CZECH REPUBLIC: BILATERAL INVESTMENT TREATY --

UNCLAS PRAGUE 001191

SIPDIS

SENSITIVE BUT UNCLASSIFIED
STATE FOR EUR/NCE, EB/IFD/OIA, L, WHA/CAN
STATE PLEASE PASS USTR LISA ERRION
COMMERCE FOR ITA/MAC/EUR MROGERS

E.O. 12958: N/A
TAGS: EINV EZ
SUBJECT: CZECH REPUBLIC: BILATERAL INVESTMENT TREATY --
TIME TO ANSWER THE MAIL

REF: PRAGUE 00827


1. (U) This is an action request. Please see para 5.


2. (U) During an August 10 introductory call on Vaclav
Rombald, Deputy Director General and Head of the Legal
Section of the Ministry of Finance International Finance
Department, econoff inquired about the timing and
expectations for the report on the U.S.-Czech Bilateral
Investment Treaty (BIT) due in cabinet this fall. Econoff
acknowledged that the Department had not yet responded to the
March 4, 2005 diplomatic note from the Czech Embassy
requesting USG reaction to a revised proposal for amending
the BIT.


3. (U) Rombald said that a progress report to the cabinet
on GOCR efforts to renegotiate the U.S. BIT was due October
(note: we understand the Czech Embassy has indicated a
September time frame) and since the USG had not replied to
the March dip note, it was difficult to say what they would
report to cabinet. He urged the USG to provide a reply so
the GOCR can have something to go on.


4. (U) Rombald emphasized that the goal of the GOCR was
not/not to terminate the U.S. BIT, although it is "an
ultimate possibility." Rombald added that a delegation was
traveling to Ottawa the following week for its final attempt
to renegotiate the Canada BIT. If the visit is not
successful, Rombald said the GOCR would terminate the BIT
with Canada.


5. (SBU) COMMENT AND ACTION REQUEST: Embassy feels
strongly that the USG should answer the mail. In our view,
even an interim reply explaining what it would take to
provide a reply would be better than a no reply at all. U.S.
companies, led by the American Chamber of Commerce in Prague,
regard the BIT as an important element of the bilateral
relationship. The GOCR understands the USG seeks to keep the
current BIT in place, and that any effort to amend it will
take time. Finance Minister Sobotka has told the Ambassador
during previous meetings that he personally does not want to
see the BIT terminated, but that he needs to demonstrate to
the Cabinet continued progress on the negotiations. A reply
consistent with previous exchanges indicating that the USG
believes the current version best preserves the interests of
U.S investments in to the Czech Republic as well as Czech
investments in the United States would be reasonable and
appropriate. Embassy requests that the Department initiate
interagency consultations to address the March dip note and
provide guidance on how to respond to the GOCR,s inquiry
about the March dip note by September 15.
MUNTER