Mongolia - Foreign Economic Relations and Comecon

More about the Economy of Mongolia.

Participation in Comecon

Foreign economic relations and comecon

In the late 1980s, Mongolia's foreign economic relations were primarily with Comecon members and other socialist countries. Mongolian policies related to Comecon were set by the Comecon Commission of the Council of Ministers. The principal official mechanisms for bilateral foreign economic relations were the various joint intergovernmental commissions on economic, scientific, and technical cooperation, which were established by treaty in the 1960s, the 1970s, and the 1980s between Mongolia and the Soviet Union as well as other socialist nations. Intergovernmental commissions--such as the Mongolian-Soviet Intergovernmental Commission for Economic, Scientific, and Technical Cooperation--met annually or semiannually to coordinate planning and to arrange bilateral annual, five-year, and longerterm trade and cooperation agreements signed on the deputy premier level. The Ministry of Foreign Economic Relations and Supply primarily, but not exclusively, was handling Mongolia's day-to-day economic interaction with foreign countries and with Comecon in the late 1980s.

Close economic ties between Mongolia and the Soviet Union have existed for a long time. For example, in 1984 MongolianSoviet links included direct ties among 20 Mongolian and 30 Soviet ministries and departments handling economic affairs as well as among 55 Mongolian and Soviet ministries and departments and about 100 Mongolian and Soviet scientific research organizations handling scientific and technical cooperation.

In December 1987, the Ministry of Foreign Economic Relations and Supply was formed from the Ministry of Foreign Trade, the State Committee for Foreign Economic Relations, and the State Committee for Materials and Technical Supplies. Because much of Mongolia's machinery and equipment, fuel, and consumer goods were imported, the Ministry of Foreign Economic Relations and Supply-- rather than the Ministry of Trade and Procurement (which ran Mongolia's domestic trade system)--had specialized organizations that combined export-import and domestic distribution functions. These organizations included Abtoneft Import and Supply Cooperative, which handled imports of motor vehicles, fuels, and lubricants; the Agricultural Technical Equipment Import and Supply Cooperative; Kompleksimport and Supply Cooperative, which imported sets of equipment for the mining industry, power stations, and production lines for the food and light industries; the Materialimpeks and Supply Cooperative, which imported construction materials and equipment; and the Technikimport and Supply Cooperative, which handled imports of industrial machinery and equipment, raw materials, chemicals, and dyestuffs.

Other organizations involved in foreign trade included Mongolimpex, which handled imports and exports of goods in convertible currencies; Mongolnom, which exported Mongolian publications; and Mongolilgeemj, which handled foreign parcel post, the sale and purchase of consumer goods, establishment of business contacts with foreign companies, and intermediary service on foreign trade and commodity exchange. The Ministry of Social Economy and Services ran Horshoololimpex, which exported handicrafts. Mongolia also had a Chamber of Commerce, the functions of which included establishing contacts between Mongolian and foreign trade and industrial organizations as well as organizing and participating in international trade exhibitions in Mongolia and abroad.

Entey into Comecon was a great boon to Mongolia's economic development, enabling it to secure increased amounts of foreign investment, assistance, and technical cooperation; to expand foreign trade markets; to raise product quality to international standards; and to coordinate economic planning better in order to direct the specialization and development the of the economy under "socialist economic integration." Mongolia coordinated its five-year plans with Comecon's five-year multilateral cooperation plans as a participant in Comecon's Cooperation in the Sphere of Planning Activity Committee as well as its Science and Technology Cooperation Committee. These committees also drew up multilateral long-term, special cooperation programs in the areas of transportation, food, energy, and consumer goods, which included development projects in Mongolia, such as the thermal electric power plant in Baga Nuur. Mongolia also participated in Comecon commissions for agriculture, coal industry, electric power, food industry, geology, light industry, nonferrous metallurgy, and transportation, and it cooperated in Comecon efforts in construction, currency-finance, foreign trade, health care, standardization, statistics, telecommunications, and postal communications.

Mongolia also received assistance from Comecon on a multilateral basis. Comecon financed the activities of the Comecon International Geological Expedition and the construction of a number of scientific, communications, and cultural facilities in Mongolia. As a member of Comecon's International Bank for Economic Cooperation and the International Investment Bank, Mongolia was eligible for, and took advantage of, loans at preferential rates. Mongolia also benefited from "incentive prices" for basic imported commodities; such commodities as fuel were imported at lower prices than those charged to Comecon's more developed East European countries.

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