Economic relations between

Japan and Mongolia:

Latest trends and developments

November 10, 2014

1. Activation of the high level personnel exchange ・・・・・・・・・・・・・・・・・・・・・・・・・・ 2 - 3

2. Deepening economic relations between Japan and Mongolia

Trade, Investment, EPA・・・・・・・・・・・・・・・・・･･･ 4 - 7

3. Economic Cooperation to Mongolia ODA・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 8 - 9

Contents

1

●Summit Meetings

November 2010 - Visit to Japan by President Ts. Elbegdorj

⇒ Signing of the “Japan-Mongolia Joint Statement for Building a Strategic Partnership”

Elevating bilateral relations from “Comprehensive Partnership” to “Strategic Partnership”

March 2012 - Visit to Japan by Prime Minister S. Batbold

⇒ ”Joint Announcement” on launching negotiations for establishing Japan-Mongolia Economic Partnership Agreement

September 2012 - Summit meeting during participation in the United Nations General Assembly

March 2013 - Visit to Mongolia by Prime Minister S. Abe

September 2013 - Visit to Japan by Prime Minister N. Altankhuyag

⇒ “Joint Statement” and “Mid-term Action Plan” - basis for elevating the “strategic partnership” between the two countries to even higher

levels and further strengthening of the mutually beneficial and complementary relationship

September 2013 – Short visit to Japan by President Ts. Elbegdorj (on his return trip after attending the United Nations General

Assembly)

January 2014 – Telephone conference between Prime Minister S. Abe and President Ts. Elbegdorj

July 2014 - Visit to Japan President Ts. Elbegdorj

⇒ Signing of the ”Joint Statement on the agreement in principle in the negotiations of the Japan-Mongolia EPA, and the promotion of trade

and investment between Japan and Mongolia”

September 2014 - Summit meeting during participation in the United Nations General Assembly

●Foreign Ministers’ Meetings

October 2012 - Visit to Japan by Minister for Foreign Affairs L. Bold

June 2013 - Visit to Japan by Minister for Foreign Affairs L. Bold (Reference: Cabinet Secretariat)

1. Activation of the high level personnel exchange: Agreement on building

“Strategic Partnership”

2

① Trade

●Total trade amount between Japan and Mongolia： approx. 31.2 billion yen （as of December 2013, Trade Statistics of Japan)

※Major export items from Japan: used cars, construction and mining machinery

※Major export items from Mongolia: coal, fluorite

・For Mongolia, Japan is the fifth-largest trade partner country Import from Japan: fifth largest (7.0 %); Export to Japan: ninth largest (0.2 %)

※ Mongolia’s top trade partners: 1. China, 2. Russia, 3. Korea (as of the end of 2013, Annual Statistics by GOM)

・For Japan, Mongolia is the 74th export partner and the 127th import partner country.

Trade share of Mongolia (2013)

China

86.8%

British

4.7%

Canada

3.2%

Russia

1.4%

Italy

1.2%

Others

2.7%

Export

China

28.7%

Russia

24.6%

USA

8.1%

South

Korea

8.0%

Japan

7.0%

Others

23.7%

Import

3

2007 2008 2009 2010 2011 2012 2013

対モ輸出 181,025 238,383 99,373 139,714 256,887 275,254 293,076

対モ輸入 19,058 37,527 6,784 20,094 14,048 20,600 18,672

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Shift of export/import trade to/from Mongolia

(Trade Statistics of Japan) (0.1mln yen)

Export

Import

2. Deepening economic relations between Japan and Mongolia

4

② Investment

●Direct Investment from Japan to Mongolia: approx. 0.207 billion $ (as of 2013, Invest Mongolia Agency)

・The twelfth-largest investor country ※ 1. Netherlands; 2. China; 3. Luxemburg; 4. British Virgin Islands;

5. Singapore

③ Japan-Mongolia Public and Private Sector Joint Committee

Based on the “Japan-Mongolia Basic Action Plan for the Next 10 Years” announced in

February 2007, “Public and Private Sector Joint Committee on Trade and Investment

Promotion” and “Public and Private Sector Joint Committee on Mineral Resources

Development” were established. Meetings of these committees are held in Japan and

Mongolia in turn. The first meeting was held in Tokyo in November 2007, and the sixth

meeting was held in Ulaanbaatar in May 2013.

0

50,000

100,000

150,000

200,000

2008 2009 2010 2011 2012 2013

( thou USD )

Investment amount from Japan to Mongolia

Top investor countries

（1990-2013）

China

26.44

Netherlands

29.68

Luxemburg

8.09

British Virgin

Islands 7.79

Singapore 5.09

Canada 3.5

Russia 2.09

Australia

2.7

South

Korea

2.69 Japan

1.46

USA

2.16

2. Deepening economic relations between Japan and Mongolia

④ Japan – Mongolia Economic Partnership Agreement (EPA) ●Mongolia looks forward to concluding its first EPA with Japan.

●March 2012 - Agreed to launch negotiations on the Japan – Mongolia EPA at the summit

meeting

●June 2012 - The first round of Negotiations was held (adopted the TOR of the

negotiations).

- A total of seven rounds were held since then.

●July 2014 - Agreement in principle

2. Deepening economic relations between Japan and Mongolia

5

Outline of principle agreement

Reference: Trade Statistics of Japan Reference: Statistics by the GOM

To Mongolia

Approx. 39.9 billion yen

Trade structure between Japan and Mongolia

Customs duties on approx.

96% of bilateral trade

turnover will be eliminated

within 10 years after EPA

comes into force

100% of Mongolia’s export

to Japan will become

duty-free within 10 years ( Trade Statistics of Japan, 2012)

Approx. 96% of Japan’s

export to Mongolia will

become duty-free within

10 years (Statistics by GOM, 2012)

Others

Machinery

(Power

generating

machine etc.)

Coal Mineral products

(Fluorspar etc.)

To Japan

Approx. 1.9 billion yen

Textile

(cashmere etc.)

Others 2.1%

Machinery

(Including

construction

machinery)

18.5%

Motor vehicle

(Including spare

parts)

Electrical Machinery Precision instruments

Agriculture

products 4.7%

Chemical

products

(including

rubber, tires)

5.1%

6

2. Deepening economic relations between Japan and Mongolia

Outline of principle agreement

Market access improvement: Mongolian side

❏ Industrial goods

・Cars and car components (spare parts): For the

most part, tariff will be eliminated within 10

years.

・ General machinery: immediate or phased tariff

elimination

❏ Agricultural goods

・Cut flowers, fruits, fermented soybean paste,

soy sauce etc.: immediate or phased tariff

elimination

❏ Others

・ Sake (brewed rice wine) and Shochu (distilled

beverage): immediate tariff elimination

Market access improvement: Japanese side

❏ Industrial goods

・For the most part: immediate or phased

tariff elimination (within 10 years after

coming into force)

❏ Agricultural goods

Immediate or phased tariff elimination

within 10 years after coming into force

・Chatsargana (sea buckthorn) products

・Pet foods

・Colza oil etc.

Tariff rate quota

・ Some processed beef products, mature

cheese, curd drink, lapsha noodle etc.

① Purpose and meaning of Assistance

Mongolia is a country located between two large countries, China and Russia. Assisting

Mongolia in strengthening its democratization and developing the country’s economy is

significant for stability and peace in East Asia, which is highly relevant to the security and

economic prosperity of Japan. It is also important from the point of view of environmental

conservation and protection of Mongolia’s indigenous traditional cultural heritage.

② Official Development Assistance

The total amount of ODA (1990-2013):

approx. 231.2 billion yen

→The largest amount among countries assisting Mongolia

－Loan Aid: 89.09 billion yen (based on exchange of notes)

－Grant Aid: 105.51 billion yen (based on exchange of notes)

－Technical Cooperation: 36.58 billion yen (based on expenditures of JICA, as of the end of 2012 FY)

Due to rapid economic development in Mongolia, assistance by Japan will be shifted from

“grant aid” to “loan aid” hereafter.

FY Loan Aid Grant Aid Technical

Cooperation

2008 0 3.15 1.15

2009 2.89 3.14 1.29

2010 5.00 4.78 1.32

2011 1.55 5.01 1.77

2012 0 3.40 1.70

2013 11.74 3.19 Being added up

Total 89.09 105.51 36.58

7

(Billion yen)

3. Economic Cooperation to Mongolia

8

③ Priority Areas of the Assistance

Final goal of supporting the effort toward poverty reduction through sustainable

economic growth and assistance is focused on the three pillars mentioned in the

“Directions of the Assistance to Mongolia (April 2012)”:

●Sustainable development of the mining sector and enhancement of governance

Support for making strategic plan for mining development, production and utilization,

strengthening the financial management and capability, improving administrative

transparency etc.

●Assisting Inclusive Growth

Expansion of job opportunities through promotion and development of SMEs towards

industry diversification, upgrading the living standards by accumulating

herder’s/farmer’s income opportunities, improving basic social services etc.

●Enhancement of the capacity and function of Ulaanbaatar as urban center

Improvement of urban planning and management, rendering assistance for establishing

the infrastructure with introduction of Japan’s experience and high technology.

3. Economic Cooperation to Mongolia