That NTR status was made permanent (PNTR) effective July 1, 1999, obviating the annual trade status review process. This report provides background information on Mongolia, including political and economic conditions, the status of U.S.-Mongolian political and economic relations, and key security and foreign policy issues. Public demonstrations for political pluralism in 1990 led to the resignation of the Communist MPRP government, whose leaders declared the end of a one-party Communist state. Since then, Mongolia has been undergoing a political and economic transition to a parliamentary democracy under new constitutional rules adopted in 1991. Post-2006: Uneasy MPRP Dominance

Since the collapse of the Democratic Coalition in 2006, the MPRP has been able to maintain an uneasy dominance in what has become a volatile political scene in Mongolia. In legislative elections for the Great Hural on June 29, 2008, the MPRP increased its legislative margin to 47 seats (up from 39 in the previous election) out of a total of 76 seats, followed by the Democratic Party with 25 seats. After Democratic Party Chairman Tsakhya Elbegdorj declared the elections to have been fraudulent, demonstrators attacked MPRP headquarters in Ulan Bator, burning the building and causing the government to declare a four-day state of emergency – the first in the country's history – in the capital. The newly elected parliament finally was sworn in on August 26, 2008, after the MPRP invited the opposition to join in yet another fragile coalition government and agreed to investigate allegations of electoral fraud. In June 2009, the Mongolian government reportedly requested the United States to re-direct nearly $188 million dollars in U.S. aid to improve the rail network to other projects, due to objections from Russia. The United States recognized Mongolia in 1987 and since then has sought to expand cultural and economic ties. At Mongolia's invitation, the United States began a Peace Corps program there in 1991, which by 2007 was maintaining about 100 Peace Corps volunteers in the country. Also in 1991, following the signing of a bilateral trade agreement, the President restored Mongolia's most-favored-nation (MFN) trading status—now referred to as Normal Trade Relations (NTR)—under the conditional annual waiver provisions of Title IV of the Trade Act of 1974. The Administration proposed FY2009 USAID budget would give Mongolia $10.4 million. U.S. support for both Mongolia's political and its economic reforms has been tangible. In addition, in 2007, the House Democracy Assistance Commission initiated a program of parliamentary assistance to Mongolia's parliament, the State Great Hural. Bilateral Trade Relations

Mongolia is a relatively minor U.S. trading partner. Mongolia has asked for a Free Trade Agreement (FTA) with the United States. Millennium Challenge Account

In FY2004, Mongolia became an eligible country for U.S. assistance through a Millennium Challenge Account (MCA). On September 12, 2007, the MCC Board of Directors awarded Mongolia a $285 million aid program, focused mainly on improving rail transportation, property rights, and vocational education and health care.
Once a Soviet satellite state ruled by the communist Mongolian People's Revolutionary Party (MPRP), Mongolia underwent a democratic transformation in 1990 after public demonstrations for political pluralism led to the resignation of the MPRP government. Since then, Mongolia has been undergoing a chaotic political and economic transition to a parliamentary democracy under new constitutional rules adopted in 1991. The now non-communist MPRP has competed in free elections with opposition parties that grew from economic reformists. The country remains quite undeveloped, but with enormous potential from vast metal and mineral resources.
Mongolia's political scene remains democratic but volatile, with the MPRP able to maintain an uneasy dominance. In legislative elections on June 29, 2008, the MPRP increased its legislative margin to 47 seats (up from 39) out of a total of 76 seats, followed by the Democratic Party with 25 seats. After Democratic Party Chairman Tsakhya Elbegdorj declared the elections to have been fraudulent, demonstrators attacked MPRP headquarters in Ulaanbaatar, causing the government to declare a four-day state of emergency in the capital. Ultimately, the MPRP invited the opposition to join in yet another in a series of fragile coalition governments. Mongolia has seen several reshufflings of government since 1990. A former coalition government collapsed in 2006.
The United States recognized Mongolia in 1987 and since then has sought to expand cultural and economic ties. At Mongolia's invitation, the United States began a Peace Corps program there in 1991, which by 2007 was maintaining about 100 Peace Corps volunteers in the country. Also in 1991, following the signing of a bilateral trade agreement, the President restored Mongolia's most-favored-nation (MFN) trading status—now referred to as Normal Trade Relations (NTR)—under conditional annual waiver provisions. NTR status was made permanent (PNTR) for Mongolia effective July 1, 1999.
In FY2004, Mongolia became eligible for U.S. assistance through the Millennium Challenge Account (MCA), and submitted a proposal late in 2005. On September 12, 2007, the MCC Board of Directors awarded Mongolia a $285 million aid program, focused mainly on improving rail transportation, property rights, and vocational education and health care. President Bush approved the aid package on October 22, 2007. The House Democracy Assistance Commission (HDAC) has established a partnership with the Mongolian parliament, the State Great Hural, focusing on parliamentary reform and improving transparency in government. HDAC sent its first bipartisan delegation to Mongolia in the summer of 2007.
Mongolia's relatively small economy relies heavily on trade and, like many other countries, has been hit hard by the global economic downturn. Prices for Mongolia's main export, copper, have declined sharply. U.S.-Mongolian bilateral trade is relatively small; total trade in 2008 was $110 million. China and Russia account for a large share of Mongolia's trade. U.S. foreign aid to Mongolia has focused largely on helping it complete its transition to a free market economy and enhancing the rule of law; the Administration's proposed FY2009 USAID budget would give Mongolia $10.4 million. In June 2009, Mongolia's government reportedly asked the United States to re-direct nearly $188 million dollars in aid to improve the rail network, due to objections from Russia.
This report provides background information on Mongolia, including political and economic conditions, the status of U.S.-Mongolian political and economic relations, and key security and foreign policy issues.