[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 3368 Introduced in Senate (IS)]

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118th CONGRESS
  1st Session
                                S. 3368

   To promote United States-Mongolia trade by authorizing duty-free 
  treatment for certain imports from Mongolia, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 30, 2023

  Mr. Sullivan (for himself and Mr. Cardin) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
   To promote United States-Mongolia trade by authorizing duty-free 
  treatment for certain imports from Mongolia, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Mongolia Third Neighbor Trade Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) In 1992, Mongolia adopted a constitution establishing a 
        parliamentary democracy, becoming the only country in Asia to 
        transition from communism to democracy. Mongolia shares land 
        borders with only the Russian Federation and the People's 
        Republic of China. With a large land area and a population of 
        only 3,255,000, Mongolia is the world's most sparsely populated 
        country, and its economy is highly dependent on its much larger 
        and more populous neighbors.
            (2) Mongolia's success as a democracy, strategic location, 
        sovereignty, territorial integrity, and ability to pursue an 
        independent foreign policy are highly relevant to the national 
        security of the United States.
            (3) Mongolia has shown its commitment to a ``third 
        neighbor'' relationship with the United States by sending 
        troops to support United States combat operations in Iraq and 
        Afghanistan, and has a strong record of troop contributions to 
        international peacekeeping missions, including nearly 900 
        personnel serving in the United Nations mission in South Sudan 
        and other missions.
            (4) Mongolia describes the United States as its most 
        important ``third neighbor'', but trade between the United 
        States and Mongolia is substantially lower than in many of 
        Mongolia's other bilateral trading relationships, and has 
        declined in recent years. Total trade between the United States 
        and Mongolia in 2012 was valued at approximately $707,000,000, 
        but in 2022 the United States exported only $149,000,000 in 
        goods to Mongolia and imported only $26,000,000 in goods from 
        Mongolia.
            (5) While the mining industry accounts for more than 80 
        percent of Mongolia's exports by value and more than 20 percent 
        of gross domestic product, agriculture, which accounts for 
        13.25 percent of gross domestic product, is a much larger 
        source of jobs, employing around a quarter of the working 
        population. The livestock sector accounts for more than 80 
        percent of agricultural production in Mongolia.
            (6) Since the 1940s, the annual mean air temperature in 
        Mongolia has risen at 3 times the average global rate. Average 
        precipitation is declining and extreme weather disasters are 
        more frequent, posing acute challenges for livestock herding in 
        the country. In 2017, an estimated 700,000 animals of the 
        country's livestock population perished due to the post-drought 
        extreme winter phenomenon known as ``dzud''. This phenomenon 
        has increased in frequency and severity in recent years, 
        causing a rise in livestock mortality and diminishing 
        livelihoods for herders, which has led to widespread rural 
        poverty and a contraction in the national economy.
            (7) Mongolia would greatly benefit from preferential 
        treatment for imports into the United States of certain 
        Mongolian products. Such preferential treatment would help 
        address some of the economic impacts of the dzuds.
            (8) The cashmere trade is particularly important to the 
        economy of Mongolia. While Mongolia produces approximately 40 
        percent of the world's raw cashmere, it produces few finished 
        cashmere products. Mongolian raw cashmere is exported to the 
        People's Republic of China, where it is diluted with other 
        fibers and labeled as Mongolian. The United States buys nearly 
        all of its cashmere products from the People's Republic of 
        China. Preferential treatment for imports into the United 
        States of certain Mongolian products, including cashmere 
        products, would benefit the United States by facilitating 
        increased direct trade with Mongolia for cashmere products 
        while also supporting the development of value-added cashmere 
        processing in Mongolia.
            (9) The development of the garment industry in Mongolia 
        would also promote women's employment and empowerment. Women 
        have historically participated in the garment industry in 
        Mongolia at high rates, and that industry has historically 
        provided safe and stable employment for women in Mongolia. The 
        United Nations has recognized the high numbers of women 
        deployed as part of Mongolia's contribution to peacekeeping 
        operations.
            (10) In developing and expanding the cashmere industry in 
        Mongolia, it is critical for Mongolia to take steps to ensure 
        the protection of its grasslands and prevent overgrazing of 
        cashmere goats. Since 2018, Mongolia has been working with the 
        United Nations Development Programme to implement the Mongolian 
        Sustainable Cashmere Platform. The Platform's objectives aim to 
        improve cashmere traceability and Mongolia's sustainable 
        cashmere value chain.
            (11) Preferential treatment for imports into the United 
        States of Mongolian products would benefit Mongolia at this 
        critical time.

SEC. 3. DUTY-FREE TREATMENT FOR CERTAIN IMPORTS FROM MONGOLIA.

    (a) In General.--Subject to subsection (c), the President may 
provide duty-free treatment for any article described in subsection (b) 
that is imported directly from Mongolia into the customs territory of 
the United States.
    (b) Article Described.--
            (1) In general.--An article is described in this subsection 
        if--
                    (A) the article is the growth, product, or 
                manufacture of Mongolia;
                    (B) the article is classified under chapter 51, 57, 
                60, 61, 62, 63, or 94 of the Harmonized Tariff Schedule 
                of the United States;
                    (C)(i) the article is an apparel or textile article 
                made of fabrics or fibers containing not less than 23 
                percent by weight of cashmere; or
                    (ii) the sum of the cost or value of cashmere 
                components of the article is not less than 51 percent 
                of the appraised value of the article at the time it is 
                entered;
                    (D) in the case of an article that is a textile or 
                apparel article--
                            (i) the yarn and fabric used to manufacture 
                        the article are wholly produced in Mongolia; 
                        and
                            (ii) the article is wholly formed and cut, 
                        or its components are wholly knit-to-shape, in 
                        Mongolia;
                    (E) the sum of the cost or value of the materials 
                produced in, and the direct costs of processing 
                operations performed in, Mongolia or the customs 
                territory of the United States is not less than 50 
                percent of the appraised value of the article at the 
                time it is entered; and
                    (F) the President determines that the article is 
                not import-sensitive, after receiving the advice of the 
                United States International Trade Commission as 
                described in section 503(e) of the Trade Act of 1974 
                (19 U.S.C. 2463(e)).
            (2) Exclusions.--An article shall not be treated as the 
        growth, product, or manufacture of Mongolia for purposes of 
        paragraph (1)(A) by virtue of having merely undergone--
                    (A) simple combining or packaging operations; or
                    (B) mere dilution with water or mere dilution with 
                another substance that does not materially alter the 
                characteristics of the article.
    (c) Eligibility Requirements.--Duty-free treatment may not be 
provided under this section unless the President determines and 
certifies to Congress that--
            (1) Mongolia meets each of the requirements set forth in--
                    (A) paragraphs (1), (2), and (3) of section 104(a) 
                of the African Growth and Opportunity Act (19 U.S.C. 
                3703(a)); and
                    (B) subparagraphs (A) through (F) of section 
                113(a)(1) of such Act (19 U.S.C. 3722(a)(1));
            (2) Mongolia has effectively enforced environmental laws, 
        regulations, or other measures and fulfilled its obligations 
        under international agreements relating to the environment, 
        including as such obligations relate to public health; and
            (3) after taking into account the factors set forth in 
        paragraphs (1) through (7) of subsection (c) of section 502 of 
        the Trade Act of 1974 (19 U.S.C. 2462), Mongolia meets the 
        eligibility requirements described in such section 502.
    (d) Verification With Respect to Transshipment for Textile and 
Apparel Articles.--
            (1) In general.--Not later than January 1 of each year, the 
        Commissioner of U.S. Customs and Border Protection shall verify 
        that textile and apparel articles imported from Mongolia to 
        which duty-free treatment is extended under this section are 
        not being unlawfully transshipped into the United States.
            (2) Report to president and congress.--If the Commissioner 
        determines pursuant to paragraph (1) that textile and apparel 
        articles described in that paragraph are being unlawfully 
        transshipped into the United States, the Commissioner shall 
        report that determination to the President and the appropriate 
        congressional committees.
    (e) Withdrawal, Suspension, or Limitation of Preferential Treatment 
and Mandatory Graduation.--The provisions of subsections (d) and (e) of 
section 502 of the Trade Act of 1974 (19 U.S.C. 2462) shall apply with 
respect to Mongolia, without regard to whether title V of that Act (19 
U.S.C. 2461 et seq.) is in effect pursuant to section 505 of that Act 
(19 U.S.C. 2465).
    (f) Termination of Duty-Free Treatment.--No duty-free treatment 
extended under this section shall remain in effect after December 31, 
2029.
    (g) Definitions.--In this section:
            (1) Cashmere.--The term ``cashmere'' means fine hair 
        obtained from a cashmere goat (capra hircus laniger).
            (2) Customs territory of the united states.--The term 
        ``customs territory of the United States'' has the meaning 
        given the term in General Note 2 of the Harmonized Tariff 
        Schedule of the United States.

SEC. 4. BRIEFING REQUIREMENT.

    Not later than one year after the date of the enactment of this 
Act, and annually thereafter, the President shall monitor, review, and 
provide a briefing to the appropriate congressional committees on--
            (1) the implementation of section 3;
            (2) compliance of Mongolia with the eligibility 
        requirements described in section 3(c); and
            (3) the trade and investment policy of the United States 
        with respect to Mongolia.

SEC. 5. APPROPRIATE CONGRESSIONAL COMMITTEES DEFINED.

    In this Act, the term ``appropriate congressional committees'' 
means--
            (1) the Committee on Ways and Means and the Committee on 
        Foreign Affairs of the House of Representatives; and
            (2) the Committee on Finance and the Committee on Foreign 
        Relations of the Senate.
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