Mongolia’s relations with North East Asian countries and possibility of involvement in regional...
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Mongolia’s relations with North East Asian countries and possibility of involvement in regional integration TS. DAVAADORJ Director of Information & Analysis Service, National Security Council of Mongolia October 3 rd , 2013
Mongolia’s relations with North East Asian countries and possibility of involvement in regional integration TS. DAVAADORJ Director of Information & Analysis
Mongolias relations with North East Asian countries and
possibility of involvement in regional integration TS. DAVAADORJ
Director of Information & Analysis Service, National Security
Council of Mongolia October 3 rd, 2013
Slide 2
Contents: I. Northeast Asia cooperation - Political
difficulties - Northeast Asian economy - Greater Tumen Initiative -
Energy security in NEA II. Mongolia and NEA countries relations -
China-Mongolia - Russia-Mongolia - Japan-Mongolia - South
Korea-Mongolia - North Korea Mongolia III. Mongolia-Russia
cooperation opportunity in the region - Main Necessities of
Russia-Mongolia Cooperation - New Silk Road - Opportunity of
Russia-Mongolian cooperation /railway/
Slide 3
Abstract The most important subregion in Asia, Northeast Asia -
comprising the China, Japan, South Korea, North Korea, Mongolia,
and the Russian Far East - is key to Asias success in contributing
to global prosperity and stability. These countries occupy
sensitive geo-political positions in both the Cold war and
contemporary eras. The regions major political challenge is to
maintain peace and security in the Korean peninsula and manage the
territorial disputes among some countries, while pursuing economic
cooperation to promote growth and development, trade and investment
integration, physical connectivity, energy security, and
environmental sustainability. In recent years, Mongolia has shown
signs of economic growth. Mongolias mining wealth is attracting
attention beyond its Russian and Chinese neighbours. Mongolian
active participation and role is important in Northeast Asia.
Slide 4
I. Northeast Asia Cooperation
Slide 5
Northeast Asia Japan, South Korea, North Korea Mainland China,
Hong Kong, Taiwan Russia, Mongolia
Slide 6
Political Difficulties: Legacies of World War II - Japanese
atrocities in Pacific Asia Legacies of Cold War - Partition of
Korea Territorial dispute - Japan China - Japan - Russia - Japan
Korea etc
Slide 7
Northeast Asian economy China, Japan and South Korea are the
worlds second, third and 11th biggest economies in the world. These
three NEA countries hold significant global economic power in the
21st century. Japan followed outward foreign investment, Korea
adopted export-driven growth, and China launched a going out
strategy. Russias plans for developing its Far East are based on
the regions potential. Russias Far East is certainly rich in
resources, including metals and minerals. It is also well placed to
be a transit and logistics hub for shipping Russian oil and gas
onward to Asia and Asian-made goods deeper into Russia. Mongolias
copper, gold, coal, molybdenum and others mining deposits have
attracted foreign direct investment. Mongolias medium-term economic
prospects are favorable. The mining sector is expected to continue
to be the main engine of growth in 2013 and 2014, with commercial
production at the Oyu Tolgoi copper and gold mine starting in
mid-2013. Growth in GDP: 12.3% in 2012. 17.5% in 2011.
Slide 8
Asia-Pacific Economic Cooperation (APEC) Established in 1989 by
the initiative of Australia Its members are 21 Pacific Rim
countries or formally Member Economies Main factors led to
establishment Growing interdependence of Asia-Pacific economies and
the advent of regional trade blocs in other parts of the world;
Fears that highly industrialized Japan would come to dominate
economic activity in the Asia-Pacific region; Establish new markets
for agricultural products and raw materials beyond Europe
Slide 9
Bogor Goals (was adopted in 1994 Bogor, Indonesia) Creating
free and open trade and investment in the Asia-Pacific by 2010 for
industrialized economies and by 2020 for developing economies
APEC's Three Pillars To meet the Bogor Goals, APEC carries out work
in three main areas: 1. Trade and Investment Liberalization 2.
Business Facilitation 3. Economic and Technical Cooperation Last
summit - Vladivostok, Russia (September 9-10, 2012) Bali Indonesia
(October 5-7, 2013)
Slide 10
Membership and Enlargement Current members Announced interest
in membership
Slide 11
China-Japan-South Korea FTA In December 2011, the three
countries held a final joint study meeting on the feasibility of an
FTA among them. In January 2012, the South Korean and Chinese
presidents announced that they would move towards negotiating a
bilateral agreement between the two countries. In March 2012, the
three countries concluded an investment agreement among themselves
which is viewed as a step towards a more comprehensive FTA. In May
2012, China and Korea held their first round of negotiations
towards an FTA in Beijing. Three sides discussed key issues such as
ways to lower tariffs and the scope of future negotiations based on
terms of reference adopted at the first round of talks. The second
round of negotiations for a Free Trade Agreement (FTA) among Japan,
China and the Republic of Korea (ROK) was held in Shanghai, China
from July 30 to August 2. In this round of negotiations, areas such
as Trade in Goods, Trade in Services, Customs Procedures,
Competition Policies, amongst others, were discussed. The third
round of negotiations will be held in Japan in November or
December, 2013.
Slide 12
Slide 13
Economic indicators of Northeast Asian countries, 2011
Slide 14
Economic integration in NEA Greater Tumen Initiative Northeast
Asian economies have undertaken an infrastructure cooperation
initiative, called the Greater Tumen Initiative (GTI). Established
in 1995 under an earlier name, the GTI is an intergovernmental
cooperation mechanism in Northeast Asia, supported by UNDP, with
the current membership of four countries: the PRC, the Republic of
Korea, Mongolia, and the Russian Federation. The GTI has an
institutional framework consisting of two intergovernmental bodies
(the Consultative Commission and the Coordination Committee), the
Tumen Secretariat, and the Council of Eminent Persons for the Tumen
Programme. The origin of the GTI is in the Tumen River Area
Development Programme (TRADP), a subregional program by UNDP
commenced in 1991. Its member countries included the PRC, the DPRK,
the Republic of Korea, Mongolia, and the Russian Federation, with
Japan, Finland, Canada, the World Bank, and ADB holding observer
status. It started as a planned 20-year-long program, which
envisioned a grand design to transform about 3,000 square
kilometers (km) of the Tumen River Economic Zone into an economic
center in Northeast Asia, like Hong Kong and Singapore. The
financial needs for the project were estimated at about $30
billion. However, due to financing difficulties, the project was
adjusted to focus on five sectors: trade and investment, transport
and communications, environment, tourism, and energy.
Slide 15
Since its commencement, the TRADP had experienced three phases.
Phase I (19911996) attempted to create a joint special economic
zone to be built on land leased from the PRC, the DPRK, and the
Russian Federation.It was envisaged that significant infrastructure
investment would be required for this internationally managed
cross-border zone. Phase II (19972000) aimed to operationalize the
agreements signed in Phase I and advance development within the
subregion with a focus on trade, investment, and environmental
management. Phase III (20012005) had a dual objective of
strengthening the institutional framework of the initiative and
continuing to contribute to the economic development of the
subregion through concrete actions in the five sectors mentioned
above (trade and investment, transport and communications,
environment, tourism, and energy)
Slide 16
Despite its large potential, however, the GTI has not been able
to make substantial progress in terms of subregional economic and
infrastructure development as well as cooperation. The main
obstacle has been political. First, political commitment to
subregional development cooperation has not been as strong as in
Asias other subregional groups, as evidenced by a lack of leaders
or even ministers processes.Sufficient financial resources have not
been put by member countries. Second, Japan has never been a member
of the TRADP or GTI, and the DPRK withdrew its membership. Japan
has not joined the program and/or initiative because of the
unfavorable political relationship with the DPRK. Third, without
tangible economic reforms and opening on the part of the DPRKnot to
mention its GTI membership withdrawalsupport for infrastructure
development may not bear sufficient fruit. A significant
improvement of political stance, external relations, and economic
regime in the DPRK would be needed for the GTI to become truly
effective.
Slide 17
Slide 18
Approved Greater Tumen Initiative Projects
Slide 19
Energy security in NEA Energy security has emerged as one of
the hottest agenda in Northeast Asia. There are three major
consuming countries (China, Japan, Korea), and two major producing
countries (Russia, Mongolia). It has been assumed that cooperation
between NEA countries would be necessary since all have faced a
major challenge to secure their energy supply. However, in spite of
shared sense of necessity, regional energy cooperation was largely
unsuccessful.
Slide 20
NEA energy security threatening factors Rapid Growth of Energy
Demand EIA (Energy Information Administration of USA) forecast of
annual growth rate for 1999~2020: China 4.7%, South Korea 2.8%,
World Average 2.2% Growing Dependency on Oil Oil becoming the
leading primary energy in NE Asia China (2 nd largest consumer),
Japan (3 rd ), South Korea (10 th ) Increasing Import from Outside
the Region 76% of NE Asia oil imports from the Middle East in 2011:
Japan (87%), S.Korea (72%), China (46%) Vulnerability to
Environmental Issues High dependency on coal (64% in China) and oil
(S. Korea 51%, Japan 50%, China 30%)
Slide 21
Main Necessities of NEA Energy Cooperation Diversification of
energy supply sources from Middle east Asia Expand scale of energy
industry - Effective development of resources throughout technology
transfer - Create and specialize business activity in energy
projects To establish new energy market - Secure a stable energy
demand - Exploit and export energy resources from East Siberia and
the Far East - Spill-over effects and expanded energy markets To
build up energy infrastructure - Set-up energy distribution and
infrastructure system in Siberia Far East and Mongolia
Slide 22
Potential Energy Cooperation Projects Resource and
transportation route development projects Construction of expanded
crude oil pipeline in East Siberia Development of natural gas.
Construction of cross-border pipeline networks: and Cross-border
power interconnection grids Mainland China-Korea-Russia Security of
Coal transit rail corridor over China and Russia Development of
Down-stream cooperation projects Joint strategic oil stockpiling
Sharing refinery/upgrading facilities
Slide 23
Comparison of Mongolian coal deposits
Slide 24
Slide 25
II. Mongolia and Northeast Asian countries relations
Slide 26
North East Asia
Slide 27
China - Mongolia Mongolia and China established diplomatic
relations in 1949. Over the last 10 years in particular, their
relations have developed rapidly and made remarkable achievements.
In 1994, bots sides signed again Treaty on Friendship and
Cooperation between China and Mongolia, laying the political and
legal foundation for the healthy and steady development of their
relations. Two countries established Strategic partnership in 2011.
In recent years, Mongolia has been following a friendly
relationship and a policy to develop sustainable mutually
beneficial cooperation with the China. China involves actively in
Mongolias infrastructure progress, besides to advocate Mongolia on
mining, transit traffic, agriculture and energy industry sectors.
Mongolia is willing to cooperate with China in mining and
infrastructure sectors on long term. The transit freight rates via
Tianjin municipality have not been resolved yet, which means
Mongolia as a landlocked country, this issue is an utmost important
one to be solved in the near future.
Slide 28
Japan-Mongolia Diplomatic relations between Japan and Mongolia
were established in 1972. Substantial expansion of the bilateral
relationship has taken place since Mongolia's democratization and
transition to market economies in 1990. Japan has been providing to
Mongolia top donor since Mongolias democratization. Mongolia states
that Japan is important developing relations of Strategic
Partnership from traditional good friendly third neighbors of
Mongolia. Mongolia and Japan established Comprehensive partnership
in 1997, the two countries proposed a new objective to step up the
relations of the two countries to level of strategic partnership.
This will further strengthen mutually beneficial relations
substituting each others disadvantages, and it will be an important
step to cooperate within the framework of politics, economy, and
environment those are challenging the region of Asia and
international communities. Also, parties confirmed to immediately
establish Economic partnership agreement /EPA/.
Slide 29
Prime minister of Mongolia N.Altankhuyag and Prime minister of
Japan Shinzo Abe held official talks in Tokyo on september 13, 2013
and signed the medium term program for Strategic partnership. This
document determines the activities for the next five years of the
Mongolia, Japan partnership.
Slide 30
South Korea - Mongolia South Korea is the first nation to
establish diplomatic relations with Mongolia after 1990
Democratization in March, 1990. Agreement on Foreign trade,
investment, economic, scientific, technological, cultural
cooperation signed in March, 1991. High level visits are frequent
since establishment of diplomatic relations. Agreement on Energy,
natural resources development based on mutual benefit and
cooperation signed in 1999. Economic relations growing since 2000.
Agreement on Good neighborly cooperation partnership signed during
President Roh Moo-Hyeons visit to Mongolia in 2006. Agreement on
Comprehensive partnership signed during President Lee Myung-Baks
visit to Mongolia in 2011.
Slide 31
North Korea-Mongolia Mongolia and North Korea established
diplomatic relations in 1948. Mongolia became the second country to
recognize North Korea after the Soviet Union. North Korea and
Mongolia are strengthening economic cooperation as national
interests of the two states overlap in many areas. As Mongolia is a
landlocked country, Ulaanbaatar wants to take advantage of North
Koreas Rajin Port as a conduit to export Mongolias natural
resources to foreign countries since access to the East Sea via use
of the port can significantly reduce transportation costs. North
Korea sends a large number of workers to Mongolia to work at
construction sites. Radio Free Asia (RFA) reported on July 3 that
there were 1,749 North Korean workers dispatched to Mongolia as of
April the second largest group of foreign laborers in Mongolia
(second only to the Chinese at 5,976 workers), which has a total of
12,064 workers from 103 countries.
Slide 32
Six-party talks have continued, on and off, for years between
South Korea, North Korea, China, the U.S., Russia and Japan.
Mongolia has maintained good relations with North Korea for
decades. So Mongolia seeks to play peacemaker as North Korea. The
official bilateral talks between the Governments of DPRK and Japan
hold in Ulaanbaatar under the auspices of the President of Mongolia
Ts.Elbegdorj on November, 2012. Mongolia negotiated with both
parties to conduct the meeting in Ulaanbaatar, and deems by hosting
this Foreign Ministerial-level talks between North Korea and Japan
in its own territory would contribute Mongolias role to normalize
the sustainable situation in the Northeast Asian region, moreover
bring the relationship between the two countries into the new level
of mutual understanding. Mongolia plays a unique role in the Korean
Peninsula by continuing close relations with its North Korean
neighbor. Mongolia is perceived by Pyongyang as Northeast Asias
only non- threatening nation. Mongolia is also one of the few if
not the only country in the world which has a visa free regime with
North Korea.
Slide 33
Initiative on Ulaanbaatar Talks on Security of Northeast Asia
President of Mongolia Ts.Elbegdorj held a meeting with Secretary
General of the United Nations Mr. Ban Ki-moon during the 68 th
General Assembly meeting and informed him about Mongolias
initiative on holding Ulaanbaatar Talks on Security in Northeast
Asia. Secretary- General expressed thanks and said UN will back all
activities initiated by Mongolia for contributing peace and
security in the region.
Slide 34
ROK Northeast Asia peace initiative Seoul Process South Korean
President Park Geun-hye unveiled her vision to promote peace in
Northeast Asia, inviting North Korea to join in the trust-building
process. The Seoul Process calls for participating states to
enhance cooperation, first on non-political issues such as climate
change, terrorism prevention and atomic power The initiative is
expanded version of Parks Korean Peninsula trust process that calls
for greater exchanges and cooperation between the two Koreas.
Slide 35
Russia - Mongolia Diplomatic relation has been established
between two countries in 1921. Mongolia shares its 3,500-kilometer
border with Russia. In the concepts of Mongolian Foreign policy and
National Security reflected that forging neighborly, close
bilateral relations with Russia and China is priority of Mongolia
and should develop multilateral cooperation with them.
Mongolia-Russia relations can be fitted on following timeline:
1921-1991 Socialist era relations 1991-1995 Slow down of relations
between two countries 1995-1999 Stabilization of relation Since
2000 New beginning for Mongolia-Russia relations
Slide 36
Economic cooperation between Russia and Mongolia Cooperation in
the field of economic relation between Russian and Mongolia can be
defined through following factors: Joint ventures (Erdenet Mining
Corporation, Mongolrostsvetmet LLC, Ulaanbaatar Railway Joint
Venture Company) Import of oil products from Russia (Mongolia
imports almost all needs of its oil products from Russia) Russian
participation in Mongolian mining sector (especially in uranium
mining sector and recently in projects such Tavan-Tolgoi etc.) As
of September 2011, trade turnover between two countries was $1.2
million. (trade deficit between two countries reached $ 1
million)
Slide 37
Russian direct investment into Mongolian economy has been
increased by 61% in 2011. Trade turnover between two countries is
increasing year by year too. However the trade deficit is still
high for Mongolia. Trade between two countries consists of
relatively few amount of products generally based on mining sector.
In the face of decreasing Russias role in Mongolian trade and
increased Chinas role, there arises need to develop trade between
our countries in order to protect our interests.
Slide 38
FDI shares in Mongolian economy (total 3.9 billion): mining
sector /85%/, construction /5%/, banking and finance sector /3%/,
communication /1%/ Russian direct investment in Mongolia
Slide 39
Russian export to Mongolia compared to other countries:
Mongolian import amount has been increased by 115% as of September
2011. Import from Russia increased too, but when its compared to
last year, its share in total import has decreased from 34.3% to
23.7%.
Slide 40
Mongolian export to Russia compared to other countries: As of
September 2011, Mongolian export has grown up by 73% compared to
September 2010. The export amount to Russia has increased, but its
share in total export has decreased from 2.7% to 2.0%.
Slide 41
III. Mongolia-Russia cooperation opportunity in the region
Slide 42
New Silk Road China unveiled Chinas new Central Asian policy as
a new Silk Road of free trade and exchange. China suggested a free
trade zone that includes China and Eurasian countries, which have
combined population of 3 billion. Beijing considers relations with
Central Asian countries a foreign-policy priority. Proposing a new
Silk Road is a strategic necessity for China. As a great power,
China has to protect its vital economic interests and political
influence in the region. The new Silk Road proposal does that.
Slide 43
Slide 44
Slide 45
The worlds newest Free Trade Area (FTA) will cover 5 CIS
countries. Trade between China and 5 CIS countries ballooned from
$460 million in 1992 to $46 billion in 2012. China and CIS
Countries Economic Cooperation
Slide 46
Chinas Provincial GDP Growth Rates in 2012 Chinas central
provinces GDP grew by over 12% in 2012 Going forward, most of
Chinas economic and industrial growth is expected to be generated
from four cities in Central China: Xining, Yingchuan, Lanzhou,
Chengdu
Slide 47
How do you reach the growth markets in Central China ? 1) New
Western Mongolian Rail line to Jiayuguan 2) New Northern Rail line
connecting to Trans -Mongolian Rail line to Yinchuan
Slide 48
1. New Western Mongolian Rail line to Central China Kyzyl
Tsagaan Tolgoi 204km Zabaikalsk - Manzhouli 2774 km The shortest
rail route from Kyzyl to Central China: 1107~1475km Reach new
industrial cities in Central China: Laoemai, China 1107km
Shiveekhuren-Sekhe 1475km Grodekovo 5390 km Jiayuguan, China
1935km
Slide 49
1. Cut transportation distance 1.4x 2.8x Cut transportation
distance and time by up to 1.4x ~ 2.8x
Slide 50
2. Northern Rail line Connecting to Trans-Mongolian Rail line
Kyzyl Ovoot 240km Erenhot 1935km Erdenet 835km The shortest rail
route from Kyzyl to Yinchuan: 3060 km Yinchuan 3060 km
Slide 51
3. Trans-Mongolian Highway: 990 KM PAVED ROAD Altanbulag Zamyn
Vvd 990 km Route: Altanbulag Zamyn Vvd Speed: 100 km/h Lanes: 4
Lanes Classification: Class 1 Asian Highway Network Central
China