HOPE for Africa Act: H.R. 772: Legislative Outline
The Human Rights, Opportunity, Partnership and Empowerment for Africa Act (HOPE for Africa Act) provides a holistic approach to a new, mutually beneficial U.S.-sub-Saharan African trade and investment policy.
The legislation includes trade, investment, business facilitation, labor and environmental standards, debt cancellation and aid.
In addition to detailed findings concerning the economic circumstances in Sub-Sahara Africa (hereafter, SSA) and a statement of a new U.S. policy toward the region, the bill:
- provides preferential access to U.S. markets for a broad range of goods and ensures that these goods are made in SSA by African workers and are produced in a manner consistent with internationally recognized labor, human rights and environmental standards;
- commits the U.S. to sharply reducing SSA’s crushing external debt burden – a major obstacle to the realization of SSA’s economic potential;
- provides business facilitation measures to promote U.S.-African business partnerships, with emphasis for small businesses;
- restores a foreign aid budget line item for Africa, locks in 1994 aid levels to African nations and ensures that aid is directed to sustainable economic development and to pressing needs, such as food security, enhancing educational opportunities for women and battling the scourge of AIDS; and
- provides additional measures for prevention and treatment of the AIDS epidemic now ravaging Africa’s human and economic potential.
I. Findings (Section 3)
Congress finds that the countries of SSA form a region of tremendous human creativity, vast natural and cultural wealth, enormous economic potential and enduring political significance. Despite this enormous potential, SSA has the largest number of the poorest countries in the world. The Findings explain the destructive impact of IMF-imposed development policies, which, far from spurring sustainable development in SSA, have exacerbated the conditions of poverty, hunger, political instability, and deferred economic and human potential that plague the region. The Act cites the need for a new approach, marrying trade and investment with debt cancellation, business facilitation, assistance for sustainable development, promotion of labor rights and environmental protection and a clear commitment to the principle that each African nation must be free to determine for itself what development course to pursue.
II. Statement of Policy (Section 4)
- The HOPE for Africa Act states a new U.S. policy toward SSA, based on the recognition that economic development must be measured by the well-being of the majority of people. The Act bases the new U.S. policy on the Lagos Plan created by African Finance Ministers in cooperation with the Organization for African Unity, which is oriented toward the following goals:
- Strengthening and diversifying SSA’s economic production capacity;
- Improving the level of people’s incomes and the pattern of distribution;
- Adjusting the pattern of public expenditures to satisfy people’s essential needs;
- Providing institutional support for transition through debt relief;
- Supporting sustainable development;
- Promoting democracy, human rights and the strength of civil society.
- The Act lifts existing textile and apparel quotas on Kenya and Mauritius and extends no-quota treatment to other SSA countries (section 201(b)) and transfers to African countries as much of China’s textile and apparel quota as these countries can fill (section 201(b)(4)), with strong protections to ensure that imports from Africa are not merely transshipped from other points of origin (section 201(d) and section 201(b)(1)(C)).
- The Act extends existing benefits enjoyed by African nations under the Generalized System of Preferences (GSP) through 2005, eliminating the need to renew these benefits in each of the intervening years and avoiding the consequent delays (section 202(c)).
- The Act grants SSA countries new GSP-equivalent quota-free, duty-free market access for goods listed under the Lome Treaty in which the U.S. is not a competing producer – these goods include a variety of minerals, tropical oils, and processed foods, among other products (section 202 (a)(2)).
- The Act is designed to ensure that SSA businesses and workers benefit from the new grant of duty free access to the U.S. market. In order to achieve these ends, the Act requires that:
- Countries seeking new duty-free access comply with the core labor standards enumerated in the International Labor Organization (ILO) treaties that most SSA nations have adopted and refrain from any use of child, forced, indentured or slave labor. Determination is made by the U.S. Labor Department with the Labor Agency of the SSA country and in consultation with the International Confederation of Free Trade Unions — African Region Office (section 201(b)(1)(B));
- Countries do not engage in significant human rights violations (section 201(b)(1)(A));
- Products benefitting from new duty-free market access are produced by companies employ at least 90% SSA workers so as to avoid importation of foreign workers into SSA (section 201(b)(1)(E));
- Products benefitting from new duty-free market access have at least 60% of their products’ value added in one or more SSA countries so as to promote diversification of economic development, including in manufacturing (section 201(b)(1)(D));
- Special tariff treatment is provided for products of corporations, including oil and mineral extraction, that involve a joint-venture arrangement with a firm based in the U.S., the E.U. or Japan that use in their African facility the same environmental standards that would apply to a similar operation in that firm’s home country (section 201(c)(2)); and
- Special tariff treatment is provided for products of corporations that have majority SSA ownership, so as to promote capital cumulation in SSA (section 201(c)(1)).
- The Act provides for strong enforcement of its provisions. It provides a citizen suit provision granting standing in U.S. federal district court. Such citizen suits can be for injunctive relief or for damages against a company violating the Act’s terms (section 203).
IV. Debt Cancellation (Title I)
The Act provides for comprehensive debt cancellation covering debt owed by SSA countries to the U.S. government, to U.S. private entities and to multilateral institutions such as the IMF and World Bank.
- Cancellation of Bilateral Debt
The Act provides for the cancellation of all bilateral debt owed by SSA countries to the U.S. (section 102) and instructs the United States to advocate for bilateral debt cancellation by all other governments holding debt from SSA nations (section 103). U.S. bilateral debt is a relatively small portion of the overall SSA debt burden.
- Cancellation of IMF and World Bank Debt
The Act instructs the U.S. representatives to the IMF and the World Bank to advocate full debt cancellation for SSA countries. In the interim, while the existing debt is being canceled, the Act provides for a cap of no more than 5% of export earnings of a SSA country to go towards servicing foreign debt (section 104).
- Cancellation of Debt Owed to Private U.S. Banks
The Act provides for the purchase by the U.S. government (at January 1, 1999 market value) of debt owed by African nations to private U.S. lenders and the debt’s subsequent cancellation (section 105). The face value of this debt, and thus its continual interest payments, are significant, but its market value is less than a single year’s interest. By eliminating the principle, this provision will remove the burden of large annual interest payments.
- Advocacy to Allocate Debt Savings to Basic Social Services
In all cases, SSA governments benefiting from debt cancellation will be encouraged to devote at least 20% of their national budgets to basic services, with civil society input into allocation decisions (section 107).
V. Sustainable Development Assistance (Title III)
- The Act restores the 1994 amount of annual aid to SSA nations under the U.S. Foreign Assistance Act ($802 million) (sections 305, 307). This remedies a situation created in 1996, in which Africa is the only region of the world without a guaranteed base amount of U.S. assistance.
- The Act requires that these funds be dispensed through non-governmental organizations in each nation (section 302), in consultation with a broad spectrum of SSA civil society, with emphasis and specific minimum levels in the following areas (sections 303-305):
- Strengthening educational systems, particularly for women;
- Strengthening health care, particularly for HIV/AIDS prevention and treatment;
- Strengthening prenatal care;
- Supporting democratization;
- Enhancing food security and sustainable agriculture;
- Increasing the incomes of poor individuals;
- Protecting the environment;
- Enhancing the social, political and economic status of women;
- The Act prohibits the use of any aid funds for military purposes.
VI. Business Facilitation: EXIM-OPIC (Title IV)
- The Act provides for the targeted use of $500 million in Overseas Private Investment Corporation (OPIC) infrastructure funds for the following purposes (section 401(a)): basic health services (specifically including AIDS prevention and treatment), potable water, sanitation, schools, rural electrification and accessible transportation (section 401(b)(3)).
- Seventy percent of investment insurance provided by OPIC will be allocated to small, women and minority-owned businesses with at least 60% SSA ownership and with assets of under $1 million (section 401(c)). Fifty percent of such funds used for energy projects will be used for renewable and/or alternative energy development.
- Advisory boards will be created to oversee these new OPIC funds (section 501) and also Ex-Im Bank financing targeted to sub-Sahara Africa (section 502). Such advisory boards shall have private sector membership including individuals with expertise in human rights, labor rights, the environment and development. Meetings will be public.
- Environmental impact assessments will be conducted and made public wherever relevant.
VII. Access to AIDS Treatment and Other Vital Pharmaceuticals (Section 601)
- In addition to the Act’s debt relief (Title I) and aid (Title III) provisions that enable SSA governments to strengthen AIDS education, prevention and treatment programs, the Act also increases the accessibility of pharmaceuticals to SSA nations. Section 601 prohibits the U.S. government from seeking to challenge or revoke any SSA country’s intellectual property or competition laws or policies designed to promote access to pharmaceuticals or other medical technologies if they conform to WTO TRIPS terms.
VIII. Review Process
- The Act requires the President, three years after enactment, to give notice for public comment on the implementation results, successes and failure of the legislation. Such comments are to be made publicly available and submitted in whole to the U.S. Congress. Additional reports are required under several other provisions of the Act, such as on the feasibility of debt payments in local currency, on countries’ enforcement of internationally recognized labor rights, and on trade impacts of the Act.