Recent and important work on Trade and Human Development G.Ganjargal – Officer, Trade and Economic Cooperation Department Ministry of Foreign Affairs and Trade of Mongolia

Background Transition to a market economy Transition to a market economy -stabilizing the economy -strengthening the private sector -improving the environment for investment -privatizing of state firms -establishing fundamental market institutions

Recent Economic Developments Economy has been growing fast Economy has been growing fast - GDP: - 8.6% in % in % first half of % second half of 2008

Recent Economic Developments Mining contribution is substantial Mining contribution is substantial - Mineral products account for 84% of total exports earnings, contributes 40% of 2008 planned budget, 51.6% of FDI flow into mining - Foreign investment is scaling up: amounting $ 1.2 billion. In 2007 reached $500 million, of which 67 percent went to mining while trade and food was the second largest receiver of FDI (22 percent)

Recent Economic Developments Current performance of the foreign trade : Current performance of the foreign trade : When compared to 2006, the total trade turnover increased in 2007 by 32.3 percent, exports by 22.5 percent and imports by 42.5 percent respectively. When compared to 2006, the total trade turnover increased in 2007 by 32.3 percent, exports by 22.5 percent and imports by 42.5 percent respectively. The growth of the mining sector in 2007: The growth of the mining sector in 2007: more than 70 percent of export were mineral productsmore than 70 percent of export were mineral products copper concentrate and gold, molybdenum concentrate, fluorspar, coal, zinc and tungsten.copper concentrate and gold, molybdenum concentrate, fluorspar, coal, zinc and tungsten. exports observed in is not due to an expansion of the production, most of it is explained by the soaring prices of minerals.exports observed in is not due to an expansion of the production, most of it is explained by the soaring prices of minerals.

Recent Economic Developments Inflation is very high Inflation is very high

Strengths and Weaknesses Disadvantages (as stated in National Development Strategy): Disadvantages (as stated in National Development Strategy): - Landlocked country - Landlocked country - Importing country - Importing country -High transport and transit cost -Direct dependence of the agricultural sector on weather conditions -Small domestic market Advantages: Advantages: - Abundant mineral resources - Improving macroeconomic indicators - Proper age structure of the population - Proximity to such huge markets as Russia and China

Foreign trade Mongolia – member of the WTO since 1997 Mongolia – member of the WTO since 1997 Trade with 109 countries Trade with 109 countries Main trading partners Main trading partners China %, Russia %, EU- 8%, China %, Russia %, EU- 8%, USA - 5.4%, Japan- 3.5% USA - 5.4%, Japan- 3.5%

Current Trade Regime The multilateral trading system – tariff is the only instrument of trade policy The multilateral trading system – tariff is the only instrument of trade policy Generalized system of preference (USA, EU, Canada and Japan) Generalized system of preference (USA, EU, Canada and Japan) RTA and FTAs RTA and FTAs Bilateral Agreement Bilateral Agreement The National trade supporting institutions The National trade supporting institutions - former Ministry of Industry and Trade (currently a separate department of Ministry of Foreign Affairs and Trade) - Foreign Investment and Foreign Trade Agency (FIFTA) - Mongolian National Chamber of Commerce and Industry (MNCCI)

Foreign Trade Foreign Trade Balance (million USD) Totalturnover Export Import Balance Source: MNCCI, 2008

What has been done UNDP support (Trade and Human Development Project) UNDP support (Trade and Human Development Project) - Global Event of Landlocked Developing Countries and Transit Countries on Trade and Trade Facilitation August 2007 in Ulaanbaatar, MONGOLIA -Ulaanbaatar Declaration Support to ongoing negotiation of “Transit Transport Agreement between Mongolia, Russia and China” (jointly with USAID) Support to ongoing negotiation of “Transit Transport Agreement between Mongolia, Russia and China” (jointly with USAID) “Millennium Development Goals-based Comprehensive National Development Strategy” was approved in January, 2008 by the Parliament. “Millennium Development Goals-based Comprehensive National Development Strategy” was approved in January, 2008 by the Parliament.

The Mid-term Trade Strategy “Millennium Development Goals-based Comprehensive National Development Strategy” has identified that “Millennium Development Goals-based Comprehensive National Development Strategy” has identified that the strategic objective of the foreign trade policy will be to “create a favorable environment for the implementation of economic development strategy with predominant export-oriented production and services”. the strategic objective of the foreign trade policy will be to “create a favorable environment for the implementation of economic development strategy with predominant export-oriented production and services”.

The Mid-term Trade Strategy General objective: Trade mainstreaming into development General objective: Trade mainstreaming into development Strategic objective 1: Diversify and increase the volume of export products Strategic objective 1: Diversify and increase the volume of export products Strategic objective 2: Diversify and increase the volume of import products in line with economic development trend Strategic objective 2: Diversify and increase the volume of import products in line with economic development trend Strategic objective 3: Develop and open new possibilities for domestic trade Strategic objective 3: Develop and open new possibilities for domestic trade

The Mid-term Trade Strategy Priority products and services for export products Priority products and services for export products Minerals (copper, gold, coal…)Minerals (copper, gold, coal…) Cashmere (raw and de-haired) and garnmentCashmere (raw and de-haired) and garnment Meat and specialty nichesMeat and specialty niches Skin and hidesSkin and hides Leather vest and shoesLeather vest and shoes Health and foods supplementsHealth and foods supplements Pet foodPet food Services Services Services for the mining industriesServices for the mining industries TourismTourism Business Processes OutsourcingBusiness Processes Outsourcing Software developmentSoftware development Transport services (facilitating trade between the two neighbors)Transport services (facilitating trade between the two neighbors) Migrant workersMigrant workers

The Mid-term Trade Strategy Cross cutting issues for products and services selected Cross cutting issues for products and services selected High transport costHigh transport cost Trade FacilitationTrade Facilitation Technical Trade BarriersTechnical Trade Barriers Sanitary and Phyto-Sanitary measures.Sanitary and Phyto-Sanitary measures. Intellectual Property RightsIntellectual Property Rights Implementation and financing of the programme Implementation and financing of the programme Management of the programmeManagement of the programme Financing sources and modalitiesFinancing sources and modalities Monitoring and Evaluation Monitoring and Evaluation

Further development Draft of the Mid-term Trade Strategy has been distributed to all Ministries, relevant agencies, NGOs and Associations of private sectors for comments Draft of the Mid-term Trade Strategy has been distributed to all Ministries, relevant agencies, NGOs and Associations of private sectors for comments However, as a result of the formation of a new Government, this draft needs to be elaborated and reviewed on the basis of : However, as a result of the formation of a new Government, this draft needs to be elaborated and reviewed on the basis of : comments received from aforementioned organizationscomments received from aforementioned organizations Government action programme that is under Parliament - ongnoing discussionGovernment action programme that is under Parliament - ongnoing discussion

Thank you for your attention!