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Side-by-Side Comparison: HOPE for Africa (H.R. 772) and African Growth and Opportunity Act (H.R. 434)

The Human rights, Opportunity, Partnership and Empowerment for Africa Act ("HOPE for Africa Act") H.R. 772 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 (hereafter SSA). It includes mutually beneficial U.S.-Africa trade and investment opportunities meaning that African businesses and workers, not just U.S. corporations, will enjoy the Act s broad trade benefits. It adopts a holistic approach to the elements essential to ensuring a mutually successful U.S.-sub-Sahara Africa economic policy, including business facilitation, debt relief, aid and AIDS prevention and treatment. The legislation enjoys 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 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. This NAFTA for Africa legislation also contains harsh eligibility rules that will force African nations to alter their economic and social policies and laws to suit the needs of foreign investors and the dictates of the International Monetary Fund despite the IMF s dismal record in the region. NAFTA for Africa is supported by the multinational corporate lobby and harshly criticized by African and African-American community, church and development groups. Nelson Mandela called the bill "not acceptable."

The choice between the two bills, whose major provisions are contrasted below, will define U.S. economic policy towards Africa for the foreseeable future.

Economic Policy: Self-Determination or Paternalism?

H.R. 434 rejects SSA nations right to self-determination by coercing them to adopt the IMF economic development model which has already had devastating consequences in the region. In order qualify for the bill s narrow trade benefits, SSA countries must be annually certified by the U.S. President as meeting a long list of U.S.-imposed, IMF-style conditions:

  • Cutting government spending, such as 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, where the OECD has said African nations will be the big losers;
  • Adopting policies, like the abolition of price controls, that will jeopardize food security;
  H.R. 772, 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 SSA 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 designed to provide SSA 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;
  • 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.;

Trade Benefits for Africa

H.R. 434 s trade "benefits" (the only benefits for Africa in the entire bill) are either short-lived, illusory or redundant, and are conditioned on the discredited IMF-style policies described above.

  • Lifts existing quotas for Kenya and Mauritius and locks in quota-free treatment for the rest of SSA for textiles and apparel. This benefit is illusory, however, given that global trade rules will end 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;
  • In the interim, there are 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;
  • The Generalized System of Preferences program for SSA countries will be extended until 2009;
  • All SSA countries are granted "least developed country" benefits of the GSP program. It turns out that all but a handful of the most economically developed African countries already have been designated as qualifying for this treatment.

H.R. 772, HOPE for Africa offers expansive market access benefits to African countries, including new benefits for countries that enforce internationally recognized human rights and labor standards.

  • For the next five years before termination of the apparel and textile quota system, HOPE for Africa lifts the quotas now existing for Kenya and Mauritius and locks in quota-free treatment for the other SSA countries, but ensures that such goods will be produced in Africa, by African workers, under conditions that protect workers rights;
  • 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;
  • HOPE provides strong, enforceable protections against transshipment;
  • The Generalized System of Preferences program for SSA countries will be extended until 2005.

Labor Rights and Environmental Protection

H.R. 434 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;
  • It provides expansive rights and benefits to multinational corporations operating in SSA, but requires nothing of them with respect to the protection of the environment.

H.R. 772, 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 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 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;
  • It doesn t require investment or creation of jobs in sub-Sahara Africa. Rather, the weak transshipment rules allow goods to be shipped through Africa.
  • It applies a mere 20% value-added requirement for the GSP program to SSA lower than any other eligible region. This reduces the likelihood of significant employment gains under the bill.

H.R. 772, HOPE for Africa aims to raise living standards and foster capital accumulation in Africa. To this end, the bill provides and requires:

  • Additional trade benefits for companies with 51% African equity participation;
  • 60% African value-added for goods to obtain the duty-free, quota-free market access guaranteed by the bill;
  • Companies benefiting from the trade preferences employ 90% African workers.

Debt Relief

H.R. 434 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.
H.R. 772, HOPE for Africa restores aid to Africa and ensures it is used to benefit the majority of SSA people.

  • Restores annual aid guarantee at the 1994 level ($802 million) under the Development Fund for Africa;
  • Requires that assistance be dispensed in consultation with African civil society, that it be directed to such vital areas as women s programs, education, healthcare, HIV/AIDS education and treatment, micro-credit, sustainable agriculture.

Sustainable Development Assistance

H.R. 434 fails to even restore the budget line item for Africa aid eliminated in 1996 even though U.S. assistance is at a historical low of .02% of U.S. GNP and sub-Sahara Africa is now the only region of the world with no guaranteed American aid.
H.R. 772, HOPE for Africa restores aid to Africa and ensures it is used to benefit the majority of SSA people.

  • Restores annual aid guarantee at the 1994 level ($802 million) under the Development Fund for Africa;
  • Requires that assistance be dispensed in consultation with African civil society, that it be directed to such vital areas as women s programs, education, healthcare, HIV/AIDS education and treatment, micro-credit, sustainable agriculture.

Business Facilitation

H.R. 434's business facilitation measures are not actually targeted to African-owned businesses.

  • 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;
  • 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.

H.R. 772, HOPE for Africa, targets investment financing for desperately needed infrastructure projects to small, women -and minority-owned businesses with majority African ownership, ensuring that the projects are undertaken in an environmentally responsible manner.

  • It targets $500 million in OPIC funds for infrastructure projects in SSA, including schools, hospitals, sanitation, potable water and accessible transportation;
  • It allocates 70% of the OPIC funding to small, women- and minority-owned businesses with at least 60% African ownership and $1 million or less in assets;
  • 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 (section 501) and Ex-Im Bank financing in SSA (section 502). These boards will have private sector experts in human rights, labor rights, the environment and development. Board meetings will be public.

The AIDS Crisis

H.R. 434 ignores the AIDS Crisis. NAFTA for Africa fails to even mention the word AIDS, much less provide any programs or funding to combat the AIDS epidemic currently enveloping the Continent.
H.R. 772, HOPE for Africa addresses the AIDS crisis by:

  • replenishing aid and newly targeting assistance from the Development Fund for Africa, specifically 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 competition policies designed to increase the availability of medications.

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