RESTRICTED
WORLD TRADE WT/ACC/MNG/6
7February 1996
ORGANIZATION(96-0461)
Original: English
ACCESSION OFMONGOLIA
Reply toQuestionnaire onState Trading
I. Enumeration ofState Trading Enterprises
Atpresent, onlythefollowing firms areengaged inState-trading activities inthecontext of
Article XVII oftheGATT 1994:
- "Mongolemimpex" Co.,Ltd(import ofmedicine);
- "Erdenet" Corporation (export ofcopper andmolybdenum concentrates);
- "Mongolrostsevetmet" (export offluor-spar).
Private firms canimport medicines without prior consent andapproval byanygovernment
agencies aswellasbytheMongolemimpex Co.,Ltd.itself thereto. ButtheGovernment places an
order ofessential medicines with, andgives totheMongolemimpex Co.,Ltd.directives tosupply
suchitems. Inthiscontext, theMongolemimpex Co.,Ltd.isinvolved inState-trading activities.
Private firms canenterintoagreements withtheErdenet Corporation andMongolrostsevetmet
andpurchase copper andmolybdenum concentrates andfluor-spar atthebargaining price, andthen
export theseproducts toanyforeign countries attheworld market price. Therefore, thelistofproducts
orgroups ofproducts falling within theState-trading activities includes onlymedicines (import of
essential medicines), copper andmolybdenum concentrates (export ofconcentrates those areextracted
andmanufactured bytheErdenet Corporation andMongolrostsevetmet).
II. Reason andpurpose forintroducing andmaintaining State-trading enterprises
Themaintenance oftheabove mentioned enterprises isnotintended toprotect thedomestic
industry andrestrict imports. These enterprises donotenjoy anyexclusive orspecial privileges since
private firms canbeengaged inimport ofmedicines andexport ofcopper andmolybdenum concentrates.
Atthesame time, theErdenet Corporation andMongolrostsevetmet arejointventures companies
constituted andincorporated under thelawsofMongolia. Theforeign capital contributions tothese
twocompanies isnotdemonstrating anyrestriction bytheGovernment ofMongolia offoreign
competition inthemining andother economic sectors ofMongolia. Foreign anddomestic investors
cansetupjointventure companies or100percentwholly owned foreign enterprises under theForeign
Investment Law, which maybeengaged inimport ofmedicines aswellasmining activities including
export ofcopper andmolybdenum concentrates.
III. Description ofthefunctioning oftheState-trading enterprises
Atpresent,anybusinessfirmsareentitledtoconductexportandimportoperationsindependently
under thePartnership andCompanies LawinMongolia. Therefore, anybusiness firms including theWT/ACC/MNG/6
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State-trading enterprises dealwithbothexports andimports. There arenoconditions onwhich private
traders areallowed toimport andexport anygoods. Private firms arecompeting withtheState-trading
andStateowned companies andthefaircompetition between themisgoverned bytheLawonUnfair
Competition, enacted in1994.
There arenoquotas andquantitative restrictions ongoods tobeexported andimported.
Exporters dodetermine export prices bynegotiations withtheirforeign partners onthebasis
oftheworld market price. There isnoStateprice control overimport andexport ofgoods, andthe
domestic prices arenotfixed andcontrolled byanygovernment authorities. Business operators do
determine domestic prices taking intoconsideration themarket demands atthatmoment.
Atpresent, long-term contracts arenotnegotiated byanyoftheabove mentioned State-trading
enterprises andState-trading methods arenotusedtofulfilcontractual obligations entered intobythe
Government.WT/ACC/MNG/6
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Statistical Information onState Trading Enterprises
Table 1:Copper andMolybdenum; Production andTrade (mln. US$)
Year Production Exports
o/w:Erdenet Others o/w: Erdenet Others
Copper Concentrate
1993 162.2 0 155.16 7.05
1994 196.66 0 188.7 7.96
1995 259.49 0 259.49 0
Molybdenum Concentrate
1993 5.45 0 5.45 0
1994 15.76 0 14.4 1.36
1995 19.16 0 18.16 0
Table 2:Fluorspar: Production andTrade (mln. US$)
Year Production Exports
Mongolrostsvetmet Others Mongolrostsvetmet Others
Fluorspar Concentrate
1993 8.86 0 8.86 0
1994 11 0 11 0
1995 17.49 0 17.49 0
Fluorspar grade
1993 8.69 0 8.69 0
1994 1.58 0 1.58 0
1995 0 0 0 0
Table 3:Trade inMedicines (thousands ofUS$)
Year Exports Imports
Total o/w.
MongolemimpexOthers Total o/w.
MongolemimpexOthers
1993 79.9 31.2 48.7 6377.8 5959.6 418.2
1994 6.6 0 6.6 2865.2 2580.3 284.9
1995 31.8 0 31.8 9591 8904.9 686.1