TRALAC - Trade Law Centre

AGOA III Bill Delay "Will be Bad for Africa"

Friday, 21 May 2004

Source: allAfrica.com

Amid concern that key provisions of the African Growth and Opportunity Act will expire later this year unless Congress votes an extension, supporters have issued a plea for public pressure on Congress.

U.S. government estimates suggest that hundreds of thousands of current and prospective jobs in some of Africa's poorest countries are at stake. Advocates of the extension say the next few days are critical to extending the legislation in time to prevent erosion of major gains it has fostered.

Bono with US Senators and House MembersThe legislation, popularly known as AGOA, which has been a centerpiece of U.S. Africa policy under both Presidents Clinton and Bush, enjoys strong bipartisan backing in Congress. But most Senate Democrats have stayed clear of endorsing this year's proposed extension of the law, which now is in serious jeopardy.

"The U.S. national interest is served by a self-sufficient Africa that is prosperous, peaceful, healthy and democratic," says an appeal from a broad coalition of corporations, religious organizations, nongovernmental groups, lobbyists and trade associations formed to press Congress to renew key provisions of the Act that otherwise expire in four months.

"Agoa must be extended" is the message that should be sent by phone, letter and email to members of both Houses of the U.S. Congress, according to the coalition, which is co-chaired by Jack Kemp, a former member of the U.S. House of Representatives and 1996 Republican vice presidential nominee, Coca Cola's Carl Ware, and Rosa Whitaker, who served as assistant trade representative for Africa under both Clinton and Bush and now heads the Washington, DC-based Whitaker Group.

Enhanced revisions of the legislation, known as the Agoa Acceleration Bill, or Agoa3, were introduced in both Houses last year. The bill won unanimous approval by the House Ways and Means Committee on May 5 and is expected to win passage by the full House in early June. Senate action on the message has been snarled by procedural disputes unrelated to the bill itself.

The new bill extends overall application of the law from 2008 to 2015, which supporters say is key to encouraging foreign investment in Africa's manufacturing sector. More immediately, the bill continues duty-free access to the United States for apparel made in Africa from fabrics of another country until September 2007. This provision for "third country fabric" imports ends September 30.

Trade bills emerged as a hot-button issue in the Democratic presidential primary contest earlier this year, with John Edwards of North Carolina contrasting his voting record against various trade-related bills, including Agoa, with that of his chief rival, John Kerry of Massachusetts. That heightened sensitivity, combined with a crowded docket, has dimmed the prospects for Senate action during the limited number of legislative days left in this election year.

"I'm calling on my fellow Democrats to stand up on this issue," Whitaker said this week in an interview. "Not one job has gone from North Carolina to Lesotho, or any other place in Africa." Agoa should be seen as a "humanitarian initiative" and not principally a trade measure, said Whitaker, who played a key role in passage and implementation of the legislation, first as an aide to Rep. Charles Rangel (D-New York) and then as the first assistant trade representative for Africa in the White House.

"Where are the Democrats at this critical moment?" she asked, citing specifically Hillary Rodham Clinton, from New York. "Her husband signed Agoa" when it was adopted nearly four years ago. "She should be with us now," Whitaker said.

The only Democrat cosponsoring the current bill, introduced by Richard Lugar (Indiana), chairman of the Foreign Relations Committee, is Joseph Lieberman (Connecticut), who ran for vice president on the ticket with Al Gore in 2000 and unsuccessfully sought his party's presidential nomination in 2004. The other cosponsors, all Republicans, include Michael DeWine (Ohio), Peter Fitzgerald (Illinois), Chuck Hagel (Nebraska), John McCain (Arizona) and Rick Santorum (Pennsylvania). Another Democrat, Max Baucus (Montana), ranking member of the Senate Finance Committee, is on record as a supporter, though not cosponsor of Lugar's Agoa3 bill.

In an effort to boost prospects for Agoa's passage, supporters led by Lugar, the Senate Foreign Relations Committee chair, hosted a reception on Capitol Hill Tuesday with Bono, lead singer of the U2 band, who has become a prominent campaigner for debt relief and the fight against HIV/Aids in Africa.

"Trade is the most important thing to our friends in Africa," Bono said, addressing a large Senate hearing room filled with Congressional staff, lobbyists, African diplomats and Agoa supporters. American leadership on Agoa and HIV/Aids "sends a message to the world" at a time when the United States needs support from other countries, the Irish rock star said. Lugar said passage of his Agoa bill is "critical to further bolster the progress Africa already has made."

Ed Royce, Republican from California who chairs the House Africa Subcommittee, said it is important to act because "Agoa has lifted people with export-led growth and has promoted reform." Agoa-related trade and investment has created some 200,000 jobs in Africa and spurred more than $340 million in investments, according to U.S. government figures.

Other lawmakers at the Tuesday reception included Senate Finance Committee Chairman Chuck Grassley and Baucus, his Democratic counterpart, as well as Republican Senators John Sununu and Lamar Alexander, who chairs the Africa Subcommittee. Joining Royce from the House were two Democrats - Charles Rangel (New York), the ranking minority member of the Ways and Means Committee, and Sander Levin (Michigan).

In a statement following the reception Grassley, whose committee has jurisdiction over Agoa, expressed "strong support" for extending the legislation: "In three short years, Agoa has made a difference. Investment in Africa is up. And trade from Africa is up. Because of Agoa, many African families can now feed their children. For the first time, there's a new sense of hope in many countries."

Despite the bipartisan backing and the congeniality between members of both parties and houses taking part in Tuesday's event, behind the scenes wrangling continues. "Current uncertainty surrounding the program can lead to investment flight from Africa to other parts of the world, most notably Asia," Grassley said. "I don't want to see that happen."

According to Anthony Carroll, vice president of Manchester Trade LLC, a consulting firm specializing in international trade and investment that is part of the coalition lobbying for Agoa , the key to Senate passage is how the bill is perceived. "This is really not a trade bill," he said. "Every trade bill is viewed as an opportunity to bring other business to the Senate floor," in the form of amendments that can doom the legislation to which they are attached.

"If Agoa's contribution to African development can be seen a paramount, which it is, then we have a good chance of getting the Congress to act," Carroll said.

However, Grassley expressed doubts about getting the full Agoa revision passed this year. "I'm afraid a broad bill - which I'd like to see - will get bogged down in partisan politics," he said. "I hope my colleagues will work with me in a bipartisan way, at a minimum to move legislation renewing the expiring provisions of the program this year," he said. "We can't afford to wait."

To short-circuit the delays, AllAfrica has learned, Grassley and Senate Majority Leader Bill Frist (Tennessee) plan to propose a "unanimous consent" resolution to win Senate approval for extension of the "third-country fabric" provision in Agoa beyond September 30. The proposed extension is also supported by Baucus, the top-raking Finance Committee Democrat, Congressional sources report, but he is said to want the extension to be for only six months, not one year, as Grassley is believed to be proposing.

"Six months doesn't do anything," Rosa Whitaker said. It is not a sufficient time frame to convince companies to commit to textile or other investments, she argues. In addition, the extension would introduce another set of complications, since it would require additional legislative action by March 2005, at a time when the newly elected and re-elected members of Congress will still be caught up in leadership selection and institutional modalities.

Such a short time frame could also complicate chances for a compromise in conference committee, since the House is expected to add three years to the 'third-country fabric' provision.

Congressional inaction on an extension "could have serious impact - losses of jobs, the closing of factories," Assistant U.S. Trade Representative for Africa Florizelle Lister told the House Africa subcommittee on May 11. In one of Africa's smallest nations, Swaziland, with a population of just over one million, whose economy has been hard hit by HIV/Aids, the 28,000 jobs and the livelihood of some 100,000 people would be negatively affected by expiration of Agoa's key provisions this year, Prime Minister A. T. Dlamini told AllAfrica in an interview earlier this month. "This is very important for alleviating poverty in Swaziland," he said.

Like other African leaders who have visited the United States in recent weeks to champion Agoa, the prime minister noted that manufacturers need stable supply lines and investors want dependable environments. Planning for end-of-the-year holiday sales is already underway, and unless retailers are assured of extension of the third-country fabric provision, they may quickly shift apparel production from Africa to Asia.

It is also important for the United States, according to Carroll, a Republican lawyer with 20 years experience in international trade and investment issues. "The Africans are valued allies not only in the war against terrorism but for the international trade negotiations." Failure to act on Agoa, an issue that African leaders regard as 'fundamental' to U.S. Africa policy, could send an unfortunate symbol, Carroll said. Because Africa is the largest voting block in the World Trade Organization, which has a crucial round of negotiations later this year, "we now have more political skin in this fight than before," he said.

Corporate, faith-based, non-governmental, consulting and trade- association members of the Agoa3 Action Committee include: ChevronTexaco, Coca Cola, Brandot International, Limited Brands and Target; World Vision, Bread for the World, Church World Service and Action Worship Center Ministries; Africare, Africa-America Institute, Africa Society, Constituency for Africa, Education Africa USA, Foundation for Democracy in Africa, the Global Integrated Development Group, the Partnership to Cut Poverty and Hunger in Africa and the Sullivan Foundation; Whitaker Group, Manchester Trade and Good Works International; and the Africa Coalition for Trade, the National Cooperative Business Assocation, the National Retail Federation and the U.S Association of Importers of Textiles and Apparel.