Recent and important work on Recent and important work on Trade and Human Trade and Human

Development Development

G.Ganjargal – Officer, Trade and G.Ganjargal – Officer, Trade and Economic Cooperation DepartmentEconomic Cooperation Department

Ministry of Foreign Affairs and Trade Ministry of Foreign Affairs and Trade of Mongolia of Mongolia

BackgroundBackground

Transition to a market economy Transition to a market economy

-stabilizing the economy-stabilizing the economy

-strengthening the private sector-strengthening the private sector

-improving the environment for -improving the environment for investment investment

-privatizing of state firms -privatizing of state firms

-establishing fundamental market -establishing fundamental market institutionsinstitutions

Recent Economic DevelopmentsRecent Economic Developments Economy has been growing fastEconomy has been growing fast

- GDP: - GDP: - 8.6% in 20068.6% in 2006- 9.9% in 20079.9% in 2007- 10.2% first half of 200810.2% first half of 2008- 11.3% second half of 200811.3% second half of 2008

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

Net taxes on products

Industry, construction

Services

Agriculture

Recent Economic DevelopmentsRecent Economic Developments Mining contribution is substantial Mining contribution is substantial

- Mineral products account for 84% of total- Mineral products account for 84% of totalexports earnings, contributes 40% of 2008exports earnings, contributes 40% of 2008planned budget, 51.6% of FDI flow into miningplanned budget, 51.6% of FDI flow into mining

- Foreign investment is scaling up: - Foreign investment is scaling up: 2005-2007 amounting $ 1.2 billion. 2005-2007 amounting $ 1.2 billion. In 2007 reached $500 million, of which 67 percent went toIn 2007 reached $500 million, of which 67 percent went tomining while trade and food was the second largest receiver ofmining while trade and food was the second largest receiver ofFDI (22 percent)FDI (22 percent)

Recent Economic DevelopmentsRecent Economic Developments Current performance of the foreign tradeCurrent performance of the foreign trade : : When compared to 2006, the total trade turnover increased When compared to 2006, the total trade turnover increased

in 2007 by 32.3 percent, exports by 22.5 percent and in 2007 by 32.3 percent, exports by 22.5 percent and imports by 42.5 percent respectively. 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 products more than 70 percent of export were mineral products

• copper concentrate and gold, molybdenum concentrate, copper concentrate and gold, molybdenum concentrate, fluorspar, coal, zinc and tungsten. fluorspar, coal, zinc and tungsten.

• exports observed in 2006-2007 is not due to an expansion of exports observed in 2006-2007 is not due to an expansion of the production, most of it is explained by the soaring prices of the production, most of it is explained by the soaring prices of minerals.minerals.

Recent Economic DevelopmentsRecent Economic Developments

Inflation is very highInflation is very high

-5%

0%

5%

10%

15%

20%

1 2 3 4 5 6 7 8 9 10

11

12

2008

2007

2006

2005

2004

2003

2002

2001

Strengths and WeaknessesStrengths 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 High transport and transit cost - Direct dependence of the agricultural sector on weather conditions Direct dependence of the agricultural sector on weather conditions - Small domestic market Small domestic market

Advantages: Advantages: - - Abundant mineral resources Abundant mineral resources - - Improving macroeconomic indicators Improving macroeconomic indicators - Proper age structure of the population - Proper age structure of the population - - Proximity to such huge markets as Russia and ChinaProximity to such huge markets as Russia and China

Foreign tradeForeign trade

Mongolia – member of the WTO since 1997Mongolia – member of the WTO since 1997

Trade with 109 countriesTrade with 109 countries

Main trading partnersMain trading partners China - China - 47.9%, 47.9%, Russia -Russia - 19.6%, 19.6%, EU- EU- 8%,8%,

USA -USA - 5.4%, 5.4%, Japan- Japan- 3.5% 3.5%

Current Trade Regime Current Trade Regime The multilateral trading system – tariff is the only instrument The multilateral trading system – tariff is the only instrument

of trade policy of trade policy Generalized system of preference (USA, EU, Canada and Generalized system of preference (USA, EU, Canada and

Japan) 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 - former Ministry of Industry and Trade (currently a separate department of Ministry of Foreign Affairs and Trade) department of Ministry of Foreign Affairs and Trade) - Foreign Investment and Foreign Trade Agency (FIFTA)- Foreign Investment and Foreign Trade Agency (FIFTA)- Mongolian National Chamber of Commerce and Industry - Mongolian National Chamber of Commerce and Industry (MNCCI)(MNCCI)

Foreign Trade Foreign Trade

Foreign Trade Balance (million USD) Foreign Trade Balance (million USD)

20002000 20012001 20022002 20032003 20042004 20052005 20062006 20072007

Total Total

turnover turnover

1006.51006.5 940.0940.0 1214.71214.7 1387.51387.5 1864.91864.9 2200.02200.0 3018.03018.0 4006.34006.3

Export Export 432.3432.3 385.2385.2 524.0524.0 600.2600.2 853.3853.3 1053.71053.7 1528.81528.8 1889.01889.0

Import Import 574.2574.2 554.8554.8 690.7690.7 787.3787.3 1011.61011.6 1148.71148.7 1489.21489.2 2117.32117.3

Balance Balance -141.9-141.9 -168.6-168.6 -166.7-166.7 -187.2-187.2 -158.3-158.3 -95.0-95.0 39.639.6 -228.3-228.3

Source: MNCCI, 2008Source: MNCCI, 2008

FOREIGN TRADE BALANCE

-500

0

500

1000

1500

2000

2500

3000

3500

4000

4500

Years

mil

US

D

Total turnover

export

import

balance

What has been doneWhat has been done UNDP support (Trade and Human Development Project)UNDP support (Trade and Human Development Project)

- Global Event of Landlocked Developing Countries- Global Event of Landlocked Developing Countriesand Transit Countries on Trade and Trade Facilitationand Transit Countries on Trade and Trade Facilitation28-31 August 2007 in Ulaanbaatar, MONGOLIA 28-31 August 2007 in Ulaanbaatar, MONGOLIA -Ulaanbaatar Declaration -Ulaanbaatar Declaration

Support to ongoing negotiation of “Transit Transport Support to ongoing negotiation of “Transit Transport Agreement between Mongolia, Russia and China” (jointly Agreement between Mongolia, Russia and China” (jointly with USAID)with USAID)

““Millennium Development Goals-based Millennium Development Goals-based Comprehensive National Development Strategy” Comprehensive National Development Strategy” was approved in January, 2008 by the Parliament. was approved in January, 2008 by the Parliament.

The Mid-term Trade StrategyThe Mid-term Trade Strategy

““Millennium Development Goals-based Millennium Development Goals-based Comprehensive National Development Comprehensive National Development Strategy” has identified that Strategy” has identified that

the strategic objective of the foreign trade the strategic objective of the foreign trade policy will be to “policy will be to “create a favorable create a favorable environment for the implementation of environment for the implementation of economic development strategy with economic development strategy with predominant export-oriented production predominant export-oriented production and servicesand services”. ”.

The Mid-term Trade Strategy The Mid-term Trade Strategy

General objectiveGeneral objective: Trade mainstreaming : Trade mainstreaming into development into development

Strategic objective 1: Diversify and increase Strategic objective 1: Diversify and increase

the volume of export products the volume of export products Strategic objective 2: Diversify and increase Strategic objective 2: Diversify and increase

the volume of import products in line with the volume of import products in line with economic development trend economic development trend

Strategic objective 3: Develop and open new Strategic objective 3: Develop and open new possibilities for domestic trade possibilities for domestic trade

The Mid-term Trade StrategyThe Mid-term Trade Strategy Priority products and services for export productsPriority 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

ServicesServices• 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 Transport services (facilitating trade between the two

neighbors)neighbors)• Migrant workersMigrant workers

The Mid-term Trade StrategyThe Mid-term Trade Strategy Cross cutting issues for products and Cross cutting issues for products and

services selected services selected • High transport cost High transport cost • Trade FacilitationTrade Facilitation• Technical Trade Barriers Technical Trade Barriers • Sanitary and Phyto-Sanitary measures. Sanitary and Phyto-Sanitary measures. • Intellectual Property Rights Intellectual Property Rights

Implementation and financing of the Implementation and financing of the programmeprogramme• Management of the programmeManagement of the programme• Financing sources and modalitiesFinancing sources and modalities

Monitoring and EvaluationMonitoring and Evaluation

Further development Further development

Draft of the Mid-term Trade Strategy has been Draft of the Mid-term Trade Strategy has been distributed to all Ministries, relevant agencies, distributed to all Ministries, relevant agencies, NGOs and Associations of private sectors for NGOs and Associations of private sectors for commentscomments

However, as a result of the formation of a new However, as a result of the formation of a new Government, this draft needs to be elaborated Government, this draft needs to be elaborated and reviewed on the basis of :and reviewed on the basis of :• comments received from aforementioned comments received from aforementioned

organizations organizations • Government action programme that is under Government action programme that is under

Parliament - ongnoing discussion Parliament - ongnoing discussion

Thank you for your Thank you for your attention!attention!