Side-by-Side Comparison: The HOPE for Africa Act (S. 1636) and The African Growth and Opportunity Act (H.R. 434)
The Human rights, Opportunity, Partnership and Empowerment for Africa Act ("HOPE for Africa Act") S. 1636 was conceived and drafted by African and U.S. civil society groups, economists, trade specialists and legislators to address the real needs and concerns of sub-Saharan African nations. It includes mutually beneficial U.S.-Africa trade and investment opportunities meaning that African businesses and workers and U.S. workers, not just U.S. corporations will benefit from the Act's broad trade preferences. It adopts a holistic approach to the elements essential to ensuring a mutually successful U.S.-Africa economic policy, including trade, business facilitation, debt relief, aid and HIV/AIDS prevention and treatment. The HOPE for Africa Act enjoys the broad support of African labor, environmental and development organizations, as well as their U.S. counterparts. It is being promoted by a coalition of African-American clergy, community organizations and leaders.
In contrast, the "African Growth and Opportunity" Act (AGOA, H.R. 434) adopts the NAFTA formula for Africa: giving foreign corporations broad new rights that will increase their capacity to profit from control of African resources, while doing nothing to ensure that benefits actually accrue to African nations and people. TransAfrica President Randall Robinson dubbed the bill the "Africa Recolonization Act" and Rep. Jesse Jackson, Jr. calls it "NAFTA for Africa."
There are several versions of AGOA. The House-passed version contains harsh eligibility rules that condition access to trade benefits on African nations altering their economic and social policies and laws to suit the needs of foreign investors and the dictates of the International Monetary Fund (IMF) despite the IMF's dismal record in the region. These conditions would be unique to U.S. trade with Africa, which is why some African critics of AGOA consider it racist. The Senate version of AGOA marked up by the Finance Committee is more vague in setting conditions but also effectively cancels out the House bill's already meager trade benefits by granting trade benefits only to African apparel made with U.S. fabric and cloth made with U.S. thread. Given the six-week shipping time each way between the U.S. and Africa, the so-called "fabric and thread forward" requirements remove the incentive to locate textile and apparel production facilities in Africa. Under a deal arranged by House and Senate GOP leaders in September 1999, the House version of the Africa bill will be combined with the Senate version of the CBI NAFTA expansion bill. Thus, the operative version of AGOA for Senate consideration is the House-passed AGOA.
The AGOA is supported by the multinational corporate lobby and harshly criticized by African and African-American community, church and development groups. Then-South African President Nelson Mandela deemed the bill "not acceptable." The decision concerning AGOA is a momentous one, as it will define U.S. economic policy towards Africa for the foreseeable future. The major provisions of AGOA and the alternative HOPE for Africa bills are contrasted below.
Economic Policy: Self-Determination or Paternalism?
H.R. 434, AGOA, rejects African nations' right to self-determination by coercing them to change purely domestic policies, such as budget priorities, by adopting the IMF economic development model, which has a long history of devastating consequences in the region. In order qualify for the bill's trade benefits, African countries must be annually certified by the U.S. President as meeting a long list of U.S.-imposed, IMF-style conditions:
S. 1636, HOPE for Africa is based on the recognition that African nations have the right to determine their own approach to economic development. Rather than being conditioned on African nations' adopting a one-size-fits-all economic model, the substantial benefits provided (market access for a wide range of African products, business facilitation, debt relief, development assistance), are instead:
- Cutting government spending, further depriving vital health and education services of desperately needed funding.
- Cutting corporate taxes.
- Privatizing public assets through divestiture and opening up most areas of their economies to ownership and control by foreign multinationals, such as mines, agricultural land and telecommunications.
- Abandoning economic development policies that nurture local industry and enable it to compete globally.
- Joining the WTO, which the OECD has predicted will hurt African countries designed to provide African nations with the resources and the freedom of maneuver necessary to pursue the policies that are in the best interest of the majority of their citizens while also ensuring U.S. workers are not harmed.
The HOPE for Africa Act is modeled on the policy priorities established in the Lagos Plan of Action drawn up by African Finance Ministers in cooperation with the Organization for African Unity. Adopting policies harmful to subsistence farmers, like the abolition of price controls that will jeopardize food security
Trade Benefits for Africa
H.R. 434's, AGOA, trade benefit is short-lived, and obtaining any benefits under the bill is conditioned on African countries adopting the discredited IMF-style policies described above. It lifts existing quotas for Kenya and Mauritius and locks in quota-free treatment for the rest of Africa for textiles and apparel. This benefit is illusory, however, given that global trade rules will end all textile and apparel quotas in 2005, at which point all countries who have invested in this industry will be overwhelmed by the dominant producer: China.
S. 1636, HOPE for Africa also includes a multi-year GSP extension and textile and apparel trade benefits. However, it provides additional diverse trade benefits to African countries, such as granting GSP treatment to a wide array of products.
- It does nothing to ensure that Africans are actually hired by companies taking advantage of the quota-free treatment for textile and apparel. For instance, Asian textile and apparel producers in the island nation of Mauritius (eligible for AGOA participation) import Asian workers to work in the export processing zones.
- It contains no meaningful safeguards to ensure that "African" textiles and apparel exported to the U.S. will actually be African in origin; weak transshipment rules mean they may be shipped through Africa from third countries such as China.
For the next five years before termination of the apparel and textile quota system, HOPE for Africa also lifts the quotas now existing for Kenya and Mauritius. However, it ensures that employment gains for African workers won't mean employment losses for U.S. workers. Instead of increasing total U.S. textile and apparel imports, the legislation reduces China's textile and apparel imports by the amount that imports increase from Africa.
- HOPE also locks in quota-free treatment for the other African countries. However, it uniquely ensures that such goods will be produced in Africa, by African workers, under conditions that protect workers' rights.
- HOPE provides strong, enforceable protections against transshipment.
The Generalized System of Preferences (GSP) program will be extended for African countries until 2009 in one extension in lieu of the customary year-by-year extensions
The Generalized System of Preferences (GSP) program for African countries will be extended until 2006.
- All African countries are granted "least developed country" benefits of the GSP program. All but a handful of the most economically developed African countries already have been designated as qualifying for this treatment.
African countries will be granted quota-free, duty-free U.S. market access for the broad range of goods listed under the Lome Treaty in which the U.S. is not a competing producer. Lome covers goods like bananas, certain minerals, processed foods, and tropical products in which African countries have an advantage.
Human Rights, Labor Rights and Environmental Protection
H.R. 434, AGOA, denies trade benefits to countries engaging in "gross" violations of human rights, but does not contain meaningful, enforceable language on labor rights and is completely silent on environmental issues.
It denies benefits to countries engaging in "gross" violations of human rights.
It contains weak and unenforceable language with respect to labor rights protections that major labor unions have declared ineffective.
S. 1636, HOPE for Africa contains strong, enforceable provisions denying benefits to human rights violators, as well as strong, enforceable safeguards to ensure that corporations operating in Africa benefitting from the bill act responsibly with respect to their employees and the local environment.
- It provides expansive rights and benefits to multinational corporations operating in Africa, but requires nothing of them with respect to the protection of the environment.
It denies benefits to countries engaging in "significant" violations of human rights.
- It denies U.S. market access to products that are produced under conditions that violate internationally recognized labor standards.
It provides additional trade benefits for products of joint ventures using the environmental standards they use in their developed country facilities.
- It empowers U.S. citizens to enforce the labor, environmental and other protections of the Act in U.S. courts.
Benefits for African Businesses, Communities and Workers
H.R. 434, AGOA, contains no conditions that African citizens or businesses benefit from the market access provisions:
It doesn't require companies to employ citizens of sub-Saharan nations. Already, Asian workers are being imported into several African countries where significant unemployment already exists among Africans to work at Asian-owned factories. (The factories are able to send goods into the U.S. when Chinese quotas are filled.)
S. 1636, HOPE for Africa aims to raise living standards and foster capital accumulation in Africa.
It requires that companies benefiting from the trade preferences employ 90% African workers.It doesn't promote, much less require investment or creation of jobs in Africa. Rather, the weak transshipment rules allow goods to be shipped through Africa. It requires only 20% value-added to come from Africa to qualify for GSP benefits. This reduces the likelihood of significant employment gains under the bill.
It reserves additional trade benefits for goods from companies with 51% African ownership.
- It requires 60% African value-added for goods to obtain the duty-free, quota-free market access guaranteed by the bill.
With upwards of 20% of sub-Saharan nations' GDP going to debt service, few resources are devoted to economic development or urgent local education, health or other primary needs. Given decades of compound interest, Africa's actual debts have been repaid many times over. However, the vicious cycle of taking out new loans to pay the excessive compound interest on the old loans ensures that its debt will never be "officially" satisfied.
H.R. 434, AGOA, provides no debt relief whatsoever despite the fact that Africa's crushing $230 billion debt burden is a massive obstacle to economic and social progress.
S. 1636, HOPE for Africa calls for comprehensive debt cancellation for African nations that do not engage in significant human rights abuses, have excessive military budgets, support international terrorism or fail to cooperate with international drug control efforts. By eliminating the principle of the debt whose market value is less than a single year's interest payments HOPE will remove the burden of servicing the debt. HOPE instructs
- the President to cancel all debts owed by African countries to the U.S. government and contains a Sense of the Congress that African nations not pay more than 5% of their export earnings servicing their debt to the U.S. in the interim.
- U.S. executive directors to the IMF and World Bank are instructed to (1) advocate for full and unconditional debt cancellation owed to the international financial institutions by African nations, (2) encourage that beneficiaries of debt cancellation allocate 20% of their budgets to basic services as called for in the United Nations 20/20 initiative and (3) advocate for a cap on future debt service payments (to 5% of export earnings, the same percentage countries paid under the Marshall Plan).
- the U.S. Secretary of State to urge in writing that all foreign governmental lenders fully cancel all debts owed by African countries.
- the U.S. Treasury to complete a report on the amount owed to private U.S. lenders the vast majority of which was incurred by the Apartheid regime in South Africa, the Mobutu regime in Zaire and the Abacha regime in Nigeria and propose a plan for U.S. government purchase and cancellation of the debt at its low market versus face value.
Sustainable Development Assistance
H.R. 434, AGOA, contains no reference whatsoever to sustainable development assistance to Africa.
S. 1636, HOPE for Africa ensures development assistance is used to benefit the majority of African people.
It requires that assistance be directed to such vital areas as women's programs, education, healthcare, HIV/AIDS education and treatment, micro-credit, sustainable agriculture and capacity building of non-governmental organizations in African countries.
H.R. 434's, AGOA, business facilitation measures are not actually targeted to African-owned businesses.
It targets $500 million in existing OPIC funds for projects in sub-Sahara Africa, but does not target African businesses as beneficiaries, nor does it require that such funds be dispensed in consultation with African civil society.
S. 1636, HOPE for Africa, targets 70% of investment financing for desperately needed infrastructure projects to small businesses with majority African ownership and requires environmental impact assessment and open decisionmaking procedures.
- It provides no safeguards to ensure that any financing will be used to benefit African nations and African economic development instead of U.S. corporations, that for instance, are seeking government backing of investment they were planning to undertake anyway.
It targets $500 million in existing OPIC funds for infrastructure projects in Africa, including schools, hospitals, HIV/AIDS prevention and treatment, sanitation, potable water, rural electrification and accessible transportation.
- It allocates 70% of this OPIC funding to small ($1 million or less in assets) businesses with at least 60% African ownership. It targets 50% of OPIC funds used for energy projects to renewable or alternative energy.
- It requires environmental impact assessments to be conducted and made public wherever relevant.
- It creates advisory boards to oversee new OPIC funds and Ex-Im Bank financing in
- It instructs the Secretary of Commerce to ensure that at least 20 full-time Commercial Service employees are stationed in no less than 10 African countries.
Africa. These boards will have private sector experts in human rights, labor rights, public interest advocacy, the environment and development. Board meetings will be public.
* It instructs the Secretary of Commerce to ensure that at least 20 full-time Commercial Service employees are stationed in no less than 10 African countries.
The AIDS Crisis
Since the onset of the worldwide HIV/AIDS epidemic, approximately 34 million people living in Sub-Sahara Africa have been infected with the disease. Given that African governments' average healthcare expenditure is $6 per year, per person, the AIDS epidemic has resulted in a horrific crisis. Life-extending medications for HIV/AIDS patients which run in the thousands per year are clearly out of reach for African citizens whose per capita income averages less than $500 per year.
H.R. 434, AGOA, ignores the AIDS crisis. AGOA fails to even mention the word AIDS, much less provide any programs or funding to combat the AIDS epidemic currently enveloping the Continent and devastating its human and economic potential.
S. 1636, HOPE for Africa, addresses the AIDS crisis by:
- targeting assistance from the Development Fund for Africa to AIDS education, prevention and treatment programs
- making it U.S. policy to help sub-Saharan African countries make needed pharmaceuticals widely available.
- prohibiting the use of U.S. funds to undermine WTO TRIPS-legal African intellectual property and competitionpolicies designed to increase the availability of medications.