TRALAC - Trade Law Centre

AGOA III testimony before US Ways & Means committee

The African continent is at a crossroads - with one path leading to economic prosperity and growth and the other leading to greater despair, hunger, conflict, disease and environmental degradation - said Representative Ed Royce (Republican of California) April 29 as he testified in support of "AGOA 3," an extension of the African Growth and Opportunity Act.

The path to prosperity, Royce said, is the path of AGOA, the U.S.-Africa trade law that "has managed to draw hundreds of millions of dollars of foreign investment to the continent, creating hundreds of thousands of desperately needed jobs" while giving Africans "experience with the export-led economic growth that has lifted hundreds of millions of people out of poverty worldwide."

Royce, chairman of the House of Representatives Subcommittee on Africa, was testifying before the House Ways and Means Committee's Subcommittee on Trade. Should Africa find itself on the downward path, he said, the United States "would suffer considerably -- our growing security and economic interests on the continent would suffer, as would our humanitarian character."

Royce warned that Africa is facing intense trade competition from China and other parts of Asia, particularly in the area of textiles and clothing production.

A key provision of AGOA 3 extends the so-called third-country fabric provision -- set to expire in September -- which allows the use of multinational manufacturing components in wearing apparel, as opposed to requiring that clothing manufactured in Africa be made solely of domestically produced materials. Since most African countries cannot supply all of their apparel components locally, they would be at a major competitive disadvantage, unlike their Asian rivals.

In supporting the trade legislation, known as the "AGOA Acceleration Act of 2004 (H.R. 4103)," Royce was joined by African trade ministers Mpho Malie of Lesotho and Jayakrishna Cuttaree of Mauritius, and Dr. Yusuf A. Nzibo, ambassador of Kenya.

Minister of Industry, Trade and Marketing Malie thanked the members of Congress for their ongoing support of AGOA legislation, specifically for their work on extending the current law (expected to continue into 2015), with additional provisions for trade expansion, eco-tourism and customs duty reduction.

Malie said textile jobs in Lesotho have increased from 20,000 in the first year of AGOA to the present number of 50,000, making the private sector the number one employer, exceeding state employment for the first time since national independence in 1966. He added that the rise in exports to the United States from $140 million in 2000 to $400 million in 2003 is "testament today that AGOA is working."

"The sustained growth experienced in Lesotho in the last three years, driven mainly by AGOA trade, provides the basis for poverty reduction on a sustainable basis in my country," Malie said.

Mauritian Minister of Foreign Affairs, International Trade and Regional Cooperation Cuttaree, who is also chairman of the African Trade Ministers' Conference, said that AGOA has fostered a dynamic relationship between the United States and Africa beyond the expansion of the economic partnership.

"AGOA fosters greater U.S. interest in Africa. As a result, Africa is ensured an effective presence in Washington ... which allows for the increase and flow of money and interest into [our region] in such sectors as the fight against HIV/AIDS and the war on poverty," Cuttaree said.

He added that "AGOA's provisions not only require that African countries take concrete steps towards political and economic democracy, but encourage ... an African renaissance, which is the steady movement toward regional integration.

Cuttaree said that the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (COMESA) and the Economic Community of West African States (ECOWAS), as regional trading blocs, have helped to lower tariffs among the member states, resulting in increased intra-African trade volume.

"This means that African governments have gained an increased revenue from legitimate trade between our countries," he said.

Kenya's Ambassador Nzibo, a member of the African Ambassadors AGOA 3 Task Force, emphasized that AGOA is more than a trade bill. "It has become to us an incredible source of hope and an effective tool to fight hunger, poverty and disease, afflicting over 700 million people on the continent," he said.

Citing successes brought by AGOA in his own country, Nzibo said that Kenya has gained more than 150,000 new jobs since its eligibility in 2001 and textile exports have tripled from $45 million at the beginning of the decade to $150 million in 2003, with total investments in AGOA-related infrastructure increasing by 23 percent from $16 million to $21 million over that same period.

"Most importantly," he said, "hundreds of thousands of people have been transformed into happier, healthier, more productive citizens. Families can enroll their children in schools and can afford basic health care. Women are finding better jobs [through training programs], and are investing their incomes to the betterment of their families."

Each of the African officials bore witness to the increasing role that African women are playing in the economic growth of their societies. While acknowledging that African women have always played an important role in providing for their families, they noted that women are becoming a critical factor in the growth of the African work force, particularly in the textile industries sustained by AGOA.

"AGOA empowering women has empowered our continent," Nzibo said.

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