VZCZCXRO5474
PP RUEHLMC RUEHVK
DE RUEHUM #0499/01 2430835
ZNR UUUUU ZZH
P 310835Z AUG 07
FM AMEMBASSY ULAANBAATAR
TO RUEHC/SECSTATE WASHDC PRIORITY 1431
INFO RUEHBJ/AMEMBASSY BEIJING PRIORITY 5742
RUEHOT/AMEMBASSY OTTAWA PRIORITY 0497
RUCPODC/USDOC WASHDC PRIORITY 1373
RUEHUL/AMEMBASSY SEOUL 2916
RUEHMO/AMEMBASSY MOSCOW 1887
RUEHTA/AMEMBASSY ASTANA
RUEHML/AMEMBASSY MANILA 1449
RUEHLO/AMEMBASSY LONDON 0183
RUEHKO/AMEMBASSY TOKYO 2627
RUEHBK/AMEMBASSY BANGKOK 1529
RUEHBY/AMEMBASSY CANBERRA 0166
RUEHSH/AMCONSUL SHENYANG 0313
RUEHVK/AMCONSUL VLADIVOSTOK 0148
RUEHOK/AMCONSUL OSAKA KOBE 0041
RHEBAAA/DEPT OF ENERGY WASHDC
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC 0694
RHEHNSC/NSC WASHDC
RUEKJCS/SECDEF WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 ULAANBAATAR 000499 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/CM AND EB/IFD/OIA 
STATE PASS USTR, EXIM, OPIC, AND EPA 
STATE PASS AID/ANE D. WINSTON 
MILLENNIUM CHALLENGE CORP WASHDC FOR F. REID 
TREASURY PASS USEDS TO IMF, WORLD BANK 
MANILA AND LONDON FOR USEDS TO ADB, EBRD 
 
E.O. 12958: N/A 
TAGS: ELTN ETRD PREL PGOV MG
SUBJECT: Meeting with Mongolian Deputy Minister of Trade and 
Industry Sodbaatar 
 
Reftel: Ulaanbaatar 0478; Ulaanbaatar 0483 
 
SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION 
 
¶1. (SBU) SUMMARY. Mongolia's Vice Minister for Industry and Trade, 
Sodbaatar, met with DCM on August 24 to discuss a number of issues, 
including cooperation on the U.S.-Mongolia trade relationship 
through the Trade and Investment Framework Agreement (TIFA) process, 
which the GOM hopes will lead quickly to a Free Trade Agreement. 
Other issues discussed included Ministry of Industry and Trade (MIT) 
participation in the proposed Fall 07 presidential summit in 
Washington; Mongolian progress in using the General System of 
Preferences (GSP); and the GOM's recent virtual "expropriatory" 
revocation of 34 exploration licenses owned by owned by 18 firms. 
END SUMMARY. 
 
Advancing the TIFA Process 
-------------------------- 
 
¶2. (SBU) DCM and Commoff met with Vice Minister (VM) Sodbaatar on 
August 24 to review the current trade relationship and plan for fall 
and early-winter events related to the TIFA process.  Following on 
promises made by both governments to regularly measure progress on 
TIFA commitments, the DCM proposed early fall -- perhaps October, 
pending USTR approval) -- for a mid-year review of commitments made 
at the 2007 TIFA meeting.  The USTR would lead USG agencies via 
digital videoconference (DVC) or some other method to assess 
progress on the 07 TIFA agenda with GOM counterparts.  The TIFA DVC 
would include a detailed discussion of the Transparency Agreement 
proposed by the USTR, which fulfils a US commitment made during the 
07 TIFA to deepen bilateral trade relations.   In addition, the TIFA 
DVC would address ongoing commercial disputes, especially those 
related to mining in Mongolia. 
 
¶3. (SBU) VM Sodbaatar responded positively to the mid-term review 
concept.  He said MIT would readily participate in either a DVC or, 
if conditions permit, a meeting with USTR representatives in Beijing 
in September, if appropriate.  Sodbaatar volunteered that he 
approves of USG proposals for DVCs, etc., because they regularize 
the TIFA process for the GOM and might lead to the FTA that Mongolia 
desires. 
 
¶4. (SBU) The VM said Mongolia wants a Transparency Agreement with 
the United States because the GOM sees such a pact as a fundamental 
stepping stone to a FTA.  He added that, regardless of its link to 
an FTA, such an agreement would be key to expanding bilateral trade 
cooperation.  The VM concluded his TIFA comments by reiterating the 
GOM's view that TIFA meetings should be the means to a FTA.  He said 
the GOM expects that the USG will make positive statements about 
concluding a FTA with Mongolia during the Presidential summit. 
 
MIT participation in Washington summit 
-------------------------------------- 
 
¶5. (SBU) The DCM asked the VM whether the MIT plans to participate 
in the proposed fall 2007 presidential summit in Washington.  The VM 
said the MIT would participate at a ministerial level, but that no 
decision has yet been made on whether the minister or the VM would 
go.  At the summit, Sodbaatar added, the MIT would meet with USTR 
and other trade-related USG officials, as well as American investors 
interested in Mongolia.  The MIT sees the summit as a good 
opportunity to improve Mongolia's profile as a destination for 
foreign direct investment from the US, which MIT believes is 
lacking. 
 
ULAANBAATA 00000499  002 OF 002 
 
 
 
General System of Preferences 
-------------------------- 
 
¶6. (SBU) CommOff detailed recent progress on GSP, paying particular 
attention to Mongolia's GSP go-ahead for two categories of 
molybdenum.  However, CommOff tempered the positive message by 
relaying a USTR statement that future Mongolian GSP petitions must 
follow all required guidelines for submissions or risk being 
rejected.  Sodbaatar expressed pleasure that Mongolian molybdenum 
was to be listed as a GSP-eligible product and committed to 
following all requested procedures for GSP submissions. 
 
Mining license revocations 
-------------------------- 
 
¶8. (SBU) The DCM also expressed USG concern over the GOM's recent 
virtual "expropriatory" revocation of 34 exploration licenses owned 
by owned by 18 firms (reftels).  The VM denied that licenses had 
been revoked, claiming that firms misunderstood the written 
communication from the GOM.  He said the companies would need to 
conform to the new mining law as soon as possible or risk losing 
their licenses.  He also blamed firms for being slow to follow 
Mongolia's new mining law.  Sodbaatar promised to formally inform 
all affected firms of the GOM's decision, to give them sufficient 
time to change their licenses. (Note: MIT has not yet honored 
commitments made at the August 24 meeting.  Apparently, a formal 
letter has been written but not disseminated.  Consulted daily, MIT 
promises to issue a formal renouncement of the revocation during the 
week of September 1. End note.) 
 
Minton 
 
 
 
4