Australia-Mongolia Trade Relations, according to Inner Mongolian professor

Li Narangoa, an Inner Mongolian national and professor of Australian National University gave interview about Mongolia-Australia trade relations to World Politics Review

Australia and Mongolia recently signed a number of agreements to increase bilateral business and educational cooperation. In an e-mail interview, Li Narangoa, a professor in the School of Culture, History and Language at the Australian National University, discussed Australia-Mongolia relations.

WPR: What is the extent of existing trade between Australia and Mongolia?

Li Narangoa: Trade between Australia and Mongolia has been small, with a total value of about $25 million in 2010. Though Australia and Mongolia established diplomatic relations in 1972, a serious trade relationship began only in the 1990s, when Mongolia introduced a democratic political system and free-market reforms. Trade mainly comprises the export of mining equipment and civil engineering services, along with a very limited volume of agricultural products such as wine, beef and lamb sent from Australia to Mongolia.

WPR: What are the areas of greatest potential for further development between the two economies?

Li: The greatest potential for further development between the two countries is the mining and resources sector. Australia and Mongolia are both rich in minerals and energy resources. Mongolia is set to become a mining giant in the Asia-Pacific region, and Australia's considerable experience in mining puts it in a position to assist Mongolia in realizing its potential. The two governments set up a joint working group to discuss collaboration in the mining and energy sectors in 2007, and the group now meets once every two years. In 2008, Mongolia set up an embassy in Australia. During a visit by Mongolian Prime Minister Sukhbaatar Batbold to Canberra in February 2011, a memorandum of understanding was signed on vocational education cooperation, aimed at helping Mongolia build the capacity of its mining workforce.

Roughly 20 Australian companies are already involved in mining and energy exploration in Mongolia -- including Rio Tinto, BHP Billiton and Leighton -- and they hold significant mineral leases there. Moreover, a growing number of Australian companies are interested in doing business in Mongolia. The Australian government has recognized Mongolia's economic potential, and the Australian Trade Commission will open a permanent office in Ulaanbaatar in 2011.

WPR: Beyond trade, what are the opportunities and challenges facing the bilateral relationship going forward?

Li: There are increasing interests in political and scientific exchanges as well as in sharing expertise in education and agriculture. Three additional agreements were signed covering these aspects during Batbold's February visit. By providing scholarships, Australia's development cooperation program has been contributing to Mongolia's human resource development. Mongolian students without a governmental scholarship, however, find it very difficult to get an Australian visa because of the stringent conditions that Australian immigration procedures require -- especially proof of financial support for their studies in Australia.

Both Mongolia and Australia are rich in minerals such as copper, gold, coal and uranium, and they have strong incentives to collaborate in the mining and energy sector, as mineral resources make up a high percentage of their trade incomes. But that means that they are also potential competitors for the same markets in the Asia-Pacific region -- China and Russia in particular. That will present challenges to both countries' efforts to collaborate in areas of common interest. For Mongolia, the priority is to create a stable political and legislative environment for Australian investors.



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