[House Hearing, 112 Congress]
[From the U.S. Government Printing Office]
THE AFRICAN GROWTH AND OPPORTUNITY ACT: ENSURING SUCCESS
=======================================================================
JOINT HEARING
BEFORE THE
SUBCOMMITTEE ON TERRORISM, NONPROLIFERATION, AND TRADE
AND THE
SUBCOMMITTEE ON AFRICA, GLOBAL HEALTH,
AND HUMAN RIGHTS
OF THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
JUNE 20, 2012
__________
Serial No. 112-159
__________
Printed for the use of the Committee on Foreign Affairs
Available via the World Wide Web: http://www.foreignaffairs.house.gov/
or
http://www.gpo.gov/fdsys/
______
U.S. GOVERNMENT PRINTING OFFICE
74-640 WASHINGTON : 2012
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing
Office, http://bookstore.gpo.gov. For more information, contact the
GPO Customer Contact Center, U.S. Government Printing Office.
Phone 202-512-1800, or 866-512-1800 (toll-free). E-mail, gpo@custhelp.com.
COMMITTEE ON FOREIGN AFFAIRS
ILEANA ROS-LEHTINEN, Florida, Chairman
CHRISTOPHER H. SMITH, New Jersey HOWARD L. BERMAN, California
DAN BURTON, Indiana GARY L. ACKERMAN, New York
ELTON GALLEGLY, California ENI F.H. FALEOMAVAEGA, American
DANA ROHRABACHER, California Samoa
DONALD A. MANZULLO, Illinois DONALD M. PAYNE, New Jersey--
EDWARD R. ROYCE, California deceased 3/6/12 deg.
STEVE CHABOT, Ohio BRAD SHERMAN, California
RON PAUL, Texas ELIOT L. ENGEL, New York
MIKE PENCE, Indiana GREGORY W. MEEKS, New York
JOE WILSON, South Carolina RUSS CARNAHAN, Missouri
CONNIE MACK, Florida ALBIO SIRES, New Jersey
JEFF FORTENBERRY, Nebraska GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas THEODORE E. DEUTCH, Florida
TED POE, Texas DENNIS CARDOZA, California
GUS M. BILIRAKIS, Florida BEN CHANDLER, Kentucky
JEAN SCHMIDT, Ohio BRIAN HIGGINS, New York
BILL JOHNSON, Ohio ALLYSON SCHWARTZ, Pennsylvania
DAVID RIVERA, Florida CHRISTOPHER S. MURPHY, Connecticut
MIKE KELLY, Pennsylvania FREDERICA WILSON, Florida
TIM GRIFFIN, Arkansas KAREN BASS, California
TOM MARINO, Pennsylvania WILLIAM KEATING, Massachusetts
JEFF DUNCAN, South Carolina DAVID CICILLINE, Rhode Island
ANN MARIE BUERKLE, New York
RENEE ELLMERS, North Carolina
ROBERT TURNER, New York
Yleem D.S. Poblete, Staff Director
Richard J. Kessler, Democratic Staff Director
Subcommittee on Terrorism, Nonproliferation, and Trade
EDWARD R. ROYCE, California, Chairman
TED POE, Texas BRAD SHERMAN, California
JEFF DUNCAN, South Carolina DAVID CICILLINE, Rhode Island
BILL JOHNSON, Ohio GERALD E. CONNOLLY, Virginia
TIM GRIFFIN, Arkansas ALLYSON SCHWARTZ, Pennsylvania
ANN MARIE BUERKLE, New York
RENEE ELLMERS, North Carolina
------
Subcommittee on Africa, Global Health, and Human Rights
CHRISTOPHER H. SMITH, New Jersey, Chairman
JEFF FORTENBERRY, Nebraska KAREN BASS, California
TOM MARINO, Pennsylvania RUSS CARNAHAN, Missouri
ANN MARIE BUERKLE, New York THEODORE E. DEUTCH, Florida
ROBERT TURNER, New York
C O N T E N T S
----------
Page
WITNESSES
Mr. Anthony Carroll, vice president, Manchester Trade, Ltd....... 10
Mr. Paul Ryberg, president, African Coalition for Trade.......... 16
Mr. Jaswinder Bedi, chairman, African Cotton and Textile
Industries Federation.......................................... 21
Mr. Stephen Hayes, president and chief executive officer, The
Corporate Council on Africa (CCA).............................. 26
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
The Honorable Edward R. Royce, a Representative in Congress from
the State of California, and chairman, Subcommittee on
Terrorism, Nonproliferation, and Trade: Prepared statement..... 3
The Honorable Christopher H. Smith, a Representative in Congress
from the State of New Jersey, and chairman, Subcommittee on
Africa, Global Health, and Human Rights: Prepared statement.... 7
Mr. Anthony Carroll: Prepared statement.......................... 12
Mr. Paul Ryberg: Prepared statement.............................. 18
Mr. Jaswinder Bedi: Prepared statement........................... 23
Mr. Stephen Hayes: Prepared statement............................ 27
APPENDIX
Hearing notice................................................... 40
Hearing minutes.................................................. 41
The Honorable Gerald E. Connolly, a Representative in Congress
from the Commonwealth of Virginia: Prepared statement.......... 43
The Honorable Theodore E. Deutch, a Representative in Congress
from the State of Florida: Prepared statement.................. 45
THE AFRICAN GROWTH AND OPPORTUNITY ACT: ENSURING SUCCESS
----------
WEDNESDAY, JUNE 20, 2012
House of Representatives,
Subcommittee on Terrorism,
Nonproliferation, and Trade and
Subcommittee on Africa, Global Health,
and Human Rights,
Committee on Foreign Affairs,
Washington, DC.
The subcommittees met, pursuant to notice, at 2:35 p.m., in
room 2172, Rayburn House Office Building, Hon. Edward R. Royce
(chairman of the Subcommittee on Terrorism, Nonproliferation,
and Trade) presiding.
Mr. Royce. This joint hearing of the Subcommittee on
Terrorism, Nonproliferation, and Trade, as well as Africa,
Global Health, and Human Rights will come to order. I want to
thank Chairman Smith, Ranking Member Bass, and the staff of the
Africa Subcommittee, as well as the Terrorism,
Nonproliferation, and Trade Subcommittee for their good work on
this hearing.
And of course, Karen Bass really urged that we hold this
hearing today. I think it is a timely hearing, given the
intent, I think, in the Senate to move forward with this
legislation in ensuing weeks.
Today we are examining the African Growth and Opportunity
Act. It was signed into law in 2000. This landmark legislation
ended years of U.S. Government indifference to Africa's
considerable commercial potential, and I am proud to have been
part of the AGOA coalition with Jim McDermott and Charlie
Rangel and some of our other colleagues on this. We were
bipartisan. We did work very hard at it, and I think we beat
the odds to get the job done.
AGOA has brought major benefits to a number of African
countries. Hundreds of thousands of Africans, many of them
women, have been employed because of this Act. I have had the
opportunity to visit apparel factories in many different
countries in Africa. I have seen AGOA's contribution to
fighting poverty in these countries. Unfortunately Africa's
emergent apparel industry is imperiled by the impending
expiration of a key AGOA provision dealing with the ability to
use non-African manufactured fabric. If we do not extend this
provision, hundreds of thousands of African apparel jobs will
be shifted to Asia. Many already have because of this
uncertainty. Africans are losing jobs, and we are losing the
diplomatic goodwill won with AGOA.
Ideally, more countries and more African industries would
have taken advantage of AGOA by now, but we shouldn't lose
sight of the fact that the number of countries exporting non-
energy products has increased from 13 to 22 on the subcontinent
in the last decade. And when AGOA was passed, Africa was
arguably irrelevant to the global economy.
Africa still has a long road ahead, but a great deal of
progress has been made because of many of the provisions in
AGOA. But one particular provision, if we don't extend it, is
going to be very injurious. One way to accelerate that progress
and help our deficit, of course, if I can go off on a tangent
for a minute, is eliminating our agricultural subsidies, which
I wish we would phase out for the benefit of fairness, the
benefit of sound economic policy, and certainly for the benefit
of Africa.
This committee wrote AGOA's eligibility criteria. The U.S.
extends duty and quota-free access with AGOA countries and
expects certain minimum commitments in return. One witness will
tell us that these standards which go to the basis of setting
up independent judiciary, and the rule of law, these standards
compelled most African countries to ``embrace the rule of law,
allow for political pluralism, respect democracy, and basic
human rights.'' And that is not bad.
We didn't pass AGOA for Africans only. The U.S. is better
off if Africa is moving away from mass poverty. AGOA can be
better utilized, which we will hear about, but we are sure
better off with it in place. When AGOA was written, the U.S.
Government was completely ignoring African commerce. AGOA has
changed that, though I was struck by reading the other day that
no Commerce Secretary has visited sub-Saharan Africa since
2002. Nothing in 10 years. And that is not the spirit of AGOA.
And that is something we seek to rectify here.
Before turning to Ranking Member Sherman for an opening
statement, I will inform members that we are also joined by a
few non-committee members who were critical to AGOA, especially
Representative Jim McDermott, who got the original ball rolling
and had the concept for the first AGOA legislation.
I will turn now to our ranking member.
[The prepared statement of Mr. Royce follows:]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
----------
Mr. Sherman. Not wishing to cause a heart attack or other
problem with my chairman, I will give you fair warning. I am
going to skip my opening statement here, and yield to my good
friend, Karen Bass. I am anxious to hear the witnesses, and
this one time I didn't use the 7- or 8- or 10-minute opening
statement. I yield back.
Mr. Royce. I thank our ranking member, Mr. Sherman, and we
will now go to Ranking Member Bass.
Ms. Bass. First of all, thank you very much, Chairman
Royce, Chairman Smith, and Ranking Member Sherman. And this
will be an unusual occasion, because I am actually going to
yield my comments in just 1 minute. But I want to thank all of
you; in particular, the cooperation with Member Sherman's
staff, and also Member Royce's staff for the opportunity to
hold this joint hearing on AGOA. And with that in mind, I would
like to defer my opening comments to one of the original
authors and leaders on AGOA, Congress Member Jim McDermott.
Mr. McDermott. Thank you, Ranking Member Bass, and thank
you Chairman Royce, and Chairman Smith, and Ranking Member
Sherman. I, being allowed to say a few words with them giving
up their time, is a unique experience on the House of
Representatives. Watch it. You are watching history being made.
I would especially thank Congresswoman Bass who pushed for
this hearing, because the timing couldn't be better. A central
part of AGOA, the so-called third-party fabric provision,
expires in less than 3 months. And some of you may have heard
that they may be making progress over in the Senate. We have
heard the drums, and the chairman tells me that he went over
and talked to the drummer, and it sounds like something is
actually going to happen over there. So we are very excited
about that welcome news.
There is no reason we should be in this position, actually.
I have been talking to my chairman about this over on our
committee. We offered this legislation a year ago. In December
the Senate was on board when they identified the same language
in their bill--Senator Baucus and Senator Hatch--but it has
been sitting there since.
Now, there are two important points here. One, the
extension is good for business. It is good for the American
economy. It is good for Africa. It is good for foreign policy.
It is good security policy, and it has been hung up for a year,
and with really no substantive reason. The delay has always
been about process and politics; no trust between the House and
Senate. And on tax bills, and if we send a tax bill, will we
get one back, or what will happen?
When we passed AGOA, it was a partnership between many
members, as Ed said, one or more of the most amazing
partnerships between myself, and then-Speaker Gingrich. We all
worked together to compromise and get a good thing done.
Now, whether you are new to Congress or been here a while,
the current era, where commonsense things don't get done
because of lack of trust, or for someone looking for an issue
to turn into a bargaining chip or something, well, it has
poisoned the well. It has poisoned the international well and
it hurts our own public. In this case, nothing has been gained,
but jobs have been lost.
When we had the hearing late--this late in the game, it
tells us good and bad things. One, it is sad it had to happen
now, but good that members have found the good sense to push it
forward. And I hope that this hearing gives the Senate the
encouragement to do what is needed. That is one point.
But the second point is that a delay in trade legislation
hurts everyone: Workers, businesses, American security, foreign
governments we need to work with. We cannot keep letting our
trade arrangements and provisions expire. Orders--I am a
doctor, all right? I am not a retailer. But I learned from
retailers very early on that when you are doing things like
clothing buying, you are doing it at least 9 months in advance,
and planning for a building is done 3 years in advance.
When we didn't get AGOA 3rd country fabric renewed within 9
months of expiration, orders from African factories have
actually started to drop. We are now 3 months away, and orders
have dropped by 35 percent. Orders equal jobs. If somebody in
New York, Jones of New York or somebody, wants to buy
something, they have to know the price that they are going to
get it from in Africa in order to make a bid. And this means we
have lost jobs in Kenya, and Lesotho, and a number of other
countries, mostly women who are usually the primary bread
winners in their families. So there is a huge multiplier effect
to these job losses.
It isn't just about money. It is also about the economic
development of these countries and the infrastructure. As women
have jobs, they teach their kids; they get education; they
teach their children. That helps the next generation.
The whole AGOA program expires in 3 years. And I hope, Ed,
that we can put that in on the first day of the next session
and get it passed right then. AGOA was meant to grow
industries, but from the perspective of investors, AGOA is
expiring right now. Every day from now on that renewal is not
done, businesses lose, jobs lose, both in Africa and in the
United States.
Twelve years ago we got the ball rolling. We had nothing up
until then. And AGOA and other initiatives got us in the game
in Africa. There were 800 million people and the United States
had no policy toward trade in Africa. And we started building
commerce, building the 21st century relationships, but the
Chinese and the Europeans have charged ahead of us recently and
they are much more agile and nimble than we are.
Today we are going to hear about AGOA and textiles from the
panelists, and legislatively we finally are about to take
action. I hope that we can use today to reset the clock a
little, to help us get to work on a new job, job creating,
mutually beneficial AGOA agreement done in 2013, and not the
last minute in 2015.
I want to thank the Foreign Affairs Committee for their
energy and for their leadership on this issue, and I am deeply
appreciative of your allowing me to come and talk here.
I am going to leave because the Ways and Means Committee is
right now dealing with should we extend NPTR to the Soviet
Union, to Russia. And so we are trying to decide if we will
improve our relationships with the Russians. So I am going to
take your leave, but thank you.
Mr. Royce. Thank you, Mr. McDermott.
Now we will go to Chairman Smith of the Africa, Global
Health, and Human Rights Subcommittee.
Mr. Smith. I thank my good friend for yielding and thank
you for calling this extremely important hearing. I think all
of us would agree to that and I would ask unanimous consent
that my opening statement be made a part of the record.
I think Mr. McDermott really summed up all of our
sentiments here on the panel, which I am sure will be echoed by
our distinguished witnesses. This has to be done immediately.
Delay is denial, especially for those who lost orders that are
occurring every single day. We have heard it from the African
ambassadors, and heard it from the businessmen and women. A
drop-dead date is just that. Not so here, as my good friend and
colleague from Washington State so clearly stated. So I do hope
that we can get this done immediately.
I will, Mr. Chairman, just note for the record, that I just
got back from Bolivia. I was visiting a prison there on behalf
of a man who has been unjustly imprisoned. I picked up a little
bit of a fever, so I am going to take my leave, because I am
feeling awful, but I thank you again for calling this hearing.
Mr. Royce. I thank you very much, Chairman Smith, and thank
you also for your leadership on not only this issue but human
rights issues around the globe, including in Bolivia. We wish
you a speedy recovery.
[The prepared statement of Mr. Smith follows:]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
----------
Mr. Royce. There are several ambassadors that I see in the
audience that we want to recognize from sub-Saharan Africa.
Ambassador Andjaba from Namibia is with us, if I can ask him to
stand. We appreciate that. From Mauritius, Ambassador Soborun.
Thank you very much, Ambassador. And from South Africa, Miss
Cheryllyn Dudley is here from the South African Parliament.
If I could ask you--thank you any other ambassadors--I will
just ask you to stand if I missed anyone. Thank you. I will
also mention that the administration has a role to play in
working with the Senate to help build trust. And as mentioned,
I was over on the Senate side talking to Senators this
afternoon about AGOA. We are all making phone calls, and
Representative Bass has talked to a number of Senators as well.
We would like the administration to pick up the phone and be
engaged as well as we move forward with this legislation.
I have a couple of witnesses to introduce at this time. And
let me begin by--Mr. Deutch, would you like to make an opening
statement?
Mr. Deutch. Thank you, Mr. Chairman, and I have an opening
statement, if--that I could submit into the record, Mr.
Chairman, and I would like to move on to our panel.
Mr. Royce. Very good. Thank you, Mr. Deutch.
Let me start with Tony Carroll. He is an international
lawyer, and development expert who has been working on African
issues since his service as a Peace Corps volunteer 35 years
ago in Botswana. He was among the first to advocate for passage
of AGOA before the Africa Subcommittee, and he serves as the
vice president of Manchester Trade and is an adjunct professor
at Johns Hopkins University School of Advanced International
Studies.
Paul Ryberg is the president of the African Coalition for
Trade, a member-supported nonprofit whose members come from the
African private sector. ACT, as it is called, has been a leader
on behalf of the African private sector in conjunction with the
development, implementation, and amendment of AGOA. He has
worked closely with several African governments as they have
worked to become AGOA eligible.
Jas Bedi is the chairman of the African Cotton and Textile
Industries Federation. This regional trade body was formed in
June 2005 by the cotton, textile, and apparel sectors from
across sub-Saharan Africa, to create a unified and recognized
voice in both regional and global trade affairs.
And Stephen Hayes, President and CEO of the Corporate
Council on Africa for 12 years. The Council is an organization
of 200 U.S. companies that represent 85 percent of U.S. private
investment in Africa. Recognizing his work at the Council, the
Department of Commerce presented him with the Ron Brown Award
for International Leadership in 2008.
All of the witnesses' complete written testimony is going
to be entered into the record, so I will remind each witness to
keep their oral presentation to 5 minutes.
And we will start with Mr. Tony Carroll.
STATEMENT OF MR. ANTHONY CARROLL, VICE PRESIDENT, MANCHESTER
TRADE, LTD.
Mr. Carroll. Mr. Chairman, thank you for affording me this
honor to testify once again on U.S.-Africa economic relations.
With your permission, I have submitted a more detailed written
statement for the record. You and your colleague--late
colleague--Don Payne provided bipartisan leadership essential
to the passage of AGOA and its subsequent amendments. AGOA,
PEPFAR and MCC have created unprecedented and diplomatic
traction and popular goodwill for the U.S. and Africa.
Thirty-six years ago I stepped off a DC-3 onto a dusty
airfield in Gaborone, Botswana as a newly minted Peace Corps
volunteer. In the subsequent years I saw Africa endure a
generation of conflict, economic marginalization, and brain
drain. However, Africa is now on the move, enjoying
unprecedented economic growth and political stability.
A contributing factor to this transformation has been AGOA.
First, the legislation has had the intended consequence of
rebooting economic development to a demand-driven formula. The
reboot has produced a winning relationship, as witnessed by the
fivefold increase in U.S. imports from Africa, and threefold
increase in U.S. exports into the continent. However, the full
measure of AGOA's success may be in its fostering trade
facilitation measures, foreign direct investment, enterprise
development, and business deregulation.
Africa's new competitiveness and AGOA's impact can be also
measured by the continent's booming trade with Asia and the
Middle East, and the fact that both foreign direct investment
and money remittances now exceed development assistance flows.
This export-led growth and FDI has created a burgeoning
middle class. According to many estimates, Africa will see 120
million people rise from poverty to the middle class by the end
of the decade. This new middle class will be a market for U.S.
goods and services. History has shown that countries with
growing economies tend to prefer trade to war in its economic
relationships with neighboring states, and Africa is no
exception. In a recent study cited in Foreign Affairs Magazine,
Professor Stephen Straus, University of Wisconsin, has
documented a 50 percent decrease in African conflict over the
past decade. Moreover, hope is our best defense against
terrorism rooted in economic and social despair.
Today I join my friends and colleagues, Jas Bedi and Paul
Ryberg, calling for the renewal of AGOA's third-country fabric
provisions. Although I have worked extensively in Africa's
textile industry I will leave it to them expound upon the
deleterious impact on the African apparel industry that
nonrenewal will cause. There is a very real chance that non-
extension will not only cause loss of jobs and closure of
factories, but also may impede Africa's ability to expand its
manufacturing base beyond apparel and textiles as the
infrastructure investments and skill development in this
industry enure to the benefit of others.
I would like to underscore that failure to extend third-
country fabric will be a disaster for U.S. interests in Africa
and deflate what has been a resurgence in our commercial and
diplomatic engagement with the continent.
I have also been asked to offer some observations on AGOA,
how it can be improved to prevent this type of brinkmanship,
and have detailed those in my submitted statement.
As we know, the next Congress will have to extend the life
of AGOA beyond 2015. It is my position that AGOA should be
extended in its essentially unilateral preference format for
another decade. This unilateral extension will permit the
continuation of regional integration initiatives now fully
underway in Africa's 48 sub-Saharan African countries and led
by its regional economic communities and the African Union.
Regional integration will foster infrastructure investment,
expand the flow of cross-border inputs and expand market size
to the U.S.--benefit of U.S. exporters. I applaud the
administration's recent policy statement endorsing such
extension and ask this body and the administration to pressure
the European Union to shelve its efforts to foist Economic
Partnership Agreements upon Africa's more developed economies,
thereby retarding these promising experts at economic
integration.
Additionally, China's extension of market preferences to
Africa has also the unintended consequence of driving a wedge
between more and lesser developed African economies. Apart from
the issue of unilateral extension, I would like to add two
final recommendations on how AGOA can be improved. An enhanced
AGOA can contribute to a diversification of agricultural
exports to the U.S. For example, either through a legislative
mandate or administrative decisions, AGOA exports could be
exempt from tariff rate quotas which are denying access to the
U.S. for a number of agricultural products, which Africa has a
competitive advantage.
This exemption could be designed in a way that it does not
have a significant impact on domestic production. Instead, it
would shift imports from more developed suppliers to poorer
African countries.
Last, as I have testified before this panel during AGOA's
initial debates, I remain steadfastly opposed to the manner in
which AGOA country eligibility is enforced. While there
certainly should be punitive measures for mostly male leaders
who foment war with neighbors, facilitate coups d'etat or
restrict economic rights or individual freedoms, closing
factories and casting thousands, mostly women, into
unemployment is not the way to go. Unless the beneficial
ownership of such factories is tied to such culprits, I believe
that sanctions targeting country leaders are more effective
tools to mete out punishment rather than punishing innocent
businesses and their employees. Thank you.
Mr. Royce. Thank you, Mr. Carroll.
[The prepared statement of Mr. Carroll follows:]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
----------
Mr. Royce. Mr. Ryberg.
STATEMENT OF MR. PAUL RYBERG, PRESIDENT, AFRICAN COALITION FOR
TRADE
Mr. Ryberg. Thank you, Chairman Royce, Ranking Members
Sherman and Bass, and members of the subcommittees. I want to
thank you for holding this hearing today on this important and
extremely time-sensitive subject. I am going to focus my
remarks on the need to renew the AGOA third-country fabric
provision.
I am appearing before the subcommittees today in my
capacity as President of the African Coalition for Trade, or
ACT, which is a nonprofit association of African private sector
groups and individual companies trading with the United States
under AGOA. Most of our members are engaged in manufacturing
apparel for export to the United States.
Increased apparel trade has been the greatest success story
of AGOA. During its first 5 years in effect, apparel exports
from Africa almost tripled, and more than 300,000 new direct
jobs were created in the apparel sector in Africa.
On top of that, more than twice that many indirect jobs
were created to provide support services to this new, vibrant,
African apparel industry.
This success was challenged and almost destroyed by the
expiration of the multifiber arrangement in 2005 which exposed
this infant African apparel industry to unfettered competition
from Asian superproducers, many of whom were heavily state-
subsidized. During the next 5 years, 2005 to 2010, AGOA apparel
exports fell by 56 percent.
The good news is that beginning last year, there was a
comeback, and U.S. apparel imports from Africa under AGOA grew
by 15 percent in 2011.
Unfortunately, this recovery has been nipped in the bud by
Congress' inability to renew the AGOA third-country fabric rule
of origin, which accounts for more than 95 percent of the AGOA
apparel trade. This key provision of AGOA, as has been noted,
is scheduled to expire on September 30 of this year. Although
identical bills have been introduced to renew the third-country
fabric provision in both the House and the Senate, Congress has
so far been unable to move either bill forward, and Africa is
now paying the price for Congress' inaction.
During May and June so far this year, apparel exports from
Africa were down by 27 percent from the same period last year.
And our members in Africa report that new orders received from
U.S. buyers are running 35 percent behind where they were at
this time last year. And the decline is accelerating with every
single day.
As orders are lost, layoffs must follow. Already this year,
3,300 jobs have been lost in Lesotho alone. In Kenya, another
2,000 workers have lost their jobs. And if the third-country
fabric provision is not renewed immediately, there is a serious
risk of a complete collapse of the Africa apparel industry,
costing literally hundreds of thousands of jobs. Ironically,
renewal of the AGOA third-country fabric provision is not
controversial and enjoys wide bipartisan support in both
Chambers of Congress.
In the past, the AGOA third-country fabric provision has
been renewed twice, both times by unanimous consent, and well
in advance of its expiration. This time, however, renewal of
the AGOA third-country fabric provision has become the victim
of inter-party and inter-chamber gridlock, despite the fact
that renewal has been endorsed by everyone in Congress and by
the Obama administration.
At the 2012 AGOA Forum which was held here in Washington
last week, no topic was discussed more frequently or with more
urgency than the need for immediate renewal of the third-
country fabric provision. As one African trade minister put it
at the forum last week:
``We came to Washington with great optimism that we
would return with good news that the third-country
fabric provision has been renewed. But we are returning
home with empty hands. What are we to tell our people
whose jobs are being lost every day?''
Another African trade minister in the same session said
that Congress' delay in renewing the third-country fabric
provision is undermining the credibility of the U.S./Africa
partnership. These are very sobering words. Congress can be
proud of its accomplishment in creating an apparel industry in
Africa, creating more than 300,000 jobs and providing a
livelihood for over 1 million people. But sadly, Congress'
inaction today threatens to destroy what has been created over
the past 12 years. Thank you.
[The prepared statement of Mr. Ryberg follows:]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
----------
Mr. Royce. Mr. Bedi.
STATEMENT OF MR. JASWINDER BEDI, CHAIRMAN, AFRICAN COTTON AND
TEXTILE INDUSTRIES FEDERATION
Mr. Bedi. Thank you, Chairman Royce, and in essence of
time, all protocols observed. The African Growth and
Opportunity Act enacted in the year 2000 was probably the most
liberal trade preference program the United States has given
any country or region which has indeed had a positive impact to
sub-Sahara Africa, creating numerous new jobs, almost 300,000
and positively impacted the livelihood of especially women who
became bread winners with a second income in many households.
The eligibility criteria for AGOA compelled most African
countries to embrace the rule of law, allow for political
pluralism, respect democracy, and basic human rights. AGOA
certainly met expectations whereby bilateral trade between the
U.S. and sub-Sahara Africa grew, benefiting for the United
States and Africa.
The third-country fabric provision benefited AGOA
countries, as the continent was unable to offer competitive
production in comparison to Asia, in respect to quantity,
quality, and price, compromising the competitive advantage from
sub-Sahara Africa. This provision allowed sub-Sahara Africa, to
compete effectively and help the U.S. consumers with
competitive pricing of apparel. The expiring of this provision
will devastate the supply chain and destroy the numerous jobs
created in the last several years, undermining the entire AGOA
trade preference program.
Through ACTIF, where I am chair, the African Cotton and
Textile Industries Federation, we have actively advocated the
need to have an organized regional supply chain which
integrates the continent and creates a competitive industry to
domestic and regional representations to individual countries
and trading blocs.
In this respect we have signed MOUs with the East African
Community, the Common Market of Eastern Southern Africa,
COMESA, and the African Union to ensure all members can easily
operate across borders and the trade precipitates to global
best practices toward economic freedom.
AGOA has created a platform of African private sector to
align mindsets and to present sub-Sahara Africa with a unified
voice for the common objective in relations to trade. This has
further filtered into the various governments in Africa,
whereby a common approach and dialogue has become evident.
The diplomatic relations between the U.S. Government and
sub-Sahara Africa have been elevated, allowing greater cohesion
in respect to multilateral trade negotiations, especially in
the WTO.
AGOA has become and annually meet with the U.S. Government
and sub-Sahara Africa to discuss what worked, what didn't work,
what can we do differently to benefit the people of the U.S.
and sub-Sahara Africa? This dialogue allows exchange of ideas
in respect to bilateral and multilateral trade negotiation,
which in turn helps the people and livelihoods of both
continents.
Sub-Sahara Africa suffers major infrastructure challenges,
hurting its competitiveness, which is an opportunity for U.S.
exporters. AGOA as a framework can help address these
challenges to create a win/win partnership within the U.S. and
sub-Sahara Africa, especially in terms of value addition which
sub-Sahara Africa desperately needs to employ its large
population, which by 2040 will be the largest working-age
population in the world, bigger than India and China.
Also the combined GDPs of Africa are anticipated to grow by
$1 trillion by 2020, with consumer spending growing by $860
billion over the same period. Hence, AGOA can be remodeled to
ensure U.S. exporters get a greater slice of this expanding
economic pie.
AGOA has, beyond economic terms, created a sense of
belonging within sub-Sahara Africa, accelerating the regional
integration agenda within various economic blocswith free
movement of goods and services, lowering tariff and nontariff
barriers for expanded trade within the region.
The total AGOA export to the U.S. is less than 1 percent of
the total U.S. imports, totaling about $1 billion, which in
essence is a needle in the haystack, with no impact to the U.S.
textile or apparel industry. In fact, both ACTIF and NCTO share
common positions in respect to multilateral trade in the cotton
textile value chain to help us and sustain a globally
competitive cotton textile industry.
The current status quo in respect to the expiring of the
third-country fabric provision, expiring on 30 September 2012,
has created great uncertainty in the marketplace, whereby we
have noticed reduction of orders from the U.S. buyers who will
only place business if the factories underwrite the import
duties payable in the event the extension of the provision is
not obtained immediately.
Considering the short window which we have left with 3
months and expiry to this date, the lead time far exceeds the
production cycle. Renewal of AGOA's third-country fabric was
declared a top priority between Africa and the United States
for 2011. In Zambia it is now a full 1 year, and what was a
priority has become a crisis. The inaction of Congress will
definitely impact the livelihoods and accelerate job losses in
the industry.
Finally, we cannot ignore the fact that job losses due to
this inaction may impact the security situation of the region,
and if not managed well could lead to a bigger insecurity that
could harvest terrorist cells affecting global peace.
Mr. Royce. Thank you.
[The prepared statement of Mr. Bedi follows:]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
----------
Mr. Royce. We will go to Mr. Hayes.
STATEMENT OF MR. STEPHEN HAYES, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, THE CORPORATE COUNCIL ON AFRICA (CCA)
Mr. Hayes. Thank you, Mr. Chairman, Congressman Sherman,
Congresswoman Bass.
Mr. Royce. Microphone.
Mr. Hayes. Thank you. There we go. Sorry.
Thank you Mr. Chairman, Congressman Sherman, Congresswoman
Bass, and Congressman Deutch.
I will speak from a different point, a slightly different
point of view. I am in total agreement with what I think is the
accuracy and the passion of Congressman Royce's opening
statement. It is also very good to see that the passion is
still there after 12 years of AGOA.
The Corporate Council on Africa is very much in favor of
extending the third-party fabric agreement. Certainly, there
are jobs at stake and that is very important, but I also think
we have to address the issue of symbolism.
It is highly symbolic that we get this done now. It is
important to our relationships, political relationships and
political credibility with Africa. And I think for those
reasons alone, we need to move now.
Our commitment to AGOA as an organization, I think, is
beyond question. We also--I also agree with Congressman
McDermott who said that the AGOA legislation also needs to be
extended sooner, in the next session as opposed to waiting
until 2015. My reasons for saying that is that I think that
AGOA by itself is not enough for our relationships on U.S.-
Africa economic trade and our political relationships. I think
it has been the cornerstone of our policy. I think it is an
important cornerstone, but if we are going to be effective in
Africa economically and if we are going to be effective--more
effective politically, then we need a broader economic
engagement.
We need to look within that package to the access to
financing for Africans. They are not going to be able to use
AGOA if financing is not accessible, and more--I am sorry, just
as important, we need access to financing for American
companies to invest in AGOA.
We also need to look at the issues of capacity building to
make AGOA more effective, but also to make U.S.-Africa trade
more effective. And certainly we need to look at infrastructure
development power, IT, all of those issues. And the sooner we
pass the extension of AGOA, the more I think we can address the
broader economic policy that is needed toward Africa.
In that, I would also agree that it is not simply Congress,
that the administration needs to step up as a partner in that,
and we need far greater public-private cooperation to make this
work. I think our highest national security interest in the
long term rests very much in Africa as much as, if not more,
than other parts of the world as well. So we need a broader
policy. AGOA is that cornerstone. We need to establish AGOA
long term to reassure our long-term commitment, and then we
need to move on from there. Thank you.
Mr. Royce. Thank you, Mr. Hayes.
[The prepared statement of Mr. Hayes follows:]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
----------
Mr. Royce. We will go to Ms. Bass for her questions.
Mr. Sherman. If I can just interject, I have been called to
the Financial Services Committee. I am glad I was able to hear
the witnesses and I may have some questions for the record.
Thank you.
Mr. Royce. Thank you, Mr. Sherman. Congresswoman Bass.
Ms. Bass. Thank you again, Mr. Chair, Ranking Member, and
our witnesses. I had a few questions I wanted to ask you. You
know, this is about AGOA more generally. Given that it is more
than 10 years old, what aspects do you think are most in need
of change? And I am saying this also in light of Mr.
McDermott's comments and yours, Mr. Hayes, in terms of we don't
want to wait. But in anticipation of the next legislative
session, what do you think we need to do to achieve the
original goals of AGOA, including increasing U.S. trade and
investments with sub-Saharan Africa?
Mr. Hayes. I think--I am sorry. I think there are a number
of things that need to be done. AGOA hasn't been--all of us
know that AGOA hasn't been as effective as we would like. Its
importance is beyond question, both politically and
economically. It has meant jobs to thousands of people. I am in
total agreement with Tony Carroll in saying that we ought to
place sanctions on individuals as opposed to whole countries
because of the damage it has done to workers and to industries.
But I think that one of the issues that was not taken
into--I guess fully into the planning of this when AGOA was
formed, is the realization that the industries in Africa were
not at the same point as the industries in Asia in 1960.
Infrastructure was different. The fact is that infrastructure
is lacking still in many parts of Africa. AGOA is not going to
be effective if they can't get their products to market. So
clearly, infrastructure needs to take place.
You have countries like Nigeria, that have still 80 percent
of its power needs are not met, so how can you expect them to
really have a consistent product flow to the United States or
anywhere else? So we have got to address those issues if we are
expecting AGOA to work.
Ms. Bass. Well, I know that in the forum last week,
infrastructure was certainly raised, both physical and
institutional, and you have mentioned a couple of things. But
what concrete actions do you think that we could take to
improve trade capacity? If it is helping the infrastructure,
where, how, when?
Mr. Hayes. I think one of the initiatives, for instance,
that Secretary Carson took with our own organization, taking an
energy--U.S. companies to Africa, because this is also where it
helps the American economy. I think we--one of the issues where
American companies can invest in Africa and speed up the
process of development, energy and power is one of them. I
think the mission, the energy mission to poor countries
actually introduced 12 companies, 10 of which were being
introduced to Africa for the first time as a business
destination. And the fact is there are ways to help the
American economy at the same time as helping AGOA. I think
those are issues.
I think the issue of financing needs to be looked at very
carefully. I think legislatively there are--Congress can make a
difference on this. You can't develop if you have no access to
financing. And for a range of reasons, unrelated many times to
anything happening here, African companies don't have access to
financing.
Ms. Bass. Okay. Before my time runs out, I want to raise a
couple of other things. One is--and this is for any of the
panelists--we are in the middle of negotiating free-trade
agreements with several Asian Pacific Islander countries,
including Vietnam, which is a major exporter of textiles and
apparel to the U.S. And I am wondering if you have any thoughts
on how that might impact U.S. trade under AGOA.
And then I also wanted to ask, some people have suggested
that the third-country provision may have a negative impact on
eligible countries by incentivizing them to concentrate on low
value-added production, and I want to know your thoughts on
that. Have you seen any evidence of this? How can the United
States encourage more diversification in production?
Mr. Ryberg. I am happy to respond to both of your
questions, Congresswoman Bass. On the question of TPP, our
group is on record opposing extending a single transformation
rule of origin to Vietnam, precisely because Vietnam is a
superproducer. They are the most competitive producer of
apparel in the world.
When the third-country fabric provision was created for
AGOA, it was because the AGOA apparel industry was in its
infancy and was not competitive. It needed an extra help to
enter the marketplace.
The Vietnam situation is the exact opposite. They are the
most competitive in the world, and they are the second biggest
supplier of apparel to the United States. So giving them the
equivalent of third-country fabric, which is the single
transformation rule of origin, turns the policy on its head. So
we are on record opposing that.
The question of whether third-country fabric inhibits
development is a legitimate one and a very serious one. And
there is something that we think about all the time. But you
really have a chicken and egg problem. To become long-term
competitive, you need to be vertically integrated. You need to
grow the cotton, and gin the cotton, spin the cotton, and make
it into fabric, and then cut and sew that into garments.
Only by being regionally vertically integrated can you
really compete in today's marketplace. But textile production,
the yarn spinning, the fabric weaving, is capital intensive and
high tech, and you have to have a critical mass of customers,
the downstream, the apparel manufacturers, in order to attract
the upstream investments.
And so the strategy that AGOA took and that we endorse, is
you start by growing the downstream, and once that reaches
critical mass, then you will start to attract the upstream, the
textile manufacturing. And we can see that just starting in
Africa today, 12 years after AGOA was enacted.
And so we think that, yes, after a reasonable extension of
AGOA third-country fabric, we would be in a position to wean
ourselves off it and become globally competitive through
vertical integration, but we are nowhere near that point right
now.
Mr. Royce. I think, following up on that, we are nowhere
near the point on vertical integration. We knew it would take
some time to reach that point. But there is another aspect of
this as we think about textiles that enters the equation. And
maybe, Mr. Ryberg, you or Mr. Carroll would like to comment on
that. And that is the competition, for example, on cotton; the
fact that the ag subsidies in the United States have an impact
on that. Mr. Carroll, would you like to comment on those
subsidies for a minute?
Mr. Carroll. Certainly. I mean, one of the problems that
Africa has is that it has historically been with some
exceptions, an exporter of raw unprocessed cotton to the
developed world, where it is spun and woven and produced into
fabric. So there hasn't been, with some exceptions, a direct
linkage between fabric production and apparel production.
However, Mr. Chairman and Ranking Member, we are starting
to see, as Paul mentioned, the growth of the textile industry
in places like Ethiopia because you are now starting to see, as
Paul said, a critical mass of demand. Also, fortunately, linked
to that, Ethiopia is a cotton-producing country which is
starting to show its ability of being able to produce at
competitive prices and at higher quality that will be accepted
by the world market.
The U.S. textile industry is heavily subsidized. The odd
thing about that is it provides a direct subsidy to the Chinese
producers who buy that cotton at a lower price and make it even
especially additionally difficult for African producers into
that market.
If you don't mind, Mr. Chairman, I would like to address
one issue that Congresswoman Bass mentioned about what can be
done legislatively in the next term. In earlier sessions I
discussed and testified on MCC. In that testimony a couple of
years ago, I mentioned that I thought consideration should be
given to granting regional compacts, because much of the
infrastructure does not end at a border and, in fact, crosses a
border. And we need to think of creative ways, possibly through
the regional economic communities providing sufficient
guarantees to allow MCC money to foster regional
infrastructure. So that is something that could be done
legislatively, and I think that has been discussed--tabled here
before. Anything to add on the cotton side?
Mr. Royce. Now, let me ask Mr. Bedi another question. When
we talk about the eligibility criteria for AGOA, which
originally was, there was some controversy involved in that. We
wanted to see that eligibility criteria. In your testimony, you
said it compelled most African countries to embrace the rule of
law, allow for political pluralism, and respect for democracy
and basic human rights.
There is a Brookings Report that came out last week that
notes that the criteria put into AGOA has been instrumental, in
their words, in compelling African governments to improve the
climate for business. In other words, improve the rule of law.
Let me hear more about that, if I could. And the reason I
want to hear more about it is because I still hear that issue,
that we shouldn't have tried to press for independent courts
and the rule of law, and I think that might be crucial long
term.
Mr. Bedi. Thank you, Chairman. I think the classical
example to give here is Madagascar. And a couple of years ago,
when we had a President take over the country, the eligibility
criteria fell apart, and the Madagascar factories did suffer.
But at the same time, there was immense pressure on the
administration at that time. And listen, we need to go back to
having elections which are going to be free and fair, and that
itself has actually created a sentiment in the whole continent:
Listen, either we play by the rules or we will lose all the
jobs which Madagascar demonstrated they lost all of AGOA jobs.
So by and large, if you look across the continent
everywhere, if you are going to be doing business with the U.S.
and if you are going to be doing business under AGOA, there are
certain fundamentals that you must observe, and those
fundamentals are democracy, political pluralism. And we have
seen that. You see Africa coming a long way today having--in
Zambia a few months ago, we had a very smooth transition from
one government to the other government, and it is no longer
that I am here to stay and this is how it is going to be.
Mr. Royce. One of the elements of feedback that I always
received from those in civil society was that they felt it
would be a force multiplier for the arguments they were making
as to why rule of law had to proceed, and why, if it did not,
there would be a downside risk for the government in power; and
thus, whatever progress they made, they could ratchet up in
terms of being able to advance the system of law and have a
deterrent effect on those who were trying to undermine it.
Mr. Bedi. Yes, but you see the way to look at this, Mr.
Chairman, is that we have come from a colonial past here in the
last 50 years, most of us. And the whole constitutions of all
of these countries were actually designed for the fewer elite
and the top echelon that controlled these economies. Kenya is
probably the first country that actually changed its
constitution in August 2010, and next year as we go into
election, we are going to be the only country in Africa as a
role model, whereby we have actually changed our entire
governance style. We are going to have a devolved government.
We are going to have a parliamentary system which is going to
be supreme. And we have seen it in the last couple of months.
The President appointed a chief justice, and Parliament
said no. And this is the first time in the history of Africa
that the Parliament said no, and the President retracted and
ran through procedural announcements. And I am sure this will
spread across the continent because everybody is talking about
a new constitution. In the Zambian election the new President
came back and said, We are going to have a new constitution.
And we are seeing that happening every other day in the
neighborhoods, that they are all talking about this old
constitution that they all embraced. And I can tell you that
the former Presidents that we have had, they have enjoyed this
power, primarily because it was designed for Lancashire and not
for Africa.
Mr. Royce. Right. Mr. Deutch. Thank you.
Mr. Deutch. Thank you, Mr. Chairman. I would like to
capitalize on the experiences of the members of the panel and
broaden the discussion a bit. As we know, the Chinese have put
considerable resources into developing trade with Africa. I
wonder if you could speak to what can be done other than--other
than renewing AGOA, what can Congress do to promote U.S.
competitiveness to encourage further trade and to tackle head-
on the competition that the Chinese pose, given their continued
expansion in the continent? I throw that out to the panel.
Mr. Hayes. All right. We also took a delegation to China to
look at exactly those issues, some of our businesses. China,
the relationship with China and Africa I think is more complex
than we give it credit for being. But particularly the large
state-owned enterprises get extensive financing. That is easily
accessible. They can put a package together very quickly. We
simply don't have that capability. One is that--could we reduce
that somewhat? Yes. I think we have to find ways that the
private sector and the public sector can work together much
more quickly. There has got to be an openness to the private
sector by the administration, whatever administration that is.
On your specific question, I think financing, again, is
key. We are looking to try to structure, you know, a strong
positive relationship with Ex-Im. I think they need to be let
loose a little bit more on Africa. On one hand, they are--they
have the demand that they produce money for the U.S. Treasury,
so they are going to be more risk averse in order to meet that
demand.
They also have a 2 percent limit now, I think, on--which
also is going to make it a little--I think you can--there are
many safe investments in Africa, but there is a risk-averse
mentality under those two constraints. We have got to find ways
to reduce that risk.
American banks aren't investing, aren't making loans
available for Africa, certainly not without Ex-Im support. What
we are seeing, interestingly, is not a rise in American banks
joining CCA, but African banks, Standard Bank, United Bank of
Africa, Standard Charter, because they see if American banks
aren't going to fill this void, perhaps we can begin to fill
that void.
But the number one issue that we heard at the Brookings
Institution as part of this AGOA week, we hear from our
members, is the access to financing. And that, I think, is one
of the most important issues that Congress can deal with.
Mr. Deutch. And Mr. Hayes, as long as you have got the
microphone, you spoke earlier in response to several comments
here about infrastructure and the need for infrastructure
development in Africa. You spoke extensively about power. Could
you speak as well to the issue of transportation
infrastructure, particularly given the number of landlocked
countries, and what your vision would be how transportation
infrastructure can be expanded for economic development?
Mr. Hayes. Yes, I don't know that I can speak as well on
that issue, but the--this is where I think Mr. Carroll was
absolutely right, that we need to look at regionalization. You
have from one company to another where the rail gauges don't
match. You have to take things off the train, and then take
them essentially by hand truck over to the next train because
the gauge is different. Also, the customs duties country by
country, somebody trying to truck something to three or four
countries may pay customs duties 20 times along the way.
So there needs to be a harmonization and regionalization
and we need to work, I think--look at regions as more viable
entities, because if the regions are able to harmonize then,
the countries themselves fall into that category as well. So I
think regionalization is vital. We need to support that.
And I think that MCC, I am in total agreement with Mr.
Carroll that MCC should look at regional projects and not
simply--not simply country by country, because I also think we
can compete with China better if we are working on regions than
country by country as well.
Mr. Deutch. Thank you.
Mr. Royce. Thank you, Congresswoman Jackson Lee, would you
like to make any----
Ms. Jackson Lee. Thank you, Mr. Chairman. Thank you for
your courtesies, and thank you for your indulgence to the
ranking member, to the chairperson, and to my colleagues here.
I will make a statement and it is one singular question, if I
might.
I had the privilege of traveling on the inaugural trip as
we began to finally craft--though many had been working on the
AGOA Act for a very long time, as Congresswoman Bass so
eloquently spoke at a meeting we were at. And we went on a
seven-country congressional delegation to speak to the value of
this legislative initiative. And I am proud of my colleagues,
Republicans and Democrats, who came together to recognize, I
think, one singular point: That the continent of Africa can be
one of America's greatest allies, first of all, and has been in
the past, but also one of our greatest trading partners, or
partner. Sometimes trade gets a bad name, but at the time that
we were traveling, we heard words such as ``trade, not aid,''
and we finally reconciled that we want trade and aid where it
is necessary and usable.
But the point that I want to make on this record is that
AGOA has had enormous success with challenges. But we have
seen, and we know it can be documented, that many, many jobs
have been created because of the African Growth and Opportunity
Act. And over the years we have listened to business persons,
governments, and others discussing how important this
particular initiative is, this balance of allowing the growth
of, in this instance, the textile industry.
So I am interested in finding out the specific impact of
the non-extension and what it would do to jobs and what it
would do to the progress that has been made, and I am going to
start with Mr. Bedi.
Mr. Bedi. Thank you. The impact of non-extension is simple,
and I mean, we are going to have a mass exodus of the factories
that we have got in the region at the moment. All our
production will be shifted to Asia, and besides all that, we
have a major problem in the neighborhood where we are seeing
all of these terrorist cells coming up. And we are going to
actually see joblessness, which can be harnessed to a very
different direction because of security concerns.
As we all know, Africa has got a large population which is
unemployed, 70 percent of which is under the age of 40. And a
lot of them are unemployed, and so that whole impact, if you
look at it, we need to create the jobs to create social peace.
And I think that is really the agenda that Africa needs to
have, and job creation can only be done in a labor-intensive
industry like textile enterprise.
Ms. Jackson Lee. Would you care to give me a ballpark
figure as to how many you think might be employed? This has
been, I am counting 1997, 1998, when this bill was passed, I
think, as I recall. We are in 2012. Obviously, it had to be
implemented, but what have you seen in the growth of employment
around these industries?
Mr. Bedi. We saw 300,000 new jobs have been created as soon
as AGOA was enacted after the year 2000, and which peaked up to
about 2006. That is when we hit 300,000. And thereafter after
that multifiber agreement, we had some exodus of factories
leaving, because the sole purpose of those factories being
located in Africa was to beat the quota regime and not so much
the tariff regime, the import tariff regime.
The import tariff regime really is that competitive
advantage that we have today, as compared to Asia. And today,
if you look at those jobs that we would have, it would be about
200,000, because we have already lost about 100,000 from 2005
to 2012.
Ms. Jackson Lee. Well, let me, I don't know if anyone else,
I see some thought here about negative impacts on sub-Saharan
Africa. And would anyone want to rebut that statement of any
negative impact or explain that statement?
Mr. Royce. Maybe the concept, if I can interject, is the
negative impact, that jobs are leaving now because we haven't,
Congresswoman, been able, we haven't been effective in
extending this AGOA provision. And as a consequence, because
businesses are planning long range, we see them voting with
their feet by moving their factories.
And that is why Congresswoman Bass asked for this hearing
today, to see if we could do anything to set in motion a focus
on the fact that there has been a real negative impact in terms
of businesses deciding to relocate and shipping their orders
instead to Asia.
Ms. Jackson Lee. Well, if the gentleman would yield, there
is the making of a bipartisan effort, and I came specifically,
although I was delayed in departing, so I thank you for your
courtesies. I think you have hit the nail on the head, business
planning, and that is why I asked, 300,000 jobs; that means we
have an opportunity to increase or to build on 300,000 jobs and
to bring companies back and to spread the opportunity even
beyond sub-Sahara.
So I just wanted to conclude my remarks, Mr. Chairman, if
you continue to yield, and to the ranking member, that I look
forward to working in the manner that we can. I just want to
leave the record clear: The continent of Africa is a vital,
important ally and friend. And that is the nation states with a
variety of resources and the infrastructure and human resource
component. Building of infrastructure, human resource, and
building of the economic engine of that continent will be
valuable to the American people, as it will be valuable to the
world, and as it will be valuable specifically to the people of
the continent of Africa. Thank you for holding this hearing and
I yield back.
Mr. Royce. Thank you, Congresswoman Jackson Lee, we thank
you for that mission that we took to Africa in terms of trying
to build support, and the support was there across Africa for
AGOA.
And we thank Congresswoman Karen Bass for asking for this
hearing today in order to try to jump-start this legislation. I
thank the witnesses for their testimony.
We stand adjourned.
[Whereupon, at 3:38 p.m., the subcommittees were
adjourned.]
A P P E N D I X
----------
Material Submitted for the Hearing RecordNotice deg.
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
\\ts\
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
\
statt\
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
\t
statt\
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
|
NEWSLETTER
|
|
Join the GlobalSecurity.org mailing list
|
|
|
