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Subcommittee on Africa and Global Health
Chairman Donald M. Payne
Hearing Opening Remarks
"Beyond Oil & Gas: African Growth and Opportunity Act's Benefits to Africa"
July 12, 2007

Good Morning and welcome to today's hearing of the Subcommittee on Africa and Global Health: "Beyond Oil and Gas: the African Growth and Opportunity's Benefits to Africa".

The purpose of this hearing is to critically analyze the impact AGOA has had on growth and poverty reduction in Africa. I have expressed concern in past hearings that AGOA has impacted and benefited only certain sectors - mainly oil -- and primarily a handful of the now 38 AGOA-eligible countries. AGOA was envisioned as a tool to expand US-Africa trade and investment and accelerate Africa's economic growth. But as a person who was deeply involved in the development of AGOA I can tell you there was a great debate as to whether this would be a tool for real, broad, sustained growth and poverty reduction for all of Africa. I must say seven years later, AGOA has not lived up to that promise. On the contrary, it seems there are two AGOAs - the AGOA we have in fact, and the AGOA we would like to have. Today we hope to have an in-depth discussion on how well AGOA has lived up to its promises and where we go from here.

In May 2000, Congress passed the African Growth and Opportunity Act in order to improve U.S.-Africa trade relations and help Africa achieve economic development through trade. AGOA provides duty-free and quota-free access to the U.S. market for certain goods from designated Sub-Saharan African beneficiary countries.

Yes, AGOA has led to an increase in jobs, especially apparel-related jobs. AGOA has had significant impact on a few countries, namely Nigeria, Angola, and South Africa in 2006 - all of which are poised to reap the benefits of a top-down model.

It is no secret that oil and gas are the biggest US imports from AGOA countries - accounting for 82% of AGOA trade in 2006. Petroleum products that come into the US under AGOA are on the rise - up more than 16% last year from 2005. Yet oil products do not need AGOA. Oil products do not need AGOA - they generally face low tariffs of around 5% per barrel, according to the Congressional Research Service, while apparel products generally face high tariffs ranging from 35% to 90% depending on the item.

We will hear from our witnesses that agriculture is critical to growth, stability, and development in Africa. It is the sector on which the majority of Africans depend. Yet AGOA benefits to that sector are not only lackluster, they are on the decline- less than 1% overall and only .6% in 2005. Textile products also seem to be on a downward trend undoubtedly as a result of China and India's growth and the end of the textile and apparel quotas in almost two years ago.

There is also the issue of capacity building; are we doing enough to spur African small and medium sized enterprises?

AGOA has not translated into sustainable poverty reduction as many of us had hoped.

So the questions arise: is AGOA headed in the right direction? Further, are we relying on AGOA to do things it cannot in its current form and if so, how do we improve it? These are some of the questions I would like our witnesses to address in their testimony and the discussion to follow.