II 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Mongolia Third Neigh5 bor Trade Act’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

8 (1) In 1992, Mongolia adopted a constitution 

9 establishing a parliamentary democracy, becoming 

10 the only country in Asia to transition from comVerDate Sep 11 2014 22:51 Dec 04, 2023 Jkt 049200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S3368.IS S3368

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1 munism to democracy. Mongolia shares land borders 

2 with only the Russian Federation and the People’s 

3 Republic of China. With a large land area and a 

4 population of only 3,255,000, Mongolia is the 

5 world’s most sparsely populated country, and its 

6 economy is highly dependent on its much larger and 

7 more populous neighbors. 

8 (2) Mongolia’s success as a democracy, stra9 tegic location, sovereignty, territorial integrity, and 

10 ability to pursue an independent foreign policy are 

11 highly relevant to the national security of the United 

12 States. 

13 (3) Mongolia has shown its commitment to a 

14 ‘‘third neighbor’’ relationship with the United States 

15 by sending troops to support United States combat 

16 operations in Iraq and Afghanistan, and has a 

17 strong record of troop contributions to international 

18 peacekeeping missions, including nearly 900 per19 sonnel serving in the United Nations mission in 

20 South Sudan and other missions. 

21 (4) Mongolia describes the United States as its 

22 most important ‘‘third neighbor’’, but trade between 

23 the United States and Mongolia is substantially 

24 lower than in many of Mongolia’s other bilateral 

25 trading relationships, and has declined in recent 


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1 years. Total trade between the United States and 

2 Mongolia in 2012 was valued at approximately 

3 $707,000,000, but in 2022 the United States ex4 ported only $149,000,000 in goods to Mongolia and 

5 imported only $26,000,000 in goods from Mongolia. 

6 (5) While the mining industry accounts for 

7 more than 80 percent of Mongolia’s exports by value 

8 and more than 20 percent of gross domestic product, 

9 agriculture, which accounts for 13.25 percent of 

10 gross domestic product, is a much larger source of 

11 jobs, employing around a quarter of the working 

12 population. The livestock sector accounts for more 

13 than 80 percent of agricultural production in Mon14 golia. 

15 (6) Since the 1940s, the annual mean air tem16 perature in Mongolia has risen at 3 times the aver17 age global rate. Average precipitation is declining 

18 and extreme weather disasters are more frequent, 

19 posing acute challenges for livestock herding in the 

20 country. In 2017, an estimated 700,000 animals of 

21 the country’s livestock population perished due to 

22 the post-drought extreme winter phenomenon known 

23 as ‘‘dzud’’. This phenomenon has increased in fre24 quency and severity in recent years, causing a rise 

25 in livestock mortality and diminishing livelihoods for 


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1 herders, which has led to widespread rural poverty 

2 and a contraction in the national economy. 

3 (7) Mongolia would greatly benefit from pref4 erential treatment for imports into the United States 

5 of certain Mongolian products. Such preferential 

6 treatment would help address some of the economic 

7 impacts of the dzuds. 

8 (8) The cashmere trade is particularly impor9 tant to the economy of Mongolia. While Mongolia 

10 produces approximately 40 percent of the world’s 

11 raw cashmere, it produces few finished cashmere 

12 products. Mongolian raw cashmere is exported to the 

13 People’s Republic of China, where it is diluted with 

14 other fibers and labeled as Mongolian. The United 

15 States buys nearly all of its cashmere products from 

16 the People’s Republic of China. Preferential treat17 ment for imports into the United States of certain 

18 Mongolian products, including cashmere products, 

19 would benefit the United States by facilitating in20 creased direct trade with Mongolia for cashmere 

21 products while also supporting the development of 

22 value-added cashmere processing in Mongolia. 

23 (9) The development of the garment industry in 

24 Mongolia would also promote women’s employment 

25 and empowerment. Women have historically particiVerDate Sep 11 2014 22:51 Dec 04, 2023 Jkt 049200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3368.IS S3368

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1 pated in the garment industry in Mongolia at high 

2 rates, and that industry has historically provided 

3 safe and stable employment for women in Mongolia. 

4 The United Nations has recognized the high num5 bers of women deployed as part of Mongolia’s con6 tribution to peacekeeping operations. 

7 (10) In developing and expanding the cashmere 

8 industry in Mongolia, it is critical for Mongolia to 

9 take steps to ensure the protection of its grasslands 

10 and prevent overgrazing of cashmere goats. Since 

11 2018, Mongolia has been working with the United 

12 Nations Development Programme to implement the 

13 Mongolian Sustainable Cashmere Platform. The 

14 Platform’s objectives aim to improve cashmere 

15 traceability and Mongolia’s sustainable cashmere 

16 value chain. 

17 (11) Preferential treatment for imports into the 

18 United States of Mongolian products would benefit 

19 Mongolia at this critical time. 

20 SEC. 3. DUTY-FREE TREATMENT FOR CERTAIN IMPORTS 

21 FROM MONGOLIA. 

22 (a) IN GENERAL.—Subject to subsection (c), the 

23 President may provide duty-free treatment for any article 

24 described in subsection (b) that is imported directly from 

25 Mongolia into the customs territory of the United States. 


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1 (b) ARTICLE DESCRIBED.— 

2 (1) IN GENERAL.—An article is described in 

3 this subsection if— 

4 (A) the article is the growth, product, or 

5 manufacture of Mongolia; 

6 (B) the article is classified under chapter 

7 51, 57, 60, 61, 62, 63, or 94 of the Har8 monized Tariff Schedule of the United States; 

9 (C)(i) the article is an apparel or textile 

10 article made of fabrics or fibers containing not 

11 less than 23 percent by weight of cashmere; or 

12 (ii) the sum of the cost or value of cash13 mere components of the article is not less than 

14 51 percent of the appraised value of the article 

15 at the time it is entered; 

16 (D) in the case of an article that is a tex17 tile or apparel article— 

18 (i) the yarn and fabric used to manu19 facture the article are wholly produced in 

20 Mongolia; and 

21 (ii) the article is wholly formed and 

22 cut, or its components are wholly knit-to23 shape, in Mongolia; 

24 (E) the sum of the cost or value of the ma25 terials produced in, and the direct costs of procVerDate Sep 11 2014 22:51 Dec 04, 2023 Jkt 049200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3368.IS S3368

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1 essing operations performed in, Mongolia or the 

2 customs territory of the United States is not 

3 less than 50 percent of the appraised value of 

4 the article at the time it is entered; and 

5 (F) the President determines that the arti6 cle is not import-sensitive, after receiving the 

7 advice of the United States International Trade 

8 Commission as described in section 503(e) of 

9 the Trade Act of 1974 (19 U.S.C. 2463(e)). 

10 (2) EXCLUSIONS.—An article shall not be treat11 ed as the growth, product, or manufacture of Mon12 golia for purposes of paragraph (1)(A) by virtue of 

13 having merely undergone— 

14 (A) simple combining or packaging oper15 ations; or 

16 (B) mere dilution with water or mere dilu17 tion with another substance that does not mate18 rially alter the characteristics of the article. 

19 (c) ELIGIBILITY REQUIREMENTS.—Duty-free treat20 ment may not be provided under this section unless the 

21 President determines and certifies to Congress that— 

22 (1) Mongolia meets each of the requirements 

23 set forth in— 


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1 (A) paragraphs (1), (2), and (3) of section 

2 104(a) of the African Growth and Opportunity 

3 Act (19 U.S.C. 3703(a)); and 

4 (B) subparagraphs (A) through (F) of sec5 tion 113(a)(1) of such Act (19 U.S.C. 

6 3722(a)(1)); 

7 (2) Mongolia has effectively enforced environ8 mental laws, regulations, or other measures and ful9 filled its obligations under international agreements 

10 relating to the environment, including as such obli11 gations relate to public health; and 

12 (3) after taking into account the factors set 

13 forth in paragraphs (1) through (7) of subsection (c) 

14 of section 502 of the Trade Act of 1974 (19 U.S.C. 

15 2462), Mongolia meets the eligibility requirements 

16 described in such section 502. 

17 (d) VERIFICATION WITH RESPECT TO TRANS18 SHIPMENT FOR TEXTILE AND APPAREL ARTICLES.— 

19 (1) IN GENERAL.—Not later than January 1 of 

20 each year, the Commissioner of U.S. Customs and 

21 Border Protection shall verify that textile and ap22 parel articles imported from Mongolia to which duty23 free treatment is extended under this section are not 

24 being unlawfully transshipped into the United 

25 States. 


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1 (2) REPORT TO PRESIDENT AND CONGRESS.— 

2 If the Commissioner determines pursuant to para3 graph (1) that textile and apparel articles described 

4 in that paragraph are being unlawfully transshipped 

5 into the United States, the Commissioner shall re6 port that determination to the President and the ap7 propriate congressional committees. 

8 (e) WITHDRAWAL, SUSPENSION, OR LIMITATION OF

9 PREFERENTIAL TREATMENT AND MANDATORY GRADUA10 TION.—The provisions of subsections (d) and (e) of sec11 tion 502 of the Trade Act of 1974 (19 U.S.C. 2462) shall 

12 apply with respect to Mongolia, without regard to whether 

13 title V of that Act (19 U.S.C. 2461 et seq.) is in effect 

14 pursuant to section 505 of that Act (19 U.S.C. 2465). 

15 (f) TERMINATION OF DUTY-FREE TREATMENT.—No 

16 duty-free treatment extended under this section shall re17 main in effect after December 31, 2029. 

18 (g) DEFINITIONS.—In this section: 

19 (1) CASHMERE.—The term ‘‘cashmere’’ means 

20 fine hair obtained from a cashmere goat (capra 

21 hircus laniger). 

22 (2) CUSTOMS TERRITORY OF THE UNITED

23 STATES.—The term ‘‘customs territory of the United 

24 States’’ has the meaning given the term in General 


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1 Note 2 of the Harmonized Tariff Schedule of the 

2 United States. 

3 SEC. 4. BRIEFING REQUIREMENT. 

4 Not later than one year after the date of the enact5 ment of this Act, and annually thereafter, the President 

6 shall monitor, review, and provide a briefing to the appro7 priate congressional committees on— 

8 (1) the implementation of section 3; 

9 (2) compliance of Mongolia with the eligibility 

10 requirements described in section 3(c); and 

11 (3) the trade and investment policy of the 

12 United States with respect to Mongolia. 

13 SEC. 5. APPROPRIATE CONGRESSIONAL COMMITTEES DE14 FINED. 

15 In this Act, the term ‘‘appropriate congressional com16 mittees’’ means— 

17 (1) the Committee on Ways and Means and the 

18 Committee on Foreign Affairs of the House of Rep19 resentatives; and 

20 (2) the Committee on Finance and the Com21 mittee on Foreign Relations of the Senate. 

Æ 


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