Mongolia-EU trade exceeds 500 million USD as of 2020 3rd quarter

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EU Trade Day took place for the third year on Monday and Tuesday with more than 200 representatives from cluster value chains and private sector in attendance.

The Mongolian National Chamber of Commerce and Industry, European Union (EU)-funded Trade Related Assistance for Mongolia (TRAM) project and GSB Hub organized the event under the general topic “Increasing export capacity of Mongolia to the European market”.

The two-day EU Trade Day enabled business representatives, experts researchers an other stakeholders to exchange views on challenges and opportunities of Mongolian businesses in exporting products to the European market, as well as ways to facilitate trade and the progress registered in implementing the WTO Trade Facilitation Agreement.

EU Ambassador to Mongolia H. E. Traian Hristea highlighted in his opening remarks that despite the pandemic restrictions, Mongolia and EU have been working together to ensure the “smooth implementation” of the Partnership and Cooperation Agreement and that EU stands ready to assist Mongolia in raising exports to the European market.

“European businesses play a crucial role in bringing in investment, expertise and transferrable skills, helping to build capacity in education, health and science but also for economic development of SMEs. Foreign direct investment also enables Mongolia to unlock its natural wealth, while projects implemented by the EU and its member states have created new export markets for traditional products such as cashmere,” he said.

“In order to diversify and increase the Mongolian value-added products and export them to the European market, we have to think about the immediate actions. The potential we have can be fully used only when we work together, improve connectivity, develop trade removing barriers and obstacles, and address challenges together. Establishing this base with common rules, increasing regulatory compatibility, standards and rules-based space and level playing field for trade and investment is important.”

Head of the Mongolian National Chamber of Commerce and Industry T.Duuren noted that the WTO Trade Facilitation Agreement, which is directed at upgrading the local trade policy and increase types of value-added final products for export to the European market, has become very significant, especially now with the pandemic causing numerous difficulties and obstacles.

Secretary General of the Ministry of Foreign Affairs N.Ankhbayar agreed with T.Duuren, stressing that Mongolia needs to develop foreign trade documents and laws to correlate foreign trade and investment and become able to produce value-added non-mining products.

Ambassador Hristea added, “One of the most challenging topics is related to the concept paper on Foreign Trade Policy. In the last years, there were many debates around the issue of Mongolia lacking a foreign trade policy law. The WTO Agreement ratified by Mongolia prevails over any other piece of legislation. A clear distinction between domestic and international trade should be made. The TRAM project drafted a Concept Paper on foreign trade that underlines Mongolia’s objectives in the area of foreign trade and proposes policy recommendations for each sector that have export potential.”

Through the TRAM project, Mongolia was able to create four export clusters for natural cosmetics, yak and camel wool, sea buckthorn and yak leather. This process has brought more understanding about the importance of clusters for increasing export among local businesses, experts said. The project has reportedly helped Mongolia-EU reach 526 million USD in the first nine months of 2020. Statistics also show that non-mining product exports rose by 15 percent in the last three years, which was possibly influenced by the new clusters.

“Based on the experience gained from these four clusters, we started independently organizing a pine nut cluster. We experienced the importance of cluster to make export. Especially, it is necessary for us to unite under integrated organization and develop value-added products in this time when unemployment rate is high due to the pandemic,” T.Duuren noted.

He shared that Mongolia supplies merely 7 percent of the world demand for pine nuts by exporting semi-processed products worth 30 million USD per year. However, these products are said to be further processed in other countries and sold to the European market at four times higher value, or 120 million USD. This means that Mongolia is losing up to 90 million USD from the pine nut business per year. Expert advised upgrading and increasing cluster value chains to maximize earnings from pine nut production.

GSP Hub project held a workshop on the second day to provide information on facilitating horizontal collaboration among stakeholders, increasing the use of GSP+ preferences by identifying routes for export diversification, encouraging European companies to increase their imports from Mongolia, and promoting international sustainability standards.

Cosmetics and products made of leather, yak, camel wool and sea buckthorn were featured on the sideline of the event to support local businesses and development of cluster value chains.

Dulguun Bayarsaikhan