S3368-118

2. Findings Congress finds the following: 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Preferential treatment for imports into the United States of Mongolian products would benefit Mongolia at this critical time.