TRADE POLICY REVIEW:

Concluding remarks by the Chairperson

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  • Trade Policy Review: Mongolia

  

Mongolia's third Trade Policy Review has provided us a good opportunity to examine its economic, trade, and investment developments since the previous Review, as well as to learn about the unique challenges caused by the COVID-19 pandemic that has impacted trade and the global economy. I would like to thank the Mongolian delegation, headed by H.E. Ms. Battsetseg Batmunkh, Minister for Foreign Affairs, for her remarks and participation from capital. My appreciation also goes to our discussant, H.E. Ambassador Dr. Rashidi Said of Malaysia for his thoughtful comments and remarks and of course to the 23 delegations that took the floor during these two days and those that participated through the advance question and answer process.

Members commended Mongolia on its overall open trade and investment regime, including its policy orientation toward more inclusive trade. Its economic performance over the review period had been impressive as there was generally continued economic growth until early 2020. The impact of COVID-19 has severely affected the Mongolian economy, albeit with Government intervention, mainly in the form of stimulus packages, it was hoped that the economy would recover quickly and accelerate. Despite these positive trends, Mongolia's economy remained heavily reliant on a few sectors and its trade was concentrated in terms of products and markets, thus Members felt that there was a strong need to diversify. This issue was recognized by the Government as one of its top national policy priorities, as addressed in Mongolia's Economic Recovery Program and the Mongolian Export Program, among others. Merchandise exports and imports reached a record high of USD 13.7 billion in 2019 and the trade balance remained positive for many years, but several Members noted that Mongolia had yet to reach its trade potential.

Mongolia was a key trade partner particularly to its regional neighbors and its move to deepen regional economic and trade integration was welcomed. It was noted that Mongolia had concluded its first FTA with Japan and had recently implemented the Asia-Pacific Trade Agreement (APTA). Furthermore, it was examining possibilities for future free trade agreements. Mongolia benefitted from a number of GSP programs from other Members that could help in diversifying its exports.

Many Members applauded Mongolia's contributions to the Multilateral Trading System including through its coordinating role of the Asian Group of Developing Countries and its contribution the group of Landlocked Developing Countries. Mongolia's ratification of the Trade Facilitation Agreement, its support of the Buenos Aires Declaration on Women's Economic Empowerment, and its participation in various Joint Statement Initiatives were viewed as particularly welcome developments during the period. Several Members inquired about the status of the initiative for joining the WTO's Agreement on Government Procurement and encouraged Mongolia to become a party to the Agreement in the near future. It was also suggested that Mongolia engage further in multilateral and plurilateral trade negotiations in order to reap greater benefits from the Multilateral Trading System.

Foreign investment had featured prominently in many interventions and in the advance written questions. Several Members noted they were a significant source of foreign direct investment in Mongolia and welcomed the initiatives of the One-Stop Service Center and the Investors Protection Council. Although investment policies and practices had generally promoted and protected foreign investors, some Members noted that there was still room for improvement. Frequent amendments of investment laws and regulations were seen as unpredictable and created an unstable environment. In the view of some Members, there was a need to enhance regulatory certainty, reduce investment risk, improve transparency and the business environment, and create a level playing field for foreign investors.

Mongolia's positive developments in the area of trade facilitation were recognized as it had undertaken significant efforts to improve trade facilitation and modernize its customs procedures. This was particularly important given Mongolia's geographical location as a landlocked country and as an important transit corridor along the old Silk Road. The adoption of the National Trade Facilitation Roadmap, the establishment of the National Trade Facilitation Committee, the development of the single window application, and creation of electronic data exchange were all important steps taken to make improvements in this area. Nevertheless, some Members noted that they still faced difficulties with Mongolia's customs clearance and inspection procedures.

In their interventions, Members referred to remaining challenges in a number of areas. Mongolia's SPS regime was characterized as lacking alignment with international SPS standards and Mongolia was encouraged to make improvements in this area. Import quotas on certain agricultural products were seen as problematic on several fronts, including what some Members saw as possible inconsistency with WTO obligations. The regulatory framework and new laws proposed on alcoholic beverages were also of concern; and at least one Member referred to disruption to trade flows over mandatory enrichment standards for wheat flour.

The importance of strengthening good governance, improving transparency and the legal environment were also recurrent themes during our discussions. Transparency was identified by several Members as needing improvement on a number of fronts, including in the areas of government procurement, investment laws and regulations, regulatory and legislative processes, and permits and licensing processes for imported goods. Securing an independent judiciary and upholding the rule of law were identified as key elements in enhancing governance.

While Mongolia had made notifications in a number of areas during the review period, several were noted as lacking and Mongolia was encouraged to make further efforts to remedy the situation. Notifications on agriculture, customs valuation, quantitative restrictions, subsidies, and import licensing were consistently noted as being outstanding. Members highlighted that it was important for Mongolia to improve transparency in its trade policies and practices through notifications in the future.

These were the main areas of discussion at this Review that has allowed us to gain a better understanding of Mongolia's trade, investment, and related policies. Mongolia received over 300 advance written questions and it was commended for having replied to all of them prior to this meeting. In a month's time, Mongolia is expected to reply to any late submissions and follow-up questions at which time the third Trade Policy Review of Mongolia will successfully conclude.

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