TURF BATTLES HINDER MONGOLIAN EFFORT TO REACH TRANSPARENCY

UNCLAS SECTION 01 OF 02 ULAANBAATAR 000110

SIPDIS

SENSITIVE
SIPDIS

STATE PASS USTR, DOC/ITA, USTDA, OPIC, AND EXIMBANK
STATE FOR EAP/CM AND EB/IFD/OIA
USAID FOR ANE FOR D. WINSTON

E.O. 12958: N/A
TAGS: ETRD PREL EAID ECON EFIN PGOV MG
SUBJECT: TURF BATTLES HINDER MONGOLIAN EFFORT TO REACH TRANSPARENCY
PACT WITH U.S.

REF: Ulaanbaatar 0050

SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION.


1. (SBU) SUMMARY: Turf battles between Mongolian ministries have
slowed preparations for a series of digital videoconferences on a
US-Mongolia Transparency Agreement, but progress has been made and
Mongolia hopes to start such conferences in late March. D.
Munkhjargal, a senior official of the Mongolian Ministry of Trade
and Industry, made this clear in a March 7 discussion with Post's
Commercial Specialist. Munkhjargal said negotiations on a
Transparency Agreement have been delayed by infighting between the
Ministry of Foreign Affairs and the Ministry of Industry and Trade,
over which would lead the trade talks. The Government of Prime
Minister Bayar has apparently settled the dispute by vesting this
authority in both ministries, through a joint Task Force dedicated
to managing bilateral trade relations. A Transparency Agreement
would enhance US-Mongolia commercial ties, boost opportunities for
U.S. businesses, and help Mongolia meet development goals. END
SUMMARY.


2. (SBU) On March 7, Post's Commercial Specialist spoke with D.
Munkhjargal, Senior Officer of the Ministry of Trade and Industry's
(MIT's) Department of Trade and Economic Cooperation, regarding GOM
preparations for a series of digital videoconferences on a
US-Mongolia Transparency Agreement (UMTA). USTR will lead the DVCs,
which will allow both sides to identify differences and points of
agreement before negotiations on the UMTA begin in earnest.


3. (SBU) Munkhjargal noted that infighting between the Foreign
Ministry and the Ministry of Foreign Affairs over which would lead
the trade talks slowed progress toward negotiations on the UMTA. He
said the GOM has responded by starting to assemble a "Task Force
Team" to deal with UMTA and other trade-related matters. This team
is to include representatives of the Ministries of Foreign Affairs,
Industry and Trade, Finance, Justice and Home Affairs, and the
National Statistics Office. (Other ministries and agencies will be
allowed to comment on the proceedings as needed.) Munkhjargal
indicated that the GOM will employ this new structure for trade
agreements with the United States and other nations, marking a new
approach to bilateral trade relations. The GOM is still working out
the precise composition and structure of the Task Force Team, which
Munkhjargal believes will be finalized by mid-March.


4. (SBU) The concept for these DVC discussions sprang from the
Fourth US-Mongolia Trade and Investment Framework Agreement (TIFA)
Talks held in Washington on February 4. During those talks, the GOM
and USG agreed to move ahead on a UMTA and establish a flexible
timetable to begin and conclude UMTA discussions (septel). However,
the Mongolians agreed to present a list of particular concerns about
UMTA in advance of any negotiations, so that USTR could determine if
active pursuit of UMTA at this time was possible. This presentation
was scheduled to occur via DVC between March 10 and 14. However,
the Mongolian Government recently contacted Post and requested a
delay until late March. The GOM assured us that it has every
intention of holding the DVCs and crafting an UMTA.


5. (SBU) We anticipate that the GOM will soon provide us with
UMTA-related material for consideration in the upcoming DVCs.
Munkhjargal suggested that USTR and Post consider a late March date
for the first DVC. He indicated that he believes that several DVCs
will be necessary to address GOM and USTR concerns about UMTA. He
noted, without elaborating, that preliminary comments from the Task
Force Team members indicate support for the UMTA in concept, though
many questions and concerns remain.

COMMENT
--------------


6. (SBU) The GOM's move to an apparently permanent,
inter-ministerial approach to bilateral trade relations is a
positive outcome of the TIFA/TA process, and could help prevent

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future bureaucratic turf wars. Technically, the Foreign Ministry
has authority over any stand-alone, bilateral agreement, while the
Trade and Industry Ministry has authority over trade agreements.
Following six months of inter-ministerial gridlock that prevented
progress toward a Transparency Agreement, the Bayar Government
directed both sides to settle the matter quickly, to move the issue
forward.

Minton