1. Research of Law and Regulatory Environment for Transit Transportation Purev NARANTSETSEG 11 March 2008 Ulaanbaatar

2. Content Research ObjectiveResearch Objective Research scopeResearch scope Structure and form of ResearchStructure and form of Research ResultsResults Actual issues in transit transportationActual issues in transit transportation RecommendationsRecommendations

3. Research Objective –To determine difficulties and barriers in entities of Mongolia for the conducting transit transportation services, –To define problems related to bilateral agreement implementations for transit transportation and to formulate recommendations,

4. Research scope Belonging companies:Belonging companies: - International freight forwarding companies - International Auto transportation companies - Foreign Trade companies Date:Date: - from 15 January to 18 February 2008

5. Research Structure and Forms International Convention Ratification Comparative Analysis Total four chapters, 48 questions -General information of companies -Transit transportation and foreign trade of Mongolia -Transit transportation through territory of Russia -Transit transportation through territory of China Direct Interview Questionnaries

6. International convention ratification ScopeInternational convention Regional agreement Bilateral agreement Total 1 Railway transportation 54312 2 Auto transportation 820634 3 Water way transportation 134 4 Air transportation 22 5 Äàìæèí ºíãºðºõ õóäàëäàà, òýýâýðëýëò 25310 6 Customs operation and activities 10 7 Trade and transportation 347 8 Road and transportation sector 4711 9Total number of convention and agreement 31401990 10Mongolian ratification711927

7. Results of comparative analysis ¹ProblemsTransit trade and transportation convention of land locked country Railway law Customs law Regulatory acts and codex 1Do not impose tax in transit goods+- ° 2Right to penetrate free+-- 3Do not impose special tax and dues in transit traffic +- ° 4Transit dues and tariffs+--- 5Providing transportation means and facilities ++++ 6Dues and charges of transportation means and facilities ++-- 7Tariffs and Charges not be higher than tariffs and charges of states with access to the sea +--- 8Customs and administrative measures +-++

8. 9To sign contract for the facilitating transit traffic++++ 10To create conditions for the goods storage in entry, exit and transit stages +-++ 11Tariffs of storage conditions addressing to the facilitating transit +-++ 12Delay difficulties in transit traffic++++ 13To cooperate for delaying difficulties in transit of land locked states +--- 14To sign contract of free zones and customs facilities+-++ 15To provide the land locked countries on the equal rights as a states with access to the sea +--- 16Ships with flying flag of land locked states same with those countries have right to have access to the sea and to use the sea ports +--- 17Rights of ships with flying flag of land locked states in transportation on the using internal water ways +--- 18To approve rights and discounts of land locked states+---

9. Results of analysis Transit transportation and foreign trade of Mongolia: International convention ratification and implementation -Doesnt ratify some conventions, so have difficulties. 87.5% Regional and bilateral agreement and implementations -Doesnt sign some agreement, so have difficulties. 75% Laws implementation related to foreign trade and transportation and implementations -Doesnt approve some laws, so have difficulties. 87.5% Implementation of rule and procedure related to foreign trade and transportation -Doesnt approve some rules and procedures, so have difficulties. 62.5%

10. Implementation of standard and norms related to foreign trade and transportation -Doesnt approve some standards and norms, so have difficulties. 62.5% Awards of state and administrative organizations related to foreign trade and transportation and implementation Resolutions of state and administrative organizations are difficult in works of us in some times. 87.5% Convenience to receive information related to laws and regulations -To buy brochures. 87.5% Delivery of laws and legal acts from state organizations -Give it to consumers, when they ask. 62.5% How much time do they spend to for the composing documentations? - 7-12 hours 50%

11. Level of single window service in the composing documentation -Some services are slip, but this is better than others. 50% in which locating country do you compose documentations easy? -Started country 50% in which country do you have difficulties related to documentations? -Arriving country 87.5% -Transit country 75% What measurements are related to difficulties to compose documentations? -For time 75% -Communicate to many organizations 62.5% Language problems in the using documentations -There are problems and barriers related to documentations, so should follow carriage and goods. Very difficult. 50%

12. Transit transportation through territory of Russia: Auto transportation scope for transit through territory of Russia -To the European country or sea port 62.5% Auto road conditions of Russia -it is ok, but difficult in some place. 75% Regulations in road traffic -Have difficulties depending on the policemen. 50% Tax and dues related to transportation -Road fees and dues 62.5% What is difference of this fee and dues from domestic transporter fee and dues? -High. 50%

13. Unofficial tax, dues and bribes -Pay to customs officials. 50% -Pay to professional auditing officials. 50% -Pay to policemen. 50% Transit transportation by railway -Have not discounts for land locked countries.50% Agreement between the Mongolian Government and Government of Russian Federation on the transit transportation to have access to the sea through Russian territory and implementations. -The provisions to give extra discounts in transit transportations and services are not implemented. (5 th article 3) 50% Boundary, customs and professional auditing -Relationships between departments and board have not been. 50% Äàìæèí ºíãºðºõ òýýâýðòýé õîëáîîòîé ýðõ ç¿éí áàðèìò áè÷ãèéí ìýäýýëýë -Õèëèéí áîîìò äýýð àâäàã. 62.5%

14. Transit transportation through territory of China: Transit transportation by railway -There are not discounts of land locked country. 75% Agreement between the MPR Government and Government of Chinese Republic on the transit transportation to have access to the sea through Chinese territory and implementation. -The provision about opportunity for transit transportation by vehicles' of Mongolia is not implemented. (4 th article a) 62.5% -Opportunity to use port sea and storage is not implemented. (7 th article 1) 62.5% -The provisions to impose export and import taxes, other tax and preliminary tax in goods, luggage is not implemented. (7 th article 3) 50% Law and legislation information related to transit transportation -Receive information in boundary port. 62.5% China auto road condition -well. 50%

15. Actual issues Transit transportation and foreign trade of Mongolia –Difficulties relating to the documentations. (for timeframe and relating to the arriving countries) –Not ratifying relevant international conventions and agreements. –Not approving some laws relating to the foreign trade and transportation. –Difficulties of awards of the state and administrative organizations. – Transit transportation through territory of Russia –Information relating to the transit transportation is taking in the boundary ports. –Customs and auditing officials and policemen have taking unofficial fees, payments, dues and bribe. –The provision on tariffs with extra discounts in transit transportation and services are not implemented. (5th article 3) Transit transportation through territory of China –Land locked countries have not discounts in transit transportation through railway. –The opportunity to use sea ports and storages is not implemented. (7 th article 1 ) –Law and regulatory Information relating to the transit transportation is taking in the boundary port only. –The provision about opportunity to conduct transit transportation through automobile of Mongolia is not implemented. (4 th artcle a à)

16. Implementing measures From side of laws and regulations –To ratify the relevant international conventions, –To reflect and to amend the land locked countries discounts and rights in regional and bilateral agreements, –To approve laws relating to the foreign trade and transportation and to create law and regulatory favorable environment. Institutional –To create conditions to provide implementations of international conventions and bilateral agreement, –To formulate rules, procedures, norms and standards to support foreign trade and transit transportation, –State and administrative decisions should be optimum, easy to understand and without difficulties for businessmen. –To create the information intensive providing system on the international laws and regulations of the transit transportation and trade for businessmen. Unofficial dues, fees and bribe –To decide by support and participation of the international organizations, –To create the monitoring system for the implementing discounts and rights of land locked states, –To relate with relevant professionals and governments of contracting countries.

17. Explaining: + There is regulation to regulate this problem - There is not regulation to regulate this problem Bilateral agreement between government is fitting to the provision of multilateral conventions - Bilateral agreement between government is not fitting to the provision of multilateral conventions ° Article of Mongolia laws is not fitting to the international conventions THANKS