US Congress bill promises duty-free treatment for Mongolian cashmere
President Kh.Battulga received several members of the US Congress including Ted Yoho, the sponsor behind the Mongolia Third Neighbor Trade Act, on September 17 as part of their visit to Mongolia.
Ted Yoho is a member of the House of Representatives and chairman of the Subcommittee on Asia and the Pacific of the Committee on Foreign Affairs. Joining him on the visit to Mongolia were fellow members of the House of Representatives Elizabeth Esty, Tom Garrett, and Ruben Kihuen. The representatives are visiting Mongolia to discuss bilateral economic, defense cooperation and the Mongolia Third Neighbor Trade Act, which was submitted to the US Congress on July 26, 2018.
The President’s Office considers the Mongolia Third Neighbor Trade Act to be an important bill in terms of exporting Mongolian cashmere and other textile garments to the US duty free, increasing Mongolia-US trade, and multiplying the number of Mongolian women working in cashmere and textile industries. President Kh.Battulga explained the importance of the bill for Mongolia, while emphasizing that it will open employment opportunities for 30,000 to 40,000 Mongolian women.
When it was introduced, the bill underlined the importance of cashmere trade to the Mongolian economy and highlighted that while Mongolia produces over a third of the world’s raw cashmere, it produces few finished cashmere products.
“Most Mongolian raw cashmere is exported to China, and the US buys nearly all of its cashmere products from China. Preferential treatment for US imports of certain Mongolian products, including cashmere products, would benefit the USA by facilitating increased trade with Mongolia and reducing US imports of Chinese cashmere products,” the proposed bill states.
On the other hand, the bill seeks to help reduce Mongolia’s economic dependence on China.
The sponsors of the bill have said that preferential treatment for US imports of such Mongolian products would benefit Mongolia by reducing Mongolia’s economic dependence on China and promoting the development of Mongolia’s garment industry.
“Experts have expressed concern that Mongolia is unduly economically reliant on China, with more than 80 percent of Mongolia’s exports flowing to China annually, largely from extractive industries. Industry leaders believe that China’s trade practices hinder the diversification of Mongolia’s economy and the emergence of a domestic Mongolian garment industry, because Chinese buyers only purchase raw Mongolian cashmere, not finished garments,” an excerpt from the bill states.
The bill is only slated to continue until 2025 as it states that “no duty-free treatment extended under this Act shall remain in effect after December 31, 2025.”
In addition, Mongolia must fulfill a myriad of requirements in order to receive duty-free treatment. Mongolia’s eligibility will be judged under the African Growth and Opportunity Act (AGOA), a piece of legislation designed to assist the economies of sub-Saharan Africa and to improve economic relations between the US and the region. Despite the fact that Mongolia is far from being an African country, the same eligibility requirements will be applied in the Third Neighbor Trade Act.
AGOA provides trade preferences for quota and duty-free entry into the US for certain goods, notably for textile and apparel goods. In order to be eligible, a country must have established or making continual progress towards a market-based economy that protects private property rights, incorporates an open rulesbased trading system, and minimizes government interference in the economy through measures such as price controls, subsidies, and government ownership of economic assets.
As such, the bill comes with a lot of strings attached. In addition to the aforementioned requirements, Mongolia must eliminate barriers to US trade and investment, including protection of intellectual property. But all of this applies only if the bill passes and that is a big if. According to Skopos Labs, a company that built an AI-powered research platform that turns unstructured data into predictions of risk and opportunity, predicted that the bill has a three percent chance of being enacted.
A bill in Congress must be passed by both the House and the Senate in identical form and then be signed by the US president to become law.This bill is in the first stage of the legislative process. It will typically be considered by committee next before it is possibly sent on to the House or Senate as a whole.
...AI-powered research platform that turns unstructured data into predictions of risk and opportunity, predicted that the bill has a three percent chance of being enacted...