some of trade and
investment measures that, we believe, need more attention. Russia has submitted
some questions for this review concerning certain TBT aspects in national food
safety regulations as well as foreign access to open tendering, which are of
particular commercial interest to us. We would appreciate any clarifications
from the Mongolian side on the above matters.
PARAGUAY
4.97. Estimamos
positivamente la participación de Mongolia en este ejercicio, en este momento
de buen desempeño económico y de expansión comercial.
4.98. En ese sentido,
la economía de Mongolia ha experimentado una recuperación importante tras la
crisis financiera y económica mundial de 2009, prueba de ello es que en el 2013
la tasa de crecimiento económico se sitúo en el 11,7%, una de las más altas del
mundo. En ese mismo año, la balanza comercial arrojó un déficit de 2.082
millones de dólares EE.UU., un 13% menos que en 2012 y el sector comercial
contribuyó en un 17.4% al PIB total y proporcionó empleo al 12,4% de la fuerza
laboral, por lo que se le considera un sector que absorbe una gran cantidad de
mano de obra y en franco crecimiento.
4.99. En ese
contexto, el logro más resaltante de Mongolia ha sido la introducción de
reformas para el régimen de concesiones y de esta manera dar un empuje a la
economía a través de alianzas público privadas.
4.100. Por otro lado,
quiero destacar que Mongolia y Paraguay comparten características similares,
ambos países nos encontramos en continentes pujantes, estamos entre dos grandes
países y carecemos de salida directa al mar. En ese contexto, Mongolia es un
aliado estratégico del Paraguay y dentro del Grupo de Países en Desarrollo sin
Litoral, tanto en la OMC como en la UNCTAD. Esto quedó demostrado en la activa
participación de nuestro grupo en las negociaciones para el Acuerdo sobre
Facilitación del Comercio.
4.101. También vale la
pena destacar que gracias al apoyo del Gobierno de Mongolia, funciona en Ulan
Baaton el "International Think Tank for Landlocked Developing" que
con el tiempo se convertirá en una importante herramienta de apoyo para
nuestros países.
4.102. En el período
en estudio, los flujos de comercio entre Paraguay y Mongolia se han mantenido
muy por debajo de su potencialidad, por lo cual creemos que esta es un área en
el cual nuestros gobiernos deben dar mayor énfasis.
4.103. Para concluir,
vale la pena destacar que el Paraguay y Mongolia comparten la misma visión
sobre el futuro del sistema multilateral de del comercio, apoyamos la pronta
implementación del Acuerdo sobre Facilitación del Comercio y un futuro Programa
de Trabajo centrado en el Desarrollo.
ARGENTINA
4.104. La Argentina
observa con bene-plácito el desempeño de la economía de Mongolia en los últimos
años. Asimismo, queremos destacar que en el mes de marzo de este año una
delegación de parlamentarios de Mongolia visitó la Argentina y se interesó por
las características de la ganadería en nuestra región de la Patagonia, en la
producción de vacunas y en el control de enfermedades.
4.105. En esa ocasión,
nuestro Ministerio de agricultura, ganadería y pesca manifestó que se
encontraba en condiciones de otorgar cooperación a Mongolia en materia de
desarrollo de tecnología, de sanidad animal, de control de enfermedades, de
genética animal, siembra directa y almacenamiento.
4.106. Esa disposición
expresada por Argentina en cooperación continúa vigente y estimamos que avanzar
en ello constituirá un paso importante en le profundización de la relación
entre la Argentina y Mongolia.
INDIA
4.107. As brought out in the reports by
the Secretariat and Mongolian Government, after a negative growth rate in 2009
due to fall in commodity prices, Mongolia has achieved an unprecedented
economic growth during the period 2010-13. In 2013, Mongolia's GDP growth rate
was 11.7% and the total trade was over US$10.6 billion which has grown more
than four fold in comparison to trade in 2005. Mongolia's achievements are
commendable despite challenges facing their economy (landlocked country).
4.108. Since its accession to the WTO,
the Mongolian Government has undertaken a number of measures directed towards
making trade laws and regulations in line with the WTO disciplines. Since its
first TPR, we note that a number of laws and regulations have been introduced
by Mongolia which, amongst other things, are intended to improve the investment
and business climate and promote fiscal stabilization. As a result of these
measures, Mongolia has achieved steady economic growth and its trade engagement
with Members has expanded.
4.109. While Mongolia has registered
positive growth, it continues to face several challenges. Recognizing
challenges that can arise from dependence on a narrow basket of export items,
fluctuations in commodity prices, vulnerability to external environment and for
broadening economic base, we note that Mongolian authorities are pursuing the
Millennium Development Goals-Based Comprehensive National Development Strategy
of 2008.
4.110. We have noted that Mongolia has
successfully concluded the negotiations with all participating States for its
accession to the Asia-Pacific Trade Agreement (APTA) and started the
negotiation for an Economic Partnership Agreement with Japan. We welcome
Mongolia's participation and commitment to the multilateral trading system. We
fully appreciate Mongolia's continued need for technical assistance to ensure
the full implementation of the WTO agreements and to participate in the DDA
negotiations.
4.111. On the bilateral front, India and
Mongolia enjoy very close and cordial relations. Our bilateral trade grew
five-fold during the period 2009-12. We look forward to working with Mongolian
authorities in further expanding our trade and investment ties for mutual
benefit. India has been extending developmental assistance as part of
South-South cooperation to Mongolia in varied sectors, including training and
capacity building activities under Technical and Economic Cooperation
Programme.
NIGERIA
4.112. Nigeria appreciates the
impressive progress in Mongolia's transition from a centrally planned economy
to a market economy, particularly, the steps taken by the authority in pursuing
the policy liberalization, deregulation, privatization and macroeconomic
stabilization. We are happy to note that through its persistent pursue of
liberal policies, Mongolia remains one of the most open trading regimes in the
world, with low import tariffs and limited non-tariff barriers. It is worthy of
note that the discovery of huge mineral resources paved the way to rapid
economic and social development which further re-integrates Mongolia into the
global economy. The real growth was estimated at 1.3% in 2009 and 17.5% in
2011. Mongolia's GDP per capita was around US$3,480 in 2012 to US$4,069 in
2013. The real growth of the economy is attributed to mining exports that
accounted for 18% in 2012 against the 17% in 2004.
4.113. Nigeria believes that open
markets, non-discrimination and global competition in international trade are
conducive to global and national welfare. My delegation commends Mongolia for
its economic development and reducing poverty as we note the medium term
outlook remains favourable, underpinned by developments in mining sector. We
also welcomed the recent steps by the Government, particularly in the areas of
fiscal and exchange rate policies towards addressing rising domestic demand and
balance of payments pressures. However, my delegation calls for further
decisive recalibration of policies to address vulnerabilities and to build
buffers against external shocks and to ensure sustainable strong growth.
4.114. As indicated in the Secretariat
report, Mongolia has made considerable progress towards improving living
standards and investment and trade in minerals have contributed considerably.
However, managing the resource based boom along with legislative, and
institutional challenges it presents, and the investment in infrastructure it
requires, constitute the biggest challenge facing the Government. At the same
time, the geographical and climatic situation of Mongolia makes these tasks
more difficult than in some other countries.
4.115. As a Member of the WTO, Mongolia
has continued to create an enabling investment environment for investors, by
increasing transparency of its trade policies with regard to the principles of
the multilateral trading system. Mongolia has also contributed to the
multilateral trading system and is active in advancing the WTO and
strengthening its role in sustaining trade liberalization as key to driving
international trade and economic development, in particular, for the developing
and least developed countries. Nigeria also wishes to express its appreciation
for the role Mongolia is playing in the WTO and how it has used market
opening's and foreign investment as instruments for economic growth and
development.
4.116. As a landlocked country, with
very specific and peculiar challenges, we are not surprised that Mongolia's
priority is trade facilitation as far as the DDA is concerned. Therefore, it is
our expectation that the Trade Facilitation Agreement, particularly with
respect to the need for uniform procedures for clearing transit goods, which
ensures transparency and predictability, will benefit Mongolia tremendously.
4.117. In conclusion, Nigeria looks
forward to collaborating with Mongolia in the ongoing Doha Development Agenda
(DDA) negotiations to ensure its successful conclusion based on its development
mandate.
URUGUAY
4.118. Uruguay
felicita los esfuerzos y cambios realizados por Mongolia desde su ingreso a la
OMC a pesar de todos los desafíos que ello ha significado.
4.119. Es importante
recordar que ambos países mantienen relaciones diplomáticas desde octubre de
1997, y es intención de los dos países en mejorar el relacionamiento en
distintas aéreas.
4.120. El comercio
entre Uruguay y Mongolia en los últimos años no ha sido muy relevante en
números, por lo cual se pretende explorar áreas de complementariedad para poder
incrementar el intercambio comercial.
4.121. En este
sentido, corresponde destacar que en marzo de este año, una delegación de
Mongolia visitó Uruguay. En dicha oportunidad, ambos países firmaron un
Memorándum de Entendimiento a los efectos de aumentar la cooperación bilateral
entre ambos países en los sectores agrícola y de alimentos.
4.122. En dicho
Memorándum se establece un Comité Consultivo en materia sanitaria y
fitosanitaria que funcionará como un Foro de Alto Nivel para facilitar la
negociación, cooperación y coordinación en los asuntos relacionados con la
salud animal y vegetal, incluidas la forestación, la piscicultura y la calidad
y seguridad de los alimentos de ambos países. Dicho foro incluirá las
siguientes materias, aunque no estará limitado exclusivamente a ellas: 1) acceso
a mercados; 2) cooperación en leyes y reglamentos relevantes para
seguridad alimentaria; 3) cooperación en ganadería en materia de identificación
y trazabilidad del sistema; 4) investigación y desarrollo en materia de salud
animal y vegetal y seguridad alimentaria, incluyendo intercambio técnico y
tecnológico; 5) establecer y revisar los estándares internacionales para
sanitarios y fitosanitarios y seguridad y calidad alimentaria.
4.123. Tal como lo
señala el informe del Gobierno de Mongolia, Uruguay comparte plenamente la
visión expresada en cuanto a la importancia y compromiso para una exitosa
culminación e implementación de la Ronda de Doha para el Desarrollo.
MR OCHIRBAT CHULUUNBAT
4.124. Let me first thank you, Madam
Chair, for your leadership for today's discussions. I would like to thank H.E.
Mr Francisco Pirez Gordillo for his positive comments and assessment to
Mongolian trade and policy. I especially would like to thank all delegates and
particularly distinguished Ambassadors who have made very valuable contributions
to today's discussions.
4.125. We very highly appreciate the
positive comments on the Mongolian trade policies. We have made progress since
the first Trade Policy Review but we still have challenges and difficulties.
Some of them have been mentioned in the speeches like issues related to
corruption, handling of foreign investment in Mongolia, and transparency.
4.126. We have tried to do our best to
provide all possible comprehensive answers to your questions. We think that
there will still be some questions and issues for clarification and we will do
that on the second day of the meeting. Thank you again for your very active
participation and we look forward to see more interesting exchange of views and
discussions.
5.1. The delegation of Mongolia appreciates the comments and questions
raised by the Members during the first session of our TPR. We find them of much
relevance and use to our trade policy.
5.2. Let me briefly respond to Members' questions.
5.3. Our investment regime and the future plans in the area of promoting
investment were of much concern to Members. Taking the opportunity, I would
like to inform Members that our investment policy was reviewed by UNCTAD in
April this year, where the Governments and the international businesses
expressed great interest in the developments in this area and where they
positively received the recent improvements.
5.4. Through the comments and questions, WTO Members also gave us some
insightful guidelines as to where our policy should be directed. Some negative
impacts to investors were caused by the Law on Foreign Investment in Entities
Operating in Strategic Sectors adopted in 2012. However, we are glad to hear
positive reactions and welcoming comments that Mongolia has repealed this law
quickly and adopted a new Investment Law, which is more liberal and friendly
for foreign investors. We are fully aware of the fact that we have to pay more
attention to the effective enforcement of the law and take much more active
actions to improve our business and investment environment based on the
principles of transparency, credibility, accountability and predictability. The
comments made by the WTO Members as well as the recommendations drawn in the
Investment Policy Review Report by UNCTAD will be given due consideration in
our future measures and decisions in this area.
5.5. As for trade policy, it was mentioned earlier that Mongolia keeps
maintaining a relatively open trade regime: tariff average is still one of the
lowest in the world at 5%; very few restrictions and technical barriers on
trade compared to other countries.
5.6. Due to the recent developments in the mining sector, a lot of
debates continue to rise regarding our trade-related policies. This, we
contend, is natural and inevitable for a country like Mongolia, which is trying
to overcome the legacy of the transition period and of the centrally‑planned
economy and still paving the way for the prospective future. Despite, the
Government continues to believe that a more open trade regime contributes to
the overall sustainable development of the economy. It is true that, as the
Members rightly noted, there are issues that we have to solve. Members are
concerned about the differentiated application of excise taxes on certain goods
and the administration of licensing procedures. We are working on these: the
draft amendments to the Law on Excise Tax will be submitted to the Parliament
during the upcoming autumn session to open on the first of October. Food
security has become a serious issue in Mongolia, especially as regards food
safety, nutrition and self-sufficiency. As for all the Members, human health
protection is a fundamental policy objective. The Law on Food Security and
related Regulation on the Exportation and Importation of Strategic Food were
adopted last year. The National Food Security Program until 2016 is being
implemented. It aims at ensuring food supply, quality and safety. As said, the
Government shall continue working to improve the enforcement of the Law on Food
Security and the administration of related regulations, including licensing.
5.7. The Members raised concerns on our tariffs. There are items on which
applied rates are higher than the bound ones. The Government has reviewed the
tariffs and an amendment is being submitted to the Parliament this autumn.
5.8. With regard to taxation, a significant reform was carried out in
2006. The General Taxation Law was renewed to cut the taxes to a single rate of
10% instead of progressive rates of 10%, 20% and 30%. Annual tax credits for individuals
were increased, including such as for housing, education, etc. The VAT was cut
from 15% to 10%. In this regard, the Government of Mongolia is taking measures
to create a more tax-friendly and favourable environment for the businesses.
5.9. Pertaining to specific trade-related measures, Members questions
focused on privatization and intellectual property.
5.10. The private sector shares around 80% in GDP today. This is a
significant share in the economy. However, the Government of Mongolia continues
to undertake privatization measures of state-owned enterprises. It has planned
to privatize 22 state-owned large enterprises between 2013 and 2016; 13 of them
should be privatized fully, and in nine, state ownership should be reduced.
These concern large entities including the Mongolian Stock Exchange, Telecom
Mongolia, the Mongolian Airlines, Information and Communication Network, Crop
Promotion Fund, the Mongolian Agricultural Commodity Exchange, the Mongol Post,
and two coal mines (Shivee-Ovoo and Baganuur).
5.11. The Government is continuing to ensure a higher-level protection of
IP. As such, it has formulated a Draft National IP strategy, which mainly aims
at strengthening the IP protection and its enforcement. The Draft is ready to
be submitted to the Cabinet. Also, Mongolia is joining the Beijing Treaty on
Audiovisual Performance and the Marrakesh Treaty to Facilitate Access to
Published Works by Visually Impaired Persons and Persons with Print
Disabilities. Accordingly, amendments are being made to the respective laws
such as the Patent and Copyright Laws. Mongolia fully complies with the TRIPS
Agreement.
5.12. Members raised considerable concern regarding transparency. In this
regard, I would like to inform Members that the Law on Information Transparency
and the Access to Information is in force since 2011 and was amended in July
2014. According to the amendments, the governmental bodies have an obligation
to make information related to their operation, human resource, budgeting and
finance, and procurement publicly accessible. Also, issues related to tendering
are now regulated by the Law on Cristal Account which was adopted two months
ago. Other laws related to transparency are being initiated such as the Draft
Law on Public Hearing. These measures show that the Government of Mongolia is
taking seriously the concerns of businesses.
5.13. As for specific sectors, Members were more interested in mining and
agriculture.
5.14. Mining has been the driving force of the country's economy in recent
years. The boom of extractive business has also had side effects by provoking
illicit practices. According to statistics, 100 thousand people are engaged in
illegal mining. These practices bear a range of issues that the Government
needs to solve, including environment and safety. Mongolia is planning to join
Safety and Health in Mines Convention. Various safety regulations have been
formulated and some of them have been introduced. Additionally, the State
Policy on Mining sets to improve the regulatory framework for fighting illegal
practices. Additionally, the Draft Law on Transparency in Mining has been
approved by the Cabinet and is being submitted to the Parliament this autumn.
5.15. In agriculture, the Government of Mongolia has been implementing
several policies and programs. The State Policy on Food and Agriculture until
2015, the Food Security Program, and the Crop Campaign III have succeeded in
their objectives to reach self-sufficiency in wheat and potato. The Government
of Mongolia is working to maintain the achievements and attract investment in
agriculture to promote integrated agriculture.
5.16. The Government continues to direct its trade and investment policy
to creating a more favourable environment for traders and investors. In the
aftermath of the painful transition period and a sudden explosion of extractive
industry, some erroneous measures may have been taken. However, we contend that
the timely correction of such measures is important and we were able to do
that. We will keep working in this direction in the future.
5.17. Please allow me to take this opportunity to bring to the attention
of the Members the importance of the Trade Facilitation Agreement for a
landlocked country like Mongolia. Reaching a consensus on the adoption of the
Agreement shall greatly contribute to easing the constraints faced by the
traders and reducing the cost of trade.
5.18. Taking the opportunity, I wish to thank the Secretariat team for
arranging a meeting with Director-General Azevêdo which took place yesterday.
We had a very interesting meeting and a productive exchange of views on how to
upgrade our cooperation in the years to come. We also thank the WTO for the
assistance it has been providing to Mongolia in recent years.
DISCUSSANT
5.19. The second Trade Policy Review of Mongolia allowed us to better
understand the evolution of its trade policies and practices and has helped us
to understand the past and future challenges facing this interesting country.
5.20. Progress on the level of economic openness through its various
reforms and the growth of 10% observed during the last three years that
Mongolia has achieved deserve a special appreciation as most Members have
expressed.
5.21. It is also important to note that many Members highlighted
Mongolia´s low tariffs and in particular that despite the different financial
and economic worldwide crises, it has largely refrained from taking
protectionist measures.
5.22. I have noted that Members encouraged Mongolia to continue the reform
process in several areas, for instance: in the investment framework, in the
diversification of the economy, in the infrastructure front, in the minerals
policy, in the adjustment of some institutional issues to improve the
efficiency and transparency and in the area of State-own Enterprises among
others.
5.23. There is no question that the transformation process of one country
does not happen overnight, so it is important to consider not only what needs
to be done but also what Mongolia has achieved so far during this short period
of time.
5.24. I am confident as I have noticed in the dialogue held with the
authorities of Mongolia, after the first day of examination, that this exercise
will be useful to continue the process of internal reforms that the country has
started even before the accession to the WTO in 1997.
5.25. The gradual and progressive opening of the economy of a country
means adopting a hard road to travel that it is not an easy one for any Member,
so I congratulate again Mongolia with the progress made so far and also for the
constructive attitude adopted during its second trade policy review. This
attitude gives me the confidence that in the next TPR many of the comments we
have made will be collected in the different future policies that the country
will implement.
5.26. Finally, I want to express once again the honour and privilege of
having participated as a Discussant in the second TPR of Mongolia and I wish
the country every success in the future.
EUROPEAN UNION
5.27. The EU has learned a lot from the interventions of the delegation of
Mongolia, the discussant and questions and statements from WTO Members and
Mongolia's replies.
5.28. The EU is grateful to Mongolia for their efforts demonstrated in
replying to our questions although we feel that some areas need to be further
clarified known to be with reference to import licensing or water services.
5.29. For this reason, I would like to reiterate our encouragement to
Mongolia to work with us in the coming months to provide more detail and
reassuring answers on those issues. I would also take this opportunity to
underline the EU availability to support the Government in creating a friendly business
and investment environment in Mongolia.
5.30. Let me reiterate the appreciation of the EU for this TPR which we
hope will be useful to Mongolia in their further efforts.
JAPAN
5.31. Japan would like to express its sincere appreciation for the hard
work by the Mongolian delegation to provide us with a comprehensive and
informative presentation.
5.32. Japan did not submit any follow-up question in written format before
this meeting. I share Mongolia's oral explanation in particular concerning its
efforts to our concerns.
5.33. Japan hopes that the views and opinions given by Members during this
TPR will help Mongolia to further its reforms. I wish the delegation a safe
trip back to Ulaanbaatar.
CANADA
5.34. I would like to join my colleagues in thanking the delegation from
Mongolia for their hard work during this Trade Policy Review, particularly the
responses to the written questions that Canada submitted prior to the review.
5.35. My colleagues and I have reviewed Mongolia's responses and very much
do appreciate the information that was provided. We do have a couple of
follow-up questions which will be submitting in writing to the Secretariat.
6.1. This second Trade Policy Review of Mongolia has provided us an
excellent opportunity to improve our understanding of the trade and investment
policies of Mongolia. Thirteen Members submitted about two hundred questions
before the meeting and 17 delegations took the floor to make statements. Our
discussion was greatly helped by the comprehensive comments of the discussant,
Ambassador Pirez Gordillo of Uruguay, and the statement made by the head of the
delegation for Mongolia, Deputy Minister for Economic Development, Mr. Ochirbat
Chuluunbat.
6.2. This review has taken place at an interesting time for Mongolia.
After several years of rapid economic growth, rising incomes, and greater
prosperity, some bottlenecks and barriers to trade and investment have been
identified as hindering real progress. This review thus is a good opportunity
to reflect on what could be done to address these issues so that growth can be
sustained into the future.
6.3. The economic expansion of the past few years has been based on
investments in mining and exports of minerals and, as we heard from the Deputy
Minister, the discussant, and delegations as well as from the Government and
Secretariat reports, more investment is expected in this sector and growth
should continue.
6.4. However, while exploitation of minerals is an opportunity for
Mongolia it also poses risks, particularly the narrow economic base and
dependence on a small range of products exported to a few markets which make
the economy vulnerable to sudden swings in prices and demand. The Mongolian
delegation recognized these risks and, along with several Members, stressed the
importance of diversification and suggested areas like agriculture, tourism and
high technology products as possible sectors for development. However, with the
mining sector attracting human and financial resources it is no easy task to
create an environment that encourages investment in alternative areas.
6.5. Despite the growth of the minerals sector, agriculture, especially
livestock, is still important and employs more people than any other sector of
the economy. Although the cold winters and dry conditions make farming difficult,
the Government has implemented several programmes to improve productivity and I
noted the statements by some delegations about bilateral contacts with other
countries on agriculture practices, animal and plant health, and food safety
and security.
6.6. Mongolia does not have any regional trade agreements - although it
does qualify under a number of Members' GSP schemes. However, it is not just in
agriculture that Mongolia has started to increase its level of bilateral
contacts. It is also negotiating with Japan on an Economic Partnership
Agreement and intends to accede to the Asia-Pacific Trade Agreement.
Furthermore, several delegations insisted they have had high-level meetings and
concluded agreements related to trade and investment with Mongolia. In the WTO,
Mongolia is a Member of several negotiating groups and the importance it
attaches to the multilateral trading system was highlighted by its notification
of its Category A commitments on trade facilitation in July of this year. And
we also welcome the statement by Deputy Minister on the need to conclude and
implement the TFA on Trade Facilitation Agreement.
6.7. Members noted Mongolia's challenge that it is a large landlocked
country with a harsh climate making development of infrastructure difficult and
expensive. And underdeveloped infrastructure adds to the cost of transport, and
therefore to trade. Improving Mongolia's road and rail links with other
countries as noted is a priority by the Government and there are ambitious
plans for improvements.
6.8. Some delegations noted in their interventions that, while needed
improvements should continue, during the review period Mongolia has shown that
it continuous to make progress towards allowing more competition, reducing
trade barriers, and introducing measures to encourage diversification of its
economy.
6.9. However, several issues were also raised which delegations believe
could impede trade and investment. Among the issues that I noted which Mongolia
might consider for further improvement are the following:
· Investment: it was
widely recognized that the new Investment Law of 2013 and the simplified
investment procedures have improved the investment climate but there were some
concerns about the new legislation and its implementation. These concerns
included the differentiation between foreign and domestic investors through
minimum paid-in capital requirements and the narrowing of the range of
stabilized fees and taxes;
· Government procurement and investment in
infrastructure: in noting the importance of
improving infrastructure, particularly in road, rail, and electricity, several
delegations suggested the Government could improve the tendering procedures and
transparency in selection process. It was suggested that Mongolia would benefit
from acceding to the Government Procurement Agreement in the WTO and exploring
greater participation by the private sector in infrastructure projects;
· Minerals policy: the
new law on investment has improved the climate for investment generally, but
Members had raised the issue that the development of a new minerals law has led
to delays in issuing exploration and mining licences. We also heard from the
Deputy Minister that better things are to come when the new law will be put in
place to ease investment in the sector;
· Bound versus applied tariffs: in general, Mongolia applies tariffs well below their bound rates
but there are some products which have bound tariffs of zero but applied
tariffs of 5%. Furthermore, excise duties on some domestically produced
products are lower than on imports and import prohibitions apply to some
products;
· Standards: many of the
technical regulations, standards, and SPS measures in place in Mongolia are not
aligned with international standards. Although the official objective is to
increase the number of standards they subscribe to international ones more
progress could be made in this area; and
· Institutional issues:
it was noted by some delegations that, in many areas, including import
licensing, investment approval, and even technical assistance, a lot of time
and cost was involved while waiting for approval. Of course, every country can
improve its bureaucratic efficiency but steps should therefore be taken to
improve institutional capacity and transparency in these areas.
6.10. In conclusion, as a large landlocked developing country with a
relatively low population, Mongolia faces many challenges to its development.
Nevertheless, Mongolia has made considerable progress to improve its trade and
investment regimes and it has recognized the need to improve efficiency and
transparency in the public sector and to deal with corruption and related
issues.
6.11. I would like to thank Mongolia for its participation in this Review,
the Deputy Minister and the discussant for their statements and I note the
interest of a wide number of WTO Members through their questions and
contributions. I hope that this exercise has given Mongolia the opportunity to
review its trade and investment policies and, in six years' time at the next
review, to hear how the economy has continued to grow and benefit the people of
Mongolia.
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