American Chamber of Commerce Annual General Meeting 2023: Ambassador’s Remarks
Friday, November 24, 2023
Shangri-La Ulaanbaatar Ballroom
Chairman Gary Biondo, AmCham members, thank you for inviting me today to address your Annual General Meeting. I congratulate you all on completing another year of progress and hard work to advance the interests of the Mongolian and American business community. I also would like to greet and congratulate the outgoing members of the Board of Directors for a successful year of service to AmCham. We are here because we’ve always considered this day among the most important in AmCham’s calendar. It’s an opportunity for us to take stock of the year that is about to pass and look forward to the year yet to come.
When I addressed you all last year, you’ll remember that I laid out my vision for strengthening the U.S. Embassy’s support for the business community in Mongolia, particularly through a strong, collaborative relationship with AmCham. I spoke about my policy priorities, among them ensuring the Transparency Agreement’s full implementation, and continuing the work with the government of Mongolia to embrace their responsibility to improve the business climate.
Looking back, I’m proud of everything we’ve accomplished together. This has been a busy and productive year, both for my economic section at the U.S. Embassy and for AmCham. In 2023, we were able to work with our Mongolian government partners over a broad range of issues. We’ve laid the groundwork for Mongolia’s participation in the global supply chain for critical minerals and metals; developed better measures to combat cyber-attacks on local networks; enhanced capacities to protect intellectual property rights; expanded the activities of our Development Finance Corporation, or DFC, and EXIM Bank; assisted with linking Mongolia to regional Indo-Pacific and global financial chains and improved the operational capacities of local exchanges; supported the technical and administrative development of Mongolia’s growing domestic rail system; and, of course, continued to support the rights of individual speech and commercial speech.
A full, active agenda with our essential partner, AmCham.
Our partnership contributed to the high level visits we pledged to increase when I arrived last year, culminating with the historic visit of the Mongolian Prime Minister which included not just a meeting with the Vice President of the United States, but five Cabinet-level secretaries, the elevation of our relationship to a Strategic Third Neighbor Partnership, the signing of the Open Skies agreement which paves the way for eventual non-stop flight between Mongolia and the United States, an Economic Cooperation Roadmap that will serve as the foundation for increased commercial and economic ties between our countries. The announcement of the opening of a new American Space in Erdenet, additional important agreements like the USAID-Ministry of Finance Development Objective Grant Agreement, commitments to improve people-to-people exchanges and to enhance the Mongolian Armed Forces’ international interoperability including through the annual multinational Khaan Quest exercise hosted by the MAF.
What incredible partners we’ve been this year. Whether it is policy coordination, business advocacy, or just simply listening to each other to understand where and how our organizations can work to promote and advance the economic and commercial interests of the United States and Mongolia in each other’s markets.
Our partnership is strong. And mutually reinforcing.
Although we may take different approaches to solving our issues, we are rowing in the same direction. Showing to our governments and our publics that we are coordinated and aligned.
I am essentially describing the heart and soul of an important relationship that yields dividends to AmCham’s members while advancing our collective policy goals for improving Mongolia’s business climate.
This is all about mutual trust.
Allow me to give you an example of this mutual trust by talking about the Transparency Agreement.
We have been working nearly 17 years on this damn Transparency Agreement. 17 years. I don’t blame you for laughing. AmCham’s predecessor associations identified lack of transparency in 2007 as a foundational problem worth fixing, and by the time AmCham came into existence, we needed your buy-in to prove to the Mongolian government that the business community favored reform—that our efforts were not some sort of groundless U.S. government lecture, but rather what truly represented a real grassroots problem.
That took a heroic amount of patience—and a bit of faith.
Unfortunately Mongolia is still working to reach the level of legislative and regulatory transparency set out in the Agreement—and, quite frankly, it may never get there.
But this is an example of how we’ve stayed coordinated and aligned.
Given where we were in 2007 and where we are in 2023, I’d say we’ve accomplished a great deal in moving this Transparency Agreement forward. In 2007, there were no laws on legislative and regulatory transparency, and now there are; there was no channel for you to express your views, and now there is; and no members of parliament who would reflexively respond to your critiques of legislation; and now there are.
A growing institutional framework for transparency exists because of this Agreement and your sustained advocacy for it.
Our coordinated efforts continue to bear fruit on other important advocacy issues. For example, the Ministry of Economy and Development’s consultative process for preparing the Investment Law draft and the Ministry of Mining and Heavy Industry’s sharing of Mining Law drafts. You continue to show to the Mongolian government that your input and your advice are useful and constructive.
Now for another issue that we’ve heard loud and clear from the business community.
We’re about to embark on a new set of priorities in the tax and dispute resolution fields that will require AmCham’s help.
Last year I began to lay the groundwork for something bolder than a mere complaint about promises of reform. The Embassy began to address this in our 2023 Investment Climate Statement:
Businesses claim the tax dispute settlement processes has become a form of indirect expropriation. 2020 amendments to the Tax Law allow tax officials force disputants to place the entire disputed tax assessment in escrow as a precondition for disputing tax assessments, which business claim encourages officials to issue excessive, punitive tax assessments that make using settlement processes prohibitively expensive and confiscatory. As many businesses cannot put the entire disputed amount into escrow as per the law, they are forced to settle what many have called “extortionate” demands. Investors also report that the Tax Authority often invalidates its own settlements and issues new assessments on the same disputes, using its system to extract additional tax revenue from companies.
And it is legal for the government to detain the senior executive officer when a tax case reaches a criminal level, regardless of who that executive might be or what they did or didn’t do.
Businesses have no clear, effective recourse. Dispute resolution processes do not work. Courts take months, or years, to reach decisions, which the Tax Authority routinely ignores, and cases ping-pong back and forth. We have cases that have remained mired in this painful situation for nearly 10 years.
Who would want to invest into this tax environment?
Resolving this problem should be just as much a priority as everything we are doing to help the government improve transparency and providing a predictable and fair legal framework in resolving these tax issues. Of course, I have no illusions that this will be resolved quickly or without some level of agony on all sides.
Our first step was accomplished at our last Trade and Investment Framework Agreement—or TIFA—talks last August 28, where we formally put the issue on the agenda.
During those talks we “pulled the band-aid off.” Our U.S. Trade Representative Office followed the Embassy’s lead in describing our objections to this tax process as bluntly and frankly as possible. But the Mongolian side needed to hear these concerns directly from the U.S. government. And we were loud about it, so much so that they agreed to take up the issue, asking for a formal letter of the particulars; and so, now this issue has officially entered the agenda—just as transparency did in 2007.
USTR will soon deliver a formal bill of particulars to the Ministry of Foreign Affairs, which will share it with the relevant ministries so deliberation can begin in their interagency process.
Will this be another 17-year odyssey or is the issue so awful that Mongolia moves quickly to reform this abusive process?
I don’t know.
But I do know we need to begin working with our partners on how to advocate for a better, non-extortionate way to assess and collect taxes and to equitably resolve such disputes that inevitably arise.
However long that may take, this will become one of the most important obstacles in improving the investment climate here.
We will start to engage with your leadership to learn more about AmCham’s position on this issue—so I encourage you all to voice your opinions so we can capture as many ideas as possible.
Now, allow me to turn to the issue of free speech. If you recall back in January this year, I raised with you all serious concerns raised by parliament’s January 2023 passage of the Law Protecting Human Rights on Social Networks. I found aspects of that law deeply troubling, particularly those sections that could have rolled back fundamental freedoms Mongolians have enjoyed for decades.
At the time, I promised you all that the U.S. embassy would be vocal in expressing our concern over this proposal.
And within a few days, together with our diplomatic partners we collectively communicated to the government, members of parliament, and the Office of the President that this bill threatened not just free speech and your commercial speech, but the business community and civil society’s ability to give feedback when bills like this are being deliberated in Parliament. Let’s be proud of the fact that AmCham was the most vocal in the business community about this social media law, leading the private sector charge to rollback this misguided legislation.
Thanks to your efforts, the law was vetoed by the president. AmCham’s coordination and advocacy was crucial to this effort.
It is AmCham’s influence and voice that the U.S. Embassy seeks to strengthen in 2024. When your voice is strong, the business community is heard in the corridors of power in Ulaanbaatar and in Washington. Earlier this year, I had the honor to witness that up close when I accompanied your delegation, led by Randolph Koppa, to Washington DC to perform the 7th annual U.S. Doorknock, the first doorknock since COVID. Your colleagues impressively and with ease navigated among influential Washington DC policymakers, making a succinct, compelling case business case for closer trade and commercial ties between our two countries. Your AmCham delegation made it very clear that Mongolia is open for business and investment, that Mongolians have the talent and the language skills to compete in the global market, and that high quality Mongolian food and cashmere products are ready for international markets, like the United States.
Here again, AmCham’s voice is heard above all others, and my colleagues in Washington DC listened and have a better understanding of why Mongolia matters. Your delegation’s advocacy influenced the discussion our Vice President had with Prime Minister Oyun-Erdene when he visited Washington a month after the doorknock.
But our work is not done. Although our friends in the Government and Parliament have assured us that there are no plans to resubmit any bill regulating online content or speech, there is no guarantee that freedoms and rights will forever be protected. The business community plays as much a crucial role in defending Mongolia’s democracy and freedoms as its soldiers or police. AmCham has to continue to be a full advocate for member interests before the government.
We have recently noted the proposed amendments to the Law on the Chamber have been submitted to parliament. These amendments, as we understand them, seek to redefine the relationships that professional associations and independent chambers have with Mongolian government by limiting channels for advocating business interests, as if only one path to government is best.
As your recent Policy Note indicated, “if Parliament passes the amendments, all professional associations and independent chambers will cease to exist, effectively making them dependent on the Mongolian National Chamber of Commerce and Industry.” If true, this is a disturbing setback for transparency and free speech for the business community. We will follow the progress of this legislation very closely and hope the amendment’s drafters and advocates waste no time in consulting you, other chambers, and other stakeholders to understand the true impact that these amendments could have on your ability to inform the public and the government.
Mongolia’s 2024 parliamentary and local elections will bring opportunities to highlight public debate of important issues on the minds of Mongolian voters. Over the next 10 months, we will likely hear ideas across the political spectrum of how to solve Mongolia’s most pressing social and economic challenges, ranging from corruption to income inequality to traffic to the environment. Those debates are entirely for the Mongolian people to handle and react to. But at the same time, we hope that this upcoming political process will show to the world the strength of Mongolia’s democracy. To show to other democracies in Asia that Mongolia’s system, despite its flaws and the pressure it feels, protects the rights and freedoms of the Mongolian people.
AmCham’s role during this election period cannot be understated. You are an influential segment of the business community. When it comes to talking about issues related to the economy, the investment climate, corruption, rule of law, freedom of speech. Your voice will carry a lot of weight. You can help set the terms of engagement and ensure that the perspectives of the Mongolian business community are heard.
Regardless of the outcome, the U.S. government looks forward to working with whomever the Mongolian people elect.
As I conclude my keynote address, I would like to discuss where the U.S. Embassy will be providing additional commercial support during 2024 and beyond.
Our efforts focus on Mongolia transcending its geography with targeted strategic commercial endeavors.
One area is linking Mongolia’s store of critical minerals with global supply chains, an aim that underlies our recent Memorandum of Understanding to assist Mongolia with critical minerals development and similar efforts by such partners as France, Germany, Australia, and Canada among others.
However, our commitment to Mongolia must be matched by a commitment from Mongolia to legislate and implement a workable dispute resolution process for its mining sector.
Among the most pressing challenges for any legislature and government developing its mining resources is resolving the conflicts that will arise among local residents and mining companies.
Resolving disputes over revenue sharing, land use, environmental concerns, just to name a few, are extremely important and extremely difficult government responsibilities that will bring political consequences far beyond localities and mining sites.
As the 2023 Investment Climate Statement points out, the central government’s response to these issues has been absent, leaving companies and residents to deal with the almost unmanageable conflicts, without a good faith referee to manage disputes, all of which has generated strife in the countryside while making Mongolia too risky for investment in a key sector. It is worth noting that the amendments to the Minerals Law of Mongolia do not address managing these disputes at all.
Parliament and the government have the responsibility to manage legitimate concerns over the domestic political impacts of public and private sector mining and manage public expectations and fears about mining activities.
Failing this will leave Mongolia chronically short of the revenues and technical expertise to bring sufficient improvement to rural and urban lives.
Developing its digital economy also allows Mongolia to overcome its geographic limitations.
Mongolia’s digital community has developed ties to the other digital economies in the region, and the next step will be to firm up those ties and seize opportunities with North America and Europe.
Right now Mongolia must use fiber-optic lines that can be disrupted, but we would like to see other options available and have promoted these options, especially U.S.-invested low earth and geostationary orbit satellite systems.
These and other reliable, secure, and interoperable systems are proving themselves in the most challenging environments and will come to Mongolia.
The United States government, with the assistance of like-minded partners, are focusing on supporting these foundational technologies to create a bridge for you to reach the digital opportunities that will present themselves once Mongolia has a full range of digital linkages.
AmCham has been a leader in promoting these efforts, and we encourage it to continue with the same urgency that we share; and look forward to finding ways to support your essential efforts.
Finally, we support Mongolia’s renewable energy transition because energy security is national security.
The world is moving from fossil fuels and Mongolia must and will move with it, or risk being chained to traditional sources of power. The time is now. Renewable energy drives economic growth and diversification and frees Mongolia from dependency for electricity.
Mongolia has vast solar and wind resources but needs the political will to manage both domestic and export markets for such energy, and the guidance of the private sector in general and AmCham in particular will be essential to a successful energy transition.
As always, I deeply appreciate the forum AmCham offers for these conversations and look forward to continuing one of the strongest, most productive partnerships in Mongolia.
Congratulations AmCham on a very successful and very productive 2023, I wish you all the best in your future endeavors and I look forward to a more robust, more challenging, but more rewarding 2024 for the U.S.-Mongolia relationship.
Thank you and good luck to the candidates in today’s Board elections.