Mongolia Third Neighbor Trade Act
This bill allows the President to provide duty-free treatment for certain apparel and textile articles imported from Mongolia.
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 3,000,000, Mongolia is the world's most sparsely populated 
        country, and Mongolia's sovereignty is thought to be at risk 
        from the overwhelming influence of its much larger and more 
        populous neighbors.
            (2) 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. 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 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 between the countries 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.
            (4) After mining, agriculture is the second most important 
        sector contributing to the Mongolian economy. The livestock 
        sector accounts for 87 percent of agricultural production in 
        Mongolia and employs around one-third of the working 
        population.
            (5) Since the 1940s, the annual mean air temperature in 
        Mongolia has risen at three times the 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 of the country's 
        livestock population were killed due to the post-drought 
        extreme winter phenomenon known as ``dzud''. This phenomenon is 
        unique to Mongolia and 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.
            (6) Mongolia would greatly benefit from preferential 
        treatment for United States imports of certain Mongolian 
        products to help address some of the economic impacts of the 
        dzuds.
            (7) The cashmere trade is particularly important to 
        Mongolia's economy, but while Mongolia produces over one-third 
        of the world's raw cashmere, 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.
            (8) The development of Mongolia's garment industry would 
        also promote women's employment and empowerment. Women have 
        historically participated in Mongolia's garment industry at 
        high rates, and the garment industry has historically provided 
        safe and stable employment for women in Mongolia.
            (9) In developing and expanding Mongolia's cashmere 
        industry, it is critical for Mongolia to take steps to ensure 
        the protection of its grasslands and prevent overgrazing of 
        cashmere goats.
            (10) Preferential treatment for United States imports of 
        such Mongolian products would benefit Mongolia at this critical 
        time.

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

    (a) In General.--Subject to the eligibility requirements in 
subsection (c), the President is authorized to 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--
                            (i) are wholly produced in Mongolia; and
                            (ii) are wholly formed and cut, or are 
                        components 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 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) Eligibility Requirements.--Duty-free treatment may not be 
provided under this Act unless the President determines and certifies 
to Congress that--
            (1) Mongolia meets--
                    (A) each of the requirements described in 
                paragraphs (1), (2), and (3) of section 104(a) of the 
                African Growth and Opportunity Act (19 U.S.C. 3703(a)); 
                and
                    (B) each of the criteria relating to the prevention 
                of transshipment described in paragraphs (1) and (2) of 
                section 113(a) of such Act (19 U.S.C. 3722(a));
            (2) Mongolia has effectively enforced environmental laws, 
        regulations, or other measures and fulfilled its international 
        environmental obligations, 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 of 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 Act 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 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 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 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, 2026.
    (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 annually 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.

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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Mongolia Third Neighbor Trade Act
To promote United States-Mongolia trade by authorizing duty-free treatment for certain imports from Mongolia, and for other purposes.
Mongolia Third Neighbor Trade Act
Rep. Titus, Dina