. /.  WORLD TRADE  
ORGANIZATION   
WT/GC/W/638 
G/C/W/652 
27 September 2011 
 (11-4682) 
General Council 
Council for Trade in Goods Original:   English 
 
 
 
MONGOLIA – EXPORT DUTIES ON RAW CASHMERE 
 
Communication from Mongolia 
 
 
The following communication, dated 22 September 2011, is being circulated at the request of 
the delegation of Mongolia. 
 
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1. Background 
Mongolia committed to phase out and eliminate the export duty on raw cashmere within ten 
years of the date of its accession.1  Following Mongolia's request for a waiver,2 the General Council 
waived its obligations and extended the implementa tion of the commitment for another five years 
until 2012.3  
 
2. The impact of the export tax on the cashmere sector 
The maintenance of the export tax on raw cashmere  had had the effect of reducing its exports, 
prevented the price fluctuations at the domestic market and ensured more stable operations of 
domestic cashmere producers. 
 In the last decade, the number of goat heads increased from 4.9 million to 18.2 million, 
subsequently the yield of raw cashmere increased from 1500 tons/year to 6800 tons/year.  There were 
about 30 cashmere processing factories, of whic h 4 were deep processing ones and the rest were 
primary processing ones in 1997.  Currently, ther e are 13 deep processing, 25 primary processing 
factories, and more than 200 knitting SMEs and fa mily-run micro-factories.  Investment in the 
cashmere sector has increased substantially.  
 The structure of production has changed signifi cantly by 2010:  primary processing decreased 
from 81.2% in 2000 to 36.8%, on the contrary, weav ing and deep processing increased to 44.1% and 
19.1% respectively from 14.6% and 4.2% in 2000.  The data shows that the level of processing 
advanced and the production of fi nished products nearly double d from USD 65.6 million in 2000 to 
USD 115.2 million in 2010.  
 During the last 12 years, when the export ta x was imposed on raw cashmere, the capacity of 
primary processing, washing and combing factories increased by 1.5-1.8 times compared to the raw 
                                                      
1 Paragraph 24 of the Report of the Working Party on the Accession of Mongolia.  WTO document 
WT/ACC/MNG/9. 
2 WTO document G/C/W/571. 
3 WTO document WT/L/695. WT/GC/W/638 
G/C/W/652 Page 2 
 
 
  cashmere prepared annually, the spinning, knitting an d weaving factories increased and reached 50% 
of raw materials.  Until 2009, herders prepar ed cashmere worth USD 150-190 million annually, of 
which about 30%-50% went to domestic producers.  As a result, the value worth more than USD 130 
million was added annually.  This doubled the prod uction and increased exports by 42% compared to 
that in 1997.  
 Cashmere is the third important product in th e country's export after gold and copper and is 
considered a product of strategic importance as it constitutes 6.3% of GDP.  The sector is the source 
of income for one third of the total population and contributes 16% in total employment. 
 
3. Conclusion 
The maintenance of the export tax on raw cashmere had a significant impact on the overall 
performance of the sector.  It increased the suppl y of raw materials to domestic producers;  the 
production and exports of finished pr oducts substantially increased.  It also helped the Government to 
address some of competitiveness measures and achieve, to a certain degree, its goal to protect and 
increase value added in the cashmere sector, which is  one of the strategically important sectors of 
Mongolia.  
Taking the opportunity, Mongolia wishes to expres s deep appreciation to all Members for the 
support of its request for a waiver of the commitment. 
 
Mongolia wishes to inform Members that in view  of the overall liberalization measures by the 
Government, the export tax on raw cashme re was eliminated in June 2009.  
  
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