Economics and Business, Environment

Will ‘Made in Mongolia’ Take Off Globally? The Cashmere Story

If we look at the movement of cashmere, it goes like this: about ⅓ of the global cashmere supply originates from Mongolia. Mongolia’s raw cashmere is transported to China to be made into garments and then sold to the rest of the world. The United States, a huge consumer economy, buys nearly all of their cashmere products from China.

To promote the direct sale of cashmere products in the U.S. from Mongolia, and bypass China, the U.S. House of Representatives introduced a bill in July 2018 to “promote United States-Mongolia trade by authorizing duty-free treatment for certain imports from Mongolia, and for other purposes.” And cue the celebration!

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Mongolian Ambassador Yo. Otgonbayar presenting his credentials to President Donald Trump.

For the U.S., this means that in a non-friendly geopolitical space, they would establish themselves as strong allies with the Mongols, who are forever stuck between the two U.S. frenemies – China and Russia. Former Ambassador to Mongolia, Jonathan Addleton, said: “[by] bypassing China, [Mongolia] could export finished products directly to the United States, strengthening the U.S. partnership with a country that has also chosen the path of democracy. Moreover, it ensures that the United States can be supportive in ways that neither threaten U.S. jobs nor involve taxpayer dollars for foreign aid.”

For Mongolia, the bill would decrease its dependence on China. The trade would also strengthen the relationship between Mongolia and the U.S. through Mongolia’s “third-neighbor” policy. With trade growth, the cashmere and fashion industry can develop further and incentivize other countries to purchase Mongolian cashmere products directly.

However, this expected cashmere renaissance in the country could also have negative environmental consequences. In Mongolia, goats are known to multiply faster than other animals. This is good for cashmere supply. But, when goats graze, they pull out the grass with its roots, aggravating desertification.

In Mongolia, there is a reason why there are five important animals tavan khoshuu –  the camel, horse, cow, goat and sheep. The increased global demand for cashmere could stress the already goat-heavy livestock that nomadic families have, straining the steppe further and the food supply of the herd in the future.

As climate change continues to worsen in the world and in Mongolia with the stress of severe dzud winters, it will be important to take into account all the direct and indirect effects of trade policies. A wide range of potential impacts, both good and bad, have to be considered before committing to a final decision.

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