Mongolia Seeks US Free-Trade Pact To Protect Textile Pdts
Dow Jones
2 September 2004
Mongolia Seeks US Free-Trade Pact To Protect Textile Pdts
BEIJING (Dow Jones)—Mongolia is seeking to protect its textile industry from the expiry of U.S. quotas at the end of 2004 by inking a free-trade deal with the U.S., a Mongolian official said Thursday.
"The expiry of the quota system is going to be a serious blow to Mongolia (and) what we are doing at this moment is that we have proposed to sign a free-trade agreement with the U.S.," Mongolian People’s Revolutionary Party Secretary Yondon Otgonbayar told a press briefing.
Mongolia signed a trade and investment framework agreement with the U.S. this year and is hoping to use that as a foundation toward a full free-trade deal, he said.
The free-trade agreement will likely be one of the economic priorities of a new coalition government whose prospective members, including the MPRP, are likely to issue a manifesto next week.
The coalition government is the result of June elections that slashed the parliamentary majority of the MPRP, which led Mongolia under communism, from 72 seats to just 36.
Mongolia’s pursuit of a U.S. free-trade agreement reflects the concern among developing Asian countries that have built thriving textile export trade regimes upon a U.S. quota system that will expire at the end of this year.
Those quotas are part of the Multifiber Agreement, or MFA, an international pact in effect since 1974 that uses import quotas to regulate the $350 billion world trade in garments.
Textile exporting countries like Mongolia fear that the MFA’s Dec. 31 expiry and the end of the U.S. quota system will put them at a competitive disadvantage to lower-cost, China-based textile exporters.
The U.S is Mongolia’s third biggest export market, the bulk of that trade being textiles.
The MFA’s pending expiry puts at risk "tens of thousands" of jobs, and textile exports’ contribution of around 10% to Mongolia’s annual gross domestic product, Yondon Otgonbayar said.
Mongolia will also likely sign by year’s end a stability agreement with Canada’s Ivanhoe Mines Ltd. (HUGO) for the planned massive Oyu Tolgoi copper and gold mine project.
The agreement will mark the end of a year of negotiations between the two sides.
"The reason why it’s taken (so) long is because it’s the first project of such magnitude for Mongolia," Yondon Otgonbayar said.
"We’ve been trying to strike a fair deal with the investor on one hand...and on the other to bargain as much as we can from the project."
