Title: Mongolia Third Neighbor Trade Act
Policy area: Foreign Trade and International Finance

Summary:
Mongolia Third Neighbor Trade Act
This bill allows the President to provide duty-free treatment for certain articles imported from Mongolia.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 3470 Introduced in Senate (IS)]

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115th CONGRESS
  2d Session
                                S. 3470

   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

                           September 18, 2018

  Mr. Cardin (for himself and Mr. Sullivan) 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 nation in Asia to 
        transition from communism to democracy.
            (2) Mongolia shares land borders with only the Russian 
        Federation and the People's Republic of China, nations that the 
        United States national security strategy states ``want to shape 
        a world antithetical to U.S. values and interests.'' With a 
        large land area and a population of only 3,000,000, Mongolia is 
        the most sparsely populated country in the world, and the 
        sovereignty of Mongolia is thought to be at risk from the 
        overwhelming influence of its much larger and more populous 
        neighbors.
            (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.
            (4) The success of Mongolia as a democracy, the strategic 
        location, sovereignty, and territorial integrity of Mongolia, 
        and the ability of Mongolia to pursue an independent foreign 
        policy are highly relevant to the national security of the 
        United States.
            (5) Mongolia describes the United States as its most 
        important ``third neighbor'', but United States-Mongolia trade 
        is substantially lower than many other bilateral trading 
        relationships and trade has declined in recent years. Total 
        trade in 2012 measured $707,000,000, but in 2017 the United 
        States exported only $82,200,000 in goods to Mongolia and 
        imported only $9,400,000 in goods from Mongolia.
            (6) The cashmere trade is particularly important to the 
        economy of Mongolia, but although Mongolia produces more than a 
        third of raw cashmere in the world, it produces few finished 
        cashmere products. Most Mongolian raw cashmere is exported to 
        China, and the United States buys nearly all of its cashmere 
        products from China. Preferential treatment for United States 
        imports of certain Mongolian products, including cashmere 
        products, would benefit the United States by facilitating 
        increased trade with Mongolia and reducing United States 
        imports of Chinese cashmere products.
            (7) Preferential treatment for United States imports of 
        such Mongolian products would benefit Mongolia by reducing the 
        economic dependence of Mongolia on China and promoting the 
        development of the garment industry of Mongolia. Experts have 
        expressed concern that Mongolia is unduly economically reliant 
        on China, with more than 80 percent of exports from Mongolia 
        flowing to China annually, largely from extractive industries. 
        Industry leaders believe that the trade practices of China 
        hinder the diversification of the economy of Mongolia and the 
        emergence of a domestic Mongolian garment industry, because 
        Chinese buyers only purchase raw Mongolian cashmere, not 
        finished garments.
            (8) The development of the garment industry in Mongolia 
        would also promote employment and empowerment of women in 
        Mongolia. Women have historically participated in the garment 
        industry in Mongolia at high rates, and the garment industry 
        has historically provided safe and stable employment for women 
        in Mongolia.

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

    (a) In General.--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, the yarn and fabric used to 
                manufacture the article are produced 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 35 
                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 in 
                accordance with 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) Verification With Respect to Transshipment for Textile and 
Apparel Articles.--
            (1) In general.--Not later than April 1, July 1, October 1, 
        and 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 Act are not being unlawfully transshipped 
        into the United States.
            (2) Report to president.--If the Commissioner determines 
        pursuant to paragraph (1) that textile and apparel articles 
        imported from Mongolia to which duty-free treatment is extended 
        under this Act are being unlawfully transshipped into the 
        United States, the Commissioner shall report that determination 
        to the President.
    (d) Eligibility Requirements.--Duty-free treatment may be provided 
under this Act only if the President determines and certifies to 
Congress that--
            (1) Mongolia meets the requirements set forth in paragraphs 
        (1), (2), and (3) of section 104 of the African Growth and 
        Opportunity Act (19 U.S.C. 3703); and
            (2) 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 of such section 502.
    (e) Withdrawal, Suspension, or Limitation of Preferential 
Treatment; 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 to the same extent and in the same 
manner as such provisions apply with respect to beneficiary developing 
countries under title V of that Act (19 U.S.C. 2461 et seq.).
    (f) Termination of Duty-Free Treatment.--No duty-free treatment 
extended under this Act shall remain in effect after December 31, 2025.
    (g) Definitions.--In this section:
            (1) 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.
            (2) Cashmere.--The term ``cashmere'' means fine hair 
        obtained from a cashmere goat (capra hircus laniger).

SEC. 4. BRIEFING REQUIREMENT.

    (a) In General.--Not later than one year after the date of the 
enactment of this Act, and periodically thereafter, the President shall 
monitor, review, and provide a briefing to the appropriate 
congressional committees on--
            (1) the implementation of this Act;
            (2) compliance of Mongolia with the eligibility 
        requirements described in section 3(d); and
            (3) the trade and investment policy of the United States 
        with respect to Mongolia.
    (b) Appropriate Congressional Committees Defined.--In this section, 
the term ``appropriate congressional committees'' means--
            (1) the Committee on Finance and the Committee on Foreign 
        Relations of the Senate; and
            (2) the Committee on Ways and Means and the Committee on 
        Foreign Affairs of the House of Representatives.
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