WORLD TRADE ORGANIZATION  
ORGANISATION MONDIALE DU COMMERCE  
ORGANIZACIÓN MUNDIAL DEL COMERCIO WT/TPR/M/145/Add.1 
17 May 2005 
 (05-1982) 
Trade Policy Review Body 
15 and 17 March 2005 Original:  English/ 
                 anglais/                  inglés 
  
TRADE POLICY REVIEW 
MONGOLIA 
Minutes of Meeting
 
Addendum  
Chairpersons:  H.E. Mr. Eirik Glenne (Nor way) and H.E. Mr.Don Stephenson (Canada)  
 This document contains the advance writte n questions, and replies provided by Mongolia.1 
__________________________________________________________________________________  
Organe d'examen des politiques commerciales 
15 et 17 mars 2005  
EXAMEN DES POLITIQUES COMMERCIALES 
MONGOLIE 
Compte rendu de la réunion
 
Addendum  
Présidents:  S.E. M. Eirik Glenne (Nor vège) et S.E. M. Don Stephenson (Canada) 
 
 Le présent document contient les questions écrites communiquées à l'avance et les réponses 
fournies par la Mongolie.1 
__________________________________________________________________________________ 
 
Órgano de Examen de las Políticas Comerciales 
15 y 17 de marzo de 2005  
EXAMEN DE LAS POLÍTICAS COMERCIALES 
MONGOLIA 
Acta de la reunión
 
Addendum  
Presidentes:  Excmo. Sr. Eirik Glenne (N oruega) y Excmo. Sr. Don Stephenson (Canadá) 
 
 En el presente documento figuran las pr eguntas presentadas anticipadamente por escrito, 
junto con las respuestas facilitadas por Mongolia.1
                                                      
 
1 In English only./En anglais seulement./En inglés solamente.  WT/TPR/M/145/Add.1 
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ADVANCE WRITTEN QUESTIONS BY MEMBERS AND 
REPLIES PROVIDED BY MONGOLIA 
I. GENERAL  
1. Question by Brazil:  
Report by the Government (WT/TPR/G/145).  Mongolia has reported great economic gains in 
services and industry, which had a positive impact in c onstant economic growth rates.  However 
persistent trade deficits remain (WT/TPR/G/145, paragraph 21), mainly because of the dependency 
on few export items. How does the Mongolian Govern ment plan to deal with this deficit? 
Answer:   
Mongolia considers that encouraging domestic industr ies, fully using their capacity, attracting foreign 
and domestic investment, intensifying the Mongolian exports are the factors to reduce trade balance 
deficit.  In consequence, it grants high importanc e to restoration and expans ion of domestic industries 
and attraction of domestic and foreign investments.   In addition, Mongolia believes that continued 
maintenance in fair competition, successful outcome of  the Doha trade talks, especially in agriculture, 
trade facilitation, services negotiations and earlier accession of Russia to the WTO will benefit 
Mongolia to reduce its trade deficit. 
Reduction of transit transportation costs and benefiting from concessions contribute to trade 
expansion.  Benefiting from the GSP schemes of trad ing partners is also another venue to increase 
exports.  Recently, Mongolia presented its official re quest to include meat and meat derived products 
in its list of imported animal origin products , as well as to remove import duty for Mongolian 
cashmere products.  
2. Question by Brazil:  
Report by the Government (WT/TPR/G/145).  In the Government Report, Mongolia stresses its 
commitment to the multilateral trading system.  It stat es that the fact that Mongolia does not belong to 
any kind of regional agreement reflects this commitmen t, but that it does not imply that Mongolia is 
closed to such agreements.  Is Mongolia consid ering the possibility of engaging in new agreements 
with its trading partners (besides the existing ones with the European Union and the United States)? 
In Mongolia’s view, what should be the relati onship between Regional Trade Agreements and the 
multilateral trading system? 
Answer:   
So far, Mongolia has not engaged in any RTAs.  However, the Government of Mongolia set in its 
Action Plan for 2004-2008 to negotiate FTAs with its major trading partners, including the US, Russia 
and the EU.  Within the framework of the preparat ory work to start the negotiations, Mongolia signed 
a Trade and Investment Framework Agreement with the US.  
As well, Mongolia is preparing to join the Bangkok Agre ement.  It also participates in the APEC with 
an observer status with a view of becoming its member by 2008.  
As of today, Mongolia conclude d bilateral trade and economic c ooperation agreements with more 
than 30 countries, including Russia, China, US, EU, Germany, Great Britain, Canada, Indonesia, 
Malaysia, South Korea and others.  It has also  concluded intergovernme ntal Agreements on the WT/TPR/M/145/Add.1 
Page 4  
 
Promotion and Mutual Protection of Investment wi th nearly 40 countries and on the Avoidance of 
Double Taxation with more than 30 countries.  
Mongolia is of the view that RTAs and multilateral trading system should complement each other to 
increase the economic growth and gains.  For a sm all economy such as Mongolia it is difficult to 
advocate on its own interests in multilateral trade rounds or in accession negotiations.  Entering a 
regional agreement (especially with countries with  a common position) could increase its bargaining 
power in multilateral negotiations, ensuring better participation in multilateral trading system.  
Regional trading agreement can be used as means to  engage in broader regional discussions, which in 
the long run can lead to multilateral liberalization.  
3. Question by Brazil: 
 
Report by the Government (WT/TPR/G/145).  The rate of unemployment has been mentioned a few 
times in the Government report.  Have the ref orms had a great impact in this area? 
Answer:   
The reforms had certain impact on unemployment rate .  Examples of such reform process include the 
establishment and recuperation of such sector s as textiles, construction and service.  
The Government of Mongolia is taking active meas ures to make amendments to the “Law on Sending 
Labor Force and Receiving Labor Force and Specialists from Abroad”, the “Law on Employment Promotion” and the “Law on Labor”, and to im prove the “National Program for Employment 
Promotion”, as well as to introduce and implem ent new subprograms within its framework.  
The Law on Employment Promotion and decisions on financing labor employment offices from state 
or local government budgets, establishing Employment Promotion Fund played a significant role in 
improving employment promotion service.  
In addition, the Government is preparing to submit to the Parliament the “State Policy on Unofficial 
Employment” and the “National Program on Improving the Safety  and Healthy Environment of 
Labor”. 
With the practical assistance of th e ILO the Government is also working to adopt the “National Plan 
of Action for Proper Employment” and has concl uded a tripartite agreement on labor and social 
consensus.  
The labor market has expanded its services in the last 4 years, contributing to the economy.  In 2004 
the number of vacant positions received by the Labor Employment Office doubled, the number of people employed through the Office increased by 2.6 times, the number of vocational trainees by 
4 times and as a result, the unemployment rate dropped from 5.5% in 1995 to 3.5% in 2003.  
4. Question by Brazil: 
 
One of the main problems underlined in the Secretariat Report is environmental degradation. 
The Government Report has addressed the matter by  saying that, in the future, "the Government 
is planning (...) to implement programs on the use of optional energy resources, such as solar and 
wind" (paragraph 71), "environmen tal rehabilitation of mining areas" (paragraph 57).  Are there 
any projects already in place in these areas?  Is Mongolia in need of any help to create or 
implement these programs?  WT/TPR/M/145/Add.1 
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Answer:   
Renewable energy:  The Government is implemen ting a 10-year programme “100 000 Solar Houses” 
from 2000.  Under the programme, about 30 000 gher s (traditional dwellings) in the country were 
provided with the necessary equipment so far.  
As well, the Ministry of Fuel and Energy is  formulating a national programme on “Renewable 
Energy”, which is to be submitted to  the Government in due course.  
Mining:  At present, over 5 thousand legal entities are carrying out explora tion and mining activities 
in 62.8 million hectare areas, which account for 41 percent of the Mongolian territory.  
By the beginning of 2005, 126 gold mines, 44 fluorspar, 28 coal and 40 other mineral resources 
activities are in operation.  
However, the issue of artisanal mining, in which more than 30 000 individuals are engaged, is 
becoming one of the major concerns of the Government.  To address the social, taxation and safety issues associated with this type of activ ity, the Government is drafting a law.  
As to the environmental protection and reclamati on, the above legal entities spent USD 3.3 million in 
reclamation activities in 2004.  USD 3.8 million is going to be spent for environmental protection 
projects in 2005.  Nonetheless, recultivation and re habilitation measures of the damaged earth are not 
taken by the companies, including big ones, to meet the requirements.  This is largely resulted by the 
lack of both liability and funding. 
Further technical and financial assistance is re quired to implement the a bove-mentioned programmes, 
specifically in mining TA is needed to make an assessment on damaged areas and the responsibility of 
license holders.    
5. Question by Japan:
 
Report by the Secretariat (WT/TPR/S/145). II. Tr ade Policy Regime: Framework and Objectives (2) 
Trade Policy Formulation and Implementations (Pages 13 to 14, para. 7 to 16).  With regard to the 
implementation of laws and regula tions, Japan considers that it is quite important to ensure the 
coherence of interpretation and guidance for the co ncerned enterprises, between central government 
and local government, within the relevant ministri es and agencies, and in each section within a 
ministry or an agency.  
Please indicate which measures are taken by the Government of Mongolia, in order to ensure the 
coherence of interpretation and gu idance for the concern ed enterprises when implementing laws and 
regulations.  
Answer:   
The coherence of the interpretation of laws is en sured through the simultaneous functioning of several 
mechanisms.  
First, in Mongolia the public is involved in the le gislative process from the very beginning.  We have 
a specific law, regulating the process of submitti ng bills to the Parliament.  This law requires 
exhaustion of necessary stages of clearance of th e bills to the Parliament, through which the 
participation of the relevant agencies and institution s is ensured.  Also we have an active and open 
media, which places any bill under consideration by the parliament in the public domain.  As a result 
the bills become, in a sense, a product developed wi th the participation of the relevant government WT/TPR/M/145/Add.1 
Page 6  
 
agencies and the public.  Consequently, the bills by the time of their enactment get familiar to the 
actors in the society, which, in turn, ensures the coherence of thei r application and interpretation.  
Secondly, we have a statutory requirement for publis hing of laws.  The effect of this mechanism is 
similar to the one described above.  
If the above mechanisms do not work we have a Court mechanism to inte rvene as in any other 
country.  All the laws but the Constitution is in terpreted by the Supreme Court.  The Court’s 
interpretive notes, which application and implemen tation are mandatory, are published and available. 
The vesting of the interpretive power to the single institution is the ultimate guarantor of coherent 
interpretation of the laws. 
6. Question by the EC: 
 
Could Mongolia please indicate which sectors are cu rrently being considered to be included in the 
process of diversifying production, and inform about the status of efforts to increase manufacturing of 
goods more generally?  
Answer:  
The processing industry is considered  to be one of the most promising sectors.  Therefore, the 
Government of Mongolia has identified this industry as a strategical priority sector.  
More precisely, the following products are considered for product diversification: 
− Meat products, depending on conformity to  international standards of hygiene; 
− Further processing of mineral products,  depending on foreign investment and 
privatization program; 
− Cashmere products, depending on the qualit y of Mongolian cashmere that declined 
due to crossbreeding of Mongolian goats; 
− Cotton-made garments, based on cotton-fibres imported from PRC and synthetic 
fibres from Korea; 
− Footwear, headgear, carpets and tapestry.” 
7. Question by the EC:  
In what way can Mongolia secure sustainable d evelopment when increasing the manufacturing of 
goods, i.e. how can Mongolia ensure adequate protection of the environment, while maximizing foreign exchange earnings?  
Answer: 
 
Mongolia offers a difficult business environment for manufacturing investment due to the country’s 
landlocked geography, small popula tion of 2.5 million, low purchasing power, inadequate physical 
infrastructure, rugged terrain, and increasing competition from neighboring countries China and Russia.  These problems are beyond the country’s immediate control.   WT/TPR/M/145/Add.1 
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The Mongolian manufacturing sector can thrive once again provided the government takes decisive 
steps to resolve long-standing transition problem s, improve its business climate and government 
services, prioritize livestock-based industries, and id entify new niche markets for products which have 
a higher processing and value added content th an the commodities mainly exported now.  
In terms of the environment protection, the Gove rnment of Mongolia is paying much attention to 
promote sustainable development through energy  efficiency improvement, poverty reduction and 
environment protection, to promote public participa tion in mitigation activity of global climate change 
and to implement Climate change mitigation mech anisms such as Clean Development Mechanism  
(CDM).  According to the Kyoto Protocol, the CDM aims to support sustainable development for 
developing countries by implementing environment friendly technology from developed countries.  
8. Question by the EC:  
Export tax concessions, subsidies, free zones and ex port performance requirements:  In the report 
prepared by the WTO secretariat (Paragraph 55, page 37) it is written that business entities with 
foreign investment and that are exporting more than 50% of its production enjoys income tax holidays 
in the first three years and 50% tax relief in the following three years.  The EC noted that Mongolia 
has committed herself to eliminate th ese subsidies by 31 December 2002.  
These measures appear to be a prohi bited Export subsidy.  Could Mongolia please clarify the status 
of the tax relief’s described above and provide info rmation on the actions to bring these measures in 
line with its obligations under Art 3 ASCM? 
Answer:   
In accordance with Article 27 (4) of the ASCM, th e Government sought the extension of the period 
(by a request to the Subsidies and Counterva iling Measures Committee dated 25 December 2002).  
No response was received from the Secretariat since then. 
The Government has the intention of waiting until any response is received from the SCM 
Committee.  Mongolia is a newly-emerged market economy, which is striving to consolidate the 
positive results reached so far.  In this consolid ation process, FDIs play an essential role and the 
Government considers it necessary to have these t ypes of incentives in order to attract foreign 
investors to Mongolia.  It cannot afford to remove  the subsidies, which are maintainable by other 
countries. 
Instead, the Government would like to seek the re vision of Annex 7 of the Agreement on Subsidies 
and Countervailing Measures (provides a list of developing countries, which are not subject to the provision of Article 3 (1a)).  In the view of the Government of Mongolia, Mongolia as a country with 
a GNP per capita far less than $1,000 per annum s hould be included in the list (GNP per capita of 
Mongolia is $ 480, which is lower than many of the countries listed in Annex 7:  Egypt (1390), 
Philippines (1080), Morocco (1320), Bolivia (890), Indonesia (810), Sri Lanka (930), Nicaragua (730), Cote d’Ivoire (660), Cameroon (640)).  It may involve complicated procedures to make such amendments.  Nonetheless, Mongolia would furthe r insist on its being included in the list. 
9. Question by the EC: 
 
Mongolia is not a signatory to the WTO Agreement on  Government Procurement;  it is an observer in 
the GPA Committee (Page 34, paragraph 42 in the re port prepared by the WTO secretariat).  Does 
Mongolia envisage becoming a full member of the GPA? WT/TPR/M/145/Add.1 
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Answer:
  
Within the context of Mongolian trade liberalizati on policy framework Mongolia will consider joining 
the GPA in the future.  And the government action plan for the next three years includes the activities 
to strengthen the national procurement system and its practice as well as to  commence and implement 
necessary preparatory steps for becoming a member of  international treaties or other initiatives related 
to public procurement.  
10. Question by the EC:  
Could Mongolia provide the EC with statistics regarding awards of contracts for year 2004 or 2003, 
detailed by type of contracts (works, supplies, services), tendering procedure (open, selective) and 
origin (international, local)? 
Answer:   
The detailed consolidated on a country basis sta tistics about the government contracts are not yet 
available due to the lack of reporting and centralized  data collecting system of public procurement in 
Mongolia.  However, the Government Action Plan a ddresses this issue and the Ministry of Finance 
with the World Bank assistance will develop and intr oduce Procurement Management and Monitoring 
system in 2005-2006.  The open tendering, as a basic tendering method under the national 
procurement law, is most common procedure in the local procurement.  Almost all projects funded by 
the Official Development Assistance, which comp rises one third of the total annual procurement 
award their contracts through international tendering. 
11. Question by the EC:  
Price preferences for local goods (10%) or se rvices (7,5%) are currently applied (Page 35, 
paragraph 44 of the report prepared by the WTO secretariat).  To which extent would the Mongolian 
authorities be willing to eliminate these restri ctions and within which time frame?  
Answer :  
If Mongolia starts to take steps to join the GPA,  the domestic price preference will be subject to 
discussions and obviously further elimination consider ing the policy achievements and other factors.  
The level and time frame of changing or eliminati ng the domestic preference is not defined by the 
relevant authorities yet. 
12. Question by the EC:  
Mongolia is a developing country with high growth.  Looking at the overall policies of Mongolia:  
What plans does Mongolia have for further adoption of policy strategies in order to meet her aim of assuring sustainable development?  
Answer:
  
With a view to attain its sustainable developm ent objectives, the government of Mongolia (GOM) 
formulated a number of policy documents in the p ast, encompassing the economic and social policy 
objectives and measures for the medium and long- term and continues to pursue them with 
determination.  Among others, th e medium and long-term devel opment policy documents include 
“The Development Concept of Mongolia” (1996), “Mongolia’s Sustainable Development Program for 
XXI century” (1998), “Good Governance for Hu man Security Program” (2000), “Regional 
Development Concept” (2002), “Economic Grow th Support and Poverty Reduction Strategy  WT/TPR/M/145/Add.1 
 Page 9 
 
 
Paper” (2003).  Some of these documents are to be  revised and updated in the coming years to reflect 
the latest developments in the economy and redirect ions in the Government’s policy priorities.  For 
instance, the GOM plans to update its main de velopment policy document “Economic Growth 
Support and Poverty Reduction Strategy” in 2005.  The strategy provides sound basis for the 
development assistance of the donor community  and focuses on the following critical issues: 
− To ensure macroeconomic stabilization an d improve the efficiency of the public 
sector; 
− To carry out institutional reform and improve the regulatory framework with a view 
to complete the transition process, to en courage the private sec tor to become an 
engine for development; 
− To promote sustainable development th rough pursuing environmentally friendly 
policies; 
− To create an equitable environment for human  development, to im prove all levels of 
education, its quality, health service provi sion and its accessibility, and ensure fair 
and appropriate redistribution of benef its of growth among the population, and 
− To improve governance and gender equality. 
According to the decree issued by the President of Mongolia in 2002 to develop and implement the 
National Development Program of Mongolia with a view to assess the country’s development achievements in 2021 or at the 100
th anniversary of Mongolian People’s Revolution, the National 
Development Program has been formulated by the GOM and will be  approved by the Parliament 
soon.  The program was developed in line with internationally accepted sustainable development 
principles, including the efficient use of natural resources, environment protection discussed at the UN’s conference on “Environment and Development” held in Rio De Janeiro in 1992, as well as 
development challenges, ideologies proposed by  the Johannesburg Summit 2002 – the World Summit 
on Sustainable Development – held in South A frica.  The program envisages specific actions, 
objectives to attain until 2021 for sustainable deve lopment, and outlines a strategy of holistic 
development that socially equitable, economically advantageous and environmentally sustainable.  
The main objectives of the Government for the period of 2004-2008 are:  
− upgrade the quality of public service to a new level by strengthening the capacity and 
accountability of public service instituti ons and civil servants, expanding civil 
participation at all levels of decision-making and ensuring transparency;  
− deepen legal reforms in all spheres of  political, economic and social life and 
substantially improve standards for ensu ring human rights and creating safe living 
environment; 
− sustain higher rates of stable, private sector-led economic growth by providing 
support for access to new markets on the basi s of knowledge and information, and by 
implementing a regional development concep t to reduce disparities in development 
between urban and rural areas;  
− conduct social policy aimed at improving living standards of families and households 
by providing them with a stable legal e nvironment, adequate infrastructure and a WT/TPR/M/145/Add.1 
Page 10  
 
financial environment conducive for accumulating savings, owning, possessing and disposing immovable property such as land and houses;  and 
− carry out human development policy aime d at educating citizens who respect 
education, culture and their national traditional heritage, and who are highly 
conscious about protection of the natural e nvironment, values of democracy and their 
own rights, and who are able to contribute to the development of their country by 
taking advantage of various opportunities provi ded by the globalization process.      
13. Question by the EC: 
 
The EC should like to ask how the issue of trade  and sustainable development fits into Mongolia’s 
overall development strategies.  Is  trade a core issue in the Action Program and in other development 
plans? 
Answer:   
Trade is one of the core issues in the G overnment Action Plan for 2004-2008.  Mongolian 
Government intends to ensure an economic growth through effective trade policy.  See the answer to 
the above question. 
14. Question by the EC:  
The EC has noted that Mongolia has adopted an Action Programme for 2004-2008 aiming at 
promoting active growth through an  active trade policy, also aimi ng at promoting production sectors 
and establishing free trade agreements.  In contin uation the EC should like to ask the following 
questions regarding Mongolia’s strate gy for trade and development.  
How is the issue of trade being dealt within Mongo lia’s national strategies?  Are the strategies based 
on the possibilities for advancing the country’s devel opment objectives in the context of increasing 
globalization through trade? 
Answer:   
The Economic Growth and Poverty Reduction St rategy (EGPRS) known in Mongolia as the 
Economic Growth Support and Poverty Reduction Stra tegy (EGSPRS) is a strategy paper, which 
presents main policy direction of the government for the medium term with a focus on economic 
growth acceleration and poverty reduction efforts. 
Specifically, one of the EGSPRS goals is to recover and develop national industry to ensure economic 
growth through export-oriented industry.  
The vision of Mongolia’s development is premised on a consensus of all stakeholders, including the 
government, civil society and the private sector.  Th e business plan for the medium term of entities is 
becoming an efficient mechanism to link this long term development vision with sectoral priorities – 
feed back loops regarding financial resource issues  is provided by a much improved medium term 
budget framework.  This sequence of activities a nd their linking will provide a base for the 
formulation and implementation of pro-poor policies.  The main objectives of the medium term plan 
will be included in the EGSPRS, and its implem entation and monitoring will be done through annual 
Socio-Economic Guidelines and the Action Program of the Government.  WT/TPR/M/145/Add.1 
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15. Question by the EC:  
One of the three pillars of sustainabl e development is the social dimension.  In this context the EC is 
encouraged to note that the Mongolian government is committed to ratifying the two outstanding core 
ILO Conventions [n°s 29 and 105 on forced and compulsory labour] and that the necessary process in the Mongolian Parliament is already underway.  Could Mongolia please inform the EC on the 
status of the ratification of the Conventions, and  when she expects that the ratification will be 
finalised?  Furthermore, how does Mongolia intend to ensure the implementation of the Conventions? 
Answer:
  
The Parliament of Mongolia has ratified the co re ILO Conventions (No. 29:  Forced Labour 
Convention, and No. 105:  Abolition of Forced Labour Convention) on Febr uary 24, 2005, and the 
Instrument of Ratification of above Conventions has been submitted to the ILO on March 15, 2005. 
Subsequent measures will be take n to ensure the implementation of the Conventions, i.e. amendments 
to the necessary laws will be made. 
16. Question by the EC:  
The importance of linking trade with sustainable domestic policies, and in particular employment 
related matters and core labour standards, was confirme d last year by the Final Report of the World 
Commission on the Social Dimension of Globalisation.  The EC is happy to see that the sustainability 
seems to be an aim for Mongolia in its trade poli cy.  Could Mongolia please clarify how she intends 
to follow up the various programmes which have be en implemented to increase employment and to 
assure that the core labour standards are followed?  
Answer:  
Amendments made to a number of employment related laws and progr ams have brought some 
effective results in increasing employment, in improving labour conditions and in assuring the consistency of labour standards with international standards. 
The Government of Mongolia is taking active meas ures to make amendments to the “Law on Sending 
Labour Force and Receiving Labour Force and Speci alists from Abroad”, the “Law on Employment 
Promotion” and the “Law on Labour”, and to im prove the “National Program for Employment 
Promotion”, as well as to introduce and implem ent new subprograms within its framework.  
In addition, the Government is preparing to submit to the Parliament the “State Policy on Unofficial 
Employment” and the “National Program on Improving the Safety  and Healthy Environment of 
Labour”. 
With the practical assistance of th e ILO the Government is also working to adopt the “National Plan 
of Action for Proper Employment” and has concl uded a tripartite agreement on labour and social 
consensus.  
The labor market has expanded its services in the last 4 years, contributing to the economy.  In 2004 
the number of vacant positions received by the Labor Employment Office doubled, the number of people employed through the Office increased by 2.6 times, the number of vocational trainees by 4 
times and as a result, the unemployment rate dropped from 5.5% in 1995 to 3.5% in 2003.  WT/TPR/M/145/Add.1 
Page 12  
 
17. Question by the EC: 
 
According to the WTO Secretariat Report (page 22) , technical assistance from various sources has 
been instrumental in supporting Mongolia’s transition to a market-based economy and open trade 
regime.  How does Mongolia perceive the relatio nship between trade and aid, and how does 
Mongolia see that trade component in relation to general development programmes? 
Answer:  
Mongolia considers aid to be one of the most important components in the implementation of 
economic reforms, including the liberalization of fo reign trade regimes.  As a result of prominent 
measures taken by the Government in overcoming the transition difficulties, Mongolia has become 
one of the liberal trade regimes.  Foreign aid, provided by international organizations and donor 
countries during the transition period from centrally  planned economy to market economy was one of 
the main factors for achieving these results.  While  recuperating the economy, Mongolia was in a 
desperate need of foreign aid during the last 10 years.  We consider that the role played by foreign aid 
in small economies like Mongolia is indispensable.  Th erefore, the country would need foreign aid for 
maintaining and further ensuring the sustainable development of the country.  
Trade is one of the main parts of the Government ’s Action Plan for the period 2004-2008.  A number 
of policy documents such as “The Development Concept of Mongolia”, “Mongolia’s Sustainable Development Program for XXI century”, “Regiona l Development Concept” and “Economic Growth 
Support and Poverty Reduction Stra tegy Paper” have been adopted  and necessary actions are being 
carried out to ensure the implementation of the programmes.  
18. Question by the EC: 
 
While noting that a Needs Assessment will be made by the World Bank, the EC should like to invite 
Mongolia to give a more comprehensi ve overview of her own percepti on of the her needs i.e. sectors 
to be prioritised, and how the technical assistan ce is planned in relation to Mongolia’s overall 
strategy for reduction strategy.  Are there area s where Mongolia has concluded that development 
cooperation focusing on trade should be improved and/or reinforced? 
Answer:  
The Government has identified the priori ty sectors for development in 2002 to be  mining, agro-
industry, tourism and IT.  The sectors are due to revision and defining the sectors, which are fundamental for further development and poverty redu ction and which need a particular attention and 
technical assistance is under consideration.  
As for the trade areas that need to be improved a nd/or reinforced, capacity building is an important 
area.  The Government of Mongolia has in the past  implemented projects in trade with the assistance 
of international donors such ADB, UNDP, ITC and the German Government (see the Government 
Report).  However, building the capacity requires con tinuous efforts and there is a need for a strong 
research institution (institute) with qualified special ists, which would be able to make market and 
other trade-related research.  The TA also is n eeded to ensure the implementation of the DDA, to 
build the capacity in  trade policy formulation, trade negotiations and reducing trade dependency.  
19. Question by the EC: 
 
Does Mongolia intend to sign the Convention on Corruption and if so in which time frame?   WT/TPR/M/145/Add.1 
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Answer:   
The Mongolian Parliament will discuss the Anti-Corr uption Law during its spring session in 2005.  At 
present the Ministry of Foreign Affairs is working on this issue.  The MFA has requested relevant 
ministries, agencies and other offices to provide th eir comments concerning this issue and it is under 
consideration at this time by government officials. 
II. TRADE POLICY  
20. Question by Brazil:  
According to Chart III.1 of the Secretariat Report (p.26), Mongolia applies a practically uniform 
tariff at 5%.  What have been the consequences of such policy? 
Answer:  
Mongolia has applied the uniform tariff of 5% since 2002.  This shows on the one hand, that 
Mongolia is committed to a more liberal trading re gime.  On the other hand, such a low tariff is 
followed to promote the capacity of producers and traders to allow them to compensate for high 
transit transportation costs, to maintain a low level of consumer prices, to improve the availability of 
cheaper consumer goods to consumers, to facilitate  the importation of machinery and equipment to 
allow technological renovation of domestic producers.   However, the Government aims to impose 
differentiated import duties in order to promote domestic production, encourage the transfer of 
advanced technology, as well as for the concerns rela ted to food security and better quality foodstuffs. 
Consequences: as to trade figures, imports in 2002 increased by 8%, in 2003 by 26% and in 2004 by 
59% compared to that of 2001, thus worsening the trade deficit.  In 2001, the trade deficit equalled 
USD 116.2 million, in 2002 it reached USD 166.7 million and in 2003- USD 185.1 million.  
However, in 2004 due to the increase of exports, the trade balance has shown some improvement 
amounting to USD 158.3 million. 
Overall economic gains are evident.  The r eal economic growth in 2004 reached 10.6%. 
21. Question by Canada:  
Report by the Secretariat (WT/TPR/S/145).  Part II I. Trade Policies and Practices by Measure, (4) 
Measures Affecting Production and Trade, (i) Promotion of inward foreign direct investment, 
Paragraph 59:   How did Mongolia decide which sectors w ould be designated “priority sectors” for 
raising production and investment?  
Answer:  
The priority sectors are: 
− Mining; 
− IT; 
− Agro-industry; 
− Tourism. WT/TPR/M/145/Add.1 
Page 14  
 
What criteria were used?  
Answer:
  
Criteria: 
1) Share of the sector in the Mongolian economy; 
2) Resource endowment; 
3) Share of the sector in the employment; 
4) External and internal mark ets for the products to be introduced and prospects 
of the markets; 
5) Extent of adding value. 
What are the reforms used to attract investment?  
Answer:   
We view that the mechanism of attracting investment into Mongolia is the security and stability in the 
country.  This is the primary mechanism; therefore, we rely on this security and stability rather than 
continued reform and changes.  However, we en visage that some tax incentive may prove to be 
useful to certain sectors of greater significance to Mongolia's development.  Specification of priority 
sectors is but one example of encour aging investment in certain sectors.  We are planning to maintain 
this approach for a long term which means again it cons titutes rather stability and not continued reforms. 
Are these measures by sector?   
Answer:   
The incentives are industry specific. 
Are they publicly available? 
Answer:   
They are publicly available. 
22. Question by the USA:  
Measures Affecting Production and Trade – Promotion of Inward Foreign Direct Investment.   
Paragraph 61 on page 38 of the Secretariat Report id entified that Mongolia provides ten years of tax 
exemption and 50% tax relief for the subsequent five years for foreign investment in power and thermal plants and their transmission networks,  highways, railways, airways and engineering 
construction, basic telecommuni cations network, electricity source and network, and technology 
renovation; and five years of tax exemption and 50% ta x relief in the subsequent five years for FDI in 
oil and coal, metallurgy, chemical production, machinery, and electronics.  
A) Do any of these incentive programs require ex ports, trade balancing, or the use of local 
content?  WT/TPR/M/145/Add.1 
 Page 15 
 
 
Answer:  
There are no trade balancing, or lo cal content requirements that would be in conflict with the TRIMs.  
However, there is an export requirement by virtue  of Article 7.6 of the Law on Economic Entity and 
Organization Income Tax, wh ich was amended in 2000.  
B) Have any of these programs involving goods b een notified to the WTO under Article 25 of the 
Agreement on Subsidies and Countervailing Duties? If not, why not? 
Answer:  
Notifications under Article 25 of the ASCM were  submitted to the Secretariat in August 2004 
covering the period from 2000 through 2004.  
Mongolia made an application to the Committee on Subsidies and Countervailing Measures in 2002 
to extend the period of elimination of export subsid ies based on Article 27 of the ASCM.  So far no 
reply was received.  
Additionally, the Government has an intention to apply for its inclusion in the list of countries in 
Annex VII of the ASCM. 
23. Question by Brazil:  
Report by the Secretariat (WT/TPR/S/145).  In Paragraph 20 of Section I of the Secretariat Report, it 
is stated that further improvements  will be required in Mongolia’s c apacity to attract FDI.  In that 
regard, what measures is the Government of Mongolia  adopting or is intending to adopt in order to 
attract FDI, particularly regardi ng the important textile sector? 
Answer:   
Promoting FDI is one of the major tasks of the Government of Mongolia.  In this respect, the 
Government in its Action Programme stated to creat e an environment that protects FDIs, within the 
framework of which it has the intention to contin ue concluding Agreements on the Promotion and 
Mutual Protection of Investment with our trad ing partners, improve the national capacity of 
investment promotion, establish free trade and economic  zones and industrial parks, carry out targeted 
investment activities, improve post-investment servi ces, improve competitive environment for FDIs.  
On 27 June 2001, the Government in its Resolution No.140 approved a list of priority sectors for FDI 
attraction.  The equipment and machinery to be  used and assembled for technological purposes in 
production brought into Mongolia by foreign investors in a priority sector are granted customs duty 
and VAT exemptions.  At present, a working group is revising the list.  
As regards the textile sector, the Government is  taking a number of measures directed towards 
improving the market access for Mongolian textiles, including an intention to negotiate a free trade 
agreement with the US, the major export destination of Mongolian te xtiles, as well as petitioning the 
EU GSP scheme. 
Domestically, the Government has decided to rela x 50% from the social insurance premium rate of 
the employer from 19% down to 9.5%.  Additiona lly, imported production inputs and accessories are 
made exempt from customs duty and the VAT. WT/TPR/M/145/Add.1 
Page 16  
 
24. Question by the EC: 
 
Which economic fields has Mongolia identifie d to attract trade related FDI?  
Answer:  
The Mongolian Government has approved the priority  sector for FDI in 2001.  The main sectors are 
mining, IT, agro-industry and tourism. 
25. Question by Hong Kong, China:  
(WT/TPR/G/145, P. 11, Para. 44).  We note that Mongolia plans to carry out a policy that creates 
incentives for and protects foreign investment.  We sugg est Mongolia to consider injecting sufficient 
degree of transparency and consistency into relevant  measures to enhance their effectiveness.  We 
would like to know more about the measures under the policy. 
Answer:   
We would appreciate if the Hong-Kong delegation would elaborate more on how we could inject 
sufficient degree of transparency and consistency into the foreign investment promotion measures.  
Up until now we have not heard any comments or complaints from a foreign investor as to the 
transparency and the consistency of these particul ar measures.  We have had many comments and 
critical notions as to the transparency and the cons istency of various other la ws of Mongolia though.  
Therefore, if there are any suggestions on further increasing the transparency and the consistency we 
would be looking forward to considering those suggestions. 
26. Question by Canada:  
Report by the Secretariat (WT/TPR/S/145). Part III.  Trade Policies and Practices by Measure, (4) 
Measures Affecting Production and Trade, (i) Promotion of inward foreign direct investment, 
Paragraph 63:  Could Mongolia elaborate on its policy of negotiating “stability agreements” 
between the government and foreign investors?  Are there any performance requirements attached to 
signing a “stability agreement”?  For example, in order for a foreign investor to benefit from a 
“stable tax environment”, is there a requiremen t that the foreign investor employ a certain 
percentage of Mongolia workers or to source thei r production inputs from local suppliers?  Are 
“stability agreements” negotiated for a specific period of time, or are they indefinite?  
Answer:   
In order to facilitate more favourable environment for foreign investors the Government of 
Mongolia developed the Concept of Stability Agre ement and incorporated it into its Foreign 
Investment Law and Minerals Law.  The primary purpose of the stability agreement is to ensure an 
investor that the environment and the regime within  which that investor made a decision as to the 
investment stays stable for a certain period of time.  The stability agreement is negotiated on behalf of 
the government by the Ministry of Finance. 
No performance requirements are attached to signing the stability agreement.  Based on the 
stability agreements already concluded which constitutes the established practice of concluding such 
agreements based on the principles embedded in the Foreign Investment or Mining law, there is no 
performance requirements attached to the singing of the agreement.  WT/TPR/M/145/Add.1 
 Page 17 
 
 
27. Question by Canada:  
Report by the Secretariat (WT/TPR/S/145).  Part II I. Trade Policies and Practices by Measure, (4) 
Measures Affecting Production and Trade, (i) Promotion of inward foreign direct investment, Paragraph 65:  In its efforts to establish “industrial and technological parks” does Mongolia require 
foreign investors to transfer their technology to dom estic firms or investors?  How is technology 
transfer otherwise encouraged?  
Answer:   
Mongolia does not require foreign investors to transfer their technology  to domestic firms. 
However, it is our firm belief that through the direct cooperation and interaction in industrial parks 
the transfer of technology and “know-how” occurs wi thin the framework of intellectual property rights 
and confidentiality related laws and contracts. 
28. Question by Canada:  
Report by the Secretariat (WT/TPR/S/145). Part III.  Trade Policies and Practices by Measure, (4) 
Measures Affecting Production an d Trade, (iii) Intellectual property rights, Paragraph 72:  
Keeping in mind that the Agreement on Trade-Rel ated Aspects of Intellectual Property Rights 
expressly recognizes that intellectual property righ ts are private rights, could Mongolia please 
provide more details about the Intellectual Propert y Office’s role in enforcing intellectual property 
legislation and examples of en forcement measures it may carry out?  
Answer:   
Under the new amendments on Copyright and Patent Law of Mongolia in 1999 a new system on 
Enforcement of IPRs is established.  The state in spector of Intellectual Property Office of Mongolia 
(IPOM) has the right to impose a fine an offending  person or business entity or organization and has 
the right to seize the infringing goods and destroy them.   
Since its establishment, the State Intellectual Property Inspection serving as an administrative 
enforcement unit inspected the practices of 1,235 enterprises and determined 774 infringements of 
intellectual property rights. As the result of  enforcement actions, counterfeit goods totaling 
100.0 mln tugrugs were disposed and 75 citizens and officials were fined by up to 13 mln tugrugs.  
For example:  APU company was fined 50 thousand tugrugs and 60.0 mln tugrugs worth of counterfeit goods, bearing COCA-C OLA trademark, were seized. 
29. Question by Canada: 
 
Report by the Secretariat (WT/TPR/S/145). Part III.  Trade Policies and Practices by Measure, (4) 
Measures Affecting Production and Trade, (iii) Intellectual property rights, Paragraph 72:  Given 
that the Intellectual Property Office not only grants e xclusive rights related to intellectual property in 
Mongolia, but also enforces intellectual property legi slation and settles disputes in this regard, what 
is being done at the Intellectual Property Office to ensure that applications, dispute settlements and 
enforcement measures are dealt with in an impartial manner?  
Answer:   
According to the Patent Law and Trademark a nd Geographical Indications Law of Mongolia, the 
IPOM examines and files appeals in connection with the examination of an application for invention 
or industrial design and trademark.  Also IPOM re ceived and dealt with around 900 applications from WT/TPR/M/145/Add.1 
Page 18  
 
IPR owners, whose rights were infringed.  A pplications, dispute settlements and enforcement 
measures are dealt with in an impartial manner.   
30. Question by Canada: 
 
Report by the Secretariat (WT/TPR/S/145).  Part II I. Trade Policies and Practices by Measure, (4) 
Measures Affecting Production and Trade, (iii) Intellectual property rights, Paragraph 73:  Could 
Mongolia provide more details on its legislation defin ing the protection of the rights of broadcasting 
organizations? 
Answer:   
Besides the Copyright Law, the Parliament of Mongolia recently adopted the Law on Public 
Television.  This law provides more detailed re gulation defining the protection of the right of 
broadcasting organization.  
Moreover, IPOM is drafting amendments to the Co pyright Law and preparing regulations to protect 
the rights of broadcasting organizations.  
31. Question by the USA:  
Measures Affecting Production and Trade – Intellectual Property Rights.  With respect to  
paragraph 72 on page 39 of the Secretariat Report c oncerning TRIPS compliance, please provide us 
with any laws, rules, decrees, bulletins, etc. from pertinent institutions indica ting that the Government 
of Mongolia protects test data and other informatio n, submitted to health authorities as a condition of 
approving the marketing of pharmaceutical or agricultural chemical products, against unfair 
commercial use by third parties, pursuant to TRIPS Article 39.3.  
Answer:  
The Law on Organizations’ Secrets is in force since 1995.  The Law regulates the protection of 
organizations’ secrets. Article 3.1.2. provides that “a secret of an organization means any information, 
document and tangibles that are identified as secret in order to protect ……  the legal interests of any organization”.  Further Article 3.2 stipulates: “a s ecret of an organization also comprises of any  
information, technological plan or design, proj ect, documents and data on studies and tests and 
equipment that are identified as secret by any organization in order to protect its own competitiveness 
and from unfair marketing, the disclosure of which is  considered to harm its legal interests.”  The 
organization itself identifies such information, technological plan or design, project, documents and data as secret. (Article 4.2) (The La w is available in Mongolian language) 
32. Question by the USA: 
 
Measures Affecting Production and Trade – In tellectual Property Rights – Copyrights. Referring to 
paragraph 73 on page 40 of the Secretariat Report, pl ease describe what efforts have been made to 
enforce Mongolia’s new copyright law, including  the number of criminal prosecutions and the 
sentences handed down to convicted infringers.  
Answer:   
No data of criminal prosecutions on the Enforcement of the Copyright Law.  WT/TPR/M/145/Add.1 
 Page 19 
 
 
33. Question by  the USA:  
Measures Affecting Production and Trade – Intellectual Property Rights – Patents.  With respect to 
paragraph 74 on page 40 of the Secretariat Report, TRIPS Article 27(3) (b) requires that members 
provide protection to plant varieties either by pat ents or by an effective sui generis system or a 
combination of both.  How does Mongolia comply with this provision?  
Answer:   
Problems of plant varieties are regulated by a separate law, Law on Plant Varieties of Mongolia. 
Under Article 6.1.2. of the Law, the author of ne w plant varieties may apply to register his/her new 
plant varieties to the Counsel of varieties.  Article  4 of the Patent Law provides that, microorganisms  
shall not be considered to be inventions.  This shall not include non- biological, or microbiological 
processes.  According to this provision, plant va rieties are not subject to patent protection. 
34. Question by the USA:  
Measures Affecting Production and Trade – In tellectual Property Rights – Enforcement.  In 
paragraph 112 of the Mongolian Government's re port, (WT/TPR/G/145), it states, "technical 
assistance is required from the WTO in these particul ar enforcement measures".  Please provide more 
details on the scope and type of technical assist ance that Mongolia is seeking to improve its IPR 
enforcement.  
Answer:   
Examples of needs identified for technical assistance from the WTO concern the training on 
enforcement of IPR for state inspectors, lawyers, officers of police and judges;  training on dispute 
settlement mechanism for lawyers and capacity bui lding on the information and training center of 
IPR.  We wish to participate in the Technical Assistance Program of the WTO on IPR Enforcement. 
35. Question by the USA:  
To assist the Secretariat and Members in eval uating Mongolia’s IPR enforcement technical 
assistance needs, we request that Mongolia provid e the following information to augment that found 
in paragraph 79 on page 41 of th e Secretariat Report, including: 
1) more details of Mongolia's system of criminal enforcement against IPR infringements 
(as required by TRIPS Article 61); 
2) the provisions in Mongolian law relating to  the disposition of seized IPR infringing 
goods and equipment (as required by TRIPS Article 46); 
3) the Customs IPR provisions contained in  Mongolian law (as required by TRIPS 
Articles 51-60);  and 
4) more detailed information on Mongolian laws and procedures for "Provisional 
Measures", injunctions and ex-parte ruli ngs, for IPR holders (as required by TRIPS 
Article 50).  WT/TPR/M/145/Add.1 
Page 20  
 
Answer:
  
1) Articles 140, 141, 168 of the Criminal Law of Mongolia provide 
  "140. Infringement upon copyright 
  140.1. Issue under one’s own name, illega l reproduction or dissemination, sale of 
somebody else’s work or forcing to co-authorship, or other appropriation of a 
copyright for such work that has caused to  the author damage in a large amount shall 
be punishable by a fine equal from 100 to 250 amounts of minimum livelihood standard or by incarceration for a term of 3 to 6 months. 
  ..141.1. Infringement upon the inventor’s  right of invention or patent holder’s 
right  
  141.1. Dissemination of the invention prior to obtaining of the respective right by the 
author, issue under one’s own name, pub licizing these without the author’s 
permission, forcing to co-authorship, or causing of damage in a large amount in other forms shall be punishable by a fine equal from 100 to 250 amounts of minimum livelihood standard or by incarceration fo r a term of more than 3 to 6 months. 
  ..168. Illegal use of trademarks and names of business entities 
  168.1. Causing of damage in a large amount to others by forgery of a trademark, use 
of a trademark or name of a foreign or  domestic business entity that engages in 
manufacture of similar product shall be puni shable by a fine equal from 100 to 250 
amounts of minimum livelihood standard , 100 to 200 hours of forced labor, 
incarceration for a term of up to 2 years."  
2) According to Article 28 of the Patent Law of Mongolia  
..If a breach of the patent legislation does not result in criminal liability, a state 
inspector or a judge shall cease production and shall destroy the infringing goods. 
  Under Article 24 Copyright Law of Mongolia    If a breach of the legislation on copyright is  held not to constitute a criminal offence, 
a state inspector or a judge shall cease production and shall destroy the infringing 
goods. 
  Article 30 of the Trade mark and Geographi cal Indication Law of Mongolia provides     
 30.1. Where a violation of the legislation on trademarks and geographical indications 
is held not to constitute a criminal offe nce, a state inspector shall impose on an 
offending natural person or bus iness entity or organization a fi ne of up to 50 000 or 
250 000 togrogs respectively; a judge shall impose on an offending person or 
business entity or organization a fine of up to 500 000 or 2 500 000 togrogs respectively and shall order to grant gains received from unlawful use of a trademark or geographical indication to the trademark owner or user of the  geographical 
indication, or to confiscate gains received from the product sales in favor of the State 
and suspend the production or service activities.  WT/TPR/M/145/Add.1 
 Page 21 
 
 
3) Articles 6.1.1 and 14 of the Customs Law of Mongolia  
  Article 6. Periods for Which Goods or Means of Transport Are Subject to Customs 
Control 
  1. Goods or means of transport crossi ng the customs frontier shall be subject to 
customs control for the following periods: 
  1) for goods cleared for home use – from the time they enter the 
territory of Mongolia until customs gives permission to import them into the customs territory;  
  2) for goods or means of transpor t temporarily imported – from the time 
they enter the territory of Mongo lia until customs gives permission to 
introduce them into the customs territory ; and where they have already been 
introduced so without payment of customs duties and other taxes – from the time they enter the territory of Mon golia until they return through the 
customs frontier; 
  3) for goods or means of transpor t in transit, where they are in the 
through transit – from the time they ente r the territory of Mongolia until the 
frontier customs office at their point of exit gives permission for them to 
leave the territory of Mongolia;  where they are in the inward transit – from 
the time they enter the territory of  Mongolia until they arrive at the 
designated inland customs office;  where they are in outward transit – from the time they are declared to the inland customs office until the frontier 
customs office at their point of exit gives permission for them to leave the 
territory of Mongolia;  where they are in  internal transit – from the time they 
leave the inland customs office of depa rture until they arrive at the inland 
customs office of destination; 
  4) for goods transshipped – from the time they enter the territory of 
Mongolia until the time they leave the territory of Mongolia; 
  5) for goods cleared for outright exportation – from the time they are 
declared to the customs until the fron tier customs office gives permission for 
them to leave the territory of Mongolia; 
  6) for goods or means of transport temporarily exported – from the time 
they are declared to the customs until the frontier customs office gives 
permission for them to leave the territory of Mongolia;  where they have left 
the customs territory without payment of customs duties and other taxes (if applicable) – from the time they leave the territory of Mongolia until the time 
they return through the customs frontier. 
  Article 14. Temporary Admission into the Customs Territory of Goods and Means of 
  Transport 
 1. Under this procedure foreign goods or means of transport may be introduced into 
the customs territory on the basis of customs documents, without altering and after levying and paying of applicable customs duties and other taxes, under the condition of their timely return. WT/TPR/M/145/Add.1 
Page 22  
 
  2. Where necessary, the customs state cen tral administrative body may extend once 
the term of return of goods or a means of transport introduced into the customs 
territory in accordance with paragraph 1 above by up to 6 months. 
  3. Goods or means of transport temporar ily admitted into the customs territory may 
not, during the specified period, be used fo r any purposes other than the authorised 
ones or undergo any alteration other than their normal depreciation. 
4) Article 69.1 of the Law on Resolving Civil Cases in Courts provides that “a judge, on 
the application or request of a plaintiff, by his/her order may take following measures to secure implementation of Court decision upon or after initiating a case:  imposition of an arrest on money or property belonging to the defendant for the sum equal to 
sum of a claim;  prohibiting the defendant from doing certain acts related to its 
property (for the sum equal to sum of a claim);  halting expenditure transaction of defendant's account (for the sum equal to sum of a claim);  requiring an advance 
payment of money demanded by a claim in to Court decision implementation deposit 
account”.  
  Article 69.5 further provides that “When ta king measures specified in paragraph 1 of 
this Article a judge shall not cause con sequences such as interruption of normal 
production and service activities, closure of an  income source or deterioration or loss 
of quality.” 
36. Question by Brazil: 
 
As regards paragraph 43 of Section IV of the Secretariat Report, what measures is Mongolia 
considering to take in order to avoid the adverse e ffects from the abolition of US quotas in 2005? 
Answer:   
Abolition of quotas on textiles is expected to have  negative effects on the industry.  In Mongolia, 
there are near 100 factories, about 80% of which ar e foreign-invested, employing in total more than 
30 000 employees, mainly women and exporting more than 90% of their products.  Textile exports 
amount to about 15%-17% of total exports.  The consequences of the quota abolition are a very much 
outspoken subject.  In order to maintain this indus try, the Government of Mongolia is taking a number 
of measures directed towards improving the ma rket access for Mongolian textiles, including an 
intention to negotiate a free trade agreement with  the US, the major export destination of Mongolian 
textiles, as well as petitioning the EU GSP scheme. 
Domestically, the Government has decided to rela x 50% from the social insurance premium rate of 
the employer from 19% down to 9.5%.  Additiona lly, imported production inputs and accessories are 
made exempt from customs duty and the VAT. 
37. Question by Brazil:  
Mongolia still does not have a definitive governmental body in charge of enforcing.  The Law of 
Mongolia on Prohibiting Unfair Competition, whic h was adopted in 1993 a nd amended in 2000.  
However, a provisional Unfair Competition and Re gulation Authority is being established.  This 
authority is to be responsible for the enforcement of  the legislation, as well as for the prohibition, 
restriction and curbing of activities harmful for compe tition.  It would also be in charge of the 
inspection and issue of conclusions on activiti es of entities conducting business activities;  and  WT/TPR/M/145/Add.1 
 Page 23 
 
 
determining market dominant companies (Secretaria t Report, p.43, paragrap h 85).  Will such body 
also carry out technical evaluation and hazards  assessment regarding monopolies in Mongolia? 
Answer:  
Unfair Competition Regulatory Authority is a regul ar agency established in November 2004 by the 
Government Resolution No 222 to implement a Law on Prohibiting the Unfair Competition.  It is not 
a provisional body.  The agency is also responsible for price regulation of the natural monopolies.  
The relevant sectoral regulating bodies and the Stat e Specialised Inspection Agency of Mongolia are 
responsible for technical evaluation and hazards a ssessment regarding natural monopolies as well as 
other companies.   
38. Question by the EC:  
The EC welcomes the Trade Facilitation reforms  in Mongolia, including those concerning 
accelerated customs procedures for best performing companies; the establishment of “one-stop” 
services at major customs points;  and automation.  What is Mongolia’s experience of these reforms 
in practice?  
Answer:   
Priority in customs operations is given to fac ilitation of trade flow and safeguarding the society 
against transnational threats.  That is why our cu stoms officers should be aware of the new challenges, 
the profound and sensitive role of the customs servi ce and it is necessary to improve their computer 
literacy and foreign language skills to carry their mission and responsibility. 
The Mongolian Customs has made notable advancemen ts at the national level in employing modern 
computer systems for trade excha nges, clearance of goods and tran smission of trade-related data 
between the Customs headquarters and customhouses f acilitating exports and imports.  This is a first 
step for activating electronic customs service, which allows to replace paper documents with electronic declarations.  The Mongolian Customs re cognizes the IT development as a key factor for 
trade facilitation and timely exchange of information between the customs and traders.  That is why a 
new software GAMAS, customs automated data processing system was developed by our experts and 
introduced into operation from 1 January 2003.  This system replaced ASYCUDA system, which was 
used since 1996.  In order to facilitate trade the customs introduced a single window service at border 
customhouses.  It allows business people to save time.  At the same time we try to introduce paperless 
declaration through networking system between customs and biggest traders receiving electronic data from our customers or sending customs clearance instructions to them electronically.  Further we are planning to use on-line payment of duties and taxes collected at the customs.  In order to improve our 
cooperation with business sector we updated our website in order to provide with timely and accurate 
information on customs procedural acts and other needed  materials.  We try to maximize the use of IT 
for data capture, processing and exchange of inform ation not only within the customs also between 
the customs and business partners. 
Under the self-compliance initiative, the honest economic entities (best performing companies) or 
organizations are identified and are en titled for “green channel” clearance. 
Under the self-compliance initiative, the compan ies are granted and enjoy the following: 
− review of the Customs and other related la ws towards promotion of foreign trade or 
facilitation of international trade; WT/TPR/M/145/Add.1 
Page 24  
 
− official publication of statutory and regulatory acts with adequate period for entry 
into force; 
− general training for Customs officials and trade communities; 
− easy access to data bases and advices. 
39. Question by the EC: 
 
What plans does Mongolia have for further reforms?  Answer :
  
Further Mongolia is planning to use on-line payment of duties and taxes collected  at the customs.  In 
order to improve our cooperation with business sect or we updated our website  in order to provide 
with timely and accurate information on customs pro cedural acts and other needed materials.  We try 
to maximize the use of IT for data capture, processi ng and exchange of information not only within 
the customs also between the customs and business partners: 
− clear (unified) interpretation of provisions of Customs and other laws; 
− no or little bureaucratism; 
− quick and polite services; 
− gaining the confidence of business community; 
− exemplary performances, etc. 
Mongolian customs pays extensive attention to th e customs and business partnership recognizing it as 
an important tool for trade facilitation and ensuring security of trade supply.  We promote cooperative 
relationship with business community in order to ex change information regarding mutual concerns, 
establish official channels for c onsultation, sharing best practices  and sign cooperative agreements 
with them.  Especially we could improve our rela tionship with freight forwarders, customs brokers, 
importers, exporters and shipping companies.  
40. Question by the EC:  
What are Mongolia’s main concerns in the field of Trade Facilitation?  Answer:
  
The issue of transit transportation has always been in the center of the Mongolian attention, 
throughout her membership in the WTO.  We reckon that the further clarification of the GATT 1994 
Article V may represent one of the most prominent contributions that the WTO may make for the 
benefits of small, landlocked countries like Mon golia.  In this connection we stand for the 
crystallization and development of the rules and co mmitments embedded in the Article.  Incorporation 
of national treatment provision or the application of Special and Differentials treatment to small, 
landlocked and vulnerable economies may reduce th e unnecessary costs and burden of transshipment 
borne by such countries.  WT/TPR/M/145/Add.1 
 Page 25 
 
 
41. Question by the EC:  
A comprehensive reform and development plan could assist Mongolia in the upgrading of the 
capacity of the Government of Mongolia to underta ke it’s obligations in international trade related 
matters.  Does Mongolia consider that the Action Program meets these aims, and which steps have been taken in order to attract coordinated donor  involvement in support of the steps envisaged?  
Answer: 
 
In January 2005, an inter-ministerial working gr oup was renewed to address the issues of the WTO 
and ensure the implementation of Mongolia’s obligations. 
In order to improve the capacity of the country in international trade relate d matters, a German-funded 
project “International trade policy/WTO’ was implemented from 1998 to 2004 at the Ministry of 
Industry and Trade of Mongolia.  In view of still needed improvement of the national capacity, the 
Ministry of Industry and Trade is developing a pr oject on “Establishing a Trade Negotiating Unit” to 
improve trade negotiation capacity of trade expe rts to be presented to international donors. 
42. Question by the EC:  
The EC considers that the WTO and multilateral libera lization is the most certain way for small and 
medium sized countries to promote their interests.  How does Mongolia judge the relative importance 
and weight of bilateral/FTA policies and further devel opment of the WTO system in terms of its own 
trade and development needs? 
Answer:   
Mongolia is of the view that RTAs and multilateral trading system should complement each other to 
increase the economic growth and gains.  For a sm all economy such as Mongolia it is difficult to 
advocate on its own its interests in multilateral tr ade rounds or in accession negotiations.  Entering a 
regional agreement (especially with countries with  a common position) could increase its bargaining 
power in multilateral negotiations, ensuring better participation in multilateral trading system.  
Regional trading agreement can be used as means to  engage in broader regional discussions, which in 
the long run can lead to multilateral liberalization. 
Establishing FTAs could be beneficial to the deve lopment of the country.  Mongolia is dependent 
upon few export goods such as cash mere, copper and textiles.  Th e creation of FTAs with other 
countries would enable the development of our export-oriented sectors and increase their competitiveness, provide with more opportunities for economic growth and attraction of FDI. 
The Government’s Action Plan for 2004-2008 set to  start the negotiations of FTAs with its major 
trading partners, including the US, Russia, China and the EU. 
FTAs are to focus on specifi c areas that would advance Mongolia’s  national interest- import tariffs 
and other charges, quotas, transit and trade facilita tion issues, non-tariff barriers, FDI in priority 
sectors. 
Among the major trading partners the most attractiv e potential partners are the US, the PRC and the 
Russian Federation by virtue of their larger current  trade with Mongolia.  In this regard we believe 
that FTA negotiations between Mongolia and its larg er trading partners will be very important for 
Mongolia.  WT/TPR/M/145/Add.1 
Page 26  
 
Besides, Japan and the Republic of Korea may offer a higher potential for creating new trade 
opportunities.  
For a small economy such as Mongolia it is difficult to  advocate on its own its interests in multilateral 
trade rounds or in accession negotiations, and joining re gional trade agreements is one of the ways to 
ensure better participation in multilateral trading system. 
The benefits for Mongolia to join regional trade pacts include fostering regional cooperation on cross-
border issues and gaining experience in negotiating trade liberalisation on a limited scale as well as 
creating trade, reducing the costs of existing tr ade barriers for Mongolian exports and gaining 
concessional market access.  The success of joini ng a regional trade pact depends on the degree to 
which trade is complementary between Mongolia and the member countries of the regional trade pact.  
Although the Government of Mongo lia considers that the multilateral trading system is the system, 
which promotes the interests of all Members, we rec kon that developing bilatera l trade relations is an 
additional avenue, through which the economic deve lopment of a country may be reinforced.  The 
Government’s Action Program puts an objective of negotiating free trade agreements with our major 
trading partners. 
43. Question by the EC: 
 
How does Mongolia see the development of her trade policies in the context of the multilateral 
system?  
Answer:   
As set out in the Government Action Plan for 20 04-2008, Mongolia’s position in the international 
community will be strengthened and the national secu rity concept and principles of foreign policy in 
accordance with a new world order and country’s new environment will be pursued.  Independent, 
open, multilateral foreign policy will be conducted in compliance with the goals of sustainable 
development.  Principles of protecting national in terests as well as the legal interests of Mongolian 
nationals and entities in foreign countries will be insured.  
Further Mongolia will strengthen the existing bilate ral relations, take measures to extend markets, 
intensify Mongolia’s participati on in multilateral trading system, pursue an effective form of 
integration into regional cooperation, etc. 
44. Question by Japan:  
Report by Government (WT/TPR/G/145). V. Multila teral Trade Cooperation (1) Mongolia and the 
World Trade Organization, Trade facilitation (Page 20, para. 108).   The Report by Mongolia states 
that the Government of Mongolia considers that provision of special and preferential tariffs for 
transportation by transit countries to land-locked developing countries would greatly contribute to 
fair competition.  We are interested  in the background of this view. 
Please indicate which difficulties Mongolia actua lly faces in transportation by transit countries.  
Answer:   
Transit transportation is one of the major constraints faced by Mongolia in its international trade.  The 
landlocked nature of its geographical location cr eates negative impact on the free flow of goods and 
impedes the economic development of the country.  Th erefore, the issue of transit transportation has 
always been in the center of the Mongolian atten tion, throughout her membership in the WTO.  We  WT/TPR/M/145/Add.1 
 Page 27 
 
 
reckon that the further clarification of the GATT 1994 Article V may represent one of the most prominent contributions that the WTO may make to the brighter prospects of small, landlocked countries like Mongolia.  In this connection we  stand for the crystallization and progressive 
development of the rule embedded in the article. In corporation of national treatment provision or the 
application of Special and Differentials treatment  to small, landlocked a nd vulnerable economies may 
reduce the unnecessary costs and burden of transsh ipment imposed on such countries.  In the 
meantime, it should be noted that Mongolia, together  with the other landlocked members, has initiated 
an informal group of landlocked developing coun ties within the WTO to protect collectively our 
interests.  
High transit transportation costs imposed by transit countries, which makes the trade flow much more 
expensive, are the major concern for Mongolia. LLDCs  trade structure weighs heavily in their trade 
costs.  Ad valorem transit costs, covering freight  and insurance costs for exports, are highest among 
LLDCs (14,1%) relative to other developing countri es (8,6%) and developed countries (4,5%) owing 
to high transit costs and risks associated with  LLDC exports. 
45. Question by Brazil:
 
Report by the Government (WT/TPR/G/145).  The Government Report underlines Mongolia’s 
dissatisfaction with transit costs, which increase pr ices to consumers, especially in food.  Although 
Mongolia has signed bilateral treaties with  Russia and China (WT/TPR/G/145, paragraphs 78), 
countries with which it borders, the problem does not  appear to have been solved.  What are the 
expectations of Mongolia regarding trade facilitation ne gotiations in order to tackle these problems?  
How effective is the Almaty Plan of Action for Land-Locked developing countries in order to help 
Mongolia with transit costs? 
Answer:   
The issue of transit transportation has always been in the center of the Mongolian attention, 
throughout her membership in the WTO.  We reckon that the further clarification of the GATT 1994 Article V may represent one of the most prominent contributions that the WTO may make for the 
benefits of small, landlocked countries like Mon golia.  In this connection we stand for the 
crystallization and development of the rules and co mmitments embedded in the Article.  Incorporation 
of national treatment provision or the application of Special and Differentials treatment to small, 
landlocked and vulnerable economies may reduce th e unnecessary costs and burden of transshipment 
borne by such countries. 
How effective?  The Almaty Declaration and its Plan of Action are the first international documents 
that specifically address the issues of land-locked developing countries.  To ensure the effective 
implementation of the Plan, assistance from donors and multinational financial in stitutions is crucial, 
specifically in creating physical infrastructure to tackle transit transportation handicap.  Both the 
Declaration and the Action Plan are considered as th e instruments that made valuable contribution to 
the trade facilitation negotiations.  
LLDCs trade structure weighs heavily in their trade co sts.  Ad valorem transit costs, covering freight  
and insurance costs for exports, are highest am ong LLDCs (14,1%) relative to other developing 
countries (8,6%) and developed countries (4,5%) owing to high transit costs and risks associated with  
LLDC exports. WT/TPR/M/145/Add.1 
Page 28  
 
46. Question by the USA: 
 
Measures Directly Affecting Imports – Customs Procedures.   According to paragraph 7 on pages 23 
and 24 of the Secretariat Report, importers must re gister with the tax authorities, and registration 
with the State Registry Office is also required for the purposes of customs clearance.  Please describe 
the requirements for registration with the tax author ities and the State Registry Office.  In each case, 
how long does the registration process usually take?  
Answer:   
In accordance with the Company Law, newly founde d companies should be registered with the State 
Registration Office and the responsible tax authoriti es.  For application for registration documents 
required by this Law should be submitted.  After the registration companies can carry out business 
activities including foreign trade without any other registration requirements.  Operations in some 
business areas require a license or a permit in line with Licensing Law.  An import activity is not 
included in the list of licensed business.  Upon unde rtaking imports any company shall present a copy 
of its state registration certificate and tax registry to the customs.  
47. Question by the USA:  
Paragraph 16 on page 25 of the Secretariat Report st ates that “the main problems facing Mongolia's 
customs administration are administrative and operational issues, including corruption and 
smuggling.  The authorities have taken steps to a ddress these issues by introducing, inter alia, 
internal measures at customs (e.g. anti-corrup tion, anti-smuggling), computerization of customs 
procedures, staff training, and capacity-building programmes at agencies involved in customs 
administration and policy making.”  Please provide details on the respective programs listed above.  
In particular, please tell us when  specific initiatives have been in troduced and to what extent they 
have been successful in reducing corruption and smuggling.  
Is the Government of Mongolia considering an y additional initiatives to address these problems?  
Answer:   
The Mongolian Customs recognizes the IT development as a key factor for trade facilitation and 
timely exchange of information between the custom s and traders.  That is why the new software 
named GAMAS, customs automated data processing system was developed by our experts and introduced into operation from 1 January 2003.  Th is system replaced ASYCUDA system which was 
used since 1996.  In order to facilitate trade, th e customs introduced a single window service at border 
customhouses. It allows business people to save time.  At the same time we try to introduce paperless 
declaration through networking system between customs and biggest traders receiving electronic data 
from our customers or sending customs clearance instructions to them electronically.  Further we are 
planning to use on-line payment of duties and taxes collected at the customs.  In order to improve our cooperation with business sector we updated our website in order to provide with timely and accurate 
information on customs procedural acts and other needed  materials.  We try to maximize the use of IT 
for data capture, processing and exchange of inform ation not only within the customs also between 
the customs and business partners. 
Since 2004 the status of the Customs and Economi c College affiliated to the Customs General 
Administration of Mongolia has been changed into Customs and Economic Inst itute and reorganized.  
The Institute aims at enhancement of training standards of customs officers who have to face 
challenges dictated by globalization of forei gn trade and modernization of customs services 
throughout the world.  Customs has now changed much and mixed with the general structure of the  WT/TPR/M/145/Add.1 
 Page 29 
 
 
national, regional and international system.  Intern ational instruments dealing with harmonization and 
simplification of customs clearance procedures a nd other customs operations are being accepted by 
most of the customs administrations.  Therefore customs have undertaken new functions shifting from 
physical inspections on the border to risk assess ment and post-clearance audit and control using 
intelligence and risk management system. 
The staff integrity is also a key issue for trade f acilitation and security enhancement.  The last year 
was announced as a year of customs integrity and we revised our Code of Conduct for customs officers in compliance with international standard  taking into account similar codes of Hong Kong 
and the US Customs Service.  
The activities in this respect have achieved certain r esults, but the intention of the Government is to 
intensify the implementation of the above efforts. 
48. Question by the USA: 
 
Measures Directly Affecting Imports – Other Charges Affecting Imports – Excise Tax.  In 
paragraph 32 on page 30, the Secretariat Report states,  “domestically produced spirits distributed to 
food factories for the production of hard alc oholic beverages or for medical use and veterinary 
medicine, as well as domestic ally produced beer and home-made liquor distilled from milk, are 
exempt from excise taxes; imports of these products  are not tax-exempt.”  Please provide more 
information on the scope and application of the excise  tax exemption.  What is the rationale for the 
different rates of tax applying to impor ts and domestically produced goods?  
Answer:    
Article XVIII of the GATT provides the possibility of  a wide range of government actions to help 
protect and encourage infant industries.  There ar e about 4 bigger breweries in Mongolia, 3 of which 
are about 3-10 years old.  These firms have limited  capacity of competing with firms located in 
developed countries and the tradition of hundreds of  years and will not able to improve their 
efficiency in production for short-time and to surviv e in the market without the Government’s backing 
them up for certain period of time.  The Government  of Mongolia considers that differentiated tariff 
on domestic and imported beer could help domestic  beer producers be able to cover their higher 
production costs and remain in business.  They would gain some produ ction and management 
experience, would lower their costs until they beco me competitive. As an infant industry, Mongolian 
brewery would be protected through  temporary and flexible tariff measures.  But the Government of 
Mongolia shall take measures step by step to eliminate the discriminatory treatment of domestic and 
imported beers.  It should be noted that befo re the amendment of the Excise Tax Law Law on 
24 December 2004, domestic beer was exempted from excise tax.  
On the other hand, it was mentioned that the priva tization process resulted in that 80% of the GDP is 
produced by the private sector.  The private sect or, as it strengthens, starts to put pressure on the 
government for protective measures.  In this par ticular case (excise tax on beer), domestic beer 
producers succeeded in pushing the Government for their protection.  
49. Question by the USA:  
Table III.5 on page 31 also indicates that Mongolia  applies ad valorem excise taxes to domestically 
produced spirits and wine, but specific excise taxes to  the same categories of imported spirits and 
wine.  How does Mongolia justify the different ra tes of tax on imports and domestically produced 
goods given its national treatment obligations?  WT/TPR/M/145/Add.1 
Page 30  
 
Answer: 
 
See the answer to the above question. 
50. Question by the USA:  
Measure Directly Affecting Exports – Export Taxes, Charges, and Levies.  We are pleased to read 
in the Secretariat Report (paragraph 51 on page 36) that Mongolia is  committed to eliminating its 
export duty on raw cashmere by 2007.  However, th e following paragraph states that Mongolia bans 
the export of raw cashmere. Please explain the current situation.  
Answer:   
During the last several years the exports of raw mate rials have increased dramatically to the benefits 
of traders, but not producers.  However, becau se of this, the processing manufacturers of those raw 
materials lack inputs (they cannot afford higher pr ice) and the total loss reached MNT150.3 billion at 
the expense of domestic producers, hence decrea sing the competitiveness of those manufacturers.  
Therefore, there is a need to promote export orie nted industry and generate  revenue for Government 
budget.  By imposing export tax (30 per cent) on raw cashmere the production of this product will 
increase by MNT21.7 billion. 
51. Question by the USA:  
Measures Directly Affecting Exports – Export-tax concessions, subsidies, free zones, and export 
performance requirements – Tax concessi ons and subsidies for exporters.  As noted in paragraph 
55 on page 37, Mongolia committed in its accession  agreement to eliminate by December 31, 2002, 
subsidy programs that provide, to a business en tity with foreign investment that exports more than 
50% of its production, income tax holidays for th e first three years and then 50% tax relief for the 
following three years.  The Secretariat Report states that the subsidies have not yet been eliminated.  
When does Mongolia intend to meet its accession commitments and eliminate these subsidies?  
Answer:   
The Government has the intention of waiting until any response is received from the SCM 
Committee.  Mongolia is a newly-emerged market economy, which is striving to consolidate the 
positive results reached so far.  In this consolid ation process, FDIs play an essential role and the 
Government considers it necessary to have these t ypes of incentives in order to attract foreign 
investors to Mongolia.  A share of trade in the GDP equals to 25%-30%, which represents the second 
biggest part of the GDP following the industry. Bu t Mongolian economy is not sufficiently diversified 
and dependent on only few export items mostly raw materials such as minerals, products of animal 
origin, like wool, skins, leather and etc.  As a transition country, Mongolia is facing lack of 
institutional and supply capacity to expand its expo rts.  The process of restructuring of the economy 
needs to maintain certain measures in order to a ttract foreign investment and to motivate them to 
export their products.  Mongolia views investment incentives promoting export activities of foreign 
investors as a useful and complementary tool for expansion of trade.  Mongolia is not formally 
classified as a LDC but has similar levels of per capita income and equally limited supply of capacity. 
In the view of the Government of Mongolia, Mong olia as a country with a GNP per capita far less 
than $1,000 per annum (GNP per capita of Mongolia  is $ 477 which is lower than that of India, 
Indonesia, Egypt, Philippines, Zimbabwe)  should be included in Annex VII of the ASCM.   WT/TPR/M/145/Add.1 
 Page 31 
 
 
Mongolia shall seek to be included in the list of  countries listed in Annex 7 of the Agreement on 
Subsidies and Countervailing Duties (developing count ries, which are not subject to the provision of 
Article 3 (1a)). 
52. Question by the Republic of Korea:  
(WT/TPR/S/145, page 30, para 32):   The WTO Secretariat's report states that different rates (of 
excise taxes) may apply between goods produced in  Mongolia and imports, that domestically 
produced beer and home-made liquor distilled from m ilk are exempt from excise taxes while imports 
of these products are not tax-exempt, and that the ex cise tax is therefore a barrier to imports of these 
products.  
The Government of Mongolia has already agreed t hat its excise taxes were not consistent with 
Article III of the GATT 1994 in the Report of the Working Party on the Accession of Mongolia 
(WT/ACC/MNG/9, p.6 para XI, 27 June 1996).  The Representative of Mongolia also stated that from 
1 January 1997, Mongolia  would apply national treatment with regard to the rate of the excise tax 
(either specific or ad valorem) for both im ports and domestically  produced products 
(WT/ACC/MNG/9, p.8, para XIII).  
However, according to the Excise Tax Law of Mongolia revised on 17 November 2000, while the tax 
was levied at $0.20 per 1 liter on imported beer,  domestically produced beer was exempted from the 
excise tax.  To make matters worse, the Government of  Mongolia revised the law on 
2 December 2004, to broaden the gap in discrimi nation between domestically produced beer 
($0.20 per 1 liter) and imported beer ($0.50 per 1 lit er), which is not reflected in the aforementioned 
WTO Secretariat's report.  
Does the Government of Mongolia have the intention to put into practice its commitment that where 
the terms of its own national legislation are contrary to the provisions of an (i nternational) treaty, the 
terms of the international t reaty prevail (WT/TPR/S145 p.17, para.18)?  Does the Mongolian 
Government have specific plans to eliminate diff erential taxation of domestic and imported beer?  
Answer:   
The measure was taken by the Government on a temporary basis as a result of harsh pressure from our 
domestic producers of beer.  Brewery is a compar atively young industry, can be considered as 
“infant” and need some backing up by the Governme nt for certain period of time until they become 
more competitive.  
The measure was taken with a view of being further eliminated. 
53. Question by  the USA:  
Measures Affecting Production and Trade – St andards and Other Technical Requirements. 
Referring to paragraphs 66 thro ugh 68 on pages 38-39 of the Secretariat Report, Mongolia's 
Statement on Implementation of the TBT Agreement (G/TBT/2/Add.4) does not indicate where notices 
of proposed standards, technical regulations and confor mity assessment proced ures are published.  In 
addition, a summary of proposals which would be mandatory, are not based on international 
standards, and which may effect trade are to be notified to other WTO members via the WTO 
Secretariat, and to date Mongolia has made no such notifications under the TBT Agreement.  
A) Please clarify where notices of proposed standar ds, technical regulations and conformity 
assessment procedures are published and whet her an opportunity for comment allowed. WT/TPR/M/145/Add.1 
Page 32  
 
Answer:
  
Notices of proposed standards, technical regula tions and conformity assessment procedures are 
published in the official journal “Standards and Metrology”. Comments are allowed.  
B) Are these notices published in the monthly Offic ial Journal of the Mongolian National Centre 
for Standardisation and Metrology (M NCSM), "Standards and Metrology"? 
Answer:   
Yes. 
C) Is there an opportunity to comment when  an agency proposes to make a standard mandatory? 
Answer:   
Yes.  Representatives of the business sector, NGOs a nd also government authorities can comment on 
proposed standards.  
D) Does the MNCSM publication include technical regulations and mandatory conformity 
assessment procedures of all government agencies?   
Answer:   
Technical regulations and mandatory conformity assessment procedures of all relevant agencies are 
included in the MNCSM publication.  
54. Question by Japan:  
Report by the Secretariat (WT/TPR/S/145). III. Trade Policies and Practices by Measure (4) 
Measures Affecting Production and Trade (ii) St andards and other technical requirements (Page 
39, para. 69).  The Report by the Secretariat states that  since June 2003, Mongolia has accepted 
conformity marks issued by selected foreign certifica tion bodies as equivalent to Mongolia’s national 
conformity marks.  Please indicate the criteria and procedures used to designate the selected foreign 
certification bodies.  
Answer:  
The conformity marks issued by selected foreign certification bodies are not automatically equivalent 
to Mongolia’s national conformity marks.  “The Law on Standardization and Conformity Assessment 
of Mongolia” was adopted in May 2003 and became effective in September of 2003.  According to 
Article 16.7 of the Law the “results of testing carried  out by foreign testing laboratories on products to 
be imported to Mongolia, and certificates of conformity (or conformity marks) issued by the certification organization shall be accepted by the Central Standardization Body on the basis of the 
agreements concluded by Mongolia wi th its trading partner countries”.  
MASM has approved and complies with the followi ng ISO/CASCO international standards in the 
field of conformity assessment for the both foreign and domestic certification bodies:  
− MNS ISO/IEC Guide 23: 2003 
  Methods of indicating conformity with st andards for third-party certification systems  WT/TPR/M/145/Add.1 
 Page 33 
 
 
− MNS ISO Guide 27: 2003 
  Guidelines for corrective action to be take n by a certification body in the event of 
misuse of its mark of conformity 
− MNS ISO/IEC Guide 62: 2003 
  General requirements for bodies operating assessment and certification/registration of 
quality systems   
− ISO/IEC Guide 65: 2003 
  General requirements for bodies operating product certification systems 
− MNS ISO/IEC Guide 66: 2004 
  General requirements for bodies operating assessment and certification/registration of 
environmental management systems (EMS) 
− MNS ISO/IEC Guide 67: 2004 
  Conformity assessment – Fundamentals of product certification  
− MNS ISO/IEC 17030:2003 
  General requirements for third-party marks of conformity 
55. Question by Japan:  
Report by the Secretariat (WT/TPR/S/145). III. Trade Policies and Practices by Measure (4) 
Measures Affecting Production and Trade (ii) St andards and other technical requirements (Page 
39, para. 69).  Please confirm that such criteria and procedures non-discriminately apply in 
designating both foreign and do mestic certification bodies.  
Answer:   
We confirm that the same criteria and proce dures non-discriminately apply in designating both 
foreign and domestic certification bodies. 
56. Question by Japan:  
Report by the Secretariat (WT/TPR/S/145). III. Trade Policies and Practices by Measure (4) 
Measures Affecting Production and Trade (ii) St andards and other technical requirements (Page 
39, para. 70).  According to the Report by the Secretaria t, the Law on Quarantine and Inspection for 
Transferring of Animals, plants, Raw Materials and Pr oducts of their Origin through the State Border 
was legislated , in order to meet concerns related to the increase in international trade. 
Please indicate whether new measures or revised measures for quarantine w ere introduced in this 
new law.  
Answer:   
The Law on Quarantine and Inspection for Transf erring of Animals, Plants, Raw Materials and 
Products of their Origin through the State Border was adopted in November 2002. 
Procedure on Inspection for Transferring of Animal s, Plants, Raw Materials and Products of their 
Origin through the State Border (Government Resolution No. 173, 2003) WT/TPR/M/145/Add.1 
Page 34  
 
Procedure on issuing of Export and Import Cer tificate for Animals, Plants, Raw Materials 
(Government Resolution No. 173, 2003) 
57. Question by Japan: 
 
Report by the Secretariat (WT/TPR/S/145). III. Trade Policies and Practices by Measure (4) 
Measures Affecting Production and Trade (ii) St andards and other technical requirements (Page 
39, para. 70).  If new measures or revised measures were intr oduced, please indicate their conformity 
to international standards.  
Answer:   
We would like to confirm that the above menti oned procedures are consistent with international 
standards.  At present, Export Certificate and Impor t Notification are being revised to be consistent 
with international standards. 
58. Question by Brazil:  
Licensing requirements have been considerably re duced since Mongolia’s accession to the WTO 
(Secretariat Report, Chapter III, p.23).  What are th e products still subject to licensing requirements? 
Answer:  
Yes, licensing has been reduced c onsiderably.  The Government Resolution No.219 of 2002 provides 
a list of the goods still subject to licensing.  These goods are live and breeding animals, semens of breeding animals, uranium or thorium ores and con centrates, human blood and organs for therapeutic 
and prophylactic purposes that require necessary c ontrol, explosives, guns, equipment and tools for 
military use and their spare parts. 
III. SECTORAL POLICY
 
III.1 Agriculture  
59. Question by Japan:  
Report by the Secretariat (WT/TPR/S /145). IV. Trade Policies by Sector  (2) Agriculture and Related 
Activities  (Page 47, para. 12).   According to the Report by the Secretariat, agricultural policy in 
Mongolia is aimed at achieving greater self-sufficie ncy. In this context, Japan supposes that Mongolia 
will share the view with Japan that the coexistence of various types of agriculture should be sustained 
under the final results of the agricultura l negotiations in the Doha round. 
In this regard, please indicate the specific view of the Government of Mongolia.  
Answer:   
The Government of Mongolia adopted New Ag ricultural Policy in 2003, which would be 
implemented until 2015.  The main objective of this policy is to sustain sustainable development of 
agricultural production through developing an intensif ied farming and irrigate d crop production.  The 
long term objective of agricultural production is to reach self-sufficiency in some major crop such as 
wheat, potato, some vegetable varieties.  At pres ent, only 20-30 percentage of total consumption has 
been supplied by domestic production.  In the past we used to supply not only domestic production, the excess of it was exported to Russia and other countries.  There are many food items 100%  WT/TPR/M/145/Add.1 
 Page 35 
 
 
imported from abroad, such as tea, sugar, vegetable oil, rice and some fruits.  The only food export is 
a small amount of meat and meat products shipped mostly to Russia. 
We, as small economy, are for further liberalizat ion of agriculture and full market access for 
agricultural products to WTO member-countries, especi ally neighbouring countries.  Until we achieve 
self-sustainability, Mongolia will con tinue to depend on food aid. 
60. Question by Brazil:  
Which policies will be adopted for promoting priv ate participation and investment in milk, flour, 
potatoes and other vegetables production (Secretariat Report, Chapter IV, paragraph 3, p. 44)? 
Answer:  
Milk, meat, flour and vegetable production is carried out by the private sector.  The responsibilities of 
the Government are to ensure the supply, look af ter the quality and the safety of major food products. 
The Government supports this sector through tax polic y even though large investments and substantial 
financial and loan support has not been made.   
For example, according to the statistics, Mongolia  supplies its own milk consumption, but during 
winter period urban centers face shortage in milk.  To address the shortage, Moneytization 
Programme of French Government assistance is funding artificial insemination of Mongolian diary 
cows in order to establish nucleus of diary ca ttle around capital and larger cities.       
The Government of Mongolia approved a Food and Agricultural Policy in 2003.  The principles for 
the implementation of the Policy are to rationa lly use natural, economic, financial and human 
resources, intensify production and its efficien cy, product quality and competitiveness and ensure 
sustainable development of food, livestock and crop production. 
As in accordance with the Policy, the Government aims to create favourable conditions for promoting 
private participation and investment by supporting the sector through a flexible taxation, credit, 
investment and foreign trade policies; improving the legal framework;  improving the technology to 
increase the competitiveness of the sector;  creating agriculture development credit fund;  improving 
the services of banks and non-banking financial or ganizations in rural areas and supporting the 
development of savings and credit cooperatives;  increasing the creation of workplaces;  creating 
favourable tariff and VAT conditions for the importation of the machinery, equipment and their spare 
parts that are not produced domestically.  
Under the Government’s Intensified Livestoc k Farming Programme, sm all sized farms, the 
remainders of the previous state planned economy and the household-level di ary farms were provided 
with some support, mainly through provid ing the expertise and professional advice.  
Domestic vegetable and food production supplies 40- 50% of total consumption, lack of processing 
and preserving technologies, rural people, herders and poor families can not  consume enough potato 
and vegetable, other wise enough supply of this pr oducts at domestic market.  Vegetable and potato 
production is not only issue of food supply, it also plays an important role in reducing poverty and unemployment.  Therefore, it is one of the Govern ment’s high priority areas.  A Green Revolution 
programme has been successfully implemented si nce 1997.  Under this pr ogramme, the Government 
supplies small-scale tractors, agricultural machiner ies, seeds, fertilizers, greenhouses, manuals for 
poor households.  Also training and information distribution activities have been organized involving governmental and non-governmental organizations, dom estic and foreign assistance funded projects.     WT/TPR/M/145/Add.1 
Page 36  
 
61. Question by Brazil: 
 
Which measures does the Mongolian government in tend to implement to expand wheat production 
(Secretariat Report, Chapter IV, paragraph 3, p. 44)? 
Answer:  
Before the 1990’s, Mongolia not only met the domes tic demand with domestically produced wheat, 
but also a substantial portion was exported.  As at the end of 2004, domestic production supplies only 
30 % of total consumption.  
To develop seed farming and renovate agricu ltural technology the Government has paid a 
considerable attention in raising foreign assistan ce and implemented projects and programmes funded 
by the ADB, the TACIS and the Swiss Government.  
In order to increase domestic wheat production, th e Government is providing financial support for 
scientific and production activities to develop irriga ted crop production, preservation and utilization of 
snow and rain water in the soil.  Also scientific  and technological research has been done upon the 
Government request.  To encourage irrigation equipment-importers, VA T exemption is being 
proposed. 
In the future, we intend to use more assistance from foreign donors in this area and to support builders 
and users of irrigation systems by tax and loan policies and the Government provides funding for 
renovation of irrigation schemes to develop irri gated crop production.  Crop producers enjoy 50% 
relaxation from income tax.  
62. Question by the EC:  
In the report prepared by the Government of Mongolia  (Paragraph 62, page 14) it is stated that the 
Government intends to privatize the land in the local areas, thus to open possibilities for local 
population to enjoy the benefits of it, to improve acce ss to water in Gobi and steppe areas, to promote 
farming and intensified agriculture and to improve th e processing of agricultural products.  How will 
Mongolia seek to ensure the sustainability of th ese efforts and how does Mongolia assess the 
possibilities for increasing trade and development while  ensuring environmental sustainability?  Does 
Mongolia currently have a specific plan addressing this?  
Answer:  
The “Law on the Allocation of Land to Mongolia n Citizens for Ownership” stated that Mongolian 
citizens can own a land for family purposes from 0.07 to 0.5 ha for free.  The law provides that crop land can be possessed after purchasing and can be possessed for long term: from 15 to 60 years. Regarding the privatization of the pasture- land and land for hay making purposes, neither 
privatization nor possession rights have been issued and they are a public property.  
Land privatization in rural areas mentioned in the Government Report means supporting intensified 
farming in local centers and crop areas.  Crop field can be used as a real estate that creates an opportunity to purchase, to make a collateral in the market economy.  The Government Action Plan stated that the Government will support in improvi ng wells and water supply in the Gobi and steppe 
provinces, support farmers and intensified farmi ng, processing of agricultural products, supporting 
initiatives to market ecologically clean products and sel ecting best breeding animals.  This intends to 
create a condition that would help to prevent th e deterioration of the pasture-land, increase the 
utilization of the pastures that were not grazed due to the lack of water supplies and improve domestic  WT/TPR/M/145/Add.1 
 Page 37 
 
 
and international marketing of ecologically clean pr oducts through the selection of local best breeding 
productive livestock.  
As regards ensuring the sustainable development, Mongolia has a long standing tradition of protecting 
the environment.  The first national park taken un der the protection of the state is regarded and 
recognized to be in Mongolia.  Therefore, in leading their nomadic way of life the Mongolians 
endeavoured to avoid causing adverse impacts on the nature. 
Besides, we have passed a number of policy docum ents:  “The Development Concept of Mongolia” 
(1996), “Mongolia’s Sustainable Development Program for XXI century” (1998), “Good Governance for Human Security Program” (2000), “Regional De velopment Concept” (2002), “Economic Growth 
Support and Poverty Reduction Strategy Paper” (2 003).  All these have the concept on ensuring 
sustainable development.  Therefore, sustainable deve lopment is a part and par cel of policy actions of 
Mongolia. 
III.2 Services
 
63. Question by Hong Kong, China:  
(WT/TPR/S/145, P. x, Para. 27; and P. 61, Para. 57).  It is stated that there are no non-prudential 
restrictions on foreign banks or other financial institu tions.  In this connection, we note that full 
market access and national treatment are committed for modes 1 to 3 of all the financial services 
covered in Mongolia’s schedule of specific commitmen ts under the GATS.  However, we note that at 
least 70% of the staff of foreign banks, irrespecti ve of business form, must be Mongolian residents.  
This seems to constitute a limitation on national treatm ent.  We would like to seek clarification from 
Mongolia in this respect. 
Answer:   
In the services sector schedule of Mongolia under the banking sector commitments mode 4 
commitments in both market access and national treatment were left unbound.  Therefore, the 
requirements (related to the banks of foreign investme nt having 70 per cent of its staff composed from 
Mongolian residents) in our view falls under our mode 4 commitment which were left unbound.  We 
left mode 4 unbound exac tly for this reason. 
64. Question by Brazil:  
In relation to services, could the Mongolian government provide further clarification on the 
substantive provisions of the Agreement between  Mongolia and the United states concerning the 
Development of Trade end Development Relations (T IFA) (Secretariat Report, p. 19, paragraph 28, 
and p. 21, table II.3) 
Answer:  
The TIFA Agreement is a framework agreement concerning further development of trade and 
investment relations, which recognizes, inter alia , “the increased importance of services in the 
economies and bilateral relations” between the Par ties.  Essentially, the Agreement provides for the 
establishment of a Joint Council that monitors trad e and investment relations, identifies opportunities 
for expanding trade and investment, … and identifi es and works towards the removal of impediments 
to trade and investment flows.” (Article 3, TIFA)  WT/TPR/M/145/Add.1 
Page 38  
 
65. Question by Brazil: 
 
Could Mongolia inform the extent of services provisi ons in the Agreement concerning trade relations 
between Mongolia and the United States (Secretariat Report, p. 21, table II.3)? 
Answer:  
Generally, the Agreement Concerning Trade Relations  between the Government of Mongolia and the 
Government of the USA, signed on January 23, 1991, accords MFN treatment and non-discriminatory 
conditions for products and ser vices originating in the territory of th e Parties to the Agreement.  As an 
Agreement signed in early 1990s, it has general provis ions pertaining to trade in goods and services 
and there are no specific provisions on services as such.  Some of the provisions addressing services in the Agreement are: 
Article 1(3):  Each Party shall accord to imports of products and services originating in the territory of 
the other Party nondiscriminatory treatment with  respect to the allocation of and access to the 
currency needed to pay for such imports. 
Article 2:  Each Party shall administer all tari ff and non-tariff measures affecting trade in a manner 
which affords, with respect to both third count ry and domestic competitors, meaningful competitive 
opportunities for products and services of the other Party. 
Article 8(2) on Financial provisions  relating to trade in product and services:  Neither Party shall 
restrict the export from its territory convertible currencies or deposits, or instruments representative 
thereof, obtained in connection with trade in products and services by nationals, companies and 
organizations of the other party. 
66. Question by Brazil: 
 
Mongolia is considering the possibility of negotiatin g free-trade agreements with its major trading 
partners, such as the European Union, Japan, and the Republic of Korea (Secretariat Report, p. 19, 
paragraph 28).  Do these initiatives address trade in services? 
Answer:  
Mongolia is only at the stage of considering  such possibilities.  At present, it has not yet engaged in 
negotiations of FTAs, though a TIFA was signed with  the US and the first TIFA Council Meeting was 
held in January 2005 to address b ilateral trade and investment issu es between Mongolia and the US.  
III.3 Telecommunications:  
67. Question by Canada:  
Report by the Secretariat (WT/TPR/S/145). Summary Observations, (4) Trade Policies by Sector: 
Paragraph 28 and Part IV. Trade Policies by Sector, (6) Services (Other Than Energy), (ii) 
Telecommunications, Paragraph 72:   Canada would like to better understand the state of 
competition in Mongolia’s basic telecoms market, partic ularly in relation to the role played by the 
state-owned Mongolia Telecom (MT).  We ask be cause the Government Report notes at paragraph 76 
that “[i]n 2002, the telecommunications service monopoly was dismantled…” [emphasis added].  We assume this refers to the monopoly by MT, which is described as being “scheduled to be privatized in 
2005”.  In comparison, we note that the Secretaria t Report states at paragraph 28 (page X) that MT 
has a “statutory monopoly on domestic basic tele communications until 20 15” and at paragraph 72  WT/TPR/M/145/Add.1 
 Page 39 
 
 
that MT “has a monopoly in wired domestic (loc al and national) telephone services until 2015 under 
the 1995 agreement with Korea Telecom (KT)” [emphasis added].   
a) We assume this can be explained by the fa ct that the Secretariat Report is referring to 
a continued monopoly on basic domestic servi ces while the Government Report uses 
a general statement but might really be referring to basic international services. 
Could Mongolia please confirm whether this is the case?  
b) Could Mongolia also confirm whether th e continuing monopoly on basic services is 
statutory or whether it originates from a commercial agreement with Korea Telecom?  
What are the implications of both?  
Answer:   
The Information and Communication Technology Authority of Mongolia, the Government 
implementing agency owns the backbone network.  The ownership of the network is leased to the 
Mongolia Telecom (MT) company on contractual basis.   The MT further leases the right to utilize the 
network to other companies.  The MT is the only provider of fixed telephony services.  If any 
restrictions are imposed by the MT on the use of the backbone network by other companies, the CRC 
has the authority to draw a deci sion and eliminate the restriction.  Therefore, it is neither a statutory 
monopoly nor a monopoly under the agreement with Korea Telecom.  
Currently, the access to the backbone networking by  other companies on equal conditions with the 
MT is under consideration.  Various options are be ing discussed, yet no definitive solution was found.  
Note: 
Mongolia Telecom was given the exclusive right until 31 December 1998  under the contract, which 
had been concluded between the Governme nt of Mongolia and the Korea Telecom on 
31 August 1995.  
The exclusive right for providing basic domestic services of telecommunications was canceled in 
2001 (February 21st). Therefore, the exclus ive right was dismantled in 2001.  The Government of 
Mongolia owns 54%, Korea Telecom – 40%, and the rest of the share – public.  The exclusive right 
for providing the international voice telephone gate way and international basic telephone services was 
canceled in 2002 (January 1st). 
68. Question by Canada:  
Report by the Secretariat (WT/TPR/S/145). Summary Observations, (4) Trade Policies by Sector, 
Paragraph 28 and Part IV. Trade Policies by Sector, (6) Services (other than energy), (ii) Telecommunications, Paragraphs 45 and 73:  Mongolia has made GATS commitments for value-
added telecoms services but it has not made any commitments for basic telecommunications services. 
We understand, however, that Mongolia has liberalized  parts of its basic telecoms market in recent 
years.  International calls were deregulated, for example, in 2002 and there are now two mobile 
operators with plans for further d eregulation (paragraph 28).  The Government also plans to further 
privatize the state-owned MT with the potential fo r full divestment and it seems to be pursuing early 
termination of MT’s monopoly for basic domes tic services to promote further competition 
(paragraphs 28 and 73).  Is Mongolia considering at least binding this liberalization by making 
commitments for basic telecoms service s in the ongoing GATS negotiations?  WT/TPR/M/145/Add.1 
Page 40  
 
Answer:   
From the TPR Report one can see that Mongolia has been pursuing consistently the policy of 
liberalization in general.  And this decisive and c onsistent drive for liberalization has penetrated all 
the sectors of the economy including the telecomm unication services.  As for undertaking specific 
commitments on binding the already ongoing liberali zation we would still need to consider it 
thoroughly.  However, this approach does not mean that we are reserving this right particularly for 
retreating back on this liberalization. 
69. Question by Canada:  
Report by the Secretariat (WT/TPR/S/145). Summary Observations, (4) Trade Policies by Sector, 
Paragraph 28 and Part IV. Trade Policies by Sector, (6) Services (Other Than Energy), (ii) 
Telecommunications, Paragraphs 73–74:   Canada is pleased to see t hat Mongolia has undertaken a 
range of regulatory reforms in recent years designed to provide the basis of what the Government 
Report describes at paragraph 76 as a “fair comp etition regime” for telecommunications.  Canada 
has a number of questions in this respect. 
a) The Secretariat Report states at paragraph  74 that Mongolia established the 
Communications Regulatory Committee (CRC) in  June 2002 after “the first telecom 
regulatory body, formed in 1996, proved in effective”.  It notes, furthermore, that 
authorities consider the CRC to be fully i ndependent, perhaps because its members 
are appointed by the Prime Minister for a six-year term, but that the CRC’s independence “is yet to be demonstrated.”  Given its experience with the first telecom 
regulatory body, how will Mongolia en sure the independence of the CRC? 
Answer:
  
The CRC, according to the Law on communications, is  intended to be secured through the following 
factors:   
- The period of terms of nomination of chairman and members of CRC has been 
defined in the Law on Communications;  
- Self financing, not from State budget;  
- Independent of service providers.  
b) The Secretariat Report also suggests that so me of the regulatory reforms are impeded 
by the continued monopoly of MT.  It d escribes, for example, at paragraph 28, how 
“[n]ew legislation in 2001 laid the founda tions for further deregulation” by creating 
in 2002 the Communications Regulatory Committee and introducing interconnection 
and other competition safeguards”.  At the same time, however, it notes at paragraph 
28 that “the MT monopoly greatly limits their practical significance” and that 
“Government policy is to end this as soon as  possible, subject to re-negotiation of an 
agreement concluded in 1995 with Korea Telecom on the terms of MT’s privatization” (paragraph 28, page X.  See also paragraph 73, page 65).  
i. Could Mongolia please address the ex tent to which the MT monopoly limits 
the significance of these reforms?   WT/TPR/M/145/Add.1 
 Page 41 
 
 
Answer:   
The issue of privatization of state shares in MT is  under consideration and these efforts could further 
deregulate this sector.  A working grou p has been set up to assess this issue. 
ii. How does the Government plan to respond?  
Answer:   
Various options are being debated.  The Government  is considering to take a gradual multiple step 
approach.  First, it is considering the approach  of separating the basic infrastructure from the 
provision of services.  Also privatization of gove rnment equities held in MT is currently under 
discussion. 
As defined in the General procedure for in terconnection between networks and access to 
telecommunications network the general conditions for interconnection are:  
- Non-discriminatory or equal treatment, transparency and co-efficient principles 
- fair competitive principles 
- Network owners shall publish RIO which is inclusive terms and conditions of 
interconnection and access, charges and ag reement procedures and make publicly 
available 
- Charges of interconnection and access shall be cost-based and inter-reasonable.  Any 
inefficiency should not be passed thr ough interconnection or access charges.  
iii. What are the prospects for early termination of the monopoly, as the 
Secretariat Report suggests?    
Answer:   
The Government vision for the privatization of state assets until 2008, which contained a provision on 
privatization of government shares in MT, ar e being considered and will be submitted for 
Parliamentary consideration.  
c) We note that although Mongolia has made some commitments for the telecom sector 
under the GATS, it has not subscribed to the WTO Reference Paper on basic telecommunications, which we believe is important to promoting a fair and 
competitive telecommunications market. Si nce its regulatory reforms have already 
touched on some of the areas addressed by  the Reference Paper, such as anti-
competitive practices and interconnection, w ould Mongolia consider signing onto the 
Reference Paper as a complement to future liberalization of this sector?  
Answer:   
Mongolia is open to take any positive recommendati ons and suggestions as to the improvement of 
business environment in telecommunications sector.  As  for the specific issue of signing the reference 
paper on basic telecommunications we would be inte rested to looking to the matter and we hope that 
the Secretariat in technical assistance program implemented vis-à-vis Mongolia will include the 
assistance on considering the cost and benefits of such action. WT/TPR/M/145/Add.1 
Page 42  
 
70. Question by Canada: 
 
Report by the Government (WT/TPR/G/145): Part  IV. Major Economic Sectors of Mongolia, 
Paragraph 72:  The Government Report notes that Mongolia  enacted “several measures such as 
liberalization of the information and communication sector…” The Government Report also refers to 
the new Information and Communication Coordination Committee, which carries out activities such 
as “eliminating restrictions, deepening the openness of the market, promotion of fair competition”.  
a) Could Mongolia please expand on how it has liberalized this sector (particularly in 
relation to computer-related services as opposed to telecoms)?  
Answer:   
The Information and Communication Coordina tion Committee should be understood as the 
Communication Regulatory Committee. 
In general, the first stage of the liberalization of  the sector started in 1996 as the first mobile service 
was introduced in the communications market.  From 1996, TV broadcasting and internet service 
were liberalized, and until 1998, both fixe d and mobile services were monopoly based, and 
International gateway used to be monopoly till 2002.  
8728271912822
0 2 04 06 08 0 1 0 0Other servicesTelevisionFM radioPostInternet telephonyInternetCellular telephonyFixed telephonyPicture 1
Service Providers in the ICT sector (2003)
 
As the monopoly in International calling service was opened in 2002, competiti on in this service has 
rapidly taken place and now there are 4 gateways  and 10 VoIPs.  Once the market has many 
operators, tariff of incoming and outgoing calls have respectively reduced and becoming more 
affordable. 
At present 7 Internet Service Providers are providing basic internet services and their market share is 
shown in picture 2.  WT/TPR/M/145/Add.1 
 Page 43 
 
 
Micom
21%
Bodicom
7%
Magicnet
47%Railcom
1%Mobinet
14%Erdemnet
1%MCS
9%Picture 2
Market shares of ISPs (by the number of users)
 
b) What kind of restrictions are being eliminated by the Information and 
Communication Coordination Committee?  
Answer:   
Eliminating restrictions 
¾ to ensure free entering to the market; 
¾ to ensure non-discrimination for the service providers; 
¾ to ensure fair allocation of scarce resources such as radio frequency and numbering. 
c) What has the Information and Communication Coordination Committee been doing 
to open the market and promote fair competition?  
Answer:   
Generally, competition is pursuant to Law on the prohibition of unfair competition as it is the only 
law for all sectors.  The law stipulates that th e Unfair Competition Regul ating Authority will be 
responsible for regulating prices for services of the natural monopolies.  The natural monopoly is 
defined as a market in which the social costs would be minimal when there is only one firm-producer.  
The procedure for determining a natural monopoly status will be developed and submitted to the 
Government for approval later this year. 
However, in the Law of Communications, the CRC is committed to create a fair competitive 
environment for service providers.  
The CRC has approved the “Procedure on determina tion of and imposing a control over a dominant 
operator within the communications and information,  technology market of Mongolia” in 2003.  By 
this procedure dominant service and dominant provide r has to be defined every year.  The service 
provider, who has been announced as a dominant operator within a current service market must WT/TPR/M/145/Add.1 
Page 44  
 
develop in time all the information and basics for the pricing, tariffs asked from the Commission for 
the purpose of being them checked and those checked  figures shall be deemed as the basics for the 
tariff settings.  The dominant operator should stric tly follow the chapter 2 on “the prohibition of 
imposing the obstacle to the fair competition from the predominant enterprises from the “Law on the prohibition of unfair competition” of Mongolia.  The dominant operator should strictly follow the 
chapter 2 on “the prohibition of imposing the obst acle to the fair competition from the predominant 
enterprises from the “Law on the prohibition of unfair competition” of Mongolia.   
71. Question by Canada: 
 
Report by the Government (WT/TPR/G/145): Part  IV. Major Economic Sectors of Mongolia, 
Paragraphs 74 and 76:  The Government Report describes a number of planned initiatives pertaining 
to the “opening up” of the information and communication technology service market.  These 
initiatives include “establishing a unified inform ation system” and “introducing e-commerce”.  
Canada would be interested in learning more ab out the unified information system and the steps 
Mongolia is taking to introduce e-commerce.  
Answer:  
There is a number of initiatives planne d to support e-commerce development: 
- Establishment of the basic environment of e-commerce  
- Creation of the database and information management system for e-commerce  
- Participation in international e-commerce  
- Development of the payment and security system  
- Development of the human resources  
- Development of the supportive infrastructur e and its components (fiber-optic cable 
network with assistance of donors)  
72. Question by Canada:  
Report by the Government (WT/TPR/G/145): Part  IV. Major Economic Sectors of Mongolia, 
Paragraphs 74 and 76:  The Government Report also refers to the amendment of related laws and 
regulations and it notes that a number of laws related to information technology services have 
already been drafted.  These include “Law on Info rmation Security”, “General Law on Information 
Technology”, “Law on E-signature”, “Law on E- agreement” and “Law on E-governance”.  Canada 
would encourage Mongolia to approach these laws with  a view to encouraging the use of e-commerce 
by ensuring that goods and services are not treate d less favorably becaus e they are delivered by 
electronic means.  Is this consistent with  Mongolia’s draft e-commerce related laws?  
Answer:   
Mongolian IT related laws such as “General  Law on Information Technology”, “Law on E-
governance”, “Law on E-commerce” and “Law on E-si gnature” have been drafted already and now 
under discussion in various professional, gove rnmental and parliamentary bodies.  WT/TPR/M/145/Add.1 
 Page 45 
 
 
73. Question by Hong Kong, China:  
(WT/TPR/S/145, P. 65 - 67, Paras. 72 – 74).   We would like to commend Mongolia’s efforts in 
pursuing an open and competitive telecommunications sect or, as well as the regulatory reforms thus 
introduced, in particular the deregulation of int ernational call market and the open mobile market.  
To ensure a more predictable environment for investors, would Mongolia consider making 
commitments to bind these already liberalized telecommunication services in its services offer?  
Answer:   
Mongolia's policy generally has remained transparent,  predictable and stable over the last decade and 
a half.  As it was mentioned in my statement in many ways we have went beyond the WTO 
commitments and we kept those extra liberalization me asures.  And this approach  is applicable to the 
telecommunication sector as well.  We take note of the Hong Kong delegatio n's suggestion and we 
will give it thorough consideration. 
74. Question by the EC:  
Telecom services.  Which are the requirements for the prov ision of interconnection under the 2001 
law?  Are such requirements eas ily accessible by all interested par ties?  Are interconnection tariffs 
regulated?  
Answer:   
The Communications Regulatory Commission (CRC) of  Mongolia regulates interconnection issues in 
accordance with its procedures within the framework  of the power described in Article 9.1.4 of 
Telecommunications Law:  “to approve general terms of interconnection agreements between 
networks and procedures of revenue distributio n”.  The following interconnection procedures 
approved in 2004 by CRC.  
• General procedure for interconnecti on between networks and access to 
telecommunications network 
• Procedure for network element unbundling, infrastructure sharing and collocation 
• Procedure on service charges of interconn ection between networks and access to 
telecommunications network (Interconnection tariff is regulated by this procedure.) 
The general conditions for interconnection are:  
- Non-discriminatory or equal treatment, transparency and co-efficient principles 
- Fair competitive principles 
- Network owners shall publish  RIO  whic h is inclusive  terms and conditions of 
interconnection and access, charges and ag reement procedures and make publicly 
available 
- Charges of interconnection and access sha ll be cost-based and inter-reasonable. Any 
inefficiency should not be passed thr ough interconnection or access charges.  
The work for implementation and enforcing above procedures has just started.    WT/TPR/M/145/Add.1 
Page 46  
 
75. Question by the EC: 
 
The majority state-owned Mongolia Telecom (MT) , has a statutory monopoly on domestic basic 
telecommunications until 2015.  Do by the term of basic telecommunications  services refer to local 
and long distance voice telephony services?   
Answer:  
Yes. 
76. Question by the EC:  
Which is the number of operators currently providing international calls?  Which is the market share 
of the incumbent? 
Answer:  
As the monopoly in International calling service was opened in 2002, competiti on in this service has 
rapidly taken place and now there are 4 gateways and 10 VoIPs. 
77. Question by  the EC:  
Why are mobile prices regulated?  Does the exist ence of duopoly result to anticompetitive prices? 
Answer:  
The CRC monitors service tariff of only dominating ope rator of mobile market under the provision of 
9.1.5 of Telecommunications Law and CRC’s Proce dure on determination of and imposing a control 
over a dominant operator within the communicati ons and information, technology market of 
Mongolia otherwise not regulates.  
78. Question by the EC:  
Which is the situation in relation to the provision of leased lines? 
Answer:  
Due to investment cost (loan) etc ., the leased line cost (price) is rela tively high in Mongolia.  So this 
is a kind of barrier for new entrants. 
79. Question by  the EC:  
Which are the safeguards put currently in place to  avoid cross-subsidisatio n?  Have any measures 
been taken for tariff-rebalancing?  If yes, is there a glide path to follow?  Is accounting separation 
required? Which pricing methodologies are used to ensure cost-based prices?  
Answer:  
Cross subsidization exists in local and domestic voice  market.  For eliminating subsidization, the first 
stage of tariff rebalancing has attempted in local fixed voice.  But the result seems ineffective.   
In some special cases, accounting separation is requi red.  Operators within a communications’ market 
while establishing their tariff, considering the distin ctive characters of its service nature shall apply  WT/TPR/M/145/Add.1 
 Page 47 
 
 
accordingly a principle from under-mentioned generally accepted by ITU recommendations and 
World Economic and Co-operations Organization, World Trade Organization’s methodologies.  They 
are: 
a. Cost based principle  
b. Price cap principle 
c. Principle of benchmarking 
80. Question by the EC:  
Is the provision of data services based mainly on re sale?  Do any backbone networks or even local 
exchanges exist for the provision of such services?  
Answer:  
Data services are not based on resale.  No backbone  networks or local exchanges exist for data 
services now, but the Government has a plan (elaborate) for this issue.  
81. Question by the EC:  
Which is the level of licence fees? Answer: 
 
The CRC shall set rates of regulatory fees on the basis of “Procedure to set rates of regulatory fees to 
licensees” which approved by the 39th order of the Minister for Infrastructure in 2003 within the 
framework of the power described 9.1.11 of the Co mmunications Law.  Regulatory fees are subject to 
factors of the number of services, scopes of services and business environment of licenses etc..,  
For example Regulatory fees to licensees which belo ng to A classification are shown in the following 
table: 
 License types Revenue 
(million tug) Regulatory fees 
(thousand tug) 
1 Establish and operate 
telecommunication basic network Up to 3,000.0 
3,000.0-5,000.0 
5,000.0-10,000.0 
above 10,000.0 11250.0 
1,500.0 
1,875.0 
by 0.025 % of revenue 
2 Establish and operate 
fixed telephony network Up to 3,000.0 
3,000.0-8,000.0 
8,000.0-15,000.0 above 15,000.0 750.0 
1,350.0 
2,875.0 by 0.025 % of revenue 
3 Establish and operate  
radio and television network Up to 10.0 
10.0-60.0 
60.0-100.0 above 1,000.0  300.0 
450.0 
650.0 by 0.55 % of revenue 
4 Establish and operate info rmation network Up to 300.0 
300.0-700.0 
700.0-1 000.0 above 1 000.0 450.0 
750.0 
1,000.0 by 0.10% of revenue 
5 Establish and operate post network Up to 50.0 
50.0-100.0 
above 100.0 250.0 
500.0 
by 0.03% of revenue 
 WT/TPR/M/145/Add.1 
Page 48  
 
Regulatory fees to licenses of B classification to run communication services are subject to fees shown in the following table. 
(in thousand tug) 
Regulatory service types Coverage of 
the country’s 
territory Ulaanbaatar Provincial 
centers Settled areas 
such as soums 
1. International Long distance Direct Dialing 
2. Domestic Long Distance Direct Dialing 
A. fixed 
B. cellular  
3. Wireless telephony services (WLL, PHS, DECT etc.) 
4. Space mobile communication service 
5. Television broadcasting and transmission 
6. Cable television (CATV, MMDS, LMDS etc.) 
7. Radio broadcasting and transmission 
8. Internet telephony service 
9. Rental line and link 
10. International post service 
11. Local and domestic long distance post service 
12. LAN installation  
13. Cable line and network installation 
14. Public service via local area network LAN 8,000.0 
 
4,800.0 
55,000.0 
4,000.0 
800.0 
3,000.0 
1,900.0 1,500.0 
4,800.0 
7,000.0 
400.0 300.0 
100.0 
100.0 
1,200.0 6,000.0 
 
1,800.0 
 
1,000.0 
 
500.0 
700.0 200.0 
1,800.0 
2,000.0 
300.0 200.0 
 
 
200.0 500.0 
 
300.0 
 
300.0 
 
100.0 
150.0 
90.0 
100.0 
500.0 200.0 
50.0 
 
 
50.0  
 
50.0 
 
50.0 
 
50.0 
50.0 50.0 
82. Question by the EC:  
Could Mongolia provide further clarifications on the provision of universal service, especially in the 
light of its provision by both fixed and mobile operators?  
Answer:  
Under the Law on Communications, 2001, the Government of Mongolia (GOM) indicated its 
intention to establish a set of Universal Service Obligations to be implemented contractually by 
providers, within the context of a liberalized a nd predominantly private sector telecommunications 
environment.  
At the time, Universal Service Obligations implem ented contractually by Incumbent (fixed telephony) 
operator - Mongolia Telecom.  
As a key policy tool, the Law also included the est ablishment of a Universal Service Obligation Fund 
(USOF).  
Under the World Bank’s Public and Private Infrast ructure Advisory Facility (PPIAF), Intelecon 
Research & Consultancy Ltd. (Canadian) has been retained to assist the Government of Mongolia to 
develop a framework and strategy for the universal service obligations throughout the country, and for 
the use of the USOF to support the strategy.   WT/TPR/M/145/Add.1 
 Page 49 
 
 
83. Question by Brazil:  
Report by Government (WT/TPR/G/145).  The Government Report highlights the significant 
improvements achieved in the telecommunications sector after privatization (WT/TPR/G/145, chapter 
IV, paragraph 75).  As examples of this success, it mentions the increase of in come in the sector and 
the establishment of a fair competition regime (W T/TPR/G/145, chapter IV, paragraphs 75 e 76).  It 
also informs about the privatization of the stat e-owned “Mongolian Telecommunication” company in 
2005.  However, the Secretariat Report states that  the referred company “has a statutory monopoly 
on domestic basic telecommunications until 2015”  (WT/TPR/S/145, paragraph 28 of the summary 
observations), which may limit the goals of M ongolia’s competition measures.  How does the 
Mongolian Government assess this situation? Is this c onsidered a limitation and,  if so, what solutions 
are envisioned? 
Answer:  
See answers to questions posed by Canada , Hong Kong and the EC with regard to 
telecommunications.  
84. Question by the Republic of Korea:  
(WT/TPR/S/145, pages 65-66, para 32):   The Secretariat Report states that the Government aims to 
achieve an open and competitive telecommunications sector, and has introduced regulatory reforms 
(Communications Law, 2001) and the Government pl ans to further privatize MT and would consider 
full divestment.  Regarding the process of the priv atization, Korea thinks it important for the 
Government to develop its policy throug h an open and transparent procedure.  
Please provide information on whet her the Government of Mongolia plans to revise Communication 
Law or relevant law.  Please also explain in more de tail about the concrete plan of the privatization.  
Answer:  
See answers to questions posed by Canada , Hong Kong and the EC with regard to 
telecommunications. 
III.4 Tourism  
85. Question by Hong Kong, China:  
(WT/TPR/S/145, P. 70, Para. 96).   It is noted that there are no restrictions on foreigners providing 
tourism services, other than guide-interpreters, wh ich must be Mongolian citizens and meet certain 
training and grading requirements.  The services provided by these guide-interpreters would apparently fall under “tourist guide services”, for wh ich Mongolia has maintained full commitments 
in respect of modes 1 to 3.  Is the nationality requirement for guide-interpreters a kind of national 
treatment limitation?  
Answer: 
 
The Ministry of Road, Transportation and Touris m has set up a working group on amending this law. 
Among the provisions of this law under the scrutiny of the working group they have the very provision that the Hong Kong delegation raised.  The preliminary approach of the working group is to 
suggest the elimination of this clause. WT/TPR/M/145/Add.1 
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86. Question by the EC: 
 
Would Mongolia inform us on how much of the FDI a ttracted by the country in the last years has been 
in the tourism sector?  
Answer:  
There are over 546 private tourist companies operating in Mongolia, of which 61 are foreign 
investmented (2004). Total foreign investment in tourism sector since 1990 has been estimated at 
USD 9,588,000 (2002). 
87. Question by the EC:   
Would Mongolia inform us about their concrete pl ans to promote the tourism sector, and what 
measures the government is taking to ensure non-discrimination of foreign services suppliers? 
Answer:  
The Government of Mongolia has declared the tourism sector as a priority sector of the economy.  It 
hasinitiated a broad range of measures and promises to provide sufficient support to promote tourism 
industry in Mongolia.  Therefore, the Governme nt Action Plan for 2004-2008 and Basic Guidelines 
for Socio-economic Development have included a speci fic set of measures to promote tourism and to 
implement Tourism Law. From July of 2001 the inte rnational service for tourists has been exempted 
from the VAT (Value Added Tax).  In addition, 10 % of total expenditure for promotion activities is 
not subject to taxation. 
Since 1990, Mongolia is consistently pursuing a polic y to promote foreign direct investment in all 
spheres of economic activities.  In line with th is policy, the Government of Mongolia recognizes 
significance of FDI in the development of tourism sector, and therefore, encourages and facilitates 
foreign investment in the sector such as construction and management of hotels and camps that 
operate and provide services at internationally accept able standards.  However, the preferential tax 
treatment for foreign investors in the Foreign I nvestment Law does not apply to tourism sector. 
88. Question by the EC:  
Would Mongolia inform us abo ut their plans for improving professional education and training 
related to the tourism sector?  
Answer:  
54 state and private universities and colleges have been running classes on tourism management since 
1993 aimed at preparation of national professionals fo r the tourist industry.  12 companies have been 
running training courses for the tour guide.  The Government Action Plan for 2004-2008 and Basic 
Guidelines for Socio-economic Development have in cluded a specific set of measures to formulate 
training policy and plan, support training and retr aining course, improve the tourism curricula, 
develop the professional training institution and professional standards, run training courses, 
workshops and seminars for service personnel. 
89. Question by the EC:  
What is the approach of Mongolia to  the regulation of tourism-related aspects of general interests 
such us environment, wildlife, urban planning, etc?  WT/TPR/M/145/Add.1 
 Page 51 
 
 
Answer:  
Most of the tourist camps are located in the Stric tly Protected Area. 14 Strictly Protected Areas are 
designated for tourism development and in some T ourism development plans are formulated in order 
to reduce, eliminate and prevent destruction of th e natural resources of the protected area, and to 
allow local communities to use the natural r esources for tourism in a sustainable way. 
90. Question by the EC:  
What is Mongolia’s viewpoint abo ut the tourism sector and promotion of local cultures, development 
of water supply and sanitation services, and public security? 
Answer:  
During the last years since 1989 significant amount of investment from the central budget was 
directed towards the completion of unfinished c onstruction of water supply, sewerage treatment 
facilities and the engineering network.  Many proj ects implemented in this sector through assistance 
of the donors have greatly contributed to the im provement of water supply conditions hygiene and 
sanitation both in central and rural areas.  The necessity for renovation of water supply and urban 
services in rural areas and rehabilitation of sewerag e treatment facilities in Ulaanbaatar and other 
urban centres is becoming an immediate task in a short-term.  The Government’s mid-term objective 
for this sector is to improve the health and welf are of urban residents by rehabilitation and gradual 
expansion of basic urban infrastructure, esp ecially water supply and sanitation urban areas. 
91. Question by the EC:  
We would like to know about Mongolia’s assessment of the effect of the tourism sector in overall 
economic growth and employment, and in particular in other econom ic sectors like construction, 
transport, computer services, educ ation and professional training.  
Answer:  
In 2004 income from tourism is estimated at USD 181 million, and constitutes 10% of the GDP. 
92. Question by the EC:  
Would Mongolia inform us about the existing legislation applicable to tour managers (professionals 
accompanying groups of tourists in their travel  through the country) and tourist guides?  Would 
Mongolia inform us about the plans that the Go vernment is considering to reduce or eliminate 
discrimination of foreign services suppliers in these fields?  
Answer:  
At present the Ministry of Transportation and T ourism is planning to make amendments to the 
Tourism Law of Mongolia and for this purpose a working committee was set up.  The amendments 
envisage to remove the phrase “must be a Mongolian citizen” in Article 12.1.1 and change to “must 
possess the knowledge of the Mongolian language, one or  more foreign languages”.  Therefore, there 
will be the legal environment for rendering tour guide business without any limitations concerning the 
citizenship. WT/TPR/M/145/Add.1 
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III. 5 Transport
 
93. Question by the EC:  
The EC notes that the services sections of the Go vernment’s report generally focus on services sectors 
which have a key role in development such as financial services and communication services.  The EC 
supports the view that these sectors are important. In  the view of the EC other crucial sectors for 
improving development, include those of busin ess services and not least telecoms and transport 
services.  Noting the importance of liberalizatio n of services in promoting development, the EC 
should like to ask the following questions.  
Freight forwarding (CPC 748/749): Can Foreign Service providers establish (Mode 3) in these 
activities without market access /national treatment restrictions?  
Answer:  
Licensing of transportation services is not required by  virtue of the provisions of the Licensing Law.  
Any company, foreign or domestic, that meets th e standards of transport services and those of 
transporting organizations may involve in transport services.  
94. Question by the EC:  
Storage warehousing (CPC 742): Can Foreign S ervice providers establish (Mode 3) in these 
activities without market access /national treatment restrictions? 
Answer:  
Licensing of transportation services is not required by  virtue of the provisions of the Licensing Law.  
Any company, foreign or domestic, that meets th e standards of transport services and those of 
transporting organizations may involve in transport services.  
According to the Customs Law of Mongolia any domes tic or foreign organization (or business entity), 
which meets the provisions of Articles 24 and 31 of  the Customs Law may engage in such activities. 
Article 24 . Customs Bonded Warehouse.  
1. For the purposes of creating opportunities for market exploration and giving time for the 
preparation of customs documents and payment of customs duties and other taxes or their 
collection, goods may be deposited in a cu stoms bonded warehouse established in the 
customs territory. 
2. The following operations shall be pe rmitted in customs bonded warehouses: 
- Inspection of goods; 
- Preserving and protection of goods; 
- Unpacking, sorting, packing and repackaging; 
- Repair and maintenance; 
- Simple processing; 
- Where necessary, taking samples into the customs territory against payment of 
customs duties and other taxes. 
3. Goods shall be allowed to be stored in a cu stoms bonded warehouse for up to 2 years.  Where 
necessary, customs may extend once this period by up to one year.  WT/TPR/M/145/Add.1 
 Page 53 
 
 
Article 31 . Common Principles for Customs Bonded Zon es, Customs Special Zones and Duty Free 
Shops  
1. Customs bonded zones or duty free shops may be established customs inspection place or 
customs special zones. 
2. A customs bonded warehouse may be classified as a public, open to the public or as a private, 
for use by only one or more restricted number of business entities or organizations. 
3. Goods or means of transport shall enter a cu stoms bonded zone or cust oms special zone only 
through the point where there is a custom s establishment and on the basis of customs 
documents. 
4. Where goods enter or leave a customs bonded zones or customs special zones directly from or 
to abroad and without crossing the customs territory, they may en joy customs simplified 
procedures. 
5. In clearance of goods entering or leaving a customs bonded zone or customs special zone the 
customs legislation and exchange rates effectiv e on the date of their entry or exit, and the 
price and quantity of goods prevailing at that particular time shall be applied. 
6. Foreign goods coming from abroad shall enter the customs bonded zones or the customs 
special zones without payment of customs duties while Mongolian goods form the customs 
territory shall enter them in compliance with the customs legislation. Where foreign goods 
cleared for home use enter a customs bonded z one or customs special zone, the customs 
duties and other taxes shall not be refunded. 
7. Where goods enter or leave a customs bonded zone or customs special zone directly from or 
to abroad without crossing the customs terr itory, no guarantee of payment of customs duties 
and other taxes shall be required. 
8. Goods prohibited from crossing the state frontier of Mongolia shall not enter a customs 
bonded zone or customs special zone. 
9. For goods entering or leaving a customs bonded z one or customs special zone form or to 
abroad there shall be no restrictions other th an those imposed on grounds of national security, 
morals, hygiene or health, or for veterinary or  phytopathological consider ations, or relating to 
trade marks, patents or copyright. 
10. Goods that have entered or left a customs bonded zone or customs special zone may cross 
back over the borders of the customs bonded zone or the customs special zone on the basis of the previous goods declaration or simple forms. 
11. The customs state central administrative body sh all have the authority to issue, extend and 
cancel licenses for operation of a customs bonde d warehouse or duty free shop as authorized 
by Government. 
12. Customs bonded zones and bonded warehou se may be managed by the customs. 
__________