USG Trade-Related Assistance to the GOM

UNCLAS SECTION 01 OF 02 ULAANBAATAR 000159

SIPDIS

SIPDIS

STATE PASS USTR, USTDA, OPIC, AND EXIMBANK
STATE FOR EAP/CM AND EB/IFD/OIA
USAID FOR ANE FOR D. WINSTON
MANILA AND LONDON FOR ADB, EBRD USEDS
TREASURY FOR USEDS TO IMF, WORLD BANK

E.O. 12958: N/A
TAGS: ETRD EAID PREL EMIN ECON PGOV MG
SUBJECT: USG Trade-Related Assistance to the GOM


C O R R E C T E D C O P Y (RETRANSMIT A CLEAN COPY)


1. SUMMARY: In the upcoming bilateral Trade and Investment
Framework Agreement (TIFA) talks, Mongolia continues to ask for
trade-related technical assistance. USAID is already providing
extensive help in a number of areas, including trade policy and
negotiations, creation of a single window for trade facilitation,
and efforts to increase government transparency. We suggest that in
the TIFA talks, the U.S. encourage Mongolia to do its part in these
areas. End summary.

Trade Policy: USAID Helping, GOM Must Act Too
--------------


2. In late 2004, USAID's Economic Policy Reform and Competitiveness
Project (EPRC) concluded that the Government of Mongolia largely
lacked the structures, processes and professional staff required to
manage competitive international trade. In March 2005, EPRC
proposed the creation of a Trade Analysis Unit and Negotiations
(TANU). EPRC negotiated with and partnered with German aid agency
GTZ and the UNDP to launch the unit formally in July 2006.


3. Staffed with GTZ and UNDP consultants, TANU performs technical
analyses and prepares briefings for GOM trade negotiators. EPRC and
GTZ contribute short-term technical assistance to help TANU prepare
trade analyses. TANU does not currently have trade negotiators due
to shortage of funds.


4. EPRC has proposed the creation of a Trade Policy Council (TPC).
TANU would report to TPC through a TPC Technical Secretariat in the
Ministry of Industry and Trade. The proposal has gone through
several rounds of discussions and a government decree has been
drafted. EPRC/USAID have mandated official promulgation of the
decree to establish the TPC as a condition precedent to provide TANU
with computer systems and networks to enable them to function
efficiently.


5. The proposed Council and its technical secretariat would:
(a)oversee the coordination of foreign trade policy and analysis;(b)
make decisions on positions in trade-related international
negotiations and meetings; (c)oversee coordination of agencies
involved in foreign trade-related issues such as customs tariffs,
VAT at the border, standards, inspections, and compliance with
international trade agreements; (d) brief Parliament; and (e)
oversee the development and implementation of public relations
efforts on trade issues; and secure resources from donors and
international organizations to provide training to selected
Mongolian international trade negotiators.


6. During the TIFA talks, we suggest that the USG:

-- Encourage the GOM to pursue and develop TANU further. TANU is
running on a shoestring budget. The limited USAID resources to
support this will not go far, and our own budget situation is tight
(overall USAID allocations to Mongolia dropped from $10 million in
FY 2005 to $5.6 million in FY 2007). Increased GOM support is
needed.

-- Encourage the GOM to set up the TPC and use it as a mechanism to
rationalize and manage its trade policy making.

Customs: Stay the Course Toward a Single Window
-------------- --


7. As a result of EPRC discussions with the GOM, in October 2006
the Ministry of Finance (MoF) passed Resolution 251 to establish a
working group (WG) to implement the concept of a single window for
trade facilitation. Another decree made the Director of the
Information and Communication Technology Authority (ICTA) Chair of
this WG. At the request of the MoF, EPRC will provide technical
assistance to support these efforts. Agencies involved in the WG
include the Mongolian National Chamber of Commerce and Industry
(MNCCI),The Open Society Forum (OSF),the Ministry of Industry and
Trade, the Customs General Administration of Mongolia (CGAM),the
Mongolian Agency for Standardization and Metrology (MASM),the
Information Communication and Technology Agency (ICTA),and the
State Specialized Inspection Agency (SSIA).

ULAANBAATA 00000159 002 OF 002




8. On December 18, the Single Window for Trade Facilitation Working
Group held its first formal meeting, with Minister Bayartsaikhan
(MoF) acting as chair. EPRC prepared a paper on the concept of a
single window for trade facilitation, a summary of successful
international experiences in implementing the concept, and a
proposed action plan to implement the single window in Mongolia.
With minor changes, the WG accepted and adopted the project
proposals and MoF Minister asked ICTA to prepare a national program
and agreement for establishing foreign trade single window with the
help of EPRC. At the Minister's request, EPRC has assisted with the
drafting of an inter-agency agreement to implement the single window
for trade facilitation. The draft agreement incorporates comments
and its signing is pending.


9. EPRC identified the Societe Generale de Surveillance (SGS) as a
potential partner in a private or public-private partnership company
(to be determined through discussions with the GOM). SGS has been
an investor and technology provider in successful single electronic
window ventures for trade facilitation. EPRC negotiated a visit
from their team in late February to expose the WG to state-of-the
art practices in single electronic windows for trade facilitation.
At the first WG, Customs formally proposed a suggestion EPRC had
made concerning negotiating with ADB to use some of the proceeds
from an approved ADB loan to modernize customs as GOM equity
contribution in the yet-to-be-formed company.


10. During the TIFA talks, we suggest that the USG:

-- Encourage the GOM to "stay the course" on the single window
effort, which will probably take some 2 or 3 years to complete.

Transparency: Start Publishing!
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