The GSP+ is a special incentive arrangement for Sustainable Development and Good Governance that supports vulnerable developing countries. Next to fulfilling the eligibility requirements of the General GSP, GSP+ countries are required to ratify 27 international conventions on human rights, labour rights, environmental protection and climate change, and good governance. In order to ensure effective implementation of the conventions as well as compliance with reporting obligations, the EU engages in monitoring activities with the GSP+ countries. GSP+ beneficiaries can benefit from complete duty suspensions for products across approximately 66% of all EU tariff lines.
Mongolia is a landlocked economy where agriculture and herding are traditionally of high importance.
Foreign direct investment particularly in extractive industries such as mining of copper, gold and coal led to a significant increase in exports after the financial crisis in 2008. Today, mineral products account for over 90% of Mongolia’s exports, which leaves the Mongolian economy vulnerable to international price fluctuations with regard to these commodities.
Mongolia is highly dependent on a small number of trading partners. Trade with China and Russia accounts for almost 80% of the country’s total trade, leaving it vulnerable to economic fluctuations in these two countries.
Services (40%) and industry (39%) account for the largest shares in Mongolia’s GDP. In the last ten years, the share of agriculture has halved to about 11%. Industrial production in Mongolia concentrates on construction and mining.
Mongolia uses GSP+ preferences for around 23% of its total EU exports
The total trade between the EU and Mongolia summed up to € 550 million in 2019. The EU accounts for a share of 4.6% of Mongolia’s total trade and ranks fourth in Mongolia's trading partners behind China, Russia and Japan.
Mongolia can be considered a highly vulnerable economy and is noticeably below the threshold of 7.4%, indeed its vulnerability ratio for 2018 stood at zero. Mongolia’s export is highly concentrated in few products. The minimum export diversification threshold stands at 75% whereas Mongolia’s percentage was 95.9% in 2018.
A relatively small share of Mongolia’s current exports is eligible for tariff reductions under the GSP.
Mongolia currently has a high preference utilisation rate of 92%.
Over the years, the preference utilisation rate has shown considerable fluctuations, especially between 2011 and 2016. The decrease in preference utilisation during this period can be traced back to an increase in GSP eligible exports that were traded under most favoured nation rates. The preference utilisation increased 8 percentage points between 2016 and 2018, although total GSP eligible imports decreased. Likewise, preference utilisation has increased for individual product sections for example for fish and footwear imports. The value of EU imports from Mongolia using GSP+ has remained relatively steady, at around 23% of total imports. Overall, Mongolia currently makes notable use of GSP+ preferences, allowing the country to benefit from the arrangement.
In recent years, Mongolia experienced no significant change with regard to its export diversification, neither on sectoral nor on product level. Mongolia’s GSP+ preferential exports to the EU mainly consist of apparel and clothing, furniture and toys, wool and fish. Apparel, however, is by far the most dominating export good, accounting for 87% of the exports using GSP+ preferences. Sections in which GSP+ preferences remain underutilised are iron and steel articles and machinery (S-16) with utilisation rates of 16.6% and 13.9% respectively.
Mongolia ratified 27 core conventions on human rights, labour rights, environmental protection, and good governance. The most recent monitoring results over the period 2018-2019 showed that Mongolia maintained ratification of all relevant conventions, and, moreover, ratified additional conventions in the areas of human rights, labour rights and environmental protection voluntarily. Even though Mongolia continues to face constraints with regard to capacity and expertise, the country overall manages to fulfil its reporting obligations with the relevant monitoring bodies.
Prevention of Torture
Human Rights defenders
Labour inspections and revised labour law
During the reporting period 2018-2019, the EU focussed its monitoring activities on six priority areas. Notable progress has been made to contain child labour while corruption continues to pose a key challenge to policy makers. The revised Labour Code has been pending during the reporting period, such that the implementation of fundamental ILO conventions remains incomplete. National debates on a possible reinstatement of the death penalty have been silenced after the Mongolian government judged it incompatible with the country’s international obligations.
The level of ratification of core human rights treaties is high and goes beyond the requirements of GSP+. Mongolia has ratified 9 out of 10 human rights treaties except for the Convention on the Protection of the Rights of all Migrant Workers and Their Families, which, however, is not included in GSP+ obligations. According to the most recent GSP report, covering the period 2018-2019, the country made improvements in the level of compliance, especially in the area of implementing human rights obligations to promote and protect children’s and women’s rights, where new policies were adopted (Child Rights Act and Child Protection Act), and budgets substantially increased. Mongolia takes part in multilateral initiatives such as the Global Alliance for Torture-Free Trade and the International Contact Group on Freedom of Religion. Following recommendations by the Committee Against Torture, Mongolia committed to establishing an independent mechanism in order to investigate complaints of torture. Likewise, in response to the concerning situation of human rights defenders, Mongolia has extended its invitation to the UN Special Rapporteur. In recent time, the public debate around a reintroduction of the death penalty intensified. An assessment by the government, however, determined an incompatibility of a reintroduction with its international obligations and dropped the idea. There has been some concern about the independence of the judiciary resulting from a series of dismissals of high-level members of the judiciary. Additionally, the situation of human rights defenders remains problematic as no law on their protection has been passed yet. Finally, amendments to a number of laws indicate increasing concentration of political power.
Mongolia has ratified all 7 ILO conventions required by GSP+ and has additionally ratified the Forced Labour Convention (1930) and its 2014 Protocol. Mongolia participated in an EU funded project with the ILO to strengthen national capacities to improve ILS compliance and reporting between 2015 and 2017. This initiated a revision of the Labour Law and to improve alignment with fundamental principles and rights at work, which is currently under discussion in Parliament. Additional progress was made counteracting child labour through the strengthening of responsible institutions. Problems continue to appear with regard to limited power and resources available to the labour inspectorate which impedes monitoring activities and enforcement of existing labour laws. Another area of concern is child labour. Even though Mongolia has improved the legal framework with regard to children’s rights, child labour continuous to exist especially in hazardous areas such as mining and horse racing.
With urban pollution ranking among the highest in the world, the area of environmental policies and protection remains challenging for Mongolia, though the country shows strong commitment through robust laws on environmental standards and safeguards. Next to maintaining ratification of all eight international conventions on environmental protection required for GSP+, Mongolia has additionally ratified the Vienna Convention for the Protection of the Ozone Layer and the Nagoya Protocol on Access and Benefit-Sharing. Furthermore, Mongolia ratified the Paris Agreement in September 2016 and submitted its Intended Nationally Determined Contribution (INDC), which envisages a 14% reduction of GHG emissions by 2030. Being confronted with substantial environmental challenges from pollution and extractive industries, Mongolia has set strong environmental standards and safeguards to protect the environment. Nonetheless, future engagement is needed with regard to air pollution and the environmental compatibility of mining projects. Moreover, restrictive capacities partly impede the effective implementation of the required conventions. For example, Mongolia is still working on adjusting its legislation to the requirements of CITES as well as effectively implementing the Cartagena and Stockholm Conventions
Mongolia has ratified all four required conventions on good governance and shows strong commitment and has strengthened its efforts with regard to the national drug control policy. Here, again capacity constraints pose a challenge to entirely effective implementation. Corruption remains a core challenge particularly in the public sector and the judiciary. The topic of corruption has increased in public attention through several high-level corruption cases in recent years. Even though the government is dedicated to counteracting corruption through an enhancement of the legal and institutional framework, important regulations on anti-money-laundering and counter-terrorist financing remain missing.
The EU assisted Mongolia with approx. €65 million between 2014 and 2020 and contributed to the country’s sustainable growth and improved employment opportunities. Furthermore, the EU supports Mongolia through a number of projects related to economic diversification and rural development, strengthening civil society and the Mongolian justice system.
|2019‑06‑27||Monitoring Mission: The EU Commission’s last monitoring mission to Mongolia took place in June 2019 together with the EU-Mongolia Human Rights Dialogue and the EU-Mongolia Joint Committee meetings|