Mr. President, I rise today to introduce the ``United States-Africa Partnership Act.'' This bill builds on the important trade and investment initiatives that were contained in the African Growth and Opportunity Act (AGOA) passed in 2000.…
Mr. President, I rise today to introduce the ``United States-Africa Partnership Act.'' This bill builds on the important trade and investment initiatives that were contained in the African Growth and Opportunity Act (AGOA) passed in 2000.
The original African Growth and Opportunity Act and the expansion of AGOA that I am introducing today emphasize the need to elevate the African private sector. The AGOA legislation offers enhanced trade benefits, more U.S. private sector investment, and a higher level dialogue with African governments. It envisions a new economic partnership between the United States and African nations.
To gain these benefits, African countries are expected to undertake sustained economic reform, abide by international human rights practices, and strengthen good goverance. These standards have been used by the U.S. to stimulate reforms in Asia, Latin America, Eastern Europe and elsewhere. There is no reason to expect that they will not be successful in Africa as well.
Private investment tends to follow good governance and economic reform, but the private sector takes cues from government policies and involvement. It is very much in our interest to play a constructive role in the evolving political and economic transition in Africa. A stable and prosperous Africa will be better equipped to cooperate on a range of shared global problems such as weapons proliferation, terrorism, narcotics, the environment and contagious diseases. African economic success also can create new markets for American exports. If jobs are created and foreign exchange is earned through enhanced exports, Africa will have greater capacity to buy goods and services from abroad. They will likely purchase machinery, electronics, financial services, agricultural products, and many other goods and services from U.S. suppliers.
If we had ignored Taiwan and Korea in the 1960s when they were at stages of economic development comparable to many African societies today, we would have missed out on enormous opportunities in East Asia. Years from now, I hope we can look back and say that we were present at a crucial juncture in Africa's growth and development and that we played a constructive role in that change.
In an effort to reverse the persistent under-performance by African economies and to stimulate American involvement in Africa, I introduced the African Growth and Opportunity Act in the United States Senate in 1999. Since its enactment in 2000, AGOA has been a positive economic force in Africa. In 2002, 94 percent of U.S. imports from AGOA-eligible countries entered duty-free. The United States imported $9 billion in merchandise duty-free under AGOA in 2002, a 10 percent increase from 2001.
Imports from African countries, not counting oil, jumped 50 percent last year. In South Africa, sub-Sahara's most important economy, exports of automobiles have increased sixteen-fold in the past two years. The tiny country of Lesotho, population 2.2 million, generated $318 million in AGOA exports in 2002. New export-oriented garment factories have created 25,000 jobs. For the first time in its history, private sector manufacturing employment--thanks to trade--exceeds government employment.
Performances like this, which occurred despite the recent slowdown in world trade, are the direct result of AGOA. The legislation lets African countries export some 1,800 products duty-free, without quotas, to the United States. It is a direct response to developing countries' long-time plea; trade, not aid, is the real key to ending poverty and bringing about sustainable, long term economic growth.
Despite these signs of progress, many Africa economies remain in bad shape. Of the 64 least developed countries in the world, 38 are in Africa. Per capita output of goods and services actually dropped during the 1990s, according to the World Bank, and with only 1.4 percent of world trade in 2001, sub-Saharan Africa has been falling behind the rest of the world. During the 1990s,
global gross domestic product grew a robust 44 percent; the figure for Africa was only 8.5 percent. From 1990 to 2001, gross national income per capita in sub-Saharan Africa actually declined by .2 percent.
Africa is in need of help, and expanding AGOA should be a part of the development strategy for the continent. The experience of AGOA has taught us valuable lessons about the path to enhanced investment and economic development and has confirmed some of the key principles that proponents of market-based development have used to guide policy. First, AGOA has demonstrated that a commitment to good governance and a positive investment climate is important to economic growth. Countries such as Lesotho, which has made significant efforts in recent years to promote economic reform and stable democracy, have derived the most benefit from the AGOA provisions. Second, the experience of AGOA has demonstrated that regional integration is as essential to development as access to the U.S. and other foreign markets. Using the infrastructure and economic stability of South Africa as a base, neighboring southern African countries have worked together to take advantage of the benefits under AGOA.
AGOA should not be seen as an end in itself. Rather, it is an initial step designed to expand development and decrease poverty by promoting greater integration of Africa into the global trading community. Achieving these goals will require both enhancements to the AGOA framework and additional steps to address the compelling problems facing Africa. Our trade efforts must be part of a broader American partnership with the often-neglected countries of Africa.
This partnership starts with three issues. First, we must help address the HIV/AIDS crisis in Africa. In addition to the human tragedy that HIV/AIDS has created in Africa, the epidemic severely limits the economic growth that would reduce Africa's poverty. When workers are forced to call in sick more days than they are able to work, when government positions are experiencing regular turnover, and when scarce capital must be diverted from investment to dealing with the AIDS crisis, it is nearly impossible to build a stable economy.
Earlier this year, Congress passed legislation establishing a program under which the United States will contribute $15 billion over the next 5 years to address the HIV/AIDS crisis in Africa. The President signed this bill into law and has placed his prestige behind its effective implementation. It is my hope that this leadership and much needed funding will start to turn the tide in the fight against the HIV/AIDS epidemic.
Second, we have begun an effort to rethink the way that aid is delivered to the world's poorest countries, most of which are in Africa. Earlier this year, the Senate Foreign Relations Committee took action on the President's Millennium Challenge Corporation initiative. This initiative would deliver up to $8 billion over the next three years to the world's poorest countries, and it would condition that aid on the development of policies by the recipient countries that will make that aid more effective. These policies include a commitment to just and democratic governance and economic freedom. The Millennium Challenge Corporation would build on the lessons of AGOA, which has demonstrated that private investment will flow to countries that build a stable, predictable investment climate. The incentives provided by Millennium Challenge Corporation dollars would help to establish conditions that will cause private investment dollars to flow to the poorest countries.
Third, we need to move forward with enhancements to AGOA itself. That is my purpose in introducing the United States Africa Partnership Act (USAPA)--also known as ``AGAO III.''' The current AGOA expires in 2008. My bill would extend AGOA benefits until 2015. This coincides with the goal of the World Trade Organizations to have a ``tariff free world'' by 2015. We should take action on this extension soon so that investors will have the certainty they need when making investment decisions involving Africa.
AGOA contains a provision that allows least developed countries (LDCs) to export capped quantities of apparel made from third country fabric to the U.S. duty free. All other countries must use U.S. or African fabric inputs in order to receive duty-free treatment. This ``special rule'' for LDCs expires on September 30, 2004. USAPA would extend this provision for four additional years until September 30, 2008.
It also would eliminate the import sensitivity test with respect to African products and nuisance provisions in the rule of origin for apparel. The AGOA rule of origin is modified so that it applies only to the essential components of apparel. USAPA also clarifies the definitions of certain fabrics for customs purposes, including hand- loomed folklore articles.
USAPA would develop initiatives to provide technical and capacity building experience. In the area of agriculture, it directs the Secretary of Agriculture to develop a comprehensive plan to increase import and export abilities in agricultural trade. It also provides that 20 full-time personnel of the Animal and Plant Health Inspection Service be stationed in at least 10 AGOA eligible countries to provide technical assistance in meeting U.S. import requirements and trade capacity building.
In an effort to stimulate business partnerships, the bill I introduce today also addresses investment incentives and encourages the Overseas Private Investment Corporation, the Export-Import Bank, and the Foreign Agricultural Service to facilitate investment in AGOA eligible countries. It directs the Secretary of the Treasury to seek negotiations regarding tax treaties with eligible countries.
In addition, it encourages U.S. private investment in African transportation, energy and telecommunications and increases coordination between U.S. and African transportation entities to reduce transit times and costs between the United States and Africa.
Finally, the bill grants funding for the continuation of the AGOA forums and establishes an AGOA task force to facilitate the goals of the Act.
The original African Growth and Opportunity Act launched an effort to formulate a new American strategy towards Africa. It sought to establish the foundation for a more mature economic relationship with those countries in Africa that undertake serious economic and political reforms. That effort was supported by virtually all sub-Saharan African nations, and it had wide support among American businesses and non- governmental organizations. We should now seize the opportunity to further integrate African countries into the world economy.
The United States-Africa Partnership Act that I introduce today recognizes the enormous potential for economic growth and development in sub-Saharan Africa. It embraces the vast diversity of people, cultures, economies, and potential among forty-eight countries and nearly 700 million people. A stable and economically prosperous Africa can provide new partnerships that will contribute greatly to our commercial and security interests. I urge all members to support the United States-Africa Partnership Act so that we can achieve the mutual long-term benefits that it would bring to Africa and to our country.