[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



 
              EXPANDING U.S. TRADE WITH SUB-SAHARAN AFRICA

=======================================================================

                                HEARING

                               before the

                         SUBCOMMITTEE ON TRADE

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 29, 1997

                               __________

                             Serial 105-77

                               __________

         Printed for the use of the Committee on Ways and Means






                    U.S. GOVERNMENT PRINTING OFFICE
58-319 CC                   WASHINGTON : 1999



                      COMMITTEE ON WAYS AND MEANS

                      BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
BILL THOMAS, California              FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida           ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut        BARBARA B. KENNELLY, Connecticut
JIM BUNNING, Kentucky                WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana               JIM McDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania      KAREN L. THURMAN, Florida
JOHN ENSIGN, Nevada
JON CHRISTENSEN, Nebraska
WES WATKINS, Oklahoma
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri

                     A.L. Singleton, Chief of Staff

                  Janice Mays, Minority Chief Counsel

                                 ______

                         Subcommittee on Trade

                  PHILIP M. CRANE, Illinois, Chairman

BILL THOMAS, California              ROBERT T. MATSUI, California
E. CLAY SHAW, Jr., Florida           CHARLES B. RANGEL, New York
AMO HOUGHTON, New York               RICHARD E. NEAL, Massachusetts
DAVE CAMP, Michigan                  JIM McDERMOTT, Washington
JIM RAMSTAD, Minnesota               MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
WALLY HERGER, California
JIM NUSSLE, Iowa


Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.


                            C O N T E N T S

                               __________

                                                                   Page

Advisory of March 31, 1997, announcing the hearing...............     2

                               WITNESSES

Office of the U.S. Trade Representative, Hon. Charlene Barshefsky    14
U.S. Department of the Treasury, Hon. Lawrence H. Summers, Deputy 
  Secretary; accompanied by Hon. Jeffrey M. Lang, Deputy U.S. 
  Trade Representative, Office of the U.S. Trade Representative, 
  and Hon. George E. Moose, Assistant Secretary, African Affairs, 
  U.S. Department of State.......................................    33

                                 ______

African Development Foundation, Willie Grace Campbell............   183
AFRICOM Telecommunications, Inc., Hon. Percy Sutton..............   102
Alexis de Tocqueville Institution, Hon. Jack Kemp................    46
American International Group, Inc., Ralph W. Mucerino............   122
AT&T Submarine Systems, Inc., William B. Carter..................   129
ATEPA Technologies, Ltd., Pierre Atepa Goudiaby..................   149
Business Council for the United Nations, James E. Obi............   167
Campbell, Willie Grace, African Development Foundation...........   183
Carrier and Employment Forum in Senegal, Papa Nalla Fall.........   162
Carter, William B., AT&T Submarine Systems, Inc..................   129
Church World Service/Lutheran World Relief, Gmakhan Sherman......   201
Constituency for Africa, Hon. David N. Dinkins...................    53
Corporate Council on Africa, James E. Obi........................   167
Dinkins, Hon. David N., Constituency for Africa..................    53
Empower America, Hon. Jack Kemp..................................    46
Equator Bank, Hon. Rush Taylor...................................   179
Equitable Financial Companies, James E. Obi......................   167
Ethiopia, Federal Democratic Republic of, His Excellency Newai 
  Gebre-Ab, Minister.............................................    76
Fall, Papa Nalla, Groupe Afric-Gestion, National Council of 
  Employers in Senegal, National Association of Consultants in 
  Senegal, Society for Women Against Aids in Africa, and Carrier 
  and Employment Forum in Senegal................................   162
Franklin, David, Sigma One Corporation...........................    95
Gabremariam, Fassil, U.S.-Africa Free Enterprise Education 
  Foundation, Inc., and Intermedia Communications, Inc...........   189
Gebre-Ab, His Excellency Newai, Minister, Federal Democratic 
  Republic of Ethiopia...........................................    76
Gingrich, Hon. Newt, a Representative in Congress from the State 
  of Georgia, and Speaker, U.S. House of Representatives.........     7
Goudiaby, Pierre Atepa, ATEPA Technologies, Ltd..................   149
Groupe Afric-Gestion, Papa Nalla Fall............................   162
Intermedia Communications, Inc., Fassil Gabremariam..............   189
Kemp, Hon. Jack, Empower America, and Alexis de Tocqueville 
  Institution....................................................    46
Kenya, Republic of, His Excellency Benjamin E. Kipkorir, 
  Ambassador.....................................................    79
Moss, Ralph L., Seaboard Corporation.............................   110
Mucerino, Ralph W., American International Group, Inc............   122
National Association of Consultants in Senegal, Papa Nalla Fall..   162
National Council of Employers in Senegal, Papa Nalla Fall........   162
Obi Group, Equitable Financial Companies, Business Council for 
  the United Nations, and Corporate Council on Africa, James E. 
  Obi............................................................   167
Seaboard Corporation, Ralph L. Moss..............................   110
Sherman, Gmakhan, Church World Service/Lutheran World Relief, and 
  U.S.-Africa Trade Policy Working Group.........................   201
Sigma One Corporation, David Franklin............................    95
Society for Women Against Aids in Africa, Papa Nalla Fall........   162
South Africa, Republic of, His Excellency Franklin A. Sonn, 
  Ambassador.....................................................    87
Sutton, Hon. Percy, AFRICOM Telecommunications, Inc..............   102
Taylor, Hon. Rush, U.S.-South Africa Business Council, and 
  Equator Bank...................................................   179
U.S.-Africa Free Enterprise Education Foundation, Inc., Fassil 
  Gabremariam....................................................   189
U.S.-Africa Trade Policy Working Group, Gmakhan Sherman..........   201
U.S.-South Africa Business Council, Hon. Rush Taylor.............   179

                       SUBMISSIONS FOR THE RECORD

Overseas Private Investment Corporation, Mildred O. Callear, 
  Acting President and Chief Executive Officer, letter and 
  attachment.....................................................   217

                                 ______

American Textile Manufacturers Institute, statement and 
  attachments....................................................   214
Apricot Producers of California, Modesto, CA, statement..........   222
California Cling Peach Growers Advisory Board, Dinuba, CA, 
  statement and attachments......................................   226
Camac Holdings, Inc., Houston, TX, Kase Lawal, statement and 
  attachments....................................................   209
Footwear Industries of America, Inc., statement and attachments..   237
International Mass Retail Association, Arlington, VA, statement 
  and attachments................................................   244
Liz Claiborne, Inc., North Bergen, NJ, Frank X. Kelly, letter....   249
Luggage and Leather Goods Manufacturers of America, Inc., New 
  York, NY, statement............................................   251
Mauritius Sugar Syndicate, and Mauritius-U.S. Business 
  Association, Inc., Paul Ryberg, Jr., joint statement...........   254
National Retail Federation, statement............................   264
Neckwear Association of America, Inc., New York, NY, statement...   267
Rubber and Plastic Footwear Manufacturers Association, statement 
  and attachment.................................................   269
Union of Needletrades, Industrial and Textile Employees, AFL-CIO, 
  New York, NY, Jay Mazur, statement.............................   271
United States Association of Importers of Textiles and Apparel, 
  New York, NY, statement........................................   274


              EXPANDING U.S. TRADE WITH SUB-SAHARAN AFRICA

                              ----------                              


                        TUESDAY, APRIL 29, 1997

                  House of Representatives,
                       Committee on Ways and Means,
                                     Subcommittee on Trade,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:06 a.m., in 
room 1100, Longworth House Office Building, Hon. Philip M. 
Crane (Chairman of the Subcommittee) presiding.
    [The advisory announcing the hearing follows:]

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                         SUBCOMMITTEE ON TRADE

                                                CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE

March 31, 1997

No. TR-4

                  Crane Announces Hearing on Expanding

                   U.S. Trade with Sub-Saharan Africa

    Congressman Philip M. Crane (R-IL), Chairman, Subcommittee on Trade 
of the Committee on Ways and Means, today announced that the 
Subcommittee will hold a hearing on ways to expand U.S. trade with the 
countries of Sub-Saharan Africa. The hearing will take place on 
Tuesday, April 29, 1997, in the main Committee hearing room, 1100 
Longworth House Office Building, beginning at 10:00 a.m.
      
    Oral testimony at this hearing will be heard from both invited and 
public witnesses. Any individual or organization not scheduled for an 
oral appearance may submit a written statement for consideration by the 
Committee or for inclusion in the printed record of the hearing.
      

BACKGROUND:

      
    Sub-Saharan Africa consists of a diverse set of 48 countries, many 
of which have undergone significant political and economic change in 
recent years. Since 1990, more than 25 African nations have held 
democratic elections. At the same time, more than 30 countries have 
instituted programs to replace their centralized economies with free 
markets under the guidance of bilateral and multilateral donors such as 
the World Bank and the International Monetary Fund.
      
    Despite the fact that 33 of the 48 countries in Sub-Saharan Africa 
are members of the World Trade Organization (WTO), U.S. trade with Sub-
Saharan African countries relative to overall U.S. trade levels remains 
low. In 1996, U.S. merchandise exports to the region were valued at 
$6.1 billion, while U.S. merchandise imports in return totaled $15.2 
billion. Although virtually all countries in Sub-Saharan Africa qualify 
for duty-free entry on a wide range of products under the Generalized 
System of Preferences (GSP) Program, GSP imports from the region 
equaled only $576.5 million in 1996, a figure representing only 3.4 
percent of all U.S. GSP imports for the year.
      
    In 1994, Congress passed the Uruguay Round Agreements Act, which 
contained aprovision requiring the President to produce a comprehensive 
trade and development policy for the countries of Africa. The first of 
the five reports called for by this legislation was submitted to 
Congress on February 5, 1996, and the second on February 18, 1997. 
Among other things, the President's reports set forth a policy 
framework structured around five basic objectives including: trade 
liberalization and promotion, investment liberalization and promotion, 
development of the private sector, infrastructure enhancement, and 
economic reform.
      
    In announcing the hearing, Chairman Crane stated: ``In recent 
years, a number of countries in Sub-Saharan Africa have undertaken the 
type of reforms that are necessary for them to attract investment, 
create jobs, and increase the standard of living for their citizens. At 
the same time, these reforms present many new trade and investment 
opportunities for U.S. exporters and workers. I believe that the United 
States must reach out to those countries in Sub-Saharan Africa that 
have taken steps to put their economies on the right track to help 
solidify these changes as these countries work to chart a new course 
for their future. I look forward to this opportunity to explore ways 
for the United States to expand and strengthen our trade relations with 
the region.''
      

FOCUS OF THE HEARING:

      
    Witnesses are expected to address ways that the United States could 
develop closer trade relations with the countries of Sub-Saharan 
Africa, including changes in the GSP Program, granting other 
preferential trade benefits, the creation of foreign trade zones within 
individual Sub-Saharan African countries, or the negotiation of a free 
trade agreement with one or more countries in the region.
      

DETAILS FOR SUBMISSIONS OF REQUESTS TO BE HEARD:

      
    Requests to be heard at the hearing must be made by telephone to 
Traci Altman or Bradley Schreiber at (202) 225-1721 no later than the 
close of business, Thursday, April 17, 1997. The telephone request 
should be followed by a formal written request to A.L. Singleton, Chief 
of Staff, Committee on Ways and Means, U.S. House of Representatives, 
1102 Longworth House Office Building, Washington, D.C. 20515. The staff 
of the Subcommittee on Trade will notify by telephone those scheduled 
to appear as soon as possible after the filing deadline. Any questions 
concerning a scheduled appearance should be directed to the 
Subcommittee on Trade staff at (202) 225-6649.
      
    In view of the limited time available to hear witnesses, the 
Subcommittee may not be able to accommodate all requests to be heard. 
Those persons and organizations not scheduled for an oral appearance 
are encouraged to submit written statements for the record of the 
hearing. All persons requesting to be heard, whether they are scheduled 
for oral testimony or not, will be notified as soon as possible after 
the filing deadline.
      
    Witnesses scheduled to present oral testimony are required to 
summarize briefly their written statements in no more than five 
minutes. THE FIVE-MINUTE RULE WILL BE STRICTLY ENFORCED. The full 
written statement of each witness will be included in the printed 
record, in accordance with House Rules.
      
    In order to assure the most productive use of the limited amount of 
time available to question witnesses, all witnesses scheduled to appear 
before the Subcommittee are required to submit 200 copies of their 
prepared statement and a 3.5-inch diskette in WordPerfect or ASCII 
format, for review by Members prior to the hearing. Testimony should 
arrive at the Subcommittee on Trade office, room 1104 Longworth House 
Office Building, no later than Friday, April 25, 1997. Failure to do so 
may result in the witness being denied the opportunity to testify in 
person.
      

WRITTEN STATEMENTS IN LIEU OF PERSONAL APPEARANCE:

      
    Any person or organization wishing to submit a written statement 
for the printed record of the hearing should submit at least six (6) 
copies of their statement and a 3.5-inch diskette in WordPerfect or 
ASCII format, with their address and date of hearing noted, by the 
close of business, Tuesday, May 13, 1997, to A.L. Singleton, Chief of 
Staff, Committee on Ways and Means, U.S. House of Representatives, 1102 
Longworth House Office Building, Washington, D.C. 20515. If those 
filing written statements wish to have their statements distributed to 
the press and interested public at the hearing, they may deliver 200 
additional copies for this purpose to the Subcommittee on Trade office, 
room 1104 Longworth House Office Building, at least one hour before the 
hearing begins.
      

FORMATTING REQUIREMENTS:

      
    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.
      
    1. All statements and any accompanying exhibits for printing must 
be typed in single space on legal-size paper and may not exceed a total 
of 10 pages including attachments. At the same time written statements 
are submitted to the Committee, witnesses are now requested to submit 
their statements on a 3.5-inch diskette in WordPerfect or ASCII format.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. A witness appearing at a public hearing, or submitting a 
statement for the record of a public hearing, or submitting written 
comments in response to a published request for comments by the 
Committee, must include on his statement or submission a list of all 
clients, persons, or organizations on whose behalf the witness appears.
      
    4. A supplemental sheet must accompany each statement listing the 
name, full address, a telephone number where the witness or the 
designated representative may be reached and a topical outline or 
summary of the comments and recommendations in the full statement. This 
supplemental sheet will not be included in the printed record.
      
    The above restrictions and limitations apply only to material being 
submitted for printing. Statements and exhibits or supplementary 
material submitted solely for distribution to the Members, the press 
and the public during the course of a public hearing may be submitted 
in other forms.
      

    Note: All Committee advisories and news releases are available on 
the World Wide Web at `HTTP://WWW.HOUSE.GOV/WAYS__MEANS/'.
      

    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-225-1904 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.
      

                                


    Chairman Crane. Good morning. I want to welcome our 
distinguished witnesses and guests to this hearing of the Trade 
Subcommittee on expanding U.S. trade relations with the 
countries of Sub-Saharan Africa.
    For more than three decades, the United States has 
supported a variety of foreign assistance programs designed to 
aid the countries of Sub-Saharan Africa. However, traditional 
foreign aid alone will not lead to the level of economic 
development we would all like to see on the African continent. 
In the long run, private sector investment and development must 
serve as the catalyst for Sub-Saharan African countries to 
become self-reliant and raise the standard of living for their 
people.
    Currently, there are no initiatives underway to engage the 
countries of Sub-Saharan Africa as business partners through 
trade and investment. In recent years, however, many countries 
in the region have held democratic elections and undertaken 
significant economic reforms. Given the change that is taking 
place, I believe it is appropriate for us to reexamine our 
policy toward the region.
    In particular, I believe we have an opportunity in the 
105th Congress to fill a major gap that exists in U.S. trade 
policy and in our relations for the region by reaching out to 
those countries that have taken steps to put the economies on 
the right track.
    Last week, a number of my colleagues, including Congressman 
Rangel, Congressman Houghton, Congressman Matsui, Congressman 
McDermott, Congressman McNulty, and Congressman Jefferson of 
this Subcommittee joined me in introducing legislation intended 
to open a new era of trade and investment relations between the 
United States and the countries of Sub-Saharan Africa.
    This legislation is designed to provide the necessary 
framework to open a mutually beneficial trade and investment 
dialog between the United States and Sub-Saharan African 
countries with a view toward eliminating the barriers which 
exist on both sides that inhibit the free flow of trade and 
investment at the present.
    I look forward to our witnesses' testimony today and their 
input as we mark up legislation on this issue in the near 
future, and I would like now to recognize our distinguished 
Ranking Minority Member on the Committee for an opening 
statement.
    Mr. Rangel. Thank you. Thank you, Mr. Chairman.
    First let me say welcome, Mr. Speaker. Bob Matsui is ill, 
but he certainly would have wanted to be here to give the 
opening statement on behalf of the Democrats on the Committee. 
I feel proud to be here, but I send his regrets.
    Second, I don't normally read statements, but coming from 
the streets of Harlem where the rich history of Africa had been 
denied me, and not knowing that there was more to the world 
than Europe until the United Nations came to Manhattan, it 
seemed the great work that had been done by my friend and 
fellow Harlemite, Ron Brown, would be continued. When we lost 
him, I made a commitment that in some way I would want to be a 
part of continuing the great work that he had started, in 
letting the whole world know that, no matter what their 
culture, their language, or their color, that we, the United 
States, have somebody from those areas and those countries.
    So when we move forward like this to provide the national 
leadership, the international leadership, it makes me proud to 
be an American, it makes me proud to be a Member of this great 
Congress, and even more proud to be a Member of this 
distinguished Committee.
    This is history that is being made. We are writing it, and 
it is not just a feel good piece of legislation. It is not just 
to make our African friends feel good. It is supported by the 
President of the United States, by the Chairman of this 
distinguished Committee, by the Speaker of the House of 
Representatives. Therefore, it is a national piece of 
legislation aimed at doing not only what is in the best 
interests of the United States of America but also what is 
decent and the right thing for our friends in Africa.
    This hearing is a message that our great Nation is prepared 
to bring down the curtains of the last vestiges of our cold 
war, which resulted in the isolation and containment of Africa. 
It shows that the war in Africa that pitted government controls 
against market-driven policies in many African nations--South 
Africa, Ethiopia, Uganda, Guinea, Cote d'Ivoire--recognized 
that private sector development is inextricably linked to job 
creation, capital formation, and overall infrastructure 
development.
    A lot has to be done, but these nations have shown that 
they know the way, they are willing to work hard to make 
certain that they become trading partners, and that while 
Europe and Japan continue to dominate Africa's market, the 
question remains, where is America's policy on Sub-Saharan 
Africa?
    I firmly believe that this African Growth and Opportunity 
Act, while so much has to be done, will be the very beginning 
of showing how great nations with great histories can work 
together.
    Mr. Chairman, our challenges are going to be immense, but I 
think the mere fact that the United States of America is 
willing to go in, to provide the vehicles to not just give aid 
but to bring investment, to upgrade the infrastructure, will 
show the world and investors that if the United States is 
involved, we intend to be with this and we intend for Africa to 
join in those victories.
    I want to thank the leadership of the Republican Party, not 
because they have not paid attention to Africa but because they 
have been in the leadership of free trade. We recognize that we 
are all looking for peace and tranquility, not only in Africa, 
but as the Speaker well knows, that in order to really have 
people to resist drugs and violence and crime, the major part 
of this legislation is bringing hope to people.
    People wake up without knowing that they can achieve as 
others have. When we go to Taiwan and Singapore, we find people 
that a couple of decades ago did not know that they would be 
world competitors. And as we find people in our inner cities 
without this hope, we certainly found people in Africa who 
gained their independence but did not have the economic freedom 
that is so important to people to enjoy.
    I want to thank those representatives of countries that 
have taken the time to come here to our hearing room and our 
Congress and an grateful that they would show their concern for 
their countries in Africa by coming.
    Would our guests from Africa please stand, the Ambassadors.
    Thank you. What a tribute.
    [Applause.]
    I think that is a tribute to our body and our Congress.
    I also would like to welcome Speaker Gingrich. It is very 
unusual that the Speaker comes to attend hearings and 
legislation that is vital to the United States, and his 
presence means a heck of a lot in terms of this legislation 
becoming law.
    I want to welcome Ambassador Barshefsky and my dear friends 
from New York: Percy Sutton, whose shoulder I stand on in 
getting here to the U.S. Congress; David Dinkins, my friend who 
set new heights for decency in city government; and my old 
friend, Jack Kemp, to whom I always give credit for the 
enterprise zones when he is present--and even when he is not 
present.
    To the business leaders that have traveled from all parts 
of Europe to come here, this is the beginning. We have work to 
do. Again, I want to thank you, and I thank the Members of this 
Committee who have worked so hard, especially Mr. McDermott and 
also Mr. Jefferson, who have worked hard to bring us to this 
day of reality.
    Thank you so much, and I apologize for taking so much time.
    Chairman Crane. I would now like to recognize Mr. 
McDermott.
    Mr. McDermott. Mr. Chairman, I want to thank you very much 
publicly for making this happen. This would not have happened--
when I put the amendment in the GATT bill 2\1/2\ years ago, I 
never thought I would have a Republican Chairman of the 
Committee, a Republican Speaker, and we would be in this 
situation. But without your leadership, we would not be 
anywhere near where we are today. And I want to make a public 
acknowledgment of the strong leadership you and Mr. Rangel have 
given, the stable and firm hand you have kept on the tiller all 
the way through this. And to Mr. Rangel I'd like to say thanks 
for your wise advice and leadership.
    Chairman Crane. Before we begin, I would like to announce 
we will be taking a break in our hearing after Secretary Kemp 
and Mayor Dinkins testify, and we will then hold a press 
conference and take a short lunch break. We will then reconvene 
to take testimony from our other witnesses.
    For our first witness, we are honored to have with us the 
Speaker of the House, Newt Gingrich.

    STATEMENT OF HON. NEWT GINGRICH, SPEAKER, U.S. HOUSE OF 
  REPRESENTATIVES, AND A REPRESENTATIVE IN CONGRESS FROM THE 
                        STATE OF GEORGIA

    Mr. Gingrich. Let me thank the Committee for allowing me to 
come and testify. I thank the Ranking Member of the Full 
Committee for being here. It is a tribute to how important this 
is. And I want to thank Chairman Crane and Mr. McDermott for 
the leadership they have shown together in developing the right 
approach to Africa.
    Let me say first on fast track in general that I am deeply 
supportive of the principle that we should have the widest 
possible areas of economic opportunity. I believe that creating 
more markets is good for the American people and good for 
American workers. I was just at the Carter Center last night 
working on the Agenda for Americas when fast track came up, and 
I indicated my hope that the administration will work with us 
to develop fast track legislation this spring.
    But in Africa, I think we need a great deal of focus, and I 
think that this bill is a first step in the right direction.
    Chairman Royce of the Africa Subcommittee of the 
International Relations Committee has also agreed, in the same 
spirit as Chairman Crane, to really take a new look at Sub-
Saharan Africa, to try to find ways to break out of our current 
patterns and look at more effective ways to help with economic 
development, more effective ways to help with health and 
education, and more effective ways to strengthen the countries 
of the region.
    It is a great tragedy that in the period since 
decolonization, economic growth has not kept pace with the 
enormous opportunities--in both human and natural resources--
that exist in Sub-Saharan Africa. Paul Johnson in his ``History 
of the 20th Century And Modern Times'' argues that part of this 
is because one of the legacies of decolonization was an 
approach to economic development that emphasized governments 
too much and emphasized bureaucracies too much. It substituted 
loans from government facilities and grants from government 
facilities for the hard work of learning how to survive and 
prosper in market economies.
    It is truly a tragic reality that Ghana and South Korea had 
approximately the same per capita income in 1960. Today that 
would seem almost inconceivable. Yet the fact is that there are 
policies that work and policies that succeed: policies of low 
taxation, of open markets, of competing in the world, of 
growing companies capable of manufacturing on a world basis, 
using assets capable of attracting capital, and doing so with 
the rule of law with private property and with a certainty and 
a civil service that is honest. Hong Kong, Singapore, Taiwan, 
South Korea are four examples.
    As a sign of our commitment to finding out how to take that 
same pattern of growth and nurture it in Sub-Saharan Africa, 
Congressman Jefferson can report to this Subcommittee he serves 
on, of a conversation we had on a flight between Shanghai and 
Tokyo where for 2\1/2\ hours, a group led by Congressman Royce 
were working on the question of how to get the kind of economic 
development we had just seen in Shanghai? How do we encourage 
that kind of success? That is why, when I learned of this bill 
from Congressman McDermott and Congressman Crane, I was excited 
to come here today, not only to support the bill but to suggest 
a broad way of where I think we need to go in the United 
States.
    I believe we should take on the challenge of developing a 
new vision and a new set of strategies for Sub-Saharan Africa, 
recognizing that that development has to occur in partnership 
with the people in the region. This cannot be an American 
vision. This cannot be an American imposition. We can't have a 
21st century economic and cultural colonialism replacing the 
military, political colonialism of the 19th and the first two-
thirds of the 20th century. But we can reach out to our many 
friends.
    And in many ways we are a uniquely placed society because 
we have a very substantial part of our population with an 
African background, and the importance of many of those members 
of American society as shown on this particular panel by 
Congressman Jefferson and Congressman Rangel, shown over the 
weekend in Philadelphia by retired Chairman of the Joint 
Chiefs, Colin Powell. The fact is that we have an emotional and 
a psychological bonding to African countries, unlike virtually 
any other developing country in the world. We have an 
opportunity to join a genuine partnership.
    And maybe I feel this particularly coming from Georgia, 
where we have Andy Young who is so recognized and, frankly, 
relied on his many friends in Africa to help us get the 
Olympics, and we feel a debt to reach out to Africa to repay 
for all the help we got during the period of deciding where the 
Olympics were to be held. So maybe from an Atlanta perspective 
I feel this more than people from other areas, although I note 
when you can have a Seattle/Chicago coalition offering a new 
bill, maybe this is a truly national undertaking.
    I think that our strategy, and, again, from the standpoint 
of Atlanta and the Center for Disease Control, I certainly have 
a regular briefing and vivid awareness of the human cost of the 
disease level resulting from not having had adequate economic 
development in Africa and the price we are paying every day in 
human beings whose lives are shortened and, in some cases, 
tragically cut off in childhood when the most basic of public 
health standards could, in fact, save millions of people.
    So I came today to say, one, that both in this Subcommittee 
and the Africa Subcommittee of the International Relations 
Committee, I want us to be committed to reengaging all of Sub-
Saharan Africa in a true partnership that looks at everything 
from public health to education, to economic development, to 
the appropriate political institutions, recognizing that if you 
don't have the rule of law, you don't have an honest civil 
service, you don't have a fair tax system, it is going to be 
very hard to get economic development.
    I would note over the weekend a report came out, I think it 
was Friday, by the World Bank, that said those countries that 
got international aid and had the right economic policies 
accelerated their development. Those countries that have the 
wrong economic policies decayed no matter how much economic aid 
they received.
    Now, I would suggest we have an interest in reaching out to 
all the countries in Sub-Saharan Africa and saying, in effect, 
we want to work with you on the right economic policies, and 
recognize that the rule of law and honest civil service, a 
sense that your property will in fact be protected, and that 
your investment will be protected, is important. We want to 
work to develop the right economic policies, which are a low 
tax, high savings, and investment policy, which has worked in 
Singapore, Taiwan, South Korea, and is working right now in 
Shanghai and in Hong Kong. It will work in Uganda, Nigeria, 
Cameroon, it will work anywhere in the world, because human 
beings are all the same in terms of ability to develop once 
they have the right incentives and the right structure.
    Then I want to say precisely as Chairman Crane said in 
opening this hearing, we want to extend the American market to 
the countries that are prepared to follow the right policies to 
ensure that you have the maximum opportunity to grow, selling 
in America and trading with America.
    And the fact is, again, you can talk about all the miracles 
of East Asia, from Japan, South Korea, to Taiwan and Hong Kong, 
and Southern China today. If it were not for the generosity of 
the United States in committing itself to a larger marketplace, 
those countries could not have developed export economies.
    While there are specific areas we have to look at, I think 
the spirit of this Committee is such that, as all of you know, 
we need to work on the issue of illegal transshipment of 
textiles, but that doesn't just relate to Africa, it relates 
across the planet. The fact is, that is an agreement that is 
not kept very well, and it doesn't help a country if all it 
becomes is a point of contact where textiles stop in briefly on 
the way to being shipped to the United States.
    So while I am very much willing to open the American 
economy to Sub-Saharan textiles, I would like to make sure we 
adopt the right kind of mechanisms to ensure that they come 
from Sub-Saharan Africa, just as I want us to expand our reach 
into the Caribbean and establish parity between the Caribbean 
Basin Initiative and NAFTA. But I want to again make sure 
transshipment is not occurring, but the products are actually 
made there.
    I hope that you will hold additional hearings. I hope you 
will meet with potential investors in Africa. I hope you will 
look at models such as the Grameen Bank in Bangladesh, which 
now extends loans to over 2 million borrowers, 94 percent of 
whom are women, and has a repayment rate of over 90 percent.
    If we can put together the right package that includes a 
commitment to a free trade zone, a commitment to private sector 
economic development, a commitment to strengthening the 
institutions of government that are necessary for free 
enterprise to flourish, and if we can then work with 
educational and health areas reaching out from American assets 
to Sub-Saharan Africa, we could, before the end of the century, 
launch a new partnership for human progress on the African 
continent that will be a genuine partnership, not an American 
plan but a plan that Africans and Americans together create. 
And I think this Subcommittee, by launching this hearing, is 
taking a first step down that road, and I thank you for that 
and support your efforts.
    Chairman Crane. Thank you very much, Mr. Speaker, and I 
know you are aware of it as a historian, but a lot of folks in 
this audience may not realize that traditionally our Republican 
Party was the one that tried to maintain a great wall of China 
around this country in terms of trade, and our Democratic 
colleagues were the advocates of free trade.
    And while we have reversed our roles a little bit, the fact 
is, we have the greatest degree of bipartisanship on the trade 
question, I think, of any that comes before Congress. So we 
have managed to maintain a degree of collegiality in this 
Committee which I profoundly appreciate.
    I would like to yield to my distinguished colleague, Mr. 
Rangel.
    Mr. Rangel. Well, there are not many things, unfortunately, 
on which we enjoy this bipartisanship, so we might as well 
enjoy the tranquility around here. But it makes us better 
Americans when we are doing the right thing. It is true, when 
we expand opportunities for others, we expand opportunities for 
ourselves.
    Whether Republicans or Democrats, there was a time where we 
just didn't recognize a billion individuals, and certainly 
Africa just wasn't on the agenda. Now we just can't afford it; 
we have to develop new markets. It is going to make us better 
Americans, and I am just so proud that on my watch is the 
beginning of a better world.
    I want to thank the leadership, because doing these things 
is contagious, because when people are successful, when they 
are working, they just don't have time to sit down and talk 
about war and about other things. And it works internationally, 
it works in inner cities, and I know you have been a strong 
spokesman on how we can improve that and rebuild the 
infrastructure and give jobs to people.
    So this is a very, very important day to me, Mr. Speaker, 
and I would hope we can get to the budget and enjoy this same 
type of bipartisanship.
    Thank you.
    Chairman Crane. I hope so too, Charlie.
    Mr. Houghton.
    Mr. Houghton. Mr. Speaker, I would like to ask you: As an 
educator, we can set up investment funds, we can ask for a quid 
pro quo in terms of economic policy, but the people who receive 
the money, whether it is a microcredit or macrocredit, have got 
to be there to make a free enterprise system work. And I wonder 
whether you feel we are doing enough to help the education of 
those people that will be the fulcrum for economic opportunity 
in that area.
    Mr. Gingrich. Thank you for the question.
    I would say first of all, not only aren't we doing enough, 
but quite often we don't have a clear sense of what we are 
trying to do. Economic development is overwhelmingly a function 
of human enterprise, not a function of natural resources or 
other things. Hong Kong and Singapore are probably the best 
examples, but, frankly, so is the island of Manhattan. 
Manhattan is not great because it has great resources. It is 
great because its people have brought drive, creativity, and 
energy.
    One of the great challenges we face is to recognize that 
there are clearly rules that work and rules that don't work. 
The private property rule of law, honest civil service, a low 
tax system with a bias in favor of savings and investment work. 
They work in the objective sense that people get richer, and 
get richer with remarkable speed, as China has proven recently. 
With a 10 percent annual growth rate, even on a fairly small 
base. That means you are doubling your economy every 7 years. 
It is a study worth taking seriously. Ghana and South Korea had 
the same gross national product per capita in 1960.
    Now, if you were to go today and look at those countries, 
that is almost unbelievable. We saw a similar pattern, frankly, 
in the Western Hemisphere with Argentina, which was virtually 
equal with the United States in 1910, then went through a long 
period of deindustrialization and government overcontrol, and 
is now, thanks to President Menem, back on the road to becoming 
very wealthy again.
    So you have to start with the idea that policies matter. 
You can have all the courses you want, but if a farmer or 
shopkeeper learns that they will lose most of the fruits of 
their labors to government or corruption or local thugs, they 
don't do as much.
    So I think we have to start with the notion that we must 
establish the right principles, get the local government to 
agree they will instill that in the system, and then reach out 
to educate people. But I think the education in most cases is 
closer to a Small Business Administration than it is to the 
World Bank or Agency for International Development. If we could 
encourage enough growth of small businesses, we would be 
astonished 20 years from now by how many wealthy people there 
were in Africa.
    Chairman Crane. Mr. McDermott.
    Mr. McDermott. Thank you, Mr. Chairman.
    Mr. Speaker, I am probably the only one on this dais or 
even in the Congress who has read your Ph.D. thesis on Zaire, 
or, as it was in those days, the Belgian Congo, and I know you 
understand those countries.
    And I appreciate what you said about the balance between 
trade and aid, that it is necessary to support the development 
of countries as well as opening the doors for trade. I think 
that is a very important point to make in this hearing, and I 
greatly appreciate your coming and saying that.
    I know you have not, as all Speakers traditionally don't 
sign on bills, but I hope you will use your office any way you 
can to move our bill, because I think it truly is a historic 
day when the Congress recognizes that what we did with APEC in 
Asia we can do in Africa.
    I was in Ghana in 1961, spent the summer there, so I know 
what the optimism of Ghana was in that year, and I have 
followed it over the years, and it is clearly possible for them 
to do what Korea has done. So with your help, I hope we can get 
it done, and I appreciate your coming today.
    Mr. Gingrich. Let me say, given the great empires that have 
flourished and the great centers of art and creativity and 
wealth that have flourished in Sub-Saharan Africa, there is no 
inherent or historic reason you could not have an explosion of 
human creativity in the next 30 years. I think aid has to be 
tied to the right policies however, and that is the part I 
would focus on, getting the policies right, reinforcing with 
aid, and then tying trade in such a way that the countries have 
the optimum opportunity to increase the development of wealth 
as rapidly as possible.
    Chairman Crane. Mr. Ramstad.
    Mr. Ramstad. Thank you Mr. Chairman, Mr. Speaker.
    Mr. Speaker, first of all, I want to thank you for your 
leadership in developing a new trade approach with Africa with 
our Subcommittee and with the Congress. Also, I appreciate your 
emphasis on the human cost of not promoting economic 
development in developing nations, and I know how deeply 
committed you are to this.
    We had a long visit on the way to the flood-ravaged Red 
River Valley on Friday. The Speaker's commitment is very, very 
deep and very heartfelt, and I certainly appreciate that 
commitment.
    I think this is a new day for many of us, and hopefully our 
friends who would have us erect a fence around the United 
States and who would not have us pass fast track legislation 
will join us in this renewed effort.
    So thank you, Mr. Speaker, for being here today.
    Chairman Crane. Mr. Jefferson.
    Mr. Jefferson. Thank you, Mr. Chairman.
    I want to join our Chairman, Mr. Rangel, Mr. McDermott, and 
others who have spoken and will speak today in thanking you for 
taking the role you are taking on this legislation today.
    I can and I do want to very much bear witness to your 
statement that on the plane from Shanghai to someplace--we went 
so many places I don't know at this time--we spent a great deal 
of time talking about this issue. And your sincerity came 
through those discussions and your commitment in private and 
now I am so glad to see in public so well expressed today.
    We talked about capital development and the rules of law 
and the rules that change economic marketplaces, but we talked 
a great deal because Shanghai was so impressive with its 
infrastructure display.
    This bill contains infrastructure funds, as you know, and 
it lays the foundation for a great deal of economic development 
in the private sector, we hope. And I wish you could relay a 
little bit to the Committee your impressions of how significant 
the infrastructure was in Shanghai to its economic development 
and laying the groundwork for privatization and private sector 
exposure and how we might see the same thing in Africa.
    But I do want to again say how much I appreciate your being 
here, and how much I enjoyed the conversation, and how useful 
it was to us in our planning for this meeting, and how it 
expresses your deep commitment on this issue. I thank you for 
that.
    Mr. Gingrich. Let me go back to the comment about trade. If 
the country is willing to adopt the right policies and willing 
to trade in the kind of way this bill envisions, there are 
going to be places where the right infrastructure, and 
transportation--again, I came off the Infrastructure and 
Transportation Committee as to my own background. It is no 
accident that George Washington talked about the Corps of 
Engineers and the Potomac River. It is no accident that the 
Founding Fathers talked about establishing the post office and 
other things.
    And Congressman Crane, who is a scholar in his own right 
and wrote textbooks, did tell you even in the very beginning of 
our country there was a sense of the importance of building the 
first turnpike, building a sense of the importance of 
infrastructure. The people wanted a limited effective 
government but one which, in port development and in other 
activities, strengthened the chance to create wealth for all 
Americans. And I think that tradition is one we want to 
continue.
    And we want to say there are places in Africa that, with 
the right policies and the right development structures, you 
can have a great increase in wealth. But the two have to go 
hand in hand. Investing in the structure without the right 
policies simply creates a dam or a railroad or a bridge that is 
decaying because the systems aren't there to sustain it.
    Chairman Crane. Ms. Dunn.
    Ms. Dunn. Thank you, Mr. Chairman.
    Mr. Speaker, we are really glad you are here today, and we 
appreciate your comments. Particularly I appreciate your 
comments on fast track. I agree with you that it is very 
important for us to come together in a bipartisan way as 
quickly as possible, and I think you recognize that many of us 
on this panel are fast track supporters.
    Ambassador Barshefsky is here today and will talk to us 
later and is making every effort for us to conclude some sort 
of agreements, and we appreciate your support.
    I wanted to ask you one question which, I guess, has to do 
with public relations. Thinking about our attitude toward Sub-
Saharan Africa, if you were putting together a public relations 
plan to change people's impression of that region, to make 
businesses, the business community, more aware of the 
investment possibilities down there, the potentials that exist 
which many corporations in my State of Washington--
Weyerhaeuser, for one--have already recognized, how would you 
put this public relations plan together to change opinions and 
create a positive attitude toward becoming involved in trade 
with Sub-Saharan Africa?
    Mr. Gingrich. That is a good question.
    I would, frankly, do most of it through the businesses that 
are already engaged in Africa. This Committee can certainly 
serve a very powerful purpose in bringing them together. But my 
guess is, you would find several hundred American corporations 
now have ongoing experience working in Africa. They can tell 
you far better than the State Department which countries have 
good rules, which countries have bad rules, which countries are 
in transition, and if they were to come together in a 
conference on job creation and wealth creation in Sub-Saharan 
Africa, they would both give you modifications for this bill 
that would make it a stronger and better bill, a more effective 
bill, and the energy of their meeting would then be 
communicated to other parts of the business community.
    The business community legitimately asks, where can we make 
a profit next? Where can we create an American job doing 
something that works?
    And I think having businesses helping to educate other 
businesses is dramatically more powerful than having the 
Agriculture Department or the State Department or the Commerce 
Department trying to explain to a company that they can make a 
profit.
    So something this Committee may after these hearings 
consider is calling together a major conference of all the 
firms doing business in Africa, and I think you would find it a 
fascinating conference and one which I suspect some outside 
groups would be very interested in helping organize and put 
together and which, frankly, the Clinton administration may 
want to help put together.
    Ms. Dunn. Thank you, Mr. Chairman.
    Chairman Crane. Mr. Nussle.
    Mr. Nussle. No questions.
    Chairman Crane. We want to thank you profoundly, Mr. 
Speaker, for appearing today and speaking on behalf of this 
legislation, and we look forward to working with you on our 
side in the Congress and look forward to getting cooperation on 
the other side, too. And with that, we will excuse you now.
    Mr. Gingrich. Thank you.
    Chairman Crane. I invite our next witness, Hon. Charlene 
Barshefsky, our U.S. Trade Representative.
    I would personally like to thank you and your staff, 
Charlene, in working with the Subcommittee staff in putting 
together this bill. I believe this bill will provide a much 
needed opportunity to open a market for our businesses and 
encourage economic stability in the Sub-Saharan region.
    With that, Madam Ambassador, we are eagerly awaiting your 
word.

STATEMENT OF HON. CHARLENE BARSHEFSKY, OFFICE OF THE U.S. TRADE 
                         REPRESENTATIVE

    Ms. Barshefsky. Thank you, Mr. Chairman and Members of the 
Committee. It is a great pleasure to be here today on this, I 
think, very special occasion.
    May I commend you, Mr. Chairman, for holding this hearing 
today, and may I also commend you, Mr. Rangel, Mr. McDermott, 
Mr. Jefferson, and others who have done so much to focus on the 
need to develop a new trade approach to Africa.
    Mr. Chairman, Mr. Rangel, the Clinton administration 
enthusiastically endorses the basic approach of the African 
Growth and Opportunity Act that you have introduced. At the 
same time, as you know, we welcome today the opportunity to 
discuss the administration's program for promoting trade and 
investment with the countries of Africa.
    We look forward to working with you and the Members of the 
Committee to draft and to craft and pass legislation that will 
help build a new trade relationship between the United States 
and African countries. We believe that this is an opportunity 
for us jointly to address the issue of our economic and trade 
relations with Africa.
    Over the last year and a half, both the administration, the 
U.S. International Trade Commission, and the Congress have 
looked carefully at this question. Two recent reports prepared 
by the administration have provided a foundation for our future 
work in this area. The President, as you know, is very 
interested and committed on this subject and has directed us to 
determine what specific steps we can take to establish more 
substantial trade relations with Africa.
    As you know, of course, Mrs. Clinton has also visited 
Africa recently and has noted that trade and investment are the 
wave of the future if we want to assure Africa's liberation 
into the global economy.
    We recognize the achievements of many countries in Sub-
Saharan Africa in pursuing economic and political reform, and 
we wish to offer special support to those countries committed 
to pursuing accelerated reform. We view the approach set forth 
in the Committee's bill and our approach as quite 
complementary.
    Today I would like to review with you the Clinton 
administration's economic approach to Africa, what we have 
called the partnership for promoting economic growth and 
opportunity in Africa.
    The partnership begins with the simple but powerful idea 
that American interests are best served if we view African 
countries as partners in trade and not merely recipients of 
aid. We begin with the idea that building a strong trade 
partnership with Africa's rapidly growing and reforming 
economies is a key to growth and opportunity in the rest of the 
continent. Our plan highlights Africa's success stories.
    In the last few years, more than 30 countries have 
instituted economic reform programs: For example, liberalizing 
exchange rates and prices, privatizing state-owned enterprises, 
instituting tighter disciplines over government expenditures, 
ending subsidies and reducing barriers to trade and investment, 
and of course many countries have also undertaken political 
reform. These efforts have helped boost economic growth in 
Africa from 1.4 percent in the 1991-94 period to 3.4 in 1995 
and 5.6 percent in 1996.
    Of course, the United States needs to encourage these 
reforms and the growth that goes along with them. The benefits 
for the United States are clear. In an increasingly competitive 
global economy, we cannot afford to neglect a largely untapped 
market of some 600-plus million people, and the world cannot 
afford to see a vast region marginalized.
    Lowering barriers will help African nations grow. They will 
also help Americans by opening these markets to our goods and 
services. Increased growth contributes to social and political 
stability on the continent and to enhance the capacity to 
address the problems with which we are all too familiar.
    We recognize that Sub-Saharan nations have much work to do. 
In the last 40 years, Africa's share of global trade has fallen 
from 3.1 percent to 1.2 percent. A recent World Bank study has 
concluded that part of Africa's marginalization in world trade 
can be attributed to Africa's trade barriers that are far more 
restrictive than those in high-growth developing countries and 
which incorporate a substantial antiexport bias.
    For example, import tariffs in Sub-Saharan Africa average 
almost 27 percent, whereas in the fastest-growing developing 
countries import tariffs average 8.7 percent. African countries 
also impose nontariff barriers on over one-third of their 
imports, a ratio nine times higher than the corresponding 
average for fast-growing exports. Such trade protectionism 
erodes the competitive position of African exports and costs 
the region an average of $11 billion a year in annual trade 
losses, about the same as total aid to Africa in 1991.
    The core premise of the administration's approach is that 
those nations willing and able to pursue the most aggressive 
policies, principally by opening their economies to the world 
marketplace, are most likely to be engines of growth on the 
continent and require support.
    Let me briefly turn to the specific elements of the 
administration's program. We recognize that not all African 
countries are ready or able to take steps necessary to spur 
high levels of growth. Therefore, we propose to make available 
and to work with relevant international institutions to make 
available the following opportunities to Sub-Saharan countries 
according to their desired level of participation in market-
opening initiatives.
    Under the overall partnership, countries can participate at 
one of three different levels. The first level of participation 
is designed to support efforts to achieved sustainable economic 
growth throughout Sub-Saharan Africa.
    The administration intends to make the following 
opportunities and assistance available: First, enhanced market 
access for African nations through continuation of the GSP 
Program and an additional number of GSP products for least 
developed countries. We strongly hope that Congress will 
reauthorize the GSP on a multiyear basis. Second, we will offer 
investment support through OPIC guaranteed funds directed at 
equity investment and infrastructure progress. Third, AID 
support for regional economic integration. Fourth, support for 
African-American business relations through USAID. Fifth, 
encouraging the use of ExIm programs through a senior advisor 
to Africa. And sixth, to ensure trade issues with Africa 
receive proper attention, I have decided to create an Assistant 
U.S. Trade Representative for Africa.
    Deputy Secretary Summers will discuss later the 
administration's plan with respect to the IMF, the World Bank, 
and other international financial institutions on steps they 
will be taking to support our program.
    The second level of partnership participation is intended 
to support those countries which pursue a more aggressive 
growth-oriented strategy, by, for example, joining the WTO, 
binding commitments in the WTO, and taking other market opening 
initiatives.
    There are additional opportunities that will be made 
available to these second-level participation countries. First, 
we will provide additional market access through an expansion 
of the GSP Program.
    We are very pleased that the African Growth and Opportunity 
Act would provide authority for the President, after receiving 
advice from the International Trade Commission, to include in 
the GSP Program a number of products presently excluded. This 
is one major area of our proposed program for which we need 
legislative authorization. While we question the 
appropriateness of making eligible for GSP certain of the 
products mentioned in the bill, we wholeheartedly welcome the 
approach and want to work with the Committee on it.
    Second, with respect to textiles and apparel, the 
administration recognizes the critical importance that this 
sector has with respect to developing countries, and we look 
forward here again to working with the Committee on an 
initiative in this regard. We support a program that will be 
consistent with our overall commitments with the WTO while 
taking into account the interests of U.S. industry and Africa.
    Third, debt reduction. The administration will support an 
approach that leads to the extinction of concessional bilateral 
debt for the poor, heavily indebted countries, and we would 
urge the World Bank and IMF boards to provide deep relief under 
the HIPC debt initiative.
    Fourth, we intend to create a U.S. Africa Economic Forum, 
which is a Cabinet-level forum designed to meet once a year to 
raise the level and caliber of the dialog between the United 
States and Africa's strongest reformers.
    Next, we intend to provide bilateral technical assistance 
to promote support agriculture market liberalization, engage in 
trade promotion, and provide further commodity assistance.
    Finally, Mr. Chairman, there is a third level of 
participation recognized in the administration's program, and 
that is the creation of trade agreements. We share your view 
that negotiations on removal of trade barriers and eventually 
trade can be a catalyst for growth. We think it is important 
that we send a signal to the private sector that Africa has the 
potential to become a more significant U.S. trading partner.
    Therefore, we believe we should affirm that we are open to 
pursue free trade association with our partners in Africa, just 
as we have confirmed this with our partners in the Western 
Hemisphere and Asia.
    The proposal in the Growth and Opportunity Act that we 
report on plans for such arrangement would provide such an 
opportunity. Of course, as you know, fast track authority would 
be necessary to conclude any such arrangement.
    We invite all Sub-Saharan countries to open their markets 
by participating in this comprehensive three-tiered program. 
This graduated approach takes into account their diversity, 
commitment, and potential.
    As you noted earlier, Mr. Chairman and Mr. Rangel, we 
believe the legislation before your Committee and the program 
that I have just outlined are quite complementary. We look 
forward to working on legislation and a program that maximizes 
our trade relations with Africa and that can lead to broad 
economic reform and accelerated growth.
    We look forward to working with you and the Members of the 
Committee, and please accept my thanks for this opportunity to 
appear before you today.
    [The prepared statement follows:]
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    Chairman Crane. Thank you always, Madam Ambassador, and we 
share your concerns about fast track, because that is an 
essential component of the advancement of our legislation under 
consideration today.
    Let me ask you one quick question. At the present time, the 
U.S. market share in Sub-Saharan Africa is about 7 percent, and 
the European Union has about 40 percent. Can you explain that 
very significant disparity between our performance and the EU's 
performance, and what might be done on our part to equalize our 
economic relationships?
    Ms. Barshefsky. Certainly a large part of the disparity is 
historic and relates to Europe's traditional role in Africa. 
Part of the disparity has to do with a lack of attention by the 
United States on increased African trade. Part of the disparity 
has to do with differences in inward investment as between U.S. 
companies and European companies in Africa. Part has to do with 
longer standing preference programs that the European Union has 
had with respect to Africa than we. I think there are a number 
of factors that account for the disparity.
    What is critical, though, is that the United States should 
no longer cede economic opportunity to the European Union based 
upon historic predilection of Europe and African nations. We 
instead should move forward the way we have outlined and the 
way the bill outlines to capitalize on this emerging region.
    Chairman Crane. That is encouraging, and I hope this is our 
first step to a giant leap forward.
    Mr. Rangel.
    Mr. Rangel. Thank you, Mr. Chairman, and we are so 
fortunate to have someone of your capacity in leading us in 
this international competitive trade era that we find ourselves 
today.
    There has been a lot of talk about fast track, and, again, 
it is a very bipartisan issue. As soon as the President can 
share with us what fast track means to him, some of us will be 
in a better position to know what it means for us.
    When we were together in Singapore, I remember being in the 
Office of the President of Singapore. There was a banner from a 
local trade union thanking the President for making sure free 
trade wasn't just for the country, wasn't just for the 
companies, but was for the people, improving their quality of 
life. And I know our President would want nothing less as we 
enter into new trade agreements--to make certain that it is the 
people of these countries who are the beneficiaries and that 
the agreements don't adversely affect people of this country. 
Knowing that is his view and your view, I join with the 
Chairman in hoping we can get something before us.
    Let me thank you for publicly announcing your decision to 
reorganize USTR to reflect the importance of Africa. I want to 
share something that our Speaker has said, because he mentioned 
how emotional this question can be for so many Americans, 
finding their heritage in Africa. I think this means a lot to 
Africans, and I know it means a lot to African-Americans.
    We have been separated by distortions of history, we have 
been forced to be skeptical of each other, because we have 
never been able to participate in the writing of history. By 
the same token, this gives us the positive opportunity to show 
growth and enjoy it vicariously like so many Members of 
Congress are able to do with countries that they have these 
special relationships with.
    I am confident that kids all over the United States of 
color will now look at Africa as a place where they can invest, 
where we can become partners, where they can say maybe at some 
time they found a place to send a care package to. This has 
been denied to so many Americans.
    And so in addition to improving the quality of life and 
expanding trade, I think it is making a large segment of 
Americans of color so proud of our country as we provide the 
leadership that is so sorely needed to bring people together 
and improve the quality of life.
    So I look forward to seeing how I can help in support of 
your decision to have an assistant trade representative that 
deals with Africa. We are fortunate that our African 
Ambassadors of the Southern African Development Community are 
so organized and willing to work with us, so we are not talking 
about an American solution. We also have the South African 
Business Council. So they are organized, they are ready to 
work.
    The President of the United States has gone out of his way 
to share with Members of Congress the depth of his commitment, 
and it is my understanding that Africa is going to be at the G-
7 one of the top priorities.
    Mr. Rangel. And so we know we have a long, long way to go. 
But I think Ron Brown would be happy to know that we didn't 
drop the ball.
    Thank you.
    Chairman Crane. Mr. Ramstad.
    Mr. Ramstad. Thank you, Mr. Chairman.
    Madam Ambassador, I do agree that you are doing an 
outstanding job, and I appreciate the pleasure of working 
closely with you on these important trade issues. I also, 
coming from Minnesota, appreciate your commitment to trade in 
agriculture. I know, having talked to a number of experts on 
Africa, many of them believe that agricultural trade and 
development are really key to sustainable economic development 
in the region.
    I would like to ask you, Madam Ambassador, specifically 
what barriers are the main problems for agricultural exports to 
Africa, and what actions are you contemplating to open Sub-
Saharan markets to our agricultural commodities as well as 
value-added products?
    Ms. Barshefsky. Without being facetious in any way, the 
main barrier to our agricultural exports, as to many of our 
exports, is extreme poverty. Certainly, there are countries 
that have imposed arbitrary barriers on agricultural products; 
for example, South Africa with respect to poultry and the 
introduction of rather surprising high tariffs. But in the 
main, it is poverty that constitutes the most significant 
barrier to U.S. exports to Africa.
    Our total exports to Africa last year were about $6 billion 
in total. This is change, as we would think of it in trade 
terms. It is terribly, terribly important in the bill before 
this Committee that the administration's additional program 
reverse the economic marginalization of Africa.
    An economically marginalized Africa leads to instability. 
It simply enshrines poverty as an immutable condition. It 
generates conflict. It is absolutely in our interests, not just 
our export interests of course but in our much broader national 
interests, to see these economies grow and flourish, to see 
rule of law, and to see democracy continue to take hold.
    And with respect to agriculture, of course, Africa is a 
continent of 600-plus million people. We see extraordinary 
opportunity there, but there is little opportunity when poverty 
is the overriding characteristic of a region.
    Mr. Ramstad. Thank you.
    I yield back, Mr. Chairman.
    Chairman Crane. Mr. McDermott.
    Mr. McDermott. Thank you, Mr. Chairman.
    I appreciate your coming and throwing the executive support 
behind our bill. It is a pleasure, and I think that with 
negotiations, I am sure we could work out something that will 
pass, hopefully, both in the House and in the Senate. So we are 
greatly appreciative of your work, and I would echo the words 
of Mr. Rangel in that it is pleasing to see that you decided to 
appoint somebody in your office to be responsible for Africa.
    It seemed to me, when I looked at this issue a long time 
ago, that it was hard to understand why we didn't have one 
person who had the responsibility. In fact, one of our more 
difficult issues, was finding somebody in the executive branch 
to actually talk to. So it is very nice to finally have 
somebody to talk to directly.
    Thank you very much.
    Chairman Crane. Ms. Dunn.
    Ms. Dunn. Thank you. Thank you, Mr. Chairman.
    Ambassador, it is good to see you again. You certainly have 
a lot of respect from the Members of this Committee. Your 
intentions are excellent, and we appreciate your patience in 
taking this difficult job.
    I just want to say a thing about patience. I have been on 
this Committee a very short time, and yet I have watched how 
slowly these initiatives move. We have talked about trade 
agreements in our hemisphere. We have talked about fast track 
since I have been on this Committee for the last 2 years. And 
it seems like every time we get to the verge of really moving 
ahead with something, something stops the momentum.
    And I would just ask you to spend a minute or two talking 
about why you believe this initiative has a chance of moving 
forward, and are we going to have to wait years and years, as 
we have been waiting, for a country like Chile, who is well 
qualified to be in NAFTA, not to be able to come in over and 
over again? Give me some hope.
    Ms. Barshefsky. The hallmark of an effective trade policy 
for the United States has always been its bipartisan character. 
Other countries take us seriously when we present a united 
front. I think that Mr. Crane, Mr. Rangel, saw this in spades 
in Singapore.
    When you have representatives from both sides of the Ways 
and Means Committee looking over the shoulders of these 
countries, looking over the shoulders of the administration--
which you need to do, as you all know, and which I welcome--
countries pay attention; they take notice of that combined and 
unified effort.
    With respect to fast track, with respect to the Africa 
Initiative, with respect to other initiatives that may come 
before Congress, these initiatives also must be the product of 
bipartisan cooperation. This is how we strengthen our hand 
economically. This is how we best signal our genuine intentions 
to our trading partners.
    With respect to fast track, the goal has always been to 
build a strong bipartisan consensus for fast track. To be sure, 
there will never be unanimity, but a strong bipartisan 
consensus is the appropriate goal here and one that would allow 
the country to move forward in the way in which we must, which 
is to capitalize on our current competitiveness, which is to 
recognize that our market is already open.
    The leveling of the playingfield, by definition, means to 
remove access barriers in other countries, and that means 
having all of the tools at our disposal to do that. Fast track 
is one such tool, a very important tool.
    With respect to this African Initiative, it will be equally 
important to show strong bipartisan support, because we are 
embarking on a new regime with respect to Africa. We are paying 
attention, as a country, to this continent as we have never 
paid before, and this attention must be demonstrated by strong 
bipartisan leadership and a strong bipartisan outcome in the 
Congress for this legislation. And this administration is 
committed to helping create that bipartisan consensus on all of 
these issues and is committed to moving forward as quickly as 
we can.
    Ms. Dunn. Thank you.
    Chairman Crane. Mr. Houghton.
    Mr. Houghton. Thank you, Mr. Chairman.
    Thank you, Ambassador, for being here.
    There are three tiers of the program that you have. There 
are seven issues on one, there are eight issues on another, and 
the third is a creation of free trade. Point out for us the two 
or three big things that we should be focusing on and working 
on together, would you?
    Ms. Barshefsky. Sure. I think on the trade side, we need to 
focus on the GSP-type initiatives, including the expansion of 
the program along the lines, for example, that we have done 
with the Caribbean Basin Initiative. But then we should try and 
go beyond what we have done in the CBI or with the Andean Pact. 
So this is one broad area.
    In that regard, it is very important that Congress 
reauthorize the GSP Program on a multiyear basis. We have had 
four expirations of the program in the last 4 or 5 years, and 
that does not give foreign companies the kind of assuredness, 
it doesn't give our importers the kind of assuredness, they 
need to create the relationships with foreign companies to 
bring those products into the United States.
    Let me also add with respect to GSP reauthorization that we 
would like to see a reauthorization that goes beyond a 
reauthorization just for the least-developed countries in the 
world. There are also developing countries that continue to 
utilize the program whose benefits for the United States remain 
quite clear.
    The second area that I think we need to pay attention to is 
the area of textiles and apparel, where I have said we need to 
work out a solution that balances our obligations in the WTO 
with the needs of both U.S. industry and the African nations. 
We have some ideas on how to create an extremely attractive 
program that would balance all of those needs. I know that the 
bill puts forward one idea. We have some other ideas. But the 
key here is working together. I think in working together, I 
feel confident we can devise a program that will be beneficial 
to all concerned.
    And I think the third major area that we need to focus on--
and I would defer on this to Deputy Treasury Secretary 
Summers--is the way in which we use our own financial 
resources, whether through ExIm or OPIC, and the way in which 
we use the resources or encourage the use of resources of the 
multilateral lending institutions, whether it is the fund, the 
Bank, the African Development Bank. And this area, this third 
tier, is an area that Secretary Summers will spend some time 
focusing on.
    So I would say those are the three main areas.
    Chairman Crane. Mr. Jefferson.
    Mr. Jefferson. Thank you, Mr. Chairman.
    Ambassador Barshefsky, we have talked I don't know how many 
times about this issue, and I thank you for your patience and 
that of Mr. Lang as well.
    I wanted to ask a question in two areas, unrelated really, 
and so I will just ask both of them and hope that it doesn't 
confound the situation too much.
    We have talked about Africa as not just being obviously one 
country but a continent with many countries and many different 
diverse legal regimes and capacities. And the one thing that we 
have discussed at some length is the issue of how regionalism 
might improve the opportunity for trading effectiveness between 
Africa and the United States.
    We have noted the efforts already underway in some places 
in Africa, in the EAC and East Africa and South Africa, and 
ECOWAS in West Africa, efforts to regionalize approaches to 
economic issues.
    And so, the first question is: Has the administration a 
plan or policy or a direction toward implementing regional 
trading agreements to help overcome some of the problems that 
you talked with in response to Mr. Ramstad's question earlier 
about the issue of poverty, about the diversity between the 
countries and their ability to deal with free trade issues on 
their own bilaterally, how the regional issues might affect it, 
and whether you have dealt with it.
    The second is in the area of textiles. I would like you to 
talk about what you see as the risk to U.S. textile 
manufacturers from the provisions in the bill, how substantial 
they are, or if they are insubstantial.
    And the transshipment question. How would you deal with 
that in the context of the bill to allay some of the fears of 
those who raise these issues with us quite recently?
    Ms. Barshefsky. Let me say first with respect to 
regionalism, you are quite right in pointing out a number of 
subregional arrangements throughout Africa. And, of course, 
there is also the Cross-Border Initiative which attempts within 
Africa to coordinate among these subregional arrangements. Some 
of these arrangements are tariff arrangements; some of these 
arrangements can work toward a customs union concept. Then you 
have this Cross-Border Initiative which attempts to lend a 
coordinating hand.
    Certainly, the United States applauds these kinds of 
regional efforts to the extent they lead to market reform, to 
the extent they enhance economies of scale. When you have 30 
countries in Sub-Saharan Africa with a population of 10 million 
people or less, these are very, very small countries. And to 
the extent we can enhance economies of scale, to the extent we 
can enhance infrastructure development on a regional basis, to 
the extent we can support good trade and economic policies, 
regionalization is extremely helpful and beneficial.
    In terms of the administration's program, there are a 
couple of things we have looked at. One is to provide 
assistance, particularly through AID, to promote regional 
efforts, including continuation of regional efforts on 
infrastructure, for example, as well as regional efforts among 
businesses within the African countries as well as among 
African nations and U.S. business. And there are a number of 
programs surrounding this notion of regionalization.
    Second, one of the things that falls within the category 
Mr. Houghton and I were talking about on GSP, we should look at 
this question of cumulation for GSP. Many small countries often 
don't qualify for GSP benefits because there is not enough of 
their own domestic content in the product to qualify.
    Well, if you could cumulate domestic content among a region 
or subregional group, you would have many more nations able 
then to take advantage of the GSP Program. So this is another 
area that we ought to be looking at to promote these kinds of 
regional alliances and these kinds of alliances that help to 
promote economies of scale. These are two examples. I think 
there are some other points that Larry Summers will make as we 
look at the international financial institutions.
    On the textile side, of course, imports from Africa of 
textile and apparel are a small percentage of total U.S. 
imports overall. But if we look at particular product 
categories as we do in the WTO under the textiles regime, we 
see that the United States has lost substantial ground in 
certain textile categories and apparel categories relative to 
the range of other countries, including, for example, Kenya in 
the area of shirts, for example.
    So we look at these issues on textiles, as we are supposed 
to do in the WTO Agreements, product by product, and we attempt 
to assess import sensitivity on that basis. In the main, I 
think it is fair to say that we feel confident that we can work 
out some appropriate program on the textile and apparel side.
    With respect to transshipments, this is a very important 
issue. It is one, where, we ran into problems with Kenya with 
transshipments from Pakistan, and this caused us some concern. 
We do have mechanisms in place with other countries to try and 
cut down on illegal transshipments or fraudulent shipments. 
There are various systems one can put into place. This is 
something also we will have to look at in the case of a more 
liberalized program for Africa.
    Chairman Crane. Mr. Nussle.
    Mr. Nussle. Thank you, Mr. Chairman.
    Thank you, Ambassador. And I want to highlight that in your 
reorganization of the office, as Mr. Ramstad said, you put not 
only an increased awareness and heightened area to Africa but 
you also did that in agriculture, and I want to thank you for 
that, just as a side note.
    You mentioned in your testimony that in the last few years 
more than 30 countries have instituted economic reform 
programs. You mentioned that the success of this can be 
certainly outlined in the percentage of growth from 1.4 percent 
in the 1991 and 1994 period; 3.4 percent from 1995 to 1996--
excuse me--in 1995, and 5.6 in 1996. So this certainly is a 
trend in a positive direction.
    The question I have is, there is some concern that has been 
voiced that the commitment to continued economic reforms is not 
as firm as maybe it needs to be, it should be, it could be. 
What is your opinion about that?
    Obviously, to ensure success, it would be--I think we would 
share the belief that those reforms need to continue. As Mr. 
Houghton mentioned, one of the two or three things that we need 
to do--what are the two or three things that you would suggest 
need to continue in Sub-Saharan Africa in order for us to use 
as maybe a barometer to know that success continues, 
particularly in the area of economic reform?
    Ms. Barshefsky. When we look at the growth rates of the 
African countries, we see very wide disparity. In the last 
year, you see 5- or 6-percent growth rates for countries like 
Senegal and Ghana and Cote d'Ivoire, Ethiopia. The unusual case 
is Uganda where you see a 10-percent growth rate. That is very 
unusual. But for many countries, growth rates fall 
substantially below these levels, so we see a very spotty range 
throughout the continent, but certainly a number of success 
stories that lend positive support to the need for economic 
reform.
    We have outlined in our testimony on the trade side the 
kinds of continuing reforms we would like to see these 
countries undertake. You have 10 or 12 countries on the 
continent who are not in the WTO at all. They should be. They 
should begin to make the commitments to allow for accession 
into the WTO.
    We see countries in the main in Africa in the WTO whose 
commitments in the Uruguay round for market reform were 
minimal, at best. So we see, as I pointed out, very high tariff 
levels; we see extraordinarily high nontariff barriers, nine 
times those of high-growth developing countries. We need to see 
the tariffs come down, and we need to see the nontariff 
barriers come down, and that can be done in a very staged and 
orderly manner.
    Nothing happens overnight, we understand that, but in order 
to continue to promote growth, particularly through trade, 
these barriers need to come down. High barriers of this sort 
are a disincentive to the ultimate export of products from 
these countries, and this is quite well documented.
    Overall, and I think Larry Summers will talk a little bit 
about commitment to additional fiscal reform, commitment to 
other kinds of economic steps related to education, to health, 
and a continued commitment to good governance as opposed to 
bloated governance.
    Chairman Crane. Mr. Collins.
    Mr. Collins. Thank you, Mr. Chairman.
    Welcome, Ms. Barshefsky. And I just wanted to reiterate, it 
was a pleasure to have visited the WTO in Singapore last 
December in your company.
    I want to refer to what the Speaker said in reference to 
aid tied to economic performance. After the trip to Asia in 
December, I had the privilege of going to the Middle East with 
Mr. Callahan on the Appropriations Subcommittee on Foreign Aid, 
where once again we heard Mr. Netanyahu speak of economic 
development there and hope that the aid from the United States 
could be lowered, not completely eliminated, based on economic 
growth; and he reiterated that.
    We went from there to Jordan, where Jordan has just gone 
through an economic reform, a tax reform where they changed 
their tax laws to encourage investment in their nation. From 
there to Cairo, Egypt, where we met with many members of the 
Egyptian Government and we met with the American Chamber of 
Commerce people there, who encouraged us to speak to President 
Mubarak about tax reform there so that it would further 
encourage investment by U.S. corporations in Egypt and Cairo. 
It is always a great pleasure for me to ride down the street of 
any nation and see the corporate signs that I know are American 
signs.
    Then too in China, in December I was in Beijing, and we 
were in discussions about textiles primarily. The Chinese 
Ambassador on Trade emphasized to us that they were going to 
change some of the tariffs there and they were going to 
increase the quotas because, due to economic development in 
China, there were people who did have the wherewithal to buy 
more U.S.-made product. Additionally, because of the good work 
of you and Rita Hayes later on after our trip in February, you 
were able to strike an agreement with them that will increase 
our presence there.
    As I look at the import-export sheet from the Sub-Saharan 
area of Africa, I see that we have a trade deficit there. I 
know that in your statement you say that there has been an 
increase in economic growth there, and that is very 
encouraging. But I want to turn to the United States and the 
need for, you know--let's look at our own backyard.
    Oftentimes actions speak louder than words, and I think we 
need to look at economic reform here. We have a strong economy. 
I say strong; it is moderate. But I think that we need to look 
at our own economic situation where we have excessive taxation, 
we have a very costly set of regulations pertaining to 
manufacturing. And too, we have a high cost of litigation in 
this country. All of these things go into the cost of 
manufacturing, which I think also makes it prohibitive for some 
of these developing nations to even afford our product.
    A lot of that is due to the fact that we have a budget that 
is in deficit spending each day, even though it has come down, 
thank goodness. But we have an accrued debt that is calling for 
almost $1 billion a day in interest payments.
    So I think as we parallel the work of trying to encourage 
development and trade in other parts of the world, and 
particularly in Africa, we need to look at our own situation 
here as far as our reforms. So I would encourage you to 
encourage the President, as we put together the policy or the 
bill that would encourage trade with Africa, that we encourage 
and make changes here.
    I want to read the statement of the following section 3 of 
this bill that says,

    Congress supports economic self-reliance for Sub-Saharan 
African countries, particularly those committed to economic and 
political reform, market incentives and private sector growth, 
the eradication of poverty, and the importance of women to 
economic growth and development.

    I think you could say that about many cities and rural 
areas of the United States. So I would encourage you to help 
work toward creating our own economic package as we also 
encourage economic growth in other countries so that we would 
be able to export products that would be more reasonable for 
those people to be able to purchase.
    Thank you, Mr. Chairman.
    Chairman Crane. Mr. Levin.
    Mr. Levin. Thank you, Mr. Chairman. And as a Member of the 
Full Committee, I appreciate the chance to participate in this 
important hearing.
    Welcome.
    As vital as fast track is, I will resist the temptation to 
ask you about it. I just want to say I think a key to 
developing any consensus is for us, with the administration, to 
face the basic underlying issues, and I hope the Subcommittee 
and the Full Committee will do so.
    Let me just say a word because the interrelationship 
between aid and trade has come up here, both with the Speaker 
and now with you. And I think back to my days for just a second 
when I was assistant administrator for the Foreign Aid Agency 
in the late seventies and early eighties, and this was then a 
major issue.
    And I just want to express my hope from the experience of 
those years--and I don't think we resolved the problems very 
well--that you will continue, and the entire administration 
will continue, to look at this interrelationship and the 
interaction and really, as the Speaker suggested, and others 
have, that it is not an either/or proposition, because I think 
as we refer, for example, to East Asian countries, we look at 
the evolution, really the revolution, in infrastructure in 
those countries, often with U.S. assistance. I don't think our 
rich trade relationships would have occurred unless there had 
been in place some infrastructure.
    And I think that is clearly relevant to Africa's further 
development, that we remember the importance of infrastructure, 
of roads, of electricity, of other infrastructure, and also the 
importance of good health.
    So while your focus is on trade, appropriately, I hope, and 
Larry Summers, who is here--Secretary Summers--and others will 
continue to work on these interrelationship issues, because if 
we fail to do that, I am afraid that everybody is going to be 
back at ground zero.
    And I just finish; I remember the endless and, I think, 
often useless discussions we had back 20 years ago about 
whether electricity and roads are important in terms of the 
development of a country. And I think we learned that there has 
to be a well-rounded, comprehensive approach. And I just wanted 
to add my words to those who have spoken earlier to hope the 
administration will continue to approach these in a 
comprehensive way rather than an either/or approach.
    Ms. Barshefsky. If I might say, I think your comments are 
very well taken. The idea behind the administration's proposal, 
and I think the idea behind the Committee's bill, is to use 
assistance, technical and financial, to drive market reforms so 
that we have--we create, through aid, not a system of 
dependency but a system of economic growth and prosperity that, 
over time, becomes self-sustaining. Certainly part of that is 
infrastructure development.
    What is very interesting to me is how our notion of 
infrastructure has changed over the years. I can remember even 
30 years ago notions of infrastructure hinging on things like 
the need to build steelmaking facilities, and now you see 
reports that come out talking about the key element of 
infrastructure as telecommunications.
    We know, for example, in Africa, phone density is the 
lowest in the world. It is something on the order of 4 to 100 
people--less actually than 4 to 100. And as we foster economic 
prosperity, as we provide aid and technical assistance to drive 
market reforms, so too we have to be smart and Africa has to be 
smart about where those reforms are needed most and in what 
order, and infrastructure will be absolutely critical.
    Mr. Levin. Thank you.
    Chairman Crane. Mr. Watkins.
    Mr. Watkins. Thank you, Mr. Chairman.
    I have been listening with great interest, Madam 
Ambassador, to the testimony, and I salute you for your 
leadership and also the Committee for this discussion.
    I think it would behoove us to follow something the Speaker 
suggested in trying to bring in private sector business and 
industry, maybe in this Committee and other activities. I know 
in Oklahoma we have some interest expressed from the standpoint 
of some energy companies. I think it is one of Africa's largest 
imports as they look at developing, also in the agriculture 
segment. I think the type of a suggested conference by the 
Speaker should include agriculture and energy, because our 
natural resource development, their natural resource 
development, is very important. So I think that suggestion is a 
very, very key one.
    I do have, I want you to know, a broader interest than just 
the that are in Europe on beef not being exported to those 
countries, so I know you hear from my office a lot about that 
beef hormone ban, and I hope you will make sure that is on top, 
or maybe someone from your office can contact me later today or 
tomorrow on that subject.
    But I want to follow up with my friend, Mr. Collins here 
and my friend Jack Kemp, and I don't know where my friend 
Charlie Rangel has gone. As I evaluate some of the things that 
are being proposed in working with African countries here, and 
they do have a tremendous infrastructure need and economic 
need. However I want to emphasize that a lot of the rural areas 
of this Nation have not recovered from the Great Depression. 
Some of the rural areas are needing, and I know my friend Jack 
Kemp and I worked on, enterprise zones and tried to get some of 
them set aside.
    I have been kind of reflecting, Mr. Chairman, on how and 
why we could not work with some incentives or companies and 
industries that locate in those enterprise zones. We should 
provide relief to these communities in trying to get products 
into some of these particular countries that need that kind of 
help and assistance.
    I mean, I think it can be a two-way opportunity to develop 
and help solve some of the problems I know Mr. Collins and I 
have on how we solve the economic problems in the low economic 
areas; in fact, infrastructure in areas that still do not have 
running water in this country.
    But I think maybe there are opportunities in Africa, and I 
commend you. As we look at it in this Committee, Mr. Chairman, 
for bringing this attention to African countries, because I 
think there are opportunities in both areas of the world. I 
just wanted to thank you for that and thank the Chairman for 
letting me come down and make a remark, too.
    Ms. Barshefsky. If I might just comment, I know Mr. Collins 
pointed out that we have a trade deficit with Sub-Saharan 
Africa, and that is absolutely right. That is occasioned 
largely based on petroleum imports, particularly crude oil. But 
for that, we would actually be in surplus with Sub-Saharan 
Africa.
    Certainly most of the inward direct investment that goes 
into the region goes into petroleum production. As you know, 
Sub-Saharan Africa attracts relatively little of the world's 
full and direct investment; about 2 or 3 percent. Asia attracts 
about 61 percent. So this shows the magnitude of the 
difference. And most of that investment is concentrated in the 
energy sector.
    So one of the goals, certainly, of the administration's 
program, and I think of the Committee's bill, is to encourage 
companies to diversify that investment portfolio to go beyond 
the hydrocarbon sector.
    Mr. Watkins. Thank you. Thank you, Mr. Chairman.
    Chairman Crane. Well, we want to thank you profoundly, 
Madam Ambassador, for your testimony, and we look forward to 
working closely with you and your staff on this and future 
issues. And with that, you may now be politely excused.
    Chairman Crane. Our next witness will be Hon. Larry 
Summers, Deputy Secretary for International Affairs at the 
Department of the Treasury. And I would like to invite 
Ambassador Jeff Lang, Deputy U.S. Trade Representative, and 
George Moose to join Mr. Summers and be available for any 
questions the Members may have for the three of you.
    Mr. Summers, you may proceed with your testimony, please.
    And will Members in the room please try and hold down their 
conversations. Thank you.

 STATEMENT OF HON. LAWRENCE H. SUMMERS, DEPUTY SECRETARY, U.S. 
  DEPARTMENT OF THE TREASURY; ACCOMPANIED BY HON. JEFFREY M. 
  LANG, DEPUTY U.S. TRADE REPRESENTATIVE; OFFICE OF THE U.S. 
   TRADE REPRESENTATIVE, AND HON. GEORGE E. MOOSE, ASSISTANT 
      SECRETARY, AFRICAN AFFAIRS, U.S. DEPARTMENT OF STATE

    Mr. Summers. Mr. Chairman, thank you very much. I welcome 
the opportunity to appear before this Committee.
    Ambassador Barshefsky laid out our initiative in some 
detail, so while I have submitted a longer statement for the 
record, I will be very brief.
    Let me just say this: I think we have an opportunity here 
to usher in what might be called the post-post-colonial era in 
Africa, an era of strong United States cooperation with Africa 
anchored in strong bipartisan support in our country.
    We have tried with many past initiatives directed at 
supporting Africa, but I believe a consensus has now formed on 
a number of important principles, some of which were expressed 
by Speaker Gingrich in his very eloquent testimony this 
morning.
    First, markets are the most powerful force for tapping 
entrepreneurial energy and stimulating growth that mankind has 
yet found. Development assistance has a role, but it will be 
effective only where the framework is right and people have the 
opportunities afforded by open competitive markets.
    Second, the most important and enduring investment that any 
country can make is in its people. Investments in people have 
to be a central responsibility of government, and effective 
governance is central for economic growth and prosperity.
    Third, government officials must use the instruments of 
government with a sense of public stewardship and 
accountability. As a consensus forms on these ideas in Africa 
and we have an opportunity to support that consensus, I 
believe, with the leadership of Congressman Crane, Congressman 
Rangel, Congressman McDermott, there is a real opportunity to 
make a major difference.
    To be sure, in large parts of Africa today a child is more 
likely to die before the age of 5 than to go to secondary 
school and a child is more likely to be malnourished than to 
learn to read. But there are encouraging signs. More than 25 
countries have had democratic elections since 1990, and in a 
number of countries growth rates exceed 6 percent.
    Ethiopia, one of the poorest countries in world, has as 
rapid a growth rate as any country in the world, 12.5 percent 
in 1995. These are the kinds of successes we want to reinforce.
    Ambassador Barshefsky has spoken about the importance of 
trade and some of the specific modalities associated with our 
trade reform. Let me just highlight several other pieces.
    First, we have worked with the international financial 
institutions to reinforce their strategy of response, a 
strategy based on conditional financing, where finance can be 
effective to support trade liberalization, investment, good 
governance, particular emphasis on increasing the role of the 
private sector and investments in human resources.
    Second, we have worked with the international financial 
institutions and our own budgetary process on debt relief. 
Where debt overhang makes private investment an impossibility, 
it is essential that debt relief be provided.
    With American leadership, the G-7 last year reached a 
historic step in agreeing that the World Bank and the IMF 
should provide deep debt relief under the Heavily Indebted Poor 
Countries Initiative. Uganda has in recent weeks been the first 
beneficiary of that important initiative.
    Third, we will work to review our own programs related to 
bilateral development assistance, investment, and trade 
promotion. OPIC expects to launch a $150 million equity fund 
for Africa and work on developing another $500 million fund 
focused on infrastructure. The ExImBank and the USDA and 
Commodity Assistance Programs will also be increasingly focused 
on the strongest performers in Africa.
    Finally, to give special attention to the African countries 
that are taking bold reforms and to exchange views on what is 
working well and what is not, the administration has proposed 
annual Cabinet level meetings with strong performing countries.
    Mr. Chairman, I believe that these steps and continued 
American leadership can make a real difference, but ultimately 
what is going to determine the prosperity of Africa is the 
choice that the African people make and the choices that their 
governments make. But I believe that we in the United States 
can position ourselves as major forces supporting positive 
change in Africa and, in that way, can make a historic 
difference.
    So I commend you on the initiative behind this hearing, 
which I think has the potential to start a process that will 
make an enormous difference over time.
    Thank you very much.
    [The prepared statement follows:]
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    Chairman Crane. Thank you, Mr. Summers.
    Sub-Saharan African countries have been asked to undertake 
a lot of reforms by the World Bank and the IMF and other 
bilateral and multilateral lenders, and it seems important to 
me that we all work toward the same goal with respect to the 
region. How would the trade and investment initiative put 
forward in our bill, H.R. 1432, fit into this process?
    Mr. Summers. I think the trade investment initiative would 
be very much supportive of what we are trying to encourage the 
international financial institutions to do. Your bill would 
recognize the importance of trade liberalization in Africa, and 
that is an important part of the international institutions' 
objective in Africa, something that I expect will be a more 
important part in the future.
    In many cases, the motivation behind protection in Africa 
is financial. Countries rely on tariffs to finance their 
budgets. Without being able to get any other source of finance, 
they have no choice but to rely on those high tariffs.
    What is needed in the situation like that is tax reform to 
tax at lower rates on a much broader base, and what is needed 
is finance to make possible that transition. And that is 
precisely what the IMF is seeking to achieve under its ESAF and 
where it is going to be able to, we hope, expand its efforts 
for those countries that are reforming most strongly.
    Similar initiatives under the label of structural 
adjustment are an important part of what the World Bank is 
doing in Africa. Similarly, other kinds of transitions require 
transitional assistance. In many cases, large state enterprises 
need to be privatized. But to make that privatization 
effective, it is necessary to have the capacity to pay 
severance pay or it won't be politically possible to make that 
privatization.
    Here, too, transitional assistance can make a crucial 
difference. But the crucial point in providing assistance is 
that it has to be assistance that is transitional, it has to be 
assistance that is based on the principle of fostering self-
reliance on market institutions to do market things.
    And there is, of course, a core need, which I think is 
parallel to but different from the things emphasized in your 
initiative, of providing support for the kinds of things that 
only governments can do: Making sure that children are 
immunized against disease, making sure that girls as well as 
boys have an opportunity to go to primary school. And this, 
too, will be a focus of our bilateral assistance efforts, and 
particularly a focus of expanded international financial 
institution efforts.
    And finally, the debt relief--if I can make one more 
point--the debt relief piece we hope will be a spur to private 
investment.
    Chairman Crane. Thank you.
    Mr. Rangel.
    Mr. Rangel. Thank you.
    Thank you, Mr. Secretary. Please share with the President 
how proud we are of the leadership that he is providing in 
letting European countries, especially France, know that we are 
not cutting and running away from competition in the great 
continent of Africa. Indeed, we hope to work with them 
cooperatively to make certain that we can have Africa emerge as 
an economic trading partner with the entire world.
    Some of my colleagues are concerned as to, where is the 
money? What is in it for us? Our communities are suffering, the 
same type of things that we see in Africa. And it is true that 
the same things that are needed in the developing countries are 
needed in development communities right within the United 
States, and what are we talking about? Investment, education, 
job training.
    And as we hope to have peace and prosperity in other parts 
of the world, we hope to eliminate the need of dependency on 
drugs, of unwanted children, and violence and prisons instead 
of universities, we have to turn that around here as well. And 
it could very well be that the President could tie in to have 
our investors than we have to invest on both sides of the 
landing.
    But how does the President respond to those questions in 
terms of what could best be described as development 
communities that suffer the same type of social and economic 
ills as our friends in Africa?
    Mr. Summers. Congressman, let me respond, if I could, at 
two levels. First, I think it is important to underscore that 
this is not a traditional foreign aid program. The program that 
we have outlined here does not involve new appropriations from 
the U.S. budget at a time when we have serious problems at 
home.
    Second, I think you are right and a number of the other 
Congressmen who made the very, very important point that we 
have crucial economic development problems here in the United 
States. And as I think you know, my boss, Secretary Rubin, has 
taken a particular interest in problems of depressed urban 
areas, although there are particularly serious problems in many 
depressed rural areas as well.
    The President and the Congress, working together, have made 
progress on the agreement on enterprise zones, and we are at 
the second stage in that process. And I think that is an 
initiative that is trying to make a difference.
    There are two other things that we are working on in the 
Treasury Department that I would want to highlight. One is 
community development financial institutions which will make 
possible the kind of microlending to small businesses on the 
Grameen type model that Speaker Gingrich emphasized in his 
testimony today.
    We hope that that initiative, which is for rural as well as 
urban areas, will be fully funded in this year's budget 
process. The stories really are inspiring, of a day care center 
that was funded and got somebody off welfare and is helping a 
number of homeless kids. There are many, many of those kinds of 
stories.
    The other, if I might make an advertisement for something 
in the President's budget that I would highlight, is the 
brownfields tax credit, which is directed at situations where, 
by providing small amounts of catalytic money, we can promote 
significant environmental cleanup and at the same time bring 
business to areas in cities, areas also in rural areas where 
otherwise land would sit fallow and sit somewhat dangerously. 
But there is a lot more we have to do to develop every region 
in this country.
    Mr. Rangel. The most hopeful thing that I find in the 
President's budget is its commitment to widespread education 
and access to that education for all. I can tell you, as we 
renew the negotiations, respecting the fact that it has to be 
bipartisan, to many of us, to detract from that commitment 
would lose a lot of the bipartisan impact that we hope that we 
can conclude these negotiations with.
    Thank you so much, Mr. Chairman.
    Mr. Thomas [presiding]. The gentleman from Minnesota, Mr. 
Ramstad.
    Mr. Ramstad. Thank you, Mr. Chairman.
    We have talked a great deal today about how we can improve 
the economy and standard of living for many people in Sub-
Saharan African nations through the various trade initiatives. 
We also know there is a strong correlation between economic and 
political stability.
    A number of us have been watching the elections in Africa 
with a great deal of interest for a number of years, and I 
know, for example, in Liberia, a country with which we had over 
$40 million in trade last year, they are making great strides. 
They are holding free and open elections very soon, I think in 
a matter of weeks.
    What, Mr. Secretary, can we do to encourage these countries 
to adopt democratic reforms to assist them in that effort and 
also to make the necessary market-based reforms that go with 
the emerging democratic reforms?
    Mr. Summers. I think that Ambassador Moose may want to 
comment in more detail on the democracy-building aspects but I 
think the most important thing we can do is work to create 
successful examples, because successful examples are followed.
    And by working to reinforce examples of successful reform, 
as I think we have by providing a historic degree of debt 
relief to Africa, to Uganda, working to provide debt relief in 
other instances, assuring open markets to those who open 
markets to us, by producing those examples, and the more 
examples that can be pointed to, the more the recognition of 
what works will spread, and the greater the evolution will be 
in the direction we prefer.
    Mr. Ramstad. I certainly appreciate your response and the 
renewed emphasis on the African nations, not only the economic 
stability and development, but also the political stability as 
well. I appreciate what I have learned from my two mentors on 
this subject; namely, the two gentlemen from New York, the 
Ranking Member, Mr. Rangel, and Secretary Kemp, who have taught 
me a lot on this important subject.
    I also appreciate the win-win proposition that today's 
hearing represents in looking at increased bilateral relations 
with Sub-Saharan African nations.
    Thank you, Mr. Secretary.
    Mr. Thomas. Does the gentleman from Washington, Mr. 
McDermott, wish to inquire?
    Mr. McDermott. Mr. Summers, I think it ought to be pointed 
out that this is pretty unique, that we have four departments 
of the executive branch all here working together, and we are 
very pleased that you have worked together on putting this 
initiative forward on the executive branch side.
    I want to ask a question or two. When I first started 
looking at this issue, one of the things that struck me was the 
problem of debt or the debt overhang in most of these 
countries, and I would like you to talk a little bit about the 
whole question of debt relief and how, from the Treasury point 
of view, how you see it moving.
    And then second, if you could talk a little bit about the 
G-7 summit and how that may be a part of this whole process, 
because I think, clearly, there are some trade issues but there 
are also some financial issues that are intimately involved in 
what happens here. It is not simply a trade issue, it is really 
a financial question: Where you get capital; how you get it in; 
and how the international markets, both public and private, 
operate in this area.
    If you could talk a little bit about debt relief, I would 
appreciate it.
    Mr. Summers. In thinking about international debt, it is 
helpful to think about the analogy with private debt in our 
economy. On the one hand, it is very important that debt 
contracts be taken seriously and the obligation to repay be a 
clear obligation, because without that, people will be very 
reluctant to lend for fear that their debt will be repudiated. 
So it is very important that we stand for the idea that people 
should pay their debts.
    But that recognition has to be tempered with the 
recognition, as it is in the private context in the United 
States, that there are occasions on which people can't pay 
their debts, and when people can't pay their debts, it is 
important that those debts be written down and discharged, 
because if those debts are not written down and discharged, 
they act as a deterrent to any future progress, because there 
is the knowledge that if any prosperity is created, it is not 
going to benefit the country, it is not going to benefit the 
person who created the prosperity, it is simply going to go to 
pay off debt.
    So the approach that the international community has moved 
to over time, with substantial leadership from the United 
States, particularly in the last 2 or 3 years, but also with a 
very energetic presence of the government of the United 
Kingdom, has been an approach based on the principle of debt 
reduction, where debt burdens are prohibitive and where strong 
economic policies are being followed.
    That approach was, frankly, not fully adequate, and it was 
not fully adequate because it embraced only some debts, debts 
from export-import banks, for example, but not debts to the 
international financial institutions, the World Bank and the 
IMF.
    So what was a historic, I think, breakthrough on this issue 
came at last year's Lyons summit when it was agreed that in 
certain circumstances the World Bank and the IMF would relieve 
their debt for strong performers. And it is that treatment that 
has recently been agreed for Uganda and is potentially in train 
for a number of the other poorest countries in the world.
    We have made a further agreement in this package to propose 
that we would forgive entirely U.S. foreign assistance debt for 
some of the most indebted countries. Frankly, that debt is 
valued at far less dollar for dollar, so it is good economics 
for us to do that.
    We will have to see how the process proceeds at the G-7 
level. I think at this point our challenge is implementing the 
debt reduction. I think where we still have some thinking to do 
and where I expect there will be energetic dialog with the 
international financial institutions is on the modes of their 
assistance and how their assistance is channeled as effectively 
as it possibly can be in reinforcing reforms, and particularly 
the challenge of encouraging private sector investment in 
Africa.
    Mr. McDermott. I think as a Committee we look forward to 
following this process as you go to Denver, because I think it 
remains as one of those issues that we have no--in the Congress 
have no ability, or it is difficult for us to deal with, and I 
think we look to your leadership, and I hope that you are 
successful.
    Mr. Summers. If I may, Mr. Chairman, Congressman, my 
presence here as a Treasury official reflects the recognition 
that this is an important economic issue for the United States 
in general, but also the recognition that financial questions 
relating to debt relief and relating to what the international 
financial institutions do are really central to the outcome.
    Mr. McDermott. Thank you, Mr. Chairman.
    Mr. Thomas. Thank you.
    There are no further questions from our side of the aisle. 
I believe the gentleman from Louisiana wishes to inquire.
    Mr. Jefferson. Thank you, Mr. Chairman.
    I think you answered the question about debt relief as 
thoroughly as I would desire. I wanted to ask what you meant 
about and what steps would be taken to support the approach of 
the World Bank and IMF and others involved in debt relief 
efforts now, but I will defer that for the moment. I suppose I 
will accept the answer you gave to Mr. McDermott and find 
another forum to pursue it if I need to.
    But on the side of financing, the bill talks about OPIC 
funds and some new emphasis in the Export-Import OPIC Board, 
and I suppose the administration is supporting these ideas. How 
critical are these financing approaches, and how much more 
expansive do you think we can get in supporting these areas?
    There are no private sector equity infrastructure funds in 
Africa, period, and there are very small private sector equity 
enterprise funds in Africa, and most of the investments there 
are in stock exchanges. So this is a very critical area if you 
are going to talk about relying on the private sector to drive 
economic interest and drive recovery, that there be some new 
emphasis placed on financing issues for private sector 
development and for infrastructure development, and I am very 
pleased to see the administration's support here, but I think 
we are going to have to look very strongly on ways we can help 
to leverage this even more.
    Mr. Summers. I think that is right, Congressman. I think 
that in many ways what will be crucial will be the number of 
bankable projects. I think at this point, the problem is 
probably less finding more money that is willing to go into 
Africa than it is finding projects that are bankable and are 
attractive.
    But certainly OPIC is going to energize its efforts in this 
area, and certainly the international financial institutions, I 
think in the years ahead, are going to be taking a very 
different approach to Africa than they have in the years past.
    In the years past, there were a lot of loans to state 
enterprises and to large government bureaucracies, and the 
focus much more in the future is going to be on transition to 
market-oriented economic policies and to particular grassroots 
interaction, support of the private sector, and to convening 
groups within these countries to discuss how we can improve 
their business climate and make themselves more attractive to 
private capital.
    So if we are able to support those institutions in the 
years ahead, they will be working on what I think is the 
central priority, which is making sure there are bankable, 
attractive projects in Africa.
    Mr. Thomas. I want to thank the panel very much and ask the 
next panel to come forward. It is my pleasure to introduce Hon. 
Jack Kemp, the codirector for Empower America and, as we know, 
former Secretary of Housing and Urban Development and a former 
Member of this body; and Hon. David M. Dinkins, who is 
currently the chairman for the Constituency for Africa but the 
former mayor of New York.
    Chairman Crane. I want to express my appreciation to Mayor 
Dinkins and Jack Kemp, esteemed former colleague from here in 
the House, for being here today to testify on behalf of our 
bill, and I would like to yield for a welcoming statement to 
our distinguished Ranking Member, Charlie Rangel.
    Mr. Rangel. Thank you.
    First let me thank Jack Kemp for his interest in 
international affairs that did not stop because of the public 
office which he held, I also note with some interest the 
administration's response to some of the domestic problems we 
are having in our inner cities and rural areas, and it is the 
empowerment zone, the enterprise zone, and the things that you 
fought so long for here in this Congress which basically show 
that if we can get this trade thing off the ground with the 
same principles that we are talking about, getting people's 
hopes and dreams off the ground, yes, it is going to take 
investment, and we have to encourage that no matter what we 
have to do with the tax system.
    But we should also be able to do the same thing that Mayor 
Dinkins tried so desperately hard, and that is to get 
investment in the people so that they would be able to change 
those dreams into reality.
    So whether we go to the mountains and hills of Africa or 
whether we go to the side streets of Harlem and the South 
Bronx, the concept that both of you have is consistent with 
competition and investment, trade, jobs, hopes, and dreams. 
That is what has made our country so great. And I just hope 
that you continue, both of you, the fact that you are not 
directly involved with public office, that you keep those 
dreams alive.
    I want to thank both of you for spending such a large part 
of your day down here, since now your days mean dollars to you, 
and I guess you just have to stick it out with us.
    Thank you, Mr. Chairman.
    Chairman Crane. You are more than welcome.
    With that, we will start with Mr. Kemp and then Mayor 
Dinkins.

 STATEMENT OF HON. JACK KEMP, CODIRECTOR, EMPOWER AMERICA, AND 
COCHAIRMAN, ALEXIS DE TOCQUEVILLE INSTITUTION; FORMER SECRETARY 
OF HOUSING AND URBAN DEVELOPMENT, AND FORMER MEMBER OF CONGRESS

    Mr. Kemp. I look forward to not only being before this 
distinguished Committee, Mr. Chairman, but also at a press 
conference with my friend David Dinkins, but you of this 
Committee, your leadership, and Charlie Rangel, Members of the 
Committee, so I am going to be mercifully brief. I know that is 
an oxymoron for Jack Kemp. But I would like to have my 
testimony submitted for the record and just make a few points 
about what I think we can do together to enhance our country's 
image in the Third World and particularly in Sub-Saharan 
Africa.
    This is an exciting time, Mr. Chairman. I don't need to 
tell you. I thank Charlie Rangel for his comments, tell David 
Dinkins how proud I am to sit on his left, to come together in 
a bipartisan way on behalf of an issue which, as Mr. Ramstad 
pointed out earlier, is win-win. This is not a zero sum world, 
and I believe that our relationship with Africa is an 
incredible opportunity to show that this country understands 
that as the cold war is over, as you pointed out, Charlie, we 
now have an opportunity perhaps to build truly a democratic 
world, and I look forward to participating in that.
    Second, and parenthetically, what an amazing morning to sit 
here and listen to Newt Gingrich, Charlene Barshefsky, Larry 
Summers, David Dinkins, Jack Kemp, all the Members of the 
Committee, our friend Percy Sutton, to have behind us the 
distinguished Ambassadors from the continent of Africa, and to 
think that we have, as we sit here today, an opportunity to 
repeat the lesson of history, which is that 50 years ago there 
was a Marshall aid plan that helped rebuild the continent of 
Europe. This is the 50th anniversary of the Truman Doctrine; it 
is the 50th anniversary of Mr. Truman's words which I would 
like to share with the Committee.
    Harry Truman, in 1947, announcing the Truman Doctrines said 
before a joint session of Congress that the seeds of oppressive 
regimes are nurtured by misery and want. They spread and grow 
in the evil soil of poverty and strife. They reach their full 
growth when the hope of people for a better life has died.
    You have within your grasp a chance to provide new hope for 
the people of what we call the Third World, certainly in Latin 
America, Asia, and particularly today on the continent of 
Africa, and I real profoundly thank you, Phil Crane, Mr. 
Chairman, you, Charlie, Mr. Jefferson, and all the Members of 
this Committee on both sides of the aisle for bringing this 
bill before the attention of Congress and a chance for me to 
say I think we need a new Marshall plan. This, to me, is what 
Harry Truman and General Marshall in a bipartisan conference 
did 50 years ago.
    I see Mr. McDermott coming back to the dais. He talked 
about APEC, think of the attention we have paid to APEC, and 
wisely so. The Asia Pacific Economic Community is what you have 
alluded to from your home base of Seattle, a terrific 
opportunity for the Pacific rim. But this is a global economy, 
capital and goods spread across borders instantaneously, and I 
would just say we have within our grasp the chance of providing 
a new golden age of democracy.
    My light is going on. I would like to make one more point. 
I was in the Los Angeles airport coming back from L.A. last 
week, Mr. Chairman, and I walked by the duty-free shop. And it 
was interesting to me: Very handsomely dressed men and women in 
the duty-free shop, in Giorgio Armani clothes, buying Calvin 
Klein and liquor and Ralph Lauren, and you could tell it was 
very upscale consumers. And it was interesting to walk by, not 
being an international traveler that day, that I kind of 
identified with the folks who could not go into duty-free.
    Have you ever thought about the fact, that why it is that 
only rich folks, who travel first class on international 
travel, get the opportunity to buy something duty-free?
    Free trade is in the interest of the consumer. Free trade 
is the ability of low-income families to be able to purchase 
the best products, the best services, the best goods from 
wherever they may be developed. And I look forward to working 
with you, Mr. Chairman, in building the type of a duty-free 
world, a world without any borders to trade and commerce and 
ideas, because we have, right now, a borderless world ahead of 
us in telecommunications. It is called the Web, the Internet.
    But we will not truly liberate the world's poor until every 
man and woman has the opportunity to buy, to sell, to trade 
freely, and I believe that will enhance the chances for 
democracy throughout this world, and you are on the cutting 
edge of the opportunity that we have to build a true golden age 
of trade, prosperity, and democracy for the Third World, 
particularly our friends and allies on the continent of Sub-
Saharan Africa. I applaud you, and we will join with you in 
building this type of a world.
    Thank you.
    [The prepared statement follows:]
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    Chairman Crane. Thank you.
    Mayor Dinkins.

STATEMENT OF HON. DAVID N. DINKINS, CHAIRMAN, CONSTITUENCY FOR 
             AFRICA AND FORMER MAYOR, NEW YORK CITY

    Mr. Dinkins. Let me say how pleased I am to be here. I say 
to audiences these days that now I have been elected a private 
citizen, I go where I wish, and I am delighted to be here, 
especially pleased to be paired with Jack Kemp, a good friend.
    Mr. Chairman, distinguished Members of the Subcommittee on 
Ways and Means, as the new chairman of the Constituency for 
Africa, I am pleased to testify on the need to expand U.S. 
trade with Sub-Saharan Africa. It is an honor for me to follow 
Ambassador Andrew Young, CFA's first board chairman and who 
continues on the board as chairman emeritus.
    I am also pleased to offer my greetings to my dear friend, 
my brother, the Ranking Minority Member, Charles Rangel. It is 
good to be with you. He has provided outstanding leadership in 
the effort to build significant and reciprocal trade relations 
between the United States and Africa.
    Founded in 1990, the Constituency for Africa has sought to 
educate the American people about Africa and African issues by 
disseminating information through seminars and forums, 
including our very successful series of townhall meetings on 
Africa. A growing proportion of our constituency is already 
doing business in Africa, and because of our national 
grassroots activity, we know that many more individuals and 
groups are interested in pursuing business opportunities, 
particularly if Congress helps set the stage.
    Former Secretary of State Warren Christopher has urged 
greater U.S. involvement in Africa and has said that no one 
ever worked harder or with more success to broaden and 
diversify our trade and investment relationship with Africa 
than the late Commerce Secretary Ron Brown. We are seeking to 
build upon his work. To this end, we support the Crane-Rangel-
McDermott bill, the African Growth and Opportunity Act, that is 
designed to strengthen trade relationships between the United 
States and Africa.
    Established on principles of economic growth, stability, 
and private sector involvement, and framed around a policy of 
liberalized trade and new investment codes, such relationships 
will no doubt prove mutually beneficial to the United States 
and Africa.
    Increasingly, African countries are poised to participate 
in a new generation of economic development based on private 
involvement. Unprecedented changes in the political climate 
through democratization have begun to build a foundation for 
prosperity. Structural changes in many countries have 
strengthened their economies.
    The average rate of economic growth in Africa was 3.8 
percent in 1995 and 5.4 percent in 1996, excluding Nigeria and 
South Africa. The U.S. trade relationship with Africa was 
responsible for a measure of this growth. Exports to Africa 
increased by 23 percent to $5.4 billion in 1995. In that year, 
U.S. exports to all of Africa were 54 percent greater than 
those to the former Soviet states; trade with Africa was 50 
percent more than trade with Eastern Europe.
    Opportunities for further involvement through trade and 
investment are very much available, particularly in our areas 
of strength, including agribusiness, capital markets, energy 
sector, education, food production, and other areas. Such 
investment would also enhance the quality of life for some 700 
million Africans in ways more powerful than economic assistance 
alone.
    One of the major impediments, however, is the reluctance of 
American business to make the infrastructure investment 
necessary for future productive relationships and to take the 
kind of aggressive risks currently undertaken in other parts of 
the world.
    Another constraint to increasing involvement with Africa is 
the lack of awareness on the part of the American public. Often 
the media focuses on negative stories rather than the real 
story of Africa. Recently there was even media criticism of 
First Lady Hillary Clinton's successful and productive visit to 
Africa.
    In an effort to enhance public and private support for 
Africa in the United States, the Constituency for Africa this 
year launched a series of 10 townhall meetings on Africa. The 
fifth meeting will take place on June 21 in Denver, Colorado, 
to coincide with the meeting of G-7 countries and Russia. 
Speakers and participants in these meetings have included 
African diplomats, Members of Congress, representatives of the 
United States Agency for International Development, officials 
of U.N. agencies, and senior representatives of nonprofit 
organizations.
    The unprecedented success of these meetings has given us a 
strong indication that there is great support for well 
structured trade and investment initiatives with Africa. To 
that end, please allow me to offer the Constituency for 
Africa's recommendations for expanding U.S. trade for Sub-
Saharan African. I will, with your permission, submit my entire 
statement which will include these recommendations.
    In conclusion, may I say how pleased I am to note the 
observation made by some others, that this is indeed a 
bipartisan effort backed by the administration and both sides 
of the aisle. It is a historic moment in our country, and I 
thank you for the opportunity to participate.
    [The prepared statement and attachments follow:]
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    Chairman Crane. Thank you very much, Mayor Dinkins.
    And to both of you: How do you see the trade and investment 
initiative contained in this legislation fitting in with the 
political and economic reforms underway currently in Sub-
Saharan Africa?
    Mr. Dinkins. How do we see it?
    Chairman Crane. Coordinating with the reforms that are 
underway in Sub-Saharan Africa right now.
    Mr. Dinkins. I think very well. You know, there was mention 
made earlier about the need for hope, and I maintain that when 
one looks at Sub-Saharan Africa, which is to a great degree 
anchored on what happens in South Africa, and that which has 
already occurred in South Africa gives me hope that we will one 
day have peace in the Middle East, in Northern Ireland, and 
elsewhere in Africa, because if that which Nelson Mandela, that 
magnificent freedom fighter, has already done, what we have 
witnessed, I maintain that anything can be accomplished. And 
with the United States leading the way with this type of 
legislation, I am confident we will all succeed.
    Mr. Kemp. Mr. Chairman, I would just add that the support 
of the Committee, the support of the United States, to the free 
trade zone to me is the most important part of this, that we 
are going to hold out to African countries who do privatize, as 
Mr. Rangel and you have pointed out, who do reduce trade 
barriers, who do take initiatives to allow private enterprise 
to flourish with the support of a government structure that 
leads to the rule of law and patent rights and intellectual 
property rights, that there would be incentives to trade freely 
with the United States.
    Our market is the biggest in the world, albeit not in 
numbers, but in terms of consumer purchases. And that is a 
market that should be open, it seems to me, to Africa as it was 
to Mexico, to the Caribbean, to Western Europe subsequent to 
World War II, and of course, increasingly to Asia through APEC.
    So that initiative, that incentive, I believe people will 
respond particularly in Africa to the opportunity to trade 
freely with the United States. So I again applaud all the 
elements of the bill before us, but particularly that part 
about building the U.S.-African free trade zone. That is 
exciting, alluding to the metaphor of APEC before.
    Chairman Crane. Thank you.
    Mr. Rangel.
    Mr. Rangel. It is just hard to sound so boring after a 
comment by Mr. Kemp, but Mr. Dinkins, as the former mayor of 
the great city of New York, and Percy Sutton is here as the 
former president of the great Borough of Manhattan, we have 
Mayor Wellington Webb here of the great city of Denver.
    And all of you have witnessed the great parades that 
Americans give for the banners waving for Greece and Italy and 
Israel. I just don't recall, Mr. Mayor, ever having any parades 
where the flags were flying for the countries in Africa. And I 
ask you, if your life depended on it, this great government 
gave you a grant for you to make a donation to your homeland, 
where your people came from, and wanted you to return there to 
show the great respect they had for you as you came into the 
United States and made something out of yourself, where would 
you go?
    Mr. Dinkins. Well, not having traced my roots, as they say, 
I wouldn't know which one of those countries in Africa; I just 
know it is one of them.
    I do know that when I was privileged to accept the 
hospitality of the ANC and Nelson Mandela in 1991, having been 
privileged to receive him in New York in 1990, I said to the 
press that I was pleased to return to the continent of my 
ancestors, and I was ridiculed and criticized for that.
    But as you know, Mr. Congressman, in the city of New York 
we have 178 separate ethnic identities and there is a parade 
about every hour and a half, and so I have participated and 
been to many a reception and many a wonderful rally on behalf 
of others, and I swell with pride.
    On St. Patrick's Day, I am David O'Dinkins, and I really 
truly appreciate the diversity that is our city. And it is sad 
that so few people, including, frankly, many African-Americans, 
don't appreciate the wonder and glory that is the continent of 
Africa. But you and your colleagues this day, I think, take a 
giant step toward enlightening Americans and the world about 
the wonderful continent of Africa.
    Mr. Rangel. And when we have our friend Jack Kemp, who is 
respected around the world for his views and the fact that he 
wants a better America and better world, it encourages 
investors to know that we are not asking them to stand alone. 
The United States of America stands with countries and with 
people, that we believe it is in our best interests, and 
encourages them.
    So when you mentioned that my colleague said it was win-
win, it is not only that way from a social and economic point 
of view, but it makes all Americans feel so proud of being 
Americans, so proud of being themselves and of their 
background, and so proud of building this bridge which is so 
important to the Free World.
    Yes, I think that Republicans ought to feel so proud of 
themselves today, because this was not a political thing, it 
was an American thing that we do, and you two have been doing 
it for some years, and I am just glad that those of us who are 
sticking around can give you some interest on the investment 
you make.
    Thank you.
    Chairman Crane. Thank you, Mr. Rangel.
    Mr. Thomas.
    Mr. Thomas. Thank you, Mr. Chairman.
    I want to apologize to everyone for not having been here. I 
am Chairman of the Health Subcommittee, and we had a Health 
Subcommittee hearing on at the same time on Medicare issues, 
which are important not only to New York but other States, on 
integrating Medicare and Medicaid for our frail, elderly 
population. We are going to try to move beyond demonstration 
programs and allow for market forces to structure products that 
meet needs. That is coordination between government and the 
private sector.
    And this is what we are talking about here, and this is one 
of the concerns I have. Trying to be realistic in terms of what 
we can do, one, I think it is overdue that we reach out to Sub-
Saharan Africa and talk about not just reducing barriers but 
eliminating them, especially when you look at the level of 
trade.
    It is a lot smarter to eliminate barriers when we don't 
have a significant trade relationship, frankly, in a number of 
the products, rather than to wait for trade to develop and then 
try to institute it.
    I also want to thank the Chairman for including a clear 
provision in the bill that we are not going to exclude 
particular products. I hope the administration is with us 
through the legislative process, and not just on takeoff, in 
making sure that we don't begin to exclude products that 
somebody might think create pressure on domestic industries, 
but we are realistic in looking at the trade relationship.
    You have got a $10 billion import, and it is in oil. Then 
you drop to $1 billion in nonferrous materials and a third of a 
billion in diamonds, and as you go down the list--cocobeans, 
cane sugar, forestry products, tobacco--it is fairly clear that 
the United States and Europe, given the size of European trade, 
still are functioning to a certain extent in a mercantilist 
structure in a postcolonial arrangement, but it is also true 
that that is what they have to sell.
    So I just hope as we go through this process, we encourage 
the development of various approaches that work for the 
Africans and not that work for us.
    Jack, you mentioned the Caribbean Basin Initiative, and, 
frankly, I have been disappointed in that area as well, because 
we figured out ways to use them in coordination with our 
structure rather than freeing up their opportunities to find 
what it is that they can do best.
    I appreciate your opening comments in terms of the vision 
of free trade. This is our opportunity to put it in practice. I 
hope everybody who is here on the takeoff is with us when we 
can get this legislation written and we can begin to encourage 
the development of broad-based economic interests and those 
folks get to export what they think makes sense to export 
rather than what we allow them to export along narrow channels 
that don't cause us any heartburn.
    Mr. Kemp. Thank you for that comment, because if you look 
at CBI, the Caribbean Basin Initiative, that which one hand 
giveth, the other hand took away, and it is a disappointment to 
many of our Caribbean friends and neighbors to think that NAFTA 
has transcended the CBI.
    I personally believe the Caribbean Basin should be totally 
included in NAFTA and the President should be given fast track 
authority to negotiate an extension of NAFTA to Chile, 
Argentina, Brazil, and we ought to rapidly approach Africa with 
an eye on passing this legislation.
    As you pointed out, Mr. Thomas, the world has always been 
threatened by the idea of mercantilism, that one nation's gain 
is another nation's loss; one business's profit is another 
business's defeat. And that type of thinking is what prevailed 
in the thirties, and as I know Mr. Crane alluded to it, helped 
bring on the high tariff policies of our party.
    Luckily, we have gotten over that, most of us, now that the 
isolationism forces of the far left and, frankly, the far right 
are raising their head again telling us we lose. Our enemy is 
not Africa, our enemy is not Mexico, our enemy is not the Far 
East, our enemy is the regulation, the taxes, the litigation, 
the paperwork and redtape that exists in this town. And America 
can compete with Africa and the whole world. If we do, our 
enemy is the bad ideas in this town, and the worst of it is 
mercantilism.
    Mr. Thomas. But it is very difficult to put together a 
Caribbean Basin Initiative when the largest country and most 
populous country is not part of the solution.
    And I want to compliment Mayor Dinkins and everyone in this 
room who had a part in making sure as we addressed the Sub-
Saharan Africa question, it is as an entire region and not with 
the exclusion of a particular country because of the 
continuation of policies that are abhorrent to all of us.
    So I want to thank everyone for allowing us to address Sub-
Saharan Africa as a unit rather than in particular pieces.
    Thank you very much, Mr. Chairman.
    Chairman Crane. Mr. McDermott.
    Mr. McDermott. Thank you, Mr. Chairman.
    I want to take an opportunity just to say something. Mr. 
Kemp and I had a little discussion in the back before he came 
out here, and he asked how did I feel about his support for 
bill, and I said it is a great idea. It is good to have 
something where we work together, because ultimately this is an 
idea whose time has come.
    I was thinking about why it didn't happen when you were 
talking about it before. We were in the middle of the cold war. 
The cold war has ended, and we are now in a position to 
reevaluate everything we have done during that period and make 
some changes. I think both sides have recognized that not 
everything we did prior to the cold war was right.
    Somebody asked me why does Seattle have any interest in 
Africa; it is a long way away; you are really Pacific rim 
oriented.
    The fact is, I saw what we did in the Pacific rim with 
APEC, and it seemed to me undeniable that if we could do it in 
those countries, you could do it in Africa. And they all 
started with the textile area. And that is why we put that into 
this bill, because we felt that textiles were a place to begin 
manufacturing.
    As Mr. Thomas points out, if you just simply do extractive 
kinds of things, going for oil or minerals, you never build a 
sustainable base, and so the whole business of textiles as a 
way of beginning manufacturing, training the work force, is 
really a part of this.
    And I think ultimately, in answer to Charlie's comment 
about where would Mr. Dinkins go, in Seattle we have a Seattle-
Mombasa sister city relationship, and we have a Seattle-Limbe, 
which is in Cameroon. And I suspect that as a result of this 
bill we will have development of those kinds of relationships 
that have not caught on in the past.
    We have a relationship in Seattle with every single Asian 
country, with Kobe and Indonesia and so forth. And I think you 
are going to see those kinds of ties develop across the country 
as a result of this. I think it is an exciting time, and if you 
have comments, you are welcome.
    I yield the rest of my time.
    Chairman Crane. OK. Mr. Ramstad.
    Mr. Ramstad. Thank you, Mr. Chairman.
    Mr. Secretary, Mr. Mayor, I can't remember in my time on 
this Committee two more inspiring witnesses, especially not on 
the same panel, and I appreciate the testimony of both of you. 
I also appreciate this exercise in bipartisan pragmatic 
decisionmaking. We need more of this in this institution.
    I also, Mr. Secretary, liked your illustration of the duty-
free treatment at the airport. That is a good one. I think it 
very dramatically illustrates the underlying premise here in 
this legislation. I hope we can mark up this bill in May, H.R. 
1432, and pass it with the same spirit that pervades this panel 
today.
    Let me ask you, if I may, Secretary Kemp--I feel really 
weird calling you Secretary Kemp--Jack, I understand the equity 
fund, the infrastructure fund, and both, are right on target. I 
also understand the U.S.-Africa Economic Forum and the role 
that will play in this legislation.
    What about the provision in the legislation directing the 
President to develop a plan to enter into one or more free 
trade agreements with African countries by the year 2020? 
Should not we be more ambitious?
    Mr. Kemp. Yes. The question about the year 2020 as a goal 
is not bold enough for this initiative. I believe that the 
current administration, with outstanding Trade Representative 
Charlene Barshefsky, should begin to introduce the negotiations 
for a free trade zone with Africa immediately with a goal of 
doing it by the new century. We are not going to have this 
opportunity again, and it shouldn't pass unobserved.
    As David Dinkins pointed out, Nelson Mandela, 27 years in 
prison and coming out of prison as the President of the new 
democratic Government of South Africa, he isn't waiting, he is 
moving as quickly as possible. Many of the nations that Charlie 
Rangel alluded to in his testimony are undertaking changes.
    I couldn't pass up, if I might just add, Dr. Sullivan, who 
I think is in his mid-seventies. He deserves a lot of credit 
for reminding us as Americans that we had to have a set of 
principles to deal with the former apartheid regime of South 
Africa. He said, and I quote--and I saw Mr. Crane with an Adam 
Smith tie on. This sounds like Adam Smith. Dr. Sullivan in 
South Africa said the desire of men to improve their living 
conditions and be free is universal, and that desire must be 
nurtured and inspired by new projects of hope, new programs of 
opportunity, and new leaders must spring up like strong oak 
trees stretching across the land. I would only add, stretching 
across the globe. We need new ideas, new men, new women, new 
ideas. Don't wait until 2020; do it by the turn of the century.
    Mr. Ramstad. Mr. Chairman, Jack, I hope the administration 
will get that message and we will get that message. I hope it 
will be well received because I couldn't agree more that we 
need to be more ambitious. Thank you again, both of you, for 
your inspiring testimony and leadership in this area. I 
appreciate it very much.
    I yield back, Mr. Chairman.
    Chairman Crane. Mr. Jefferson.
    Mr. Jefferson. Thank you, Mr. Chairman.
    This is growing ever exciting, Mr. Chairman and Mr. Rangel.
    Mr. Kemp, whom I have known for a long time, we enjoyed a 
good relationship when you were Secretary. We did a lot of very 
important work across the country and in my district. And Mayor 
Dinkins, I have long respected your work, and of course your 
friendship with Charlie Rangel is well known. He doesn't lose 
an occasion to express this to me from time to time; I will 
relate to you later under what circumstances.
    And to Mayor Wellington Webb, who is going to host a very 
important summit for us, I am glad he has taken the time to 
come here and just inform himself about this process and 
incorporate his participation here and for other meetings and 
this meeting. Thank you very much for that.
    Africa sorely needs a constituency out there in America, 
and your leadership, Mayor Dinkins, on this, is very, very 
important, and you come well equipped for the job, and we are 
very happy to see you in this role.
    But every constituency needs something to rally around, 
excite itself about, and this bill and these cooperative 
efforts here between the Republicans and the Democrats give the 
constituency which is kind of dormant on Africa a chance to 
come alive and really learn something, and it helps our 
Committee to have a chance here or after to get the word out 
about this bill and build momentum for it here in this 
Congress. So it is a two-way street that we are very excited 
about, Mr. Mayor, and Mr. Secretary, about your involvement 
here.
    I want to ask, you didn't get a chance to go through the 
entirety of your written remarks, Mr. Dinkins. You talked about 
the need to strengthen the equity funds in the bill. You talked 
about the need to work on the debt relief issue more directly. 
You talked about a shorter time to deal with the--I think the 
issue that Secretary Kemp just talked about.
    And you talked about some more effective ways to use GSP, 
the General System of Preferences Program. You didn't get a 
chance to talk about these in your testimony. If there is 
something you would like to say to help further enlighten the 
Committee on these suggestions, or Mr. Kemp could chime in, I 
would very much appreciate it.
    Thank you.
    Mr. Dinkins. I thank you for your kind words and this 
opportunity. I think it is important to remind people that this 
legislation doesn't call for a cut in aid. There are levels of 
cuts in aid not to--I would urge that they be increased. In my 
formal comments I suggest that the African Development Fund 
should not only not be cut, but the ADF should be increased by 
10 percent a year for the next several years.
    And while I have this opportunity, let me also say that 
while we who go around the country and come to Mayor Web's 
great city in June talking about this legislation, another 
thing that will help focus the attention of the world on Africa 
is the effort of South Africa to have the Olympics in the year 
2004 in Cape Town, and that could happen. That really could 
happen, and it will be a wonderful thing not just for South 
Africa, obviously it will be good for South Africa, but it will 
be good for all of Africa, and I say the world. And we have 
never had Olympics in Africa. The time is right.
    Mr. Kemp. Could I add in postscript to Mayor Dinkins' 
comment, I mentioned the Marshall aid plan for the recovery of 
Western Europe. And to expand that metaphor, to Africa, I don't 
mean it as a metaphor alone, because I do believe that aid was 
instrumental in helping Europe rebuild in the post-World War 
period.
    But I would remind everybody listening that the fastest 
growing economies of Western Europe subsequent to World War II 
were the countries that reduced their barriers to trade, that 
privatized as quickly as possible, that followed, and it 
wouldn't be a Jack Kemp testimony if I didn't allude at least 
to the fact that they followed low tax rates on labor and the 
formation of capital and followed policies that were integral 
to the post-World War II Bretton Woods international 
stabilization of currencies. Very controversial, but sound 
money, low taxes, and private profit are instrumental to 
economic development.
    Newt Gingrich talked about the Asian Tigers, all of which 
followed those policies, and the countries in Africa that are 
doing the best are the ones that have begun to reduce the tax/
regulatory/unstable monetary policies.
    So it has nothing to do with climate, it has nothing to do 
with color, it has nothing to do with geography, it has to do 
with unleashing the power of individual entrepreneurs, men and 
women who are free to produce and to better their condition. 
They can do it anywhere in the world.
    I would add as my word of caution, I worry too much, 
perhaps to some, but for me it isn't worrying too much, that 
the International Monetary Fund too often follows policies in 
Third World countries and less developing countries that 
require them to devalue their currency and keep their tax rates 
high. The tax in many African countries is close to 50 percent 
on people earning $2,000.
    Some people would say, Jack, not many people earn $2,000. 
Well, they will never want to earn $2,000 or be able to earn 
$2,000 if you take and confiscate the fruits of their labor. So 
I hope you get a chance to read my testimony, because I go into 
the IMF, of which I have been an interested observer for many 
years.
    Chairman Crane. Mr. Collins.
    Mr. Collins. Mr. Chairman, I want to thank you for 
extending me the courtesy, not being a Member of the 
Subcommittee, to be able to sit on the panel today to listen to 
this very important discussion on trade.
    I am encouraged that we do have a bipartisan effort to 
encourage trade, because I know of no American worker who 
doesn't take pride in seeing a product they manufacture shipped 
around the world and sold to people of other nations.
    I, too, am encouraged about the continuous debate today and 
that will follow about what policy we should take to encourage 
global trade in this country. Should we continue the policy of 
more government programs here to enhance the lives of 
Americans, or do we take Mr. Kemp's advice and look at the 
private sector here?
    And we are our own worst enemy in a way because of the 
excessive taxation and the high cost of regulations and also 
the high cost of legislation that prohibits a lot of Americans 
from seeing the product they make shipped around the world.
    Thank you for the courtesy you have extended to me to be a 
part of this hearing.
    Chairman Crane. Thank you.
    And I want to express my appreciation to you, Jack, and 
Mayor Dinkins, and we will now break for a press conference, to 
answer any questions that the prudential press may have 
regarding this bipartisan legislation, and we will follow that 
press conference with a short lunch break and reconvene at 2 
p.m.
    The Committee stands in recess.
    [Recess.]
    Chairman Crane. The Committee will now reconvene. Welcome 
back.
    We will now hear from our next panel of witnesses, each of 
which are speaking on behalf of a Sub-Saharan African 
government. They will discuss what the trade provisions of H.R. 
1432 will mean to people in the Sub-Saharan region. And we will 
now hear from His Excellency Newai Gebre-Ab, Minister and 
Economic Advisor to the Prime Minister of Ethiopia; His 
Excellency, Benjamin Kipkorir, Ambassador to the United States 
from Kenya; and His Excellency, Franklin Sonn, Ambassador to 
the United States from South Africa.
    Mr. Rangel. Would the Chairman yield?
    Chairman Crane. Yes, I would be happy to yield.
    Mr. Rangel. Thank you very much.
    I just want to take this time now to thank not only you, 
Ambassador Sonn, but the entire group of Ambassadors for the 
candor and the friendship and the spirit of cooperation that 
you have given to Members of Congress. So many times, we have a 
feeling that we are doing something to help somebody and we 
forget to ask those people whether it is the help that they 
need or the help that they want.
    For some reasons, our representatives from Africa, before 
the explosion of freedom in South Africa, of course, there was 
a reluctancy for the Ambassador corps to enjoy the relationship 
with Members on the Hill that other countries have enjoyed. 
Fortunately, that is behind us, and you know that we can never 
do everything someone would want, nor should we expect that you 
would be able to do the things that we want. But I just feel so 
good about the honest exchanges we have had as we work toward a 
common goal.
    And I think that as we enjoy this bill, the release of 
Nelson Mandela, the freedom in South Africa, the explosion of 
freedoms throughout the world, that this relationship would be 
something not only that we as Members of Congress treasure but 
a part of the legacy that we can leave to our children.
    I just wanted to say that before they testify. Thank you.
    Chairman Crane. You are more than welcome.
    And I would like to remind the witnesses that we would 
appreciate it if you could keep your presentations, oral 
presentations, to roughly 5 minutes. But any printed statements 
you have will be made a part of the permanent record.
    And with that, I will yield to you in the order that I 
introduced you.

  STATEMENT OF HIS EXCELLENCY NEWAI GEBRE-AB, MINISTER, CHIEF 
     ECONOMIC ADVISOR TO THE PRIME MINISTER OF THE FEDERAL 
                DEMOCRATIC REPUBLIC OF ETHIOPIA

    Mr. Gebre-Ab. Thank you.
    Mr. Chairman and Members of the Trade Subcommittee, allow 
me to express the profound appreciation of my government for 
being given this opportunity to testify on the new U.S. policy 
of trade and investment for Sub-Saharan Africa. The bill, 
fittingly cited as the African Growth and Opportunity Act is 
fully welcomed by my government. Its vision for a free trade 
area of the United States and Africa, as well as its 
institutional and financial implementation measures consisting 
of an economic cooperation forum and a partnership program, are 
appropriately ambitious and well-conceived.
    The bill is opportune for Africa, which in recent years has 
been engaged in far-reaching processes of political and 
economic change. By providing an opportunity for fast growth in 
Africa, the bill will reinforce the attainment of necessary 
reforms for successfully integrating Africa into the world 
economy.
    Ethiopia has undertaken fundamental political and economic 
reforms in recent years. It has replaced a unitary state with a 
Federal system of government, initiated multiparty politics and 
pluralism, and laid the foundations for the maintenance of 
human rights. At the same time, a centralized command economy 
has been supplanted by a market-based economy, bringing the 
private sector into the center stage of economic growth and 
poverty alleviation.
    In a short space of barely 6 years, since the overthrow of 
a longstanding dictatorship among the worst of its kind in the 
history of the continent, the Ethiopian landscape, both 
political, economic and dare I say environmental as well, has 
changed for the better. There is peace and stability where 
there was none for 30 years, and a fast economic growth has 
arrested the previous decade-long decline in per capita income.
    Economic reform was embarked upon under the umbrella of a 
long-term vision of economic growth in Ethiopia. This was 
formulated as an agricultural development-led 
industrialization. It has two distinguishing features. First, 
it envisions a process of broad-based development, in which 
growth encompasses as its beneficiary an ever increasing 
proportion of the population of the country. Second, it 
foresees a process of interaction between agriculture and 
industry, each reinforcing the other. Much as this 
reinforcement holds great potential for a sustainable process 
of development in a relatively large country such as Ethiopia, 
with a current population of some 55 million, practice revealed 
to us sooner than expected the importance of export-led growth 
as an integral part of our long-term perspective of economic 
development. I refer to a lesson learned from our success in 
increasing dramatically our cereal production during the last 2 
years.
    The synergy between policy reforms buttressed by programs 
of support and economic growth have been strikingly evidenced 
in food production. It needs no reminding that Ethiopia was a 
humanitarian basket-case for almost 2 decades since the famine 
of the early seventies. The country was chronically in shortage 
of food, even in fairly good rainy seasons. Food deficit was 
judged to have turned structural. In 1995-96, this was 
reversed, as domestic production of cereals increased by over 
15 percent, bridging the food gap.
    The following year, 1996-97 again witnessed a sharp growth 
of production of cereals, which has made the country virtually 
self-sufficient in food. At the same time, it became necessary 
for Ethiopia to export maize to avert a price collapse and its 
attendant price disincentive effects, at even such an early 
stage of our agricultural development. This is a story worth 
telling on its own, but what I wanted to underscore here, by 
citing this instance, is how growth of output can be 
constrained by lack of domestic market and how exports can help 
lift this bottleneck and enable growth to proceed.
    The expectation is therefore that the proposed act will 
contribute to the process of export-led growth in Africa; that 
it can lead to the growth of exports to the huge U.S. market by 
enlarging Africa's trading network with the United States, 
improving know-how of marketing in the United States, and 
enhancing market access for designated commodities.
    It is equally important for Africa to attract foreign 
investment if it is to attain a fast growth rate over an 
extended period of two to three decades, which would make the 
minimization of poverty an eventual possibility.
    Africa is viewed as a continent of sluggish growth and 
volatile economy. For this reason, it is unable to attract 
foreign investment in any significant measure. The picture on 
the ground, however, is beginning to change positively in 
several Sub-Saharan African countries. Ethiopia's economic 
performance in the last 3 years of 1994-96, for instance, shows 
a yearly average growth rate of GDP of around 6 percent; a 
sharp fall of inflation from 17 percent in 1994 to 2 percent in 
1995 and -5 percent in 1996; and a narrowing of the fiscal gap 
with zero domestic borrowing.
    Economic growth, with macroeconomic stability and 
commitment to continued economic reform, is setting a favorable 
environment for attracting foreign investment to Ethiopia. With 
similar economic performances being observed in several Sub-
Saharan Africa countries, it is to be hoped that the trade and 
investment bill can set into motion a new perception of Africa 
as a region where it is safe and profitable to do business for 
American investors.
    I thank you.
    [The prepared statement follows:]
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    Chairman Crane. Ambassador Kipkorir.

   STATEMENT OF HIS EXCELLENCY BENJAMIN E. KIPKORIR, PH.D., 
                 AMBASSADOR, REPUBLIC OF KENYA

    Ambassador Kipkorir. Mr. Chairman, Honorable Rangel, 
Members of the Committee, it is a great honor for me to have 
been given this opportunity to testify before this Committee on 
a matter which I believe is of great importance.
    Today, Africa resembles a kaleidoscope. Mention poverty, 
ethnic strife, disease, illiteracy and, yes, corruption, and 
you have a familiar picture of Africa. But amidst all this 
confusion and apparent hopelessness, there burns a candle of 
promise that Africa's potential is not lost and that its people 
are poised for a better future provided the continent gets a 
fair chance at the world markets.
    Let me talk about my country Kenya, which in many ways is 
an average African country and a product of colonial legacy. 
After attaining our independence in 1963, we promoted a mixed 
economy in which the government was a major player in business 
alongside the private sector. We specifically pursued import 
substitution policies aimed at encouraging local 
industrialization through protectionism, sometimes leading to 
monopolistic situations.
    Import substitution policies are no longer tenable. 
Accordingly, we have embarked on a comprehensive package of 
reforms affecting the economy as well as our government.
    Together with other African countries, we have participated 
in the creation of regional markets beginning with the 
preferential trade area, PTA, now transformed into the Common 
Market for Eastern and Southern Africa, COMESA.
    Closer home, we have revived the East African Community 
under the banner of the East African Cooperation.
    It might interest Members of Congress, Mr. Chairman, to 
know that close to 40 percent of Kenya's exports go to our 
immediate neighbors and to other COMESA countries.
    Relations between Kenya and the United States have always 
been cordial, Mr. Chairman. Kenya, as you know, has served as a 
base for the U.S. Government and international humanitarian 
relief activities in the Eastern African region by providing 
port facilities at Mombasa and Nairobi.
    With regard to foreign investment and trade, more than 80 
percent of United States private corporations have interests in 
Kenya, mainly in the service sector. However, Kenya's exports 
to the United States of only $107 million are a pittance, 
accounting for only 2.7 percent of our total exports in 1996, 
while our imports from the United States at $104 million in the 
same year, or 5.3 percent of our total imports, are only a 
little better.
    Clearly, there is room for improvement in this area as the 
late Ron Brown so eloquently pointed out during his visit to 
Kenya in February 1996. Until recently, apart from imports of 
civilian aircraft and military materials, most Kenyans have 
regarded the United States as a source of aid and not as a 
serious trading partner. While foreign assistance for my 
country, as indeed for the rest of the continent, may have 
alleviated short-term problems, it has failed to achieve 
sustainable economic growth.
    We all recognize that the era of aid is gone. We must have 
in its place something better. Despite aid flows, Africa has 
continued to sink deeper into indebtedness. Africa's debt, 
estimated at US$199 billion in 1995 hampers development. At the 
same time, a poor and inadequate basic infrastructure 
discourages new investment. These issues must be quickly 
addressed through appropriate policies to assist growth of 
African economies.
    When we in Kenya began to liberalize our markets in the 
earlier part of this decade, we readily welcomed investment and 
transfer of technology. We yearn for the creation of jobs for 
our youthful population. With those endeavors in mind, Kenya 
introduced MUB, manufacturing under bond, and export processing 
zones. Among the earliest foreign investments to take advantage 
of these facilities were those in the garment sector. The 
apparel industry seemed to offer us a leg up out of economic 
impoverishment due to the emerging economies of the world. This 
was an exciting new window of opportunity, and for some time 
Kenya appeared set to have a stable basis for an industrial 
takeoff. All hope, however, was shattered when the United 
States slammed quotas on Kenya's budding textile industry.
    Mr. Chairman, I have just returned from a visit home where 
I consulted with government officials and business 
representatives in the textile industry. I can confirm the 
findings of the study conducted by the World Bank in 1996. 
Without a doubt, the imposition of quotas had a devastating 
effect on Kenya's garment industry, leading to a loss of 
employment opportunities for about 10,000 workers and about 2 
percent of Kenya's manufacturing GDP per annum, mainly due to 
closure of factories and cancellation of investment proposals.
    This was the unkindest cut of all, coming from a nation 
that is so renowned for her charity and her belief in the 
promotion of free trade. Clearly, our infant garment industry 
was not a threat to the U.S. market, estimated at about $120 
billion per annum. The imposition of quotas ran counter to the 
spirit of fair trade as advocated by the United States and the 
WTO.
    Furthermore, out of the entire African continent, only 
Kenya and Mauritius are subjected to quotas. We, therefore, 
welcome and support the textile initiative in the proposed 
bill.
    Sub-Saharan Africa also stands to benefit from an expanded 
GSP which should include textile products as this would place 
Africa almost at par with competitors such as Mexico and the 
Caribbean countries, which have special arrangements with the 
United States. The private sector will continue to be the 
engine of development in Africa and therefore the proposed Sub-
Saharan funds are desirable instruments in promoting U.S.-
African private enterprise.
    Last but not least, exchange of high-level visits and 
regular consultations will provide opportunities to review 
future U.S.-Sub-Saharan Africa economic and trade relations.
    I thank you, Mr. Chairman, for your attention.
    [The prepared statement follows:]
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    Chairman Crane. Thank you.
    Ambassador Sonn.

   STATEMENT OF HIS EXCELLENCY FRANKLIN A. SONN, AMBASSADOR, 
                    REPUBLIC OF SOUTH AFRICA

    Ambassador Sonn. Mr. Chairman and Members of the 
Subcommittee, thank you very much for the opportunity afforded 
us to testify to this Committee, and particularly a word of 
thanks to the Chair and also to the Ranking Minority Member of 
the Subcommittee for the interest in promoting improved 
relations between the United States and Africa.
    The whole question of Africa was a matter of concern until 
awhile ago since Africa appeared to be slipping off the 
American radar screen.
    We owe a great debt of gratitude to the Speaker for his 
depth of knowledge and his constant urgings to keep the focus 
on Africa as an opportunity for American industry and trade, 
and I also want to make use of this opportunity to single out 
perhaps the Ranking Minority Member, Charlie Rangel, for his 
contribution and his sticking to Africa, and particularly to 
South Africa, over a long period of time.
    This hearing is another positive example of the importance 
of democracy and the effect of bipartisan cooperation within 
the context of freedom, which also presupposes freedom in the 
marketplace. I would also like to thank the authors and 
sponsors of the legislation before us for their work in 
preparing this legislation, and the staff for their hard work 
in preparing the bill.
    I am appearing here on behalf of the South African 
Government. This in itself is a historic moment therein that it 
is the first time that a representative of a new democratic 
South Africa appears before your Committee, which makes this 
event an auspicious and memorable one for all of us.
    The South African Government's fundamental--point of 
departure is that South Africa is intrinsically and inherently 
part of Africa.
    At first sight, this statement appears to be trite. The 
fact is, however, that apartheid isolated South Africa from 
Africa. My government and the vast majority of people of South 
Africa want to thank you for your efforts to isolate the 
apartheid regime as we now also pay tribute to you for seeking 
to bind us in and together so that we can, along with you and 
our African compatriots, act on the business of affecting the 
renaissance of Africa. This is the context in which we view 
this bill.
    South Africa represents 4 percent of the African territory, 
6 percent of the African population, yet generates 47 percent 
of the continent's electricity. Its economy is four times the 
size of the rest of the SADC countries of 12 put together, with 
a GNP of US$190 billion. South Africa's GNP is $120 billion of 
that $190 billion, which places an enormous responsibility on 
our country to play its part in the revitalization of Africa 
and also in what we term the coming renaissance of Africa.
    Relations between the United States and South Africa are 
very good. The Binational Commission, or we call it the Gore 
and Mbeki Commission, is one sign of that. The visit of First 
Lady Hillary Clinton is another sign of that, and to other 
African countries, and the about-to-happen congressional 
delegation lead by Congressman Royce is another sign of the 
growing and close relations between South Africa and the United 
States.
    We in South Africa are cognizant of the deep support then 
and now from many organizations in Africa for the South African 
cause to--and here we would like to mention particularly the 
Clinton administration and particularly Ron Brown and his 
Commerce Department, the African desk of the State Department, 
and also the Treasury Department; also the constituents of 
Africa that testified this morning, Corporate Council on 
Africa, Ambassador Dave Miller, the African American Institute, 
U.S.-South Africa Business Council, Reverend Sullivan, Trans-
Africa, the African American Chamber of Commerce, and many 
organizations which over a long period of time have shown 
direct interest in the travails and in the aspirations of South 
Africa.
    The South African Government is committed to restructuring 
its economy, to promote trade and investment, reduce tariff and 
nontariff barriers, the elimination of the financial rand the 
easing of exchange controls, the bilateral tax treaty being 
negotiated between South Africa and the United States, and also 
the promotion of regionalization through the increase of trade 
and investment with the SADC countries.
    Malaysia, with Southwestern Bell in Texas has just made its 
biggest investment ever in Africa, with its 30 percent 
acquisition of the telecommunications industry.
    The Maputo Corridor Project is another example of a $240 
million project between South Africa and its neighboring 
countries, and also the U.S. companies' investment in oil 
exploration in South Africa, are some of the largest 
investments in Africa. And then we have just launched now the 
SADC Web site, World Wide Web site, which is an indication of 
us moving into the modern world.
    We want to express broad general support for the bill under 
consideration. A written statement of my government's view is 
in your possession. We trust that this bill will have a smooth 
and easy passage and that once it is promulgated into law will 
form the basis of fruitful and constructive trade negotiations 
and relations between the United States and South Africa, as 
indeed also between the United States and the region--the 
United States and Africa.
    A relationship that will emanate from this must be a 
relationship of respect for the integrity and sovereignty of 
each nation, and also respect for the hopes and aspirations of 
all of our people.
    Thank you very much.
    [The prepared statement follows:]
    [GRAPHIC] [TIFF OMITTED] 58319.338
    
    [GRAPHIC] [TIFF OMITTED] 58319.339
    
      

                                


    Chairman Crane. Thank you, Ambassador.
    A question to you, Ambassador Sonn. South Africa is clearly 
the wealthiest nation in the region at present. You mentioned 
in your written statement that your country will never be 
satisfied with investment within its borders alone.
    Could you tell us what South Africa is doing to reach out 
to economically integrate with its neighbors?
    Ambassador Sonn. South Africa considers itself part of the 
Southern African Development Unit, what we call SADC, and it is 
currently in consultation with Lome and with other trade 
organizations, with the WTO and also with its neighboring 
states in order to create free trade areas between these 
nations.
    Our basic position is that we must first resolve our 
situation between ourselves and then reach out to the outside 
world as a unit, and also from there as a continent.
    Chairman Crane. And a question for any of you to respond to 
is: What policies or barriers do each of you see that keep 
greater levels of exports from coming to the United States from 
Sub-Saharan Africa?
    Ambassador Kipkorir. If I might begin, I think it is all 
agreed and we all applaud the sentiments already expressed 
today about the importance of the textile sector as an engine 
of industrialization and economic growth. This is the means by 
which most of the ties in the east began. We were just 
beginning it. We haven't given up hope and it is for that 
reason that we strongly welcome the initiative, Mr. Chairman, 
in this bill and the provisions particularly leading to 
quotas--removal of quotas in textiles.
    There is no doubt that we have shown in the little that we 
have done that we are capable of producing quality goods for 
the American market. We should be encouraged in that area.
    Chairman Crane. Anyone else want to comment on that?
    All right. I will yield to Mr. Rangel.
    Mr. Rangel. His Excellencies, this is a very exciting and 
important day for me and many of my colleagues. You may have 
read or noticed that in recent years my country has gone color 
blind. It is a disease that has struck them just recently, 
however.
    But as we work more closely together, I do hope in your 
various countries that you remember that we have a lot of 
villages and towns in this country of people of color, and they 
are trying to gain the expertise to be able to work with your 
countries, and I trust that you never get the disease that we 
recently had. We hope to be that bridge for a stronger working 
relationship, a better United States, and a better world for 
all of us to work and live in. And your contributions to that 
have been very, very meaningful to all of us.
    I just hurried from home and they say that even our little 
black kids are watching C-SPAN today because they heard that 
you would be on, so thank you for your contribution.
    Ambassador Sonn. Thank you very much.
    Ambassador Kipkorir. Thank you.
    Chairman Crane. Mr. Houghton.
    Mr. Houghton. Thank you, Mr. Chairman. No questions since I 
missed most of the testimony, but I wanted to thank the 
Minister and Ambassador Kipkorir, but particularly I wanted to 
thank my friend, Ambassador Sonn, for being here. Thanks very 
much for your contribution.
    Ambassador Sonn. Thanks, Congressman.
    Chairman Crane. Mr. Jefferson.
    Mr. Jefferson. Thank you, Mr. Chairman.
    I would like to express my appreciation for your presence 
here, but more meaningfully for the participation that you and 
your governments and your representatives have had in this 
process of developing the legislation so far, and we are now in 
a position which portends not only to help U.S. interests but 
to address the objectives of creating more economic growth and 
opportunity in Africa as well. And so I appreciate your 
participation.
    I want to ask a question to follow up on something I asked 
Ambassador Barshefsky this morning. Which of the--of your 
countries, if either, is interested in the foreseeable future 
in a free trade agreement with the United States? And what 
might be the possible timing?
    And as a follow-up to that, are free trade agreements more 
likely to be developed on a regional basis or on a bilateral 
basis, country-by-country with the United States?
    Mr. Gebre-Ab. Well, sir, I would imagine that perhaps it is 
not a question of either/or in terms of building the free trade 
relationship with Africa. It could be attempted on the basis of 
a country-by-country basis. And as countries within Africa also 
creates regions and subregions of free trade areas, why then, 
of course, these subregions can also be incorporated into U.S.-
African subregional free trade zones.
    I would imagine that an approach which leaves open the 
question and pursues the matter in a flexible way would be the 
most appropriate approach.
    Ambassador Sonn. I think I will go with that, that it will 
happen in both ways. Each country has its own integrity and its 
own sovereignty and it is, therefore, required by its own 
taxpayers to enter into treaties on behalf of its own country, 
to operate within an economic context.
    And South Africa is operating within the context of SADC. 
South Africa is a population of a market of about 42 million. 
It recognizes that the SADC countries as a whole has a market 
of 120 million which is, therefore, a more attractive 
proposition. We are also conscious that in the SADC region, 10 
of the 12 countries are full democracies. The other two are 
becoming democracies. All of them subscribe to a free market 
system. The growth, the average is 5 percent throughout, and 
for that reason it is an economic proposition.
    However, on the second part of the question, we consider 
this to be a bill, an act of the Congress of the United States 
of America, and the extent to which the free trade agreements 
between our own country and the United States will occur on the 
ground is therefore a matter for negotiation and that we will 
enter into once this bill is promulgated by the Congress of the 
United States of America.
    So we welcome it as such, but the terms of the free trade 
agreement, obviously as the Ambassador also indicated, will be 
a matter of constant negotiation between two equal partners.
    Ambassador Kipkorir. If I may add my own comments 
reflecting those of my country, I think a regional approach is 
probably the route. As I said, we have just begun. We just 
restored the East African Cooperation or the East African 
community, which is a region of some 80 million people. But I 
think the most important thing that has to be done is to enable 
us to have the capacity to participate in a free trade.
    I think that one of the attractions inherent in the bill is 
the facilitating of capacity building in African countries to 
enable them to participate in trade negotiations and such 
matters. So I think a slowly, slowly approach is best. And I 
welcome most warmly the consultation that has been generated by 
this bill.
    Mr. Jefferson. Thank you, Mr. Chairman.
    Chairman Crane. Well, I want to thank all of our witnesses 
very much for your informative testimony on the African economy 
and the benefits that you feel increased trade with the United 
States would have on your countries.
    Now I would like to welcome our next panel to testify, 
which is comprised of representatives of U.S. businesses which 
are involved in trade with the Sub-Saharan region.
    First is David Franklin, president of Sigma One 
Corporation; Hon. Percy Sutton, chairman of AFRICOM; Ralph 
Moss, director of government affairs for the Seaboard 
Corporation; Ralph Mucerino, president of Africa and Middle 
East Division for the American International Group; and William 
Carter, president of AT&T Submarine Systems, Inc.
    Gentlemen, after you are situated, will you proceed in the 
order I introduced you, and I will be happy to yield to my 
distinguished colleague, Mr. Rangel.
    Mr. Rangel. Mr. Chairman, while the witnesses are being 
seated, may I point out that the gentleman in the brown suit, 
Mr. Sutton, is one of the people that my mother told me about 
when I was very young. She said, if you are never going to 
amount to anything at least associate with people who do. And 
in that light, I was befriended by Mr. Sutton in my very, very 
young years out of law school in trying to understand and learn 
more about politics.
    And my method was that if you really jumped and attacked 
one of the biggest giants, whether you knew anything or not, 
you got a lot of attention. I got more than I needed but in the 
course of that we became friends. That was many decades ago, 
and my mother was right. I hung out with someone that really 
knew how to do it and I have lived better ever since.
    Thank you, Mr. Chairman.
    Chairman Crane. Mr. Sutton, something else he told me 
earlier today is that Mayor Dinkins was his older brother.
    Mr. Sutton. With the same validity.
    Chairman Crane. Well, gentlemen, in the order I introduced 
you to sit down, will you start proceeding with your testimony, 
and try and keep your oral remarks to 5 minutes roughly, but 
any printed statements will be made a part of the permanent 
record.

   STATEMENT OF DAVID FRANKLIN, PH.D., PRESIDENT, SIGMA ONE 
                          CORPORATION

    Mr. Franklin. Mr. Chairman, Members of the Subcommittee, I 
am David Franklin. I am president of Sigma One Corporation in 
the Research Triangle Park in North Carolina. I want to thank 
you for the opportunity to testify on the subject of trade 
between the United States and Sub-Saharan Africa.
    I strongly support the African Growth and Opportunity Act, 
and I commend its sponsors for its relevance to the need of 
Africa today and for its focus on the private enterprise.
    My testimony today is derived from nearly a quarter century 
of engagement with Africa. At Sigma One Corporation, our global 
focus is on the business side of agriculture. And being 
involved with agriculture, our natural concern is for the great 
majority of poor yet enterprising folk who derive their 
livelihood from agriculture-based businesses. This bill is good 
for all the farmers and agribusinesses and enterprises of 
Africa, and I want to emphasize that it is good for the farmers 
of America, also.
    American business enterprises have much to offer and much 
to gain from increased trade with African private enterprises. 
The provisions of this bill are needed to foster business to 
business partnerships between U.S. business and the emerging 
new entrepreneurs of Africa. The bill is needed because today 
most of Africa remains a high cost and high risk environment 
for private enterprise, be they African or American 
enterprises.
    One of the reasons that costs and risks of doing business 
in Africa are high is that the infrastructure to support 
business activity is weak, unreliable, or nonexistent. Past 
grants and concessional loans from donors and multilateral 
financial institutions, including our own Agency for 
International Development, have resulted in poorly maintained 
and managed transport communication systems and other 
inadequate basic services. The bill's provision for an 
infrastructure fund to support private services will not only 
add to the stock of infrastructure but, importantly, it will 
promote sustainable operational effectiveness of what is 
already there, because through the pressures of competition, it 
will force state-provided services to become more efficient.
    African governments must be encouraged to allow the pricing 
of public services to reflect full cost recovery and 
profitability. The so-called cheap water, sanitation, 
electricity, transport and communication systems that are 
priced at less than the rates needed to service the resulting 
debts and to maintain the systems end up costing the poor 
people of Africa themselves more than if they did not have 
those services at all. These costs to the poor people of Africa 
arise through inflationary public finance, unreliable services 
which drive job creating enterprises away from Africa and 
through diseases from unsafe water and polluted environments.
    And while I am on the subject of the poor, allow me to 
state unequivocally that further removal of the barriers to 
international trade and investment will benefit the poor of 
Africa directly as much as it will benefit established 
businesses. Yes, the benefits for the poor are direct and not a 
result of trickling down of benefits from better placed 
enterprises.
    Also, I wish to commend you for the recognition in the 
language of the bill that Africa's manufacturing base is small 
and weak and, therefore, of very little threat to U.S. industry 
and to U.S. workers.
    And I wish to note that I do come from the State of North 
Carolina, where textiles and agriculture are very important and 
where I have heard there is serious concern about the threat. I 
would say to my fellow North Carolinians that they have very 
little to worry about. If this is their biggest worry, they 
don't have much to worry about.
    By increasing the value and output from Africa--excuse me. 
I am going to skip these comments given that I have seen the 
light here. And I don't often come to Washington to see the 
light but I have today.
    I also wish to praise the sponsors of the bill for the 
strategy that the bill reflects with respect to the development 
fund for Africa.
    While the Agency for International Development needs to be 
seriously redesigned, I believe that if we did not--if we saw 
the bill as competition or a substitute for that agency, we 
would find that we would have to reinvent a lot of the good 
things that agency does. So that the spirit of complementarity 
that is written into the present version of the bill, I 
believe, is highly commendable.
    We need a physical presence in Africa to help us address 
all of those many high cost and high risk issues of doing 
business in Africa. Thank you very much.
    [The prepared statement follows:]

Statement of David Franklin, Ph.D., President, Sigma One Corporation
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    Chairman Crane. Thank you.

       STATEMENT OF HON. PERCY SUTTON, CHAIRMAN, AFRICOM 
                    TELECOMMUNICATIONS, INC.

    Mr. Sutton. Mr. Chairman, Mr. Crane, Congressman Rangel, 
Congressman Houghton, and Congressman Jefferson, I am highly 
honored to be here today. I have heard, as I have sat here, my 
old friend Jack Kemp, Secretary Kemp, testify here on behalf of 
this bill. I have heard my mayor, David Dinkins, old friend 
David Dinkins testify. I see in the room Frank Ferra, a man who 
some years ago adopted me, younger than I am, adopted me, and 
we began attending African American Institute conferences. 
Congressman Houghton, we were together in Egypt recently.
    I am for this bill. It is a good bill. With some changes, 
if enacted, it will be of great value.
    I live in Harlem, USA, at 10 West 135th Street, next door 
to Congressman Rangel. I am an attorney and businessman with my 
principal offices in Mr. Rangel's congressional district. My 
businesses are in the fields of radio, television, and cable 
television and telecommunications. Of all of my businesses and 
their interests, my principal interest is now as chairman of 
AFRICOM Telecommunications, Inc., a mobile satellite 
telecommunications system hopefully now in the last period of 
development before launching and providing handset--satellite 
to a handset or other linkage to the entirety of the continent 
of Africa.
    I became aware of this bill in talking to Congressman 
Rangel, who invited me to come here today. And once again, I am 
most grateful to my Congressman for taking yet another action 
to advance the interests of his constituents with also--while 
also advancing the interests of this Nation.
    I am grateful also that this is a bipartisan activity. My 
first visit to Africa when I was a youngster of 13 years of age 
traveling with my father, a businessman and academic, who at 
that time was interested in developing trade between our home 
State of Texas and the continent of Africa. I have been 
involved in Africa--on the African continent as a businessman 
for more than 35 years, and during all of those years I have 
yearned for that day when the Nation of my birth, the United 
States of America, would develop a comprehensive trade policy 
with regard to the African continent, and Sub-Saharan Africa in 
particular.
    During the intervening years, I have invested in a variety 
of businesses, both in Africa itself and here in the United 
States with Africa being the target consumer area.
    I am firmly of the belief that some of my failures might 
have been successes had there been a more attentive and 
sensitive U.S. policy with regard to the African continent.
    As a businessman, I experienced the difficulty of obtaining 
financing for African ventures, partly--and particularly, 
rather, for infrastructure projects in Sub-Saharan Africa. 
Banks and financial institutions typically denigrate African 
countries. They lump them together as bad investments, too 
poor, too unproductive or too unstable to be trusted. The facts 
show otherwise.
    In fact, Sub-Saharan Africa's rate of return on investment 
is among the highest in the world. Africa is not the dark, 
impenetrable monster characterized by some misguided and 
misinformed institutions and individuals.
    I am particularly pleased, Mr. Chairman, that the African 
Growth and Opportunity Act before you includes the development 
of infrastructure and equity funds. The act reaffirms our 
Nation's belief in Africa's promise.
    As chairperson of the AFRICOM telecommunications system, I 
have devoted a great deal of time and resources to placing 
telecommunication satellite over the continent of Africa. And 
my colleagues, in our effort to enhance the economy of Africa 
and the economy of the United States, have found that ofttimes 
there was resistance. However, each of us believes that no 
nation can come to prominence, no nation can play a meaningful 
role in the world society, without having a meaningful 
infrastructure. So we see our telecommunications as one form of 
infrastructure.
    This bill, if enacted, will provide access to investors who 
now would not invest in Africa. It will be beneficial both to 
the United States and to Africa.
    Let me close by saying that I had much more to say until 
the light came on, and I must say to you, Mr. Chairman, that 
having been in government for many, many years in New York, I 
have always said it is like as a trial lawyer going to a jury, 
don't ever go after lunch: The crowd isn't there, not all the 
judges are present, the hearing doesn't go too well, and you 
are rushed. And sometimes your throat gets dry, as mine has.
    Thank you very much, Mr. Chairman. Thank you distinguished 
Members.
    [The prepared statement follows:]
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    Chairman Crane. I think that pitcher has water in it, Mr. 
Sutton.
    Our next witness is an old and dear friend, Ralph Moss. 
Ralph, proceed.

   STATEMENT OF RALPH L. MOSS, DIRECTOR, GOVERNMENT AFFAIRS, 
                      SEABOARD CORPORATION

    Mr. Moss. Mr. Chairman and distinguished Members, my name 
is Ralph L. Moss. For the past 5 years, I have had the pleasure 
of serving as director of government affairs for Seaboard 
Corporation, an American international agribusiness and 
transportation company. Seaboard is heavily invested in and 
engaged on the African continent. In fact, for over 30 years 
Seaboard has sought out and pursued opportunities in 
agriculture, grain and feed processing, ocean transportation, 
and we have survived and, indeed, prospered.
    In our field I do not believe that there is another 
American company with holdings and on-the-ground investments 
larger than our own. Seaboard, under the direction of our 
president, Harry Bresky, and our executive vice president, 
Joseph Rodrigues, has long viewed Africa being rich in both 
potential and opportunity. And the company has, thus, not been 
afraid to put its money and manpower on the ground.
    I am pleased to report that Seaboard's vision and risk has 
been justly and amply rewarded, and we continue to look for new 
and expanded investment opportunities in Sub-Saharan Africa.
    I have enclosed in my statement a profile of Seaboard 
Corporation.
    All of the above having been said and true, let me not 
mislead you or create any false impressions. Doing business in 
Africa has not been easy and Seaboard has succeeded only 
because we have endured, subdued, and overcome all the 
difficulties, obstacles, and travesties which are, alas, the 
sad realities of doing business on the continent.
    I need not belabor the litany of these encumbrances as they 
are all too well known to any company that has dared an African 
exercise. Unfortunately, many American companies have been 
scared off by such horror stories. The USA has a very small, 
almost negligible, presence in corporate Africa, except, of 
course, for those states which have been found rich in oil and 
natural gas.
    Alas, this then has left most interaction between America 
and Africa in the hands of missionaries, aid workers, 
diplomats, and World Bankers, each of whom, no doubt, faithful 
to their assigned tasks and heavenly and immortal masters but 
not much darn good for business.
    I would contend that if the USA is to have, at last, a 
meaningful and positive effect and affect upon Africa, 
corporate America must take the lead. We must get ourselves on 
the ground, and search out and find the myriad opportunities 
there calling out for our special American intellectual and 
technological genius.
    Thus, it is with great pleasure that I come now to endorse 
the African Growth and Opportunity Act. This is a most 
significant and right minded piece of legislation dealing with 
Africa to come out of the Congress which I can recall, and I 
have been dealing in African affairs now for over 20 years.
    It is time that Africa be treated as an adult rather than 
as a dependent stepchild, and held responsible for her behavior 
and growth just as any other adult nation or continent of 
nations is so held. Neither aid, prayer or diplomacy have done 
a great deal to relieve the lamentations and suffering of the 
African peoples. Nor have they done much to disallow, uproot, 
and suppress the kleptomaniacal greed and bumbling incompetence 
of the parade of infamy that has been continental leadership.
    Mr. Chairman and cosponsoring Members, you are truly to be 
commended for giving Africa the opportunity to participate in a 
program that can lead to sustained economic growth, democratic 
development, and true freedom. This, I believe, is the first 
such adult bill, one which offers adult incentives and 
responsibilities to individual African nations but one which 
also offers tangible and achievable rewards.
    This bill also offers necessary encouragements to corporate 
America, realizing that some incentives and protections hereto 
are needed if a new era of real investment is now to be opened 
and achieved with Africa.
    Attracting solid American investment will not be easy for 
the Africans. As we have all heretofore acknowledged, Africa 
has not been the easiest place to do business, especially for 
American companies.
    Let me be clear. There can be no real economic recovery and 
sustained growth in a nonfree and nondemocratic state. Further, 
African governments must now fully open up their economies and 
provide a climate which truly welcomes, encourages and protects 
free capital investment and free markets. Until this has become 
the reality, no significant American investment will flow into 
Africa, this bill notwithstanding.
    Again, Mr. Chairman, I welcome the opportunity to endorse 
the bill and know that Seaboard will be in Africa, no matter 
what, and we will work with you in this endeavor to make it a 
reality.
    [The prepared statement and attachment follow:]

Statement of Ralph L. Moss, Director, Government Affairs, Seaboard 
Corporation
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    Chairman Crane. Thank you, Ralph.
    Mr. Mucerino.

 STATEMENT OF RALPH W. MUCERINO, PRESIDENT, AFRICA AND MIDDLE 
 EAST DIVISION, AMERICAN INTERNATIONAL UNDERWRITERS, AMERICAN 
                   INTERNATIONAL GROUP, INC.

    Mr. Mucerino. Thank you. I am Ralph Mucerino. I am the 
president of the Africa and Middle East Division of American 
International Group, an insurance company based in New York.
    Mr. Chairman, I am pleased to have been invited to appear 
before you today as a representative of AIG. AIG has a long 
relationship with Africa. We value our growing operations in 
South Africa, Zimbabwe, Kenya, and Uganda. Our African 
companies are vital parts of an international network that 
spans 130 countries.
    We intend to link relationships throughout the world with 
Africa by introducing new products, technologies, and transfer 
of skills. We are encouraged to see Malaysian businesses 
investing in Zimbabwe and South Africa so we can provide 
continuity in programs across national boundaries.
    We are encouraged by our joint venture with South African 
national civic organizations to establish a marketing company 
to train hundreds of members as agents that sell AIG insurance 
products in South Africa, resulting in significant skill 
transfer and job creation.
    We welcome the Growth and Opportunity Act as a framework 
for an end to dependency by supporting economic development and 
private investment. Congressmen Crane, Rangel, and McDermott 
should be commended for their vision and leadership in 
introducing this legislation, which is important to the growing 
number of American companies that wish to invest in Africa.
    Important policy reforms are occurring throughout Africa. 
Open markets lead to investments. Realistic exchange rates 
provide a level playingfield. Privatized state-owned industries 
open the market to competition.
    However, these reforms are only a start. Some existing 
policies deter investment, particularly when introduced in the 
middle of the game. Demands to divest assets to satisfy local 
ownership requirements, work permit processes that encumber the 
free flow of personnel and damage our ability to manage our 
assets, surplus requirements that force foreign companies to 
invest more financially--more than financially weaker local 
companies. Political reforms have started the flow of capital. 
More companies are looking to Africa to expand markets and open 
businesses which grow the economy and increase wealth.
    AIG's 77 years of international experience allow us to 
offer some insights as to the promotion of the flow of capital, 
capital flows to countries that welcome it and that provide an 
adequate return. Key issues are in the area of management of 
capital, majority ownership, majority control, and free flow of 
funds.
    An unencumbered insurance market helps developing countries 
mobilize domestic pools of capital to invest in infrastructure 
projects. Capacity and financial strength of the insurer are 
keys to attracting investment. An unencumbered insurance market 
introduces new products needed by expanding businesses which 
allow for the transfer of new skills and technologies.
    Mr. Chairman, we are encouraged by this bill. The equity 
and infrastructure fund initiative is an innovative proposal. 
AIG has extensive experience in infrastructure funds and the 
impact it can have in various geographies. We created a $1.1 
billion Asian infrastructure fund in 1994, with a focus on 
telecommunications, power, and transportation projects. This 
fund is almost completely committed and we are looking to a 
second fund with twice the capital.
    We are also considering an Asian debt fund. We have also 
put together successful infrastructure funds in Latin America, 
Russia, and the newly independent states, and we see the impact 
these funds can have on economies. Africa must provide a 
climate which can compete globally for foreign investment, 
which provides for the availability of sound infrastructure 
projects. There is a codependency between efficient commerce 
and modern infrastructure.
    Both depend upon capital and healthy capital markets. This 
is the most important piece of legislation to Africa in many 
years, and it comes at a time when many African countries are 
putting their economic house in order.
    AIG supports the effort to attract capital and expand 
business. We support the efforts to transfer skills, products, 
and technology which enhance the reliability of African 
industry. We look at AIG Zimbabwe, AIG South Africa, AIG Kenya, 
and AIG Uganda as vital parts of a global network and where 
success will allow for the expansion into other African 
nations.
    Mr. Chairman, I appreciate this opportunity to offer our 
perspectives, and we look forward to a continued dialog with 
you and your Committee.
    [The prepared statement follows:]
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    Mr. Crane. Thank you.
    Mr. Carter.

   STATEMENT OF WILLIAM B. CARTER, PRESIDENT, AT&T SUBMARINE 
                         SYSTEMS, INC.

    Mr. Carter. Thank you very much for the opportunity to be 
here today and participate in the discussion on the 
legislation.
    I would like to put aside my written testimony for the time 
being, but I would request it be a part of record.
    For the last 10 years, I have been fortunate enough to be 
associated with the fastest growing part of communications in 
the world. My company installs and manufactures undersea 
fiberoptic systems. 10 years ago, 80 percent of the 
communications of the world was carried on satellite. 
Currently, today, approximately 70 percent of the world's 
communications is carried on undersea fiberoptic cables. The 
connectivity in the last 10 years has grown substantially along 
with that. In the last 10 years, no countries, zero countries, 
were connected with undersea fiberoptics. Today, almost 100 
countries are connected internationally via fiberoptic cables.
    I would draw your attention to the map, which is the next 
to the last page of my testimony, which points out a glaring 
deficiency in that ubiquitous network, and that is, Africa is 
not connected via fiberoptic connectivity to any place. In Sub-
Saharan Africa, only South Africa is connected via fiberoptic 
connectivity to the rest of the world.
    Countries today are competing with each other for trade and 
investment. Countries compete with export goods and attracting 
outside investment. That essentially requires connectivity to 
the global marketplace. That connectivity by choice, by media 
choice, is that by fiberoptic connectivity. Africa today is 
solely deficient upon that. A solution to that in my opinion is 
what we call Africa One.
    Africa One represents a fiberoptic undersea cable that 
completely surrounds the continent of Africa. This solution was 
developed through collaboration of the ITU, the Regional 
Satellite Administration and Coordination Committee in Africa, 
and the Pan-African Telecommunication Union. It is a 
collaboration of government and private sector that has come up 
with a solution to develop a regional network for the entire 
continent of Africa.
    I emphasize the point, regional. A regional network is 
necessary to not have disparity between countries and not have 
migration of workers from one unprosperous developing country 
to one that is prosperous. We would rather migrate the work to 
people rather than have migration of people to the work. That 
solution depends upon this legislation.
    This legislation has mechanisms which will assist in 
getting the finance for Africa One. There are 29 countries that 
need approximately $15 million to connect fiberoptic Africa One 
fiber connectivity. This legislation applies the mechanisms 
that make that possible. Consequently, Africa One, our solution 
for fiberoptic connectivity to Africa, is completely consistent 
with this legislation.
    I appreciate the opportunity to testify before you, and I 
also appreciate the support to this legislation.
    Thank you very much.
    [The prepared statement and attachments follow:]
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    Chairman Crane. Thank you, Mr. Carter.
    Dr. Franklin, I was intrigued by a statement in your 
written record about how you observed that trade and investment 
opportunities had benefited some of the poorest, more rural 
regions of Sub-Saharan Africa already. Can you elaborate more 
fully on that.
    Mr. Franklin. Yes, Mr. Chairman, I would be pleased.
    One of the surprising things is that of the various 
countries of Africa in offering, in East Africa, the 
relationship with Kenya and Tanzania, in particular, in Ghana, 
the relationship with its neighbors.
    As the policies and the rules for trade have tried to make 
these countries more open to trade with Europe and the United 
States with the rest of the world, a very interesting 
phenomenon has occurred, that they are trading more with each 
other. And the kinds of things that they are trading are things 
like, for example, in Ghana, gari, which is a meal prepared 
from the root of manyar plant, in English known as casaba.
    We are looking at the statistics. Something like 10 million 
dollars' worth of gari--that is a traditional food in West 
Africa--is now going across the border in small loads, 80 to 
100 kilograms, to the neighboring countries of Togo and 
elsewhere. This means that very, very poor people out in the 
hinterland are benefiting from the policies that were intended 
to improve the ability of the better situated enterprises to 
deal with their partners outside of the continent.
    I have just spent some time in the Arusha region in 
Tanzania. They are taking advantage there. It is a slightly 
more advanced situation, but I think it is perhaps indicative 
of the sequencing of incorporation of very poor people into the 
global economy out of the Arusha region, which had 
traditionally, or is famous for its coffee exports. And coffee 
exports in Tanzania had traditionally been sold to the coffee 
board and shipped out through Tanzanian ports.
    In the very early eighties, when the policies in Tanzania 
were very, very severe, the coffee plants were being uprooted 
and the peasants were growing their own maize and corn 
products, but they also learned the only way to get the money 
to buy the small things they needed to have, like batteries for 
their flashlights and transistor radios, was to smuggle; well, 
what was then called smuggling today is called cross-border 
trade. But today, the farmers of Tanzania, in the northern 
region along the border, are cross-border trading. It is no 
longer called smuggling; it is no longer illegal. They are 
exporting high-value horticultural products that take advantage 
of the very well established industry that is headquartered in 
Nairobi.
    And so out of the Arusha region, the French people are now 
able to eat delicious adaqua beans and the Dutch people are 
able to wear the flowers grown there, and it is because of this 
cross-border trade.
    And I want to emphasize that there are many folks who have 
a romantic view of Africa and, in their love for Africa, want 
to preserve Africa in its state of poverty, because they want 
to preserve the traditional foods for consumption within the 
village, they want to preserve those traditional ways of doing 
things, and in so doing, they very often punish the poor people 
of Africa from having opportunities, the poor people of 
anywhere where they can trade.
    So I know sooner or later there will be opposition for this 
bill from very well intentioned folks that are going to be 
concerned about what is this bill going to do for the poor 
people of Africa. I can document very concretely the examples I 
have cited in many more that over 25 years of presence in 
Africa I have personally and my company have experienced.
    Thank you for the question, sir.
    Chairman Crane. I am a little dismayed at hearing where 
some of the opposition will come from. And I remember we used 
to spend time down on the family farm before World War II. We 
had no internal electricity, no indoor plumbing, it was kind of 
primitive facilities, and didn't even have a tractor; we did 
all the plowing with horses in those days. But I can guarantee 
to you that all the residents in that area are happy with 
modernization.
    And I happily yield to Charlie.
    Mr. Rangel. Every time I hear you tell those stories, 
Chuck, I just choke up.
    I don't know where to start. One of the major problems that 
we have with any trade bill is with people who are insecure, 
who like to blame trade for most all of their problems. 
Certainly, in the last election we found some candidates that 
were using trade to conjure up fear. I want to congratulate AIG 
for the great work that they are doing in education.
    But it seems to be my experience that the multinationals 
spend tens of billions of dollars in educating and training 
their own, but our school system is failing and crumbling so 
that we can't even get anyone in some of our inner cities to be 
eligible for the great training that these outfits have.
    It would help us a great deal if, in the course of helping 
us to liberalize trade and tearing down the barriers to free 
trade, if you could see your way to put on your list of 
national priorities not only wiping out capital gains taxes and 
wiping our inheritance taxes and all of those things that 
impede capital formation, but to concentrate on human capital 
as well, because our businesses have--they don't have the 
luxury of just finding out what is going to happen at the end 
of the week or at the end of the year, you have to plan for 
decades ahead.
    And as you see a growing number of Americans being locked 
up and homeless and creating children when they are children, 
and drugs and alcohol, you should be concerned that we go to 
that international negotiating table with close to 2 million 
people locked up that should be productive, and they are 
unemployable, and this number is increasing.
    So Mr. Sutton is involved in all types of literacy programs 
and education programs, he is involved in my empowerment zone, 
but we could be overwhelmed by people who are absorbed in fear 
unless we have people who believe, when the President talks 
about high-paying jobs and high-tech jobs, that they could be 
included, and in too many towns and villages, they know they 
are excluded.
    AIG is doing a terrific job, as well as many, many other 
corporations, and we are working with them, but I don't know 
how we are coming out in this budget negotiation. And I have 
lobbyists visit with me about so many things they would want to 
make certain remain in the budget, but, unfortunately, the 
education proponents in the budget have not been on their list. 
I wish we could find some way it would not be just a problem of 
poor folks but a problem our country faces and some of you 
could see your way clear to get that on your national agenda.
    Thank you.
    Mr. Houghton [presiding]. Mr. Rangel, you have somebody 
else in the chair now. Are you all choked up?
    Mr. Rangel. No.
    Mr. Houghton. Mr. McDermott.
    Mr. Rangel. Wait until he starts telling you the story of 
his background.
    Mr. McDermott. I will turn off my microphone, and you can 
talk about your background, sir.
    Thank you Mr. Chairman.
    When I went to Charlie, we were talking about this way back 
2 years ago, he was saying, you know, when we talk to people, 
they always say you can't do business in Africa. So I am really 
excited by this panel. And I would like to hear individually 
your answer to the person who says to you, what do you mean, 
you can't--you are doing business in Africa, you can't do 
anything there? How do you respond when people tell you that 
you can't do business in Africa?
    Anywhere--start with Mr. Carter, and just move across.
    Mr. Carter. Thank you very much. I appreciate that.
    What I tell them basically is, the potential of Africa is 
one of the last untapped resources in the world. For instance, 
in Zaire, the quality of copper is four times that of the 
United States. But we can't get to the resources. We can't get 
in to have the investment and trade in Africa because of the 
limits of being able to get into it. That is all.
    In my opinion, Africa, to use Secretary Kemp's analogy, is 
somewhat like a 747, and it requires about a 300-mile-an-hour 
wind out of the engines of the 747, which is called breakaway 
thrust, to move it in the first place, and, in my opinion, that 
is where we are with Africa. The whole continent of Africa, in 
my opinion, is about South America 10 years ago, and it is 
about to unleash one of the largest economic growths we have 
seen in this world. I think the potential is larger.
    Mr. Sutton. One of the reasons I am so excited about this 
bill is, yes, there are many people who say you can't do 
business in Africa--it is too poor, you won't get paid, just a 
variety of things.
    Over the last 3 years, we have met with virtually every 
major investment banker in America with regard to our 
telecommunications project. It appears now that on Monday we 
shall have released ourselves from all this past and we will 
have accomplished a joint venture that will permit us, within 
this year, to place a satellite in the sky, and maybe we can 
then use the cable from around the continent; it will be very 
helpful.
    But one of the reasons, we think, is perception, that there 
is this perception: We were rejected, rejected, rejected. But 
this bill is an invitation to the private sector of America to 
invest in the infrastructure of Africa. There has never been 
anything like this.
    There are some things I disagree with. For example, I think 
in waiting until 2020 before free trade is a very long wait, 
but I think this bill, if enacted, will accomplish more with 
regard to Africa, wiping away old ills, wiping away old 
perceptions; there is nothing like it. Please enact it.
    Mr. McDermott. Mr. Franklin.
    Mr. Franklin. Mr. McDermott, for too long, certainly since 
independence, Africa spent its first 40 years of independence 
destroying much of the wealth that it had, and that was 
destroyed by the action of the African governments that 
ostensibly wanted to help the poor people. But in case after 
case after case, they destroyed agriculture, they destroyed a 
lot of the productive capacity. And in spite of this, you saw 
that the petty entrepreneurs, the market women and the farmers, 
managed to feed the people.
    And so what I say to the people that I want to encourage to 
come is, that is where some of the real entrepreneurship 
exists. In spite of all they have had to carry from your 
governments heretofore, the African people are ready to do 
business with each other and ready to do business with us.
    Mr. Moss. Mr. McDermott, I have been asked that question 
several times, and we always at Seaboard kind of chuckle, 
because we have been successful.
    I think American business--no foreign place has been easy 
to do business, and Africa is no different. I think by 
ignorance and ignoration, by ignoring the African continent, we 
have lost out. Every time I am asked that question, I always 
come back with the answer: I go to Africa about once a month, 
and why is it I see Malaysians, I see Singaporeans, I see 
Germans, I see all of our European brothers, people from the 
former CIS, you see everyone in Africa except Americans? You 
hear every language spoken in Africa except American English.
    I think Americans have shied away from Africa out of 
ignorance and ignoration, and we have lost. We have not dared.
    Africa is not easy, but no foreign place is. Where there is 
greater risk, there is greater potential reward. And the 
Africans, unlike many of the other regions in the world, want 
to do business with Americans. They know the American labels; 
they know the American product; they know and respect the 
Americans, generally, in business.
    So I think Seaboard has been successful simply because our 
chairman has dared to be successful. He has dared to go into 
Africa. He has put his own money on the ground. He has not 
sought financing from banks. We have just bought a flourmill in 
Beira and paid $7.3 million. That was Harry Bresky's money. We 
are going back to Mozambique now to build 12 million dollars' 
worth of silos at the port of Beira. That will be Harry 
Bresky's money.
    And so American business has got to get off the dime and 
dare to do.
    Mr. Mucerino. From an AIG perspective, we have been in 
Africa for many decades, and we have been successful because we 
have had a vision that went beyond an immediate set of issues. 
We have seen that persistence pays off. We have started with 
reasonable objectives. We built upon our successes, and we have 
become part of the local community and transferred skills that 
wouldn't have necessarily been available from other insurers in 
the area given our international backgrounds. So from that 
perspective, I think, I would say persistence is the key 
virtue.
    I would like to comment also on Mr. Rangel's earlier 
comment about AIG supporting a broader-based educational effort 
in the United States. We do support many foundations, 
corporately. We are actively involved in an inner-city program 
in New York City, and I have one of the kids in this program 
starting work for me in another couple of weeks to provide 
employment where, given, employment might not necessarily be 
available. I will be happy to send Mr. Rangel some more details 
on all of the initiatives that were involved with it.
    Thank you.
    Mr. McDermott. Thank you.
    When I lived in Zaire, I always wanted a Land Rover, so I 
bought one in England and had it shipped down. And I realized I 
made a mistake; I should have brought a Land Cruiser, because 
the Japanese were everywhere; you could buy parts and service. 
And I always wondered why Americans weren't there. So I hope 
you people will help spread the bill.
    Thank you.
    Mr. Houghton. Thank you.
    Mr. Jefferson.
    Mr. Jefferson. Thank you, Mr. Houghton.
    All of you have done extensive business in Africa, 
apparently, and the bill talks about having African governments 
make appropriate adjustments in their rules and in the 
marketplace there to incentivize U.S. business to get more 
involved.
    If you were going to advise the African governments on this 
matter, what would you suggest as important measures that the 
African governments should themselves take to try for U.S. 
investment trade?
    Mr. Moss. Congressman Jefferson, may I?
    We have, as I say, just gone around the hump and now coming 
up into East Africa in Mozambique. I think the Mozambique 
Government is to be commended and really singled out for the 
program that it has adopted. It is a very realistic program, 
and it is being very successful. They have gone to 
privatization.
    Here you have a country that was many years a Marxist state 
and have moved under President Chissano to an open and free 
market, capitalist economy. The Government of Mozambique has 
been most transparent, it has carried out the most transparent 
privatization program we have seen any place in Africa.
    They have privatized over 3,000 companies, large and small. 
They have attracted investment not only from their former 
colonial ruler, Portugal, but you now have Seaboard, you have 
Enron there, you have other American companies looking, South 
African companies, companies from all other Europe and Asia.
    They are moving to reduce their tariffs, the protective 
tariffs that they have had. They are moving to clean up their 
customs operations. They have truly, I think, recognized that 
to have and to encourage foreign investment, they must clean up 
their act, so to speak, and they have done that. It has been 
difficult, but they have done it, and they are to be commended.
    Mr. Franklin. Mr. Jefferson, if I may add, I think one of 
the very important things is that the process of privatization 
is not finished--and I mean it in a very special sense--in that 
maybe the enterprises have been privatized and they are now in 
the hands of private citizens of Africa and their international 
partners, but too often the people that represent the African 
interests remain the same bureaucrats that were controlling the 
business enterprise before or are people that are well 
connected to those.
    So that there are many, many barriers to entry. And so new 
enterprises, new businesses, new ideas, find it very difficult 
to come in, because connections to the palace, connections to 
the castle, connections to the minister or to the principal 
secretary of this ministry or that other ministry still in 
Africa today remain much too much a determinant of the success 
of a potential business. And that means corruption, it meanings 
that only the elite and the well situated have access to these 
opportunities.
    So we really want to take Africa to the next level of 
economic performance. We have got to harness the people who 
have been excluded by their governments and by all these rules. 
And that is why I have argued here that we need some sort of 
presence there. It is not just a commission that would meet on 
a biannual basis and harangue the top level of government 
officials.
    They will tell you: Oh, but we have a committee, we have a 
private sector advisory group. The folks that have access to 
the private sector advisory group meet at the five-star hotels 
with their international business partners and with their 
African business partners. That is not where the wealth in 
Africa resides. If we are going to get Africa moving, we have 
got to get the rest of Africa that doesn't meet at the five-
star hotels to come to the business table also.
    Mr. Mucerino. If I may, I would say a key phrase is to keep 
a level playing field. All too often in the midst of conducting 
business, some bureaucrat will show up and say: Those aren't 
the rules anymore. We have changed the rules, and you have to 
sell 51 percent of your company to local interests, whom, by 
the way, we will recommend. It puts us in a very difficult 
position to justify maintaining assets in countries with that 
kind of environment.
    Secondly, there are some countries still that require us to 
cede a certain percentage of our income into state pools, 
thereby depriving us to a rate of return on all of our income. 
So consequently, if we have earned $1 profit, we have given 37 
cents to a reinsurance company that doesn't allow us to make a 
proper return on our investment.
    Mr. Jefferson. I appreciate that. I was just saying to Jim 
McDermott here that the problems you are talking about in 
Africa, in some Asian countries we heard the same conversations 
from our chambers of commerce, businesspeople there, and it is 
a long-term process, apparently, getting the rules right for so 
many foreign interests, but--I mean areas.
    But one provision of the bill I think is very good is that, 
in order to get the participation and the benefit from the bill 
and the trade and investment and all the rest of it in 
financing, and even the debt relief aspects of it, we are going 
to have some serious talks about getting down to rules that are 
market-oriented rules that make sense for American business or 
any other business to locate and prosper there.
    So I think your comments are very important and very 
timely, and I think they are very helpful to us. Thank you.
    Mr. Houghton. Thank you, Mr. Jefferson.
    I have a few questions. Thank you, Mr. Jefferson, but I 
particularly want to thank Mr. McDermott. You have been in on 
this legislation, and we wouldn't be here talking about it if 
it weren't for you. So I appreciate your part in the 
leadership.
    I have got one specific question and a couple of general 
ones, and you don't have to have any elaborate or lengthy 
answers.
    Mr. Carter, I would like to ask you first about the 
telephone system. You have been talking about the Africa One 
network. There has been an emphasis on increasing the number of 
phones in the country related to increasing the productivity 
and growth, which is right. But I wonder why the employment for 
Africa is better than concentrating resources on the local 
telephone density for individuals in African nations.
    Mr. Carter. It is an excellent question. I don't think 
anybody has ever done wrong with teledensity, and Africa is 
primary for increasing teledensity.
    Everyone comes back with stories out of Africa. My own is 
one in investment in teledensity. I look at it as an inside-out 
approach, and for the specific unique needs of Africa at this 
time, an outside-in approach--in other words, connectivity to 
the global marketplace and the ability to export products and 
ability to attract outside investments, of which international 
communications is the hardest, the real necessity of getting 
done--that provides a funding mechanism to actually do 
something about the teledensity problem within Africa.
    Investment alone doesn't provide that funding basis, 
whereas an outside-in approach, the global connectivity would 
provide a funding mechanism actually to increase teledensity.
    Mr. Houghton. So what you are saying, in effect, if you 
have an outside-in approach, the internal will take care of 
itself.
    Mr. Carter. Well, it will be assisted through the 
investment that could be attracted through decent 
communications through the international global marketplace, 
yes.
    Mr. Houghton. Thank you very much.
    Now, Mr. Sutton, I would like to ask you a question, and 
this has to do with people, and it has to do with people in 
training. One of the great successes of the United States, I 
think, in Europe immediately after World War II was the 
establishing of the pockets of business education, law 
education. There is artistic education, but there hasn't been 
business education. And you can have an entrepreneurial spirit, 
you can be smart, and you can have the savvy for business, but 
you get to a particular point and you need, as a lawyer needs, 
some more formal education. And I don't see that happening in 
the continent of Africa. I don't see it in South Africa; I may 
be wrong. I don't see it in Zimbabwe or Uganda or any place 
like this.
    Do you have thoughts on this?
    Mr. Sutton. Yes, I think there is an increasing 
concentration on education. But increasingly the African 
nations are investing in education and higher education.
    Mr. Houghton. Good. And you think it is not only specific 
basic education but also it is the type of education which can 
help people that are going to take businesses a step further.
    Mr. Sutton. I am not sure that the concentration is on 
those things that might have application to the real world. 
Most of it is academic. The facts I have before me don't show 
in mechanical education and engineering and sciences there is 
any concentration at all on that. Most of that is taking place 
abroad.
    Mr. Houghton. All right. Would any other of you gentlemen 
like to comment on this?
    Mr. Moss. Yes, sir. In the milling business, for instance, 
we don't like to employ or send expatriates overseas. It is 
very, very expensive and difficult family wise, family 
considerations. In the milling industry, the Kansas State 
University in Manhattan, we have sent many, many African 
millers. Men and women who have trained and worked for us have 
gone to Kansas to be trained to be master millers.
    In almost every one of our mills in Africa, we have African 
master millers who have been trained, whom we are advancing as 
quickly as we possibly can, because it only makes economic good 
sense to put these people into management positions. We see 
this in other areas also.
    So there is, but it is limited, and it is regrettable that 
it is so limited, training opportunities. They do exist I know 
in milling, but they are limited.
    Mr. Houghton. Yes, because one of the problems in deciding 
to invest in a country outside of your own is not just the 
infrastructure and the money available, but the people who can 
carry on those specific tasks, and they are getting 
increasingly technical.
    I have a question, and, Mr. Moss, maybe you can give an 
answer, or anybody else also. When you are in business in the 
United States, people come into your office all the time and 
say, if you ever want to put a plant someplace, put it down in 
Research Triangle, because Raleigh is a great place to live, 
and so on and so forth.
    I have been in business for many years. People come from 
African countries and say: ``We would like investment.'' But 
there is nothing behind that. There is nothing to say this is 
what the taxes are, this is what we will do, this is what the 
educational system is, this is the type of transportation 
facilities.
    I just wonder whether there are not a lot of people, not 
only in this country but other hard currency countries, who 
would like to invest in Africa but just don't know enough about 
the specific areas there, where they get that information from 
Taiwan and from Singapore and from Germany and places like 
that.
    Mr. Sutton. Yes, I have an opinion. Right here in the 
United States, you will find that those cities, those towns in 
America that get the large investments are towns that offer 
certain tax cuts and other benefits. Education can tell you the 
status of their educational system there. So the business moves 
there, because it knows that there is an infrastructure and 
there is an educational base and there is receptivity.
    That requires some sophistication, because right here in 
America a number of our towns and cities don't know how to do 
it well. As a result, when the competition is there, they don't 
gain any entree.
    Mr. Houghton. Thank you.
    Does anyone else have a comment on this?
    Mr. Moss. Many times--and I don't mean to be critical--the 
Embassies are becoming more and more sophisticated and they are 
sending men and women who can be very good salespersons for 
their countries. But again, American industry doesn't know a 
lot about Africa, and what it knows is mostly negative.
    The African governments can hire all the PR companies you 
want to hire to try to sell the country. The best way they can 
sell their country is having an Ambassador and a commercial 
officer being as sophisticated as possible, and they should 
encourage visits.
    We go and look at countries repeatedly. We looked at 
Mozambique 3 years ago and said no to an investment, and it was 
only after 3 years we went back, and by then the investment 
climate had improved, and we then decided to make the 
investment in Mozambique.
    We are looking all the time, and most times we come back 
and say no, it is not the right time, it is not the right 
circumstance or situation.
    But I think that the African governments have got to sell. 
They are their best salesperson. The Ambassador and the 
commercial officer, can be the best and most effective 
salespersons for their countries. But the African governments 
themselves must show a willingness to be encouraging of 
American investment.
    Mr. Mucerino. If I may, one of the issues is that 
infrastructure--Mr. Sutton touched upon this before--is really 
the major selling point of putting a plant or equipment any 
place in the world, and the African countries are at a 
disadvantage because of the lack of this infrastructure. So it 
is sort of a catch-22.
    We receive, you know, many approaches from different 
countries around the world. Very rarely do we receive 
approaches from African countries. Instead, what we receive is 
approaches through third-party entrepreneurs who are looking to 
engage us in joint ventures in different countries and very 
specific areas.
    I think if we look at some of the free trade areas in 
Tunisia or Dubai that are being established now, it is very 
easy to move into the facility like that, because all you have 
to do is move in your inventory and you are ready to do 
business. You have got communication, you have got electric, 
you have got transportation, and right now the African 
countries are on that same playingfield.
    Mr. Houghton. I thank you very much.
    Mr. Rangel. Could I?
    Mr. Houghton. Yes.
    Mr. Rangel. When I went last to Africa with Ron Brown, I 
saw where the Ambassador had converted our Embassy into just a 
salesroom. I mean, everyone who came from America with 
business, deals were set up, meetings were set up, 
encouragement was given, banking facilities were made 
available, and it was such an exciting thing.
    And I just watched Ron Brown in total amazement of how 
people in the different African countries felt so impressed 
about his sensitivities not just in selling American goods but 
of trying to put them in the position of having a disposable 
income, to improve education and improve health. And while for 
some reason Americans seem to be well liked throughout the 
world, I got the impression that Ron Brown, in addition to 
being extremely qualified, had a sense of identity with those 
people in South Africa.
    Now, in your background, you would be qualified and do well 
no matter what, where your country was based, whether it was in 
Europe or Asia. But I asked the sensitive question because I 
don't see enough people of color in the Trade Representative's 
Office, I don't find enough people of color have been trained 
in the State Department, and I always thought that a country 
would like to see from time to time when America has the 
gorgeous mosaic of every our country did you ever find that 
your color was an asset in addition to the abilities that you 
brought in doing business in Africa?
    Mr. Moss. Well, I sometimes find that it is a curiosity. 
Many times it is a curiosity, because, quite frankly, many 
Africans in the five-star hotels where American businessmen 
gravitate don't see a lot of black American businessmen.
    In Mozambique, for instance, because I go every month, it 
is amazing for me to watch the desk reception staff. They have 
all become like family to me now because we all know each other 
now so well. They watch me talking to the Minister of Finance 
or the chairman of the port authority, and they see us shaking 
hands; and so forth. They watch me talking to these people, 
whispering in their ear the way the white American businessman 
do, and they look at me, and, quite frankly, I find it amusing. 
I also understand that it is encouraging to them that I am in 
this position, and I feel very fortunate.
    I am in this position, I hope, first because I am qualified 
to be in it. My color does help, and it has served as an 
encouragement. And I think that it is unfortunate that we don't 
see more people of color, of any color, and we don't see more 
women on the continent doing business.
    Mr. Rangel. What you are saying indirectly is, by seeing 
your success and accomplishment, that is really a plus for the 
United States of America.
    Mr. Moss. I think that it is, because it demonstrates the 
truism that America is a land of opportunity. And I think this 
was one of Ron Brown's great strengths; here was a man who 
would have been successful no matter where he was from, no 
matter where he went, no matter what he did. The fact that he 
was successful as a black American who had the ear of the 
President, who had the ear of presidents, who commanded 
corporate chieftains, brought them around the world at his 
command, I am sure that that was a great encouragement. They 
speak of Ron Brown, no matter where you are, they speak of Ron 
Brown, not only in Africa, but in Africa it was so positive, 
his presence, because he really proved that America was 
concerned for Africa, that the leadership was concerned for 
Africa, and Africa could be treated as an equal nation, equal 
state.
    Mr. Rangel. And on the other side of the ocean, every black 
kid in every black community would hope that he or she could be 
Ron Brown.
    Mr. Sutton. May I address that issue? Over the years there 
has been a change in attitude in Africa with regard to African-
Americans.
    Before there was an Andy Young, before there was a Ron 
Brown, and before Africans saw black Americans in positions of 
stature, before there were any black mayors, in that period of 
existence in Africa, visitations, you would find there was not 
great receptivity because they didn't believe African-Americans 
had any power.
    But as the years have passed, there has been a marked 
change in the experience, and I can say this as a person who 
has for the last 35 years been investing in Africa and been 
involved in the freedom movement in Africa, raising funds and 
things of that nature, using some of my radio stations around 
this country for raising funds for emerging governments. I have 
found a dramatic establishment of affection between Africans 
and African-Americans.
    For the first time, we have had an experience right now of 
us being asked, not because we sought it out, but being asked 
to join as partners in radio stations throughout Africa. Why? 
Because we have developed the expertise here. They have heard 
of the Inner City Broadcasting Corp. in America, and they come 
to us.
    But I do think there is a distinctive advantage right now 
for African-Americans in Africa. I don't like that necessarily, 
because I think that we are all Americans, but it is a fact of 
life.
    Mr. Rangel. Thank you.
    Mr. Houghton. Thank you very much, gentlemen. I appreciate 
your being here, and then we will have the next panel.
    The next panel will be Mr. Goudiaby, president of ATEPA 
Technologies, member of the board of directors of the West 
African Stock Exchange, Senegal; Nalla Fall is president of 
Afric-Gestion in Senegal; and James Obi, chairman of the Obi 
Group in Connecticut.
    If you gentlemen would come to the witness table, we would 
appreciate it.
    Mr. Rangel. Mr. Chairman, it is my understanding that two 
of our witnesses traveled from Senegal just to be here at this 
hearing today. Is that so? Is that true?
    Mr. Goudiaby. Yes.
    Mr. Rangel. Let me tell you how honored we are that you 
would make such an effort to be with us. It is deeply 
appreciated. And I yield back to the Chair.
    Mr. Houghton. I would second that. Thank you so much for 
your graciousness and the time you have spent here, but we hope 
it will be worthwhile.
    Let me call on Mr. Goudiaby.

     STATEMENT OF PIERRE ATEPA GOUDIABY, PRESIDENT, ATEPA 
                       TECHNOLOGIES, LTD.

    Mr. Goudiaby. Thank you very much, Mr. Chairman.
    I would first like to apologize for not having written my 
statement in the proper manner. It is just that I am a very 
busy man traveling every day, and when the fax came I just 
instructed someone in my office to do a little statement and 
printed it. So they put an IBM computer, put the pictures in 
it, and came out with this very beautiful brochure, which isn't 
really what was asked for, so I apologize for that, just 
because they didn't know.
    Mr. Houghton. I think it is a great idea, and I think we 
ought to copy that.
    Mr. Goudiaby. Well, I will tell you one thing. They used an 
IBM computer made in America but which I bought in France. So 
that tells you how important this hearing is to us, Mr. 
Chairman.
    Mr. Rangel. I was telling the Chairman that maybe we can 
get one of those disks put in it where the testimony could be 
played back as well.
    Mr. Goudiaby. Well, anyway, it is really a great pleasure 
for me and a big opportunity to be able to speak on my own 
behalf as a businessman from Africa, but also as an American-
trained student from Africa. I am very grateful to the American 
people to have given me back 30 years ago what I think is one 
of the best educations that could be provided in the world 
today. And I have been since making a lot of projects in 
Africa, including a lot of central banks, hospitals.
    We just finished building an airport in Bonjoul, and as I 
sit talking to you here, I have about 50 containers of goods 
travelling from America to Africa to build a five-star hotel. 
So this is a great opportunity not only for us but for the 
whole continent of Africa.
    As a matter of fact, I brought with me one of the 
newspapers with an interview of Jim McDermott. You didn't see 
it? Well, this is the recent copy that came out the day before 
yesterday. I brought a copy for you. This said--means that the 
Americans are pushing Europe--well, not out of Africa, but they 
bring pressure to Europe.
    So I hope you maintain the pressure, and this is why I am 
very glad to be here to testify for you.
    Since this will be retyped and, Chairman, with your 
permission, I hired an American team to do the writing I should 
do, so we will be doing this report in a proper manner so that 
it could be in the files for the record.
    I would like to start by saying that since the last panel 
ended with our very dear late Ron Brown, to say that in Africa, 
to us, Ron Brown is a hero, and we are very eager to see that 
another Ron Brown comes out of America to show his appreciation 
for Africa.
    And we hope, Congressman Rangel, that maybe you will be the 
next Ron Brown for Africa, because we really need a new good 
partner who knows what we want and who cares about us. That is 
the most important thing.
    Now, I don't want to go through all these things about how 
the trade is not efficient, only 4 percent of this, 5 percent 
of that. I just want to concentrate on a few things that, as a 
businessman, are important to me and to us.
    The first thing is that the image of Africa has to change 
in America, and I think that this bill, and with appropriate 
measure, you can help us change this image using the media, 
because, unfortunately, all the things that the media see about 
Africa are disasters, wars, Idi Amin type of dictators, and so 
forth.
    Now, if you just portrayed the real image of Africa, 
winning Africa, we think that businesspeople from America would 
come very naturally to Africa and make business. So to us, this 
is a very important issue, and I wish that the Congress would 
see to it that this conversion of mentalities, when you see 
Africa, you think that, well, it is hard away in the jungles, 
they are all killing each other, that is not the right picture 
of Africa.
    The other thing that needs to be known is that Africans 
didn't just sit back and relax and wait for aid and wait for 
programs and wait for people to come and help. We are 
organizing ourselves to be able to reach out to the hands that 
want to come to work with us.
    And Mr. Jefferson said earlier this morning that, talking 
about the coast and all these regional organizations, to me, 
these organizations are certainly the most important things 
that you people can work with. And that is one of the reasons 
why--well, the reason why I was invited to this panel is, I was 
establishing across the street an office to try to promote the 
West African region, which has come into inside the coast, and 
inside the coast you have the African countries who are trying 
to do everything they can to reach to America.
    Not that we want to forget the French, because we speak 
French, but to us the area of Internet with the area of global 
market and American is the priority now.
    I will probably come back when the questions are asked, 
but, in conclusion, what I want to say is that everybody I have 
talked to before coming here are really, really awaiting, 
something big out of this congressional bill.
    I talked to the President himself, President Abdou Diouf, 
his prime ministers. We talked about these things for more than 
half an hour, and we are really all eager to see that America 
regards Africa as a partner and as a partner who really wants 
to do things the right way, the proper way.
    Well, I guess that when the questions come maybe I will 
elaborate a little more. I thank you again, and we will wait 
for the questions.
    [The prepared statement and attachments follow:]
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    Mr. Houghton. Thank you, Mr. Goudiaby.
    Mr. Fall, would you testify, please.

 STATEMENT OF PAPA NALLA FALL, PRESIDENT AND DIRECTOR GENERAL, 
GROUPE AFRIC-GESTION; NATIONAL COUNCIL OF EMPLOYERS IN SENEGAL; 
  NATIONAL ASSOCIATION OF CONSULTANTS IN SENEGAL; SOCIETY FOR 
WOMEN AGAINST AIDS IN AFRICA; AND CARRIER AND EMPLOYMENT FORUM 
                           IN SENEGAL

    Mr. Fall. Thank you very much, Mr. Chairman.
    My name is Papa Nalla Fall. I am from Senegal. I didn't 
have the opportunity that Goudiaby has to study in the United 
States, but I am coming back to the States because I am a 
visiting professor of the Wharton School of Business in 
Philadelphia, and being a businessman as well as professional 
at the Wharton School of Business in Philadelphia, I think when 
I got the bill, I had two reactions. The first reaction is the 
first one of enthusiasm, my saying, at long last, we have won. 
And the second reaction is the reaction of saying, now what 
next?
    So this is the next expectation. Why I was enthusiastic 
about the bill is the content of the bill. In order to achieve 
our growth objectives, it makes perfect sense to direct the 
funds to the development of infrastructure. All the speakers 
are talking about infrastructure in Africa, and I think it is a 
basic infrastructure that is needed to facilitate the 
circulation of goods, persons, capital, and make sure that what 
we call the poor people will have basics, growing local 
organizations can get there produce to the local market, to the 
national market, and to the international market.
    The second thing is when we invest in infrastructure, 
particularly in education, and I am very well qualified to talk 
about education, because being at the entrepreneurial center of 
Niger and the entrepreneurial center of Philadelphia, I know 
why we have to invest in human resources, because without human 
resources we cannot make our infrastructure profitable, we 
cannot make our investment profitable, we cannot make the 
relationship you are building within this bill profitable.
     We cannot make our investment profitable. We cannot make 
the relationship we are building within this year profitable 
for you and profitable for us.
    So, therefore, the equity fund focused on promoting both 
investment in local entrepreneurship ventures and direct 
investment of U.S. firms with emphasis on joint ventures. Then 
we promote job creation, technology transfers, export of 
American equipment, goods and services.
    Already, the U.S. export to Africa accounts for 100,000 
American jobs, an output of current American aid and 
investment. It is very small, but if we increase that type of 
export, that would increase the job creation in the States and 
will not deplete job creation in the United States.
    We are witnessing in Africa, and particularly in our part 
of the continent, an increasing amount of savings are being 
made by local entrepreneurs, be it man or woman, in what we 
call the informal sector. Those amounts of money are waiting to 
be invested in most productive and more modern aspects. That's 
why we need those basic infrastructures to be built up. So 
combine those savings locally that are looking for profitable 
investment.
    The economic forum to be set up within this bill is also 
timely, because this is the only continent which does not have 
annual or biannual meetings with high level chiefs of state in 
Africa. We have it on the Francophone side. We have it on the 
Commonwealth. Why not have it with America?
    And also, the last but not the least, the U.S. 
representative, to be very well versed in Africa and in trade 
in Africa and the investment in Africa, representing the U.S. 
Trade Secretary, could be also a member of that forum and could 
be also a type of implementing organization of the policy that 
would be discussed in that forum on an annual or biannual 
basis.
    My concluding remark is, this morning I was listening to 
some people talking about the Marshall plan, and I think in 
June this will be the 50th anniversary of the Marshall plan and 
the Harvard address by George C. Marshall. I think this would 
be also the time whereby by passing this bill you will make 
also history, because the Marshall plan was history and this 
bill would also be another type of historymaking--between the 
relationship between Africa and the United States.
    I thank you very much for listening.
    [The prepared statement follows:]

    [GRAPHIC] [TIFF OMITTED] 58319.386
    
Statement of Papa Nalla Fall, President and Director General, Groupe 
Afric-Gestion; National Council of Employers in Senegal; National 
Association of Consultants in Senegal; Society for Women Against AIDS 
in Africa; and Carrier and Employment Forum in Senegal
[GRAPHIC] [TIFF OMITTED] 58319.387

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    Mr. Houghton. Thank you very much, Mr. Fall.
    Mr. Obi, would you like to testify?

   STATEMENT OF JAMES E. OBI, CHAIRMAN, OBI GROUP, STAMFORD, 
   CONNECTICUT; DIRECTOR, MANAGEMENT DEVELOPMENT, EQUITABLE 
   FINANCIAL COMPANIES; MEMBER BUSINESS ADVISORY COMMITTEE, 
 BUSINESS COUNCIL FOR THE UNITED NATIONS; AND MEMBER CORPORATE 
                       COUNCIL ON AFRICA

    Mr. Obi. Thank you very much for the opportunity to appear 
before this Committee. I applaud the President and Members of 
Congress for the initiative to develop an African trade policy. 
I especially thank the Chairman of this Committee and 
Congressman Rangel and Mr. McDermott and all Members of this 
Subcommittee for the efforts that you have made to advance this 
bill.
    My name is James Obi, chairman of the Obi Group, an 
organization devoted to business development in Africa, 
specifically natural resources and consumer goods. I am also 
the director of management development for the Equitable 
Financial Companies, a member of the Global AXA Group. I am a 
member of the Business Advisory Committee of the Business 
Council for the United Nations and a member of the Corporate 
Council on Africa.
    I am an African-born American. I immigrated to the United 
States 30 years ago and built one of the largest life insurance 
and financial services agencies for the Equitable before 
forming the Obi Group 5 years ago in order to take back some of 
the things I have learned in this country to the continent of 
my birth.
    Our group is about to build a carbonated soft drink and 
bottling distribution business in the country of Malawi and are 
now exploring gold through a joint venture in that country. At 
the same time, we are in discussion with various African 
countries on oil exploration.
    I enthusiastically endorse the proposed legislation to 
develop free trade between Africa and the United States. This 
bill will be good for both.
    I want to tell you a story that Ambassador Paul Hare, U.S. 
Special Representative to the Angolan peace process, told at a 
recent Attracting Capital to Africa Conference, organized by 
the Corporate Council on Africa. This is how he said Angolans 
tell the story:
    At the beginning, when God created the world, he gave the 
best and most beautiful, richest parts to Angola. And so, the 
story goes, the rest of the world complained. Angola is, 
indeed, blessed. It is a beautiful country with majestic and 
breathtaking landscape. It is well endowed by nature. The land 
has good soil and river systems, making it potentially rich in 
agricultural production. Its oceans team with sea life.
    Offshore, substantial oil reserves created over the 
millennium from deposits coming down from the rivers into the 
ocean have been discovered and exploited.
    On the land itself, some of the best diamonds in the world 
are found, as well as other natural resources. Its people are 
hard working.
    The land, if anything, is underpopulated, an area twice the 
size of Texas. The people are only 11 to 12 million in 
population. This is the promise of Angola.
    The other side of the story of God's creation, according to 
Angolans, is the misfortune of the land, that its promise was 
to be unrealized until now. With some variations on this theme, 
the misfortune is generally attributed to the bad character 
that God gave the people of Angola and that, basically, they 
were scooped out from the bottom of the barrel.
    This humorous story about Angola parallels the story of the 
rest of the Sub-Saharan Africa. With about 650 million people 
in 48 countries and huge natural resources, the market 
potential is enormous. However, for several decades, the 
economy was mismanaged. Now, the promise of Africa is about to 
be realized as more and more democratic political systems are 
replacing dictatorial regimes and market-based economic reforms 
are taking the place of statist economic policies.
    In 1989, only four African countries were implementing 
democratic reforms. Today, over two-thirds are either 
democratic or are at some stage of democratic transition. 
Commitment to market reforms are growing.
    A recent World Bank study stated that Africa's human 
capital has been significantly upgraded. One prominent American 
businessman said recently that Africa is the emerging market of 
the 21st century.
    It is time for America to step up to the plate. The United 
States has an important stake in Africa's success since 
economic development of these African countries is dependent on 
increased trade and investment.
    Africa's success can be America's success as well. For the 
past 15 years, Africa has led the world in rates of return on 
investments by American multinational firms in natural 
resources, manufacturing and services. UNCTAD calculated the 
average return during this period at 25 percent. This is much 
higher than the returns on American investments in Europe for 
the same period.
    For example, in 1993, it was 25 percent, while the average 
return for similar ventures in all developing countries was 
16.6 and 8.6 in developed countries.
    But what is our record on trade? Between 1985 and 1994, 
U.S. exports grew at 3 percent per year. South Africa and 
Nigeria represent 62 percent of the total U.S. export market in 
Africa, with South Africa alone making up 50 percent. Angola, 
Cote d'Ivoire, Ghana, Ethiopia, Kenya and Zimbabwe account for 
about 19 percent but are capable of achieving rates of growth 
that would have significant positive impact on U.S. exports. 
Given the size of the Nigerian economy, there is enormous 
potential for U.S. export growth, when and if political and 
economic reforms finally take place.
    Mozambique, Zambia, Botswana, Cameroon, Malawi, Uganda, 
Tanzania, all stable democratic countries, offer great 
potential for American exports as well. Zaire, in spite of her 
present difficulties, is a potentially large market.
    This is a market that America is well positioned to 
dominate. America's most urgent needs--sorry. Africa's most 
urgent needs in the next 10 years are in areas where the United 
States has comparative advantage: energy, telecommunications, 
the need for computers and computerization are just a few of 
the huge untapped markets. Africans, many of whom have been 
educated in this country, and the educated class all like 
American goods and like America.
    Let me just make a few recommendations and conclude my 
remarks.
    First, this bill, which intends to impose eligibility 
requirements for these countries to participate, must be based 
on a level playingfield. It is important that the 
conditionalities be clear, firm and equally applied. Sliding 
and shifting conditionalities will discourage rather than 
encourage African countries from undertaking the necessary 
reforms that we seek. It must also be clearly communicated, 
those who fail to qualify must be told of their deficiencies 
and encouraged to make necessary corrections.
    Criteria must be based on what is good for America and good 
and practical for the African countries, given their culture 
and environment.
    Second, free trade: What does it mean to the African 
economy? Would we, through this bill, help promote intra-Africa 
trade? Efforts should be made to avoid the present trend where 
Africa's poor has been forced to exploit their resources for 
export while proceeds from such sales are used to import needed 
goods at a far higher rate.
    Third, let's use this bill to reverse migration and stem 
brain drain from Africa. There are a number of trained African 
professionals in the United States. Present conditions in 
Africa make it difficult for them to return to their home 
countries. We can, through the Equity Fund Initiative, 
structure a program that will encourage them to return and 
start their own businesses.
    Fourth, let's also try to leverage the funds from this bill 
by involving the African private sector. This will have the 
effect of multiplying the funds.
    Let me conclude by stating that the time to act is now. For 
far too long, we have left the field for others; and they have 
profited from their investments. We have the superior 
technology and other differential advantages to make a positive 
impact in Africa while providing jobs for Americans. What we 
have lacked is the will. This bill provides it.
    Thank you.
    [The prepared statement follows:]
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    Mr. Houghton. Thank you very much, Mr. Obi, Mr. Goudiaby 
and Mr. Fall.
    Now I would like to turn the platform over to Mr. Rangel, 
who will inquire.
    Mr. Rangel. Well, I don't think I will. The eloquence of 
the testimony on this panel in particular, because you have 
traveled so long to get here, and the fact that this morning we 
had the Speaker of the House, we had representatives from the 
President's offices, we had Republicans and Democrats, and so 
it is an exciting period. It is a great opportunity. It is a 
no-lose. If we did nothing, it creates an atmosphere where 
people of good will are trying to understand each other, trying 
to find out what we think you need by asking you what you need 
and putting it together.
    And so no matter what we have here, it is just a vehicle 
for goodwill, rehabilitation of relationships, the rebuilding 
of Africa, the provisions of hope and dreams and jobs on both 
sides of the Atlantic; and we can only hope and pray that it 
moves as fast and becomes as successful as we all hope it will 
be.
    So you made a great trip. I hope I can take back home our 
hopes with you that we will have a better America and a better 
Africa. Thank you.
    Mr. Houghton. Thank you very much, Mr. Rangel.
    Mr. McDermott.
    Mr. McDermott. Thank you, Mr. Chairman. I want to take the 
opportunity to ask a question of Mr. Fall and Mr. Goudiaby.
    I read in your brochure, Mr. Goudiaby, that there is a 
central currency, a single currency--the CFA franc and the 
countries that are involved in it. And one of the questions 
that comes to mind or that sometimes people raise in this 
country is, well, we can't go do business in a Francophone 
country because they will--the French Government will one way 
or another make things so that it can't work and somehow we 
won't be dealing with a level playingfield.
    Can you respond to that question? Because I think it is one 
of those things that people who do not understand Africa 
sometimes are swayed by believing that somehow we have to cede 
certain parts of Africa to the French because they have 
stabilized the currency and whatever.
    And Mr. Fall as well, both of you, if you have some comment 
on this whole area it would help me to understand what you 
anticipate an American businessman would face going into that 
area of the world.
    Mr. Fall. Thank you very much, Congressman McDermott. I 
think it is a very interesting question, and I will elaborate 
on that question, because that question will be raised again in 
1999 when we get to the Euro--when the European currency will 
be Euro not the francs, the deutsche mark, the sterling, the 
lira and so forth.
    Why that question will be raised, because it used to be 
that the CFA franc is pegged to the French francs; and the 
French treasury was guaranteeing the convertibility of the CFA 
francs. But since the devaluation in 1994, the direct 
convertibility is no longer valid. You have to have, between 
CFA francs and French francs, exchange rate. So, therefore, the 
exact rate which applies to dollars or sterling is applying to 
the French francs.
    So, therefore, the answer to your question is not a 
question of you cannot do that because the French is so, so, 
so, so, so. The direct convertibility is no longer valid. So 
you have to go through the normal channel of exchange rate and 
using the exchange rate.
    That is why I salute the fact that you are asking the 
Export Import Bank to become much more forceful and 
guaranteeing some investment outside, and also maybe helping 
through Fed to have the transfer of money and having the 
transfer back, depending on the conditions of that.
    That is my answer to that--to your question.
    Mr. Goudiaby. I would just like to add that something very 
important happened right now. The Francophone countries, 
because those are the countries you referred to, have come to a 
point that they have been very disappointed; and most of our 
youngsters now, most of--a lot of them have gone to American 
universities outside France and Europe.
    And also, because of the fact that the private sector is 
really having its way now, the private sector doesn't care if 
you are from France or from America. What they want to know is 
if you want to do good business, well we will do business with 
you.
    For example, right now, I was given by the Government of 
Guinea 1 million tons of bauxite to sell because they want me 
to build 300,000 housing units in Guinea. Well, I sent it 
through the Web, and I am waiting. So it is--what was true 
before is not true now.
    And also, the other thing is, I talked about the education 
and that I was very grateful to have had an American education 
about 30 years ago. Well, now with the modern means of 
communication maybe there are modern ways of doing things that 
did not exist then.
    And also, I think that the American people should know that 
Africa is not that far away. It takes me less time to get to 
New York than it would take you to get from New York to Los 
Angeles, and people have to know that. That is also a fact.
    Now, coming back to the CFA zone and coming back to this 
fact that you are talking about free trade in the year 2020, I 
hope I will--I hope it will happen sooner so that I will be 
able to be part of it.
    Mr. McDermott. So do I.
    Mr. Goudiaby. Now, that is just too far for us.
    I thought you would say, well, we will do it tomorrow. And 
why do it tomorrow? Well, because we think that the time is 
ripe now, since all of these countries have gotten together, 
and the only thing is a shortcut to that.
    For example, in the CFA zone, if you had established a 
business in a partnership--say, with an American firm, I 
establish a business in Senegal, if I manufacture goods from 
Senegal, I can sell it duty free throughout all the other seven 
countries of the region. So this is a wise way of having a 
shortcut to that growing market.
    All you have to do is bring your technology, and we are not 
begging for money. We just want partnership. If someone puts $1 
million, I put $1 million, it makes $2 million and we do 
business. That is what we want. Forget about the money.
    Thank you.
    Mr. McDermott. Thank you very much.
    Mr. Obi. Sir, if I may also comment on your question.
    I was part of a delegation by the Corporate Council on 
Africa, Trade and Outreach Mission recently, and we traveled to 
the Congo and the Cote d'Ivoire, countries that were previously 
under the French control. Our experience in the Cote d'Ivoire 
responds directly to your question about what the new 
environment is today versus what it used to be in these 
Francophone countries. Our experience was that in the Cote 
d'Ivoire, for example, the leadership went out of their way to 
solicit American businesspeople.
    The President clearly said to us, look, in the past we were 
tied to France. It was a disadvantage. Because we were tied to 
France, we didn't get the most we could for our goods. Our 
business was not bid for competitively. We did not take 
advantage America's superior technology.
    But that has changed. We have gone through the experience--
of the devaluation. It was not to advantage. We have now opened 
up our market. We want American goods.
    Let me give you some examples of what happened. There was a 
particular contract where France had bid. It was a 
privatization scheme. The government opened it up to a 
competitive bid. American companies bid higher than France did. 
France then upped their bid. As a result of that, they got more 
for that particular business than they would have gotten 
without American participation.
    So now you find that they are making a very, very strong 
effort. They are trying very hard to attract American business. 
They like America. They want American business. They want 
American products.
    Mr. McDermott. Thank you. I----
    Mr. Fall. May I add just one remark, if you may allow me?
    Mr. McDermott. Sure.
    Mr. Fall. I don't know whether or not you have gone to New 
York. If you go to New York and see those--what we call the 
informal guys around Harlem and doing some business, they 
have--they are doing business in millions of millions of 
dollars, exporting goods from the United States to Africa in a 
manner that you cannot imagine for the time being. And those 
are doing it in dollars, so the French francs is not a 
constraint as far as doing business is concerned.
    Mr. McDermott. Thank you. I appreciate your--I really 
elicited those questions because I want them in the record, 
because I think it is important for Americans to know that 
Francophone is not off-limits for American companies to go in 
and do good business. Thank you all for your testimony.
    Chairman Crane [presiding]. Mr. Jefferson.
    Mr. Jefferson. Thank you, Mr. Chairman.
    I want to also thank each of you for your very strong 
testimony. That is very helpful to my understanding of 
opportunities in Africa, and I think and I believe will be 
helpful to the understanding of American businesspeople about 
opportunities there. Americans generally can appreciate the 
opportunities that this bill presents for our common 
enterprises.
    I want to ask Mr. Obi to elaborate on a statement he made 
in his testimony with regard to free trade. You said, ``efforts 
should be made to avoid the present trend where Africa's poor 
have been forced to exploit their resources for export while 
proceeds from such sales are used to import needed goods at a 
far higher rate.''
    Could you elaborate on that statement and talk about what 
might be done to correct this problem?
    Mr. Obi. I made that point not because I oppose free trade. 
I think it is very critical to poverty alleviation in Africa. I 
want to be very careful, though, that in introducing free trade 
we do not continue the errors of the past.
    What happened in the past was simply that Africa, which has 
natural resources, people went to the land, tilled it, produced 
goods, sent them abroad. The resources were refined, sent back 
and we had to pay more for it. It had a drain on resources of 
those African countries. It didn't help them.
    How we can correct that today? Through this bill, teach us 
how to better produce our goods at home. When we send them to 
you, you will pay us the market price for those goods.
    When I say ``we,'' I am talking as an African-born 
American. I am an American. So excuse me when I say ``we.''
    When the goods are finished--at least Africans, those poor 
people, instead of taking that raw material and sending it 
abroad, let us finish them where they are. Let them finish 
them.
    You can help.
    Mr. Jefferson. I understand.
    Mr. Obi. Raw material, the technology to teach us, will 
create jobs in this country.
    Mr. Jefferson. I see.
    Mr. Obi. And the ability to finish those goods in the 
finished form will also produce jobs in those countries in 
Africa and alleviate poverty, which this bill is intended to 
do.
    Mr. Jefferson. Oh, I see. Your argument is for 
strengthening the private sector in Africa----
    Mr. Obi. Yes.
    Mr. Jefferson [continuing]. So that there can be value 
added to the raw materials?
    Mr. Obi. Yes.
    Mr. Jefferson. And the products can be exported which are 
more nearly finished products for sale at higher prices as they 
leave Africa?
    Mr. Obi. Yes.
    Mr. Jefferson. So they can be created on the African 
continent from the value added aspects of the manufacturing?
    Mr. Obi. Indeed.
    Mr. Jefferson. So this bill is meant to complement these 
two ideas of trade and investment. It talks about both of them 
and it talks about creating a private sector in Africa. It also 
talks about foreign direct investment or U.S. direct 
investment, locating there, taking with it the advantages of 
the technology transfer and of wage increases and change in the 
culture of the workplace and so many other things which I think 
go hand in glove to the things you are talking about here.
    Let me ask Mr.--let me see. There is some discussion 
about--Mr. Goudiaby?
    Mr. Goudiaby. Yes.
    Mr. Jefferson. That there be--that Africa be subdivided 
into four economic grouping or areas and a strategy and action 
plan be devised for each and not to treat the region as a 
single whole. That is part of what you said. Can you tell me 
what you are talking about there?
    We have made a lot of points today about a regionalization. 
Regionalization is something that Africans have to address 
themselves. No one in this body or anywhere else can impose 
upon them a regional organizational structure. But there are 
peculiar advantages, we think, to a regional approach because 
they overcome some of the issues of small countries that won't 
be capable of taking advantage of a lot of the aspects of the 
bill but in use and with others can take advantage of them.
    But can you elaborate more on what you mean by the 
structure you proposed here? Is it different from what we have 
talked about today or is it in line with our prior discussions?
    Mr. Goudiaby. Well, the thing is what I was trying to say 
is that when you want to approach the whole continent as one 
unit, you are making a big mistake. Because what is true for, 
let's say, the ECOWAS countries and even within the ECOWAS 
countries--as you well know, there are 16 of them--if you take 
what is proper to the Francophones, if you want to get into the 
Francophone market, it is a whole different new ball game.
    Now, by using these entities, it is much easier to deal 
with one group of countries because the legislations are being 
the same and also it is much easier to implement.
    If I take the example of the just-formed Economic Union of 
West African States, we are having almost the same legislation 
on everything. So when you come to Senegal or to the Ivory 
Coast, you address one of these countries, you are really 
addressing all of them.
    And this is what President Sangor was saying, working with 
concentrical circles, whereas in West Africa we are organized, 
in central Africa they are organized, and so forth, and so 
forth; and all of those organizations will interconnect.
    Also businesswise, if, for example--and that is what we 
want to do, creating this business, U.S. Is one thing. If you 
organize the businesspeople from one region, it is easier to 
make them meet. In one point, you say that, for example, we 
want to meet businessmen from ECOWAS in Senegal. You can just 
go to one country and meet all of them. You don't need to go 
through all of those.
    So I think that the bill, this organization of the African 
countries, will really facilitate the implementation of the 
bill or whatever things you want to do with us.
    Mr. Jefferson. So the four groups--if I might continue, Mr. 
Chairman, to ask the last question.
    Chairman Crane. Yes.
    Mr. Jefferson. The four groups you talk about are the ones 
that we are familiar with now that already exist in Africa 
which are trying to operate as economic units. ECOWAS you 
talked about, SADC and EAC, and I guess the central--in the 
central part of the continent as well. Am I right on that, that 
is what you are talking about, dealing with----
    Mr. Goudiaby. Yes.
    Mr. Jefferson [continuing]. Those four?
    And you think that--you say that we are making a big 
mistake if you think about bilateral arrangement on this--on 
these issues. Do you mean the entire bill should be focused 
toward a regional approach to trade?
    Mr. Goudiaby. Well, maybe a big mistake was too strong a 
word. As I told you--a big mistake is probably too strong a 
word; but it is easier--I think it is easier to recognize that 
we are organizing ourselves into these regions----
    Mr. Jefferson. I see.
    Mr. Goudiaby [continuing]. And work with them. But a big 
mistake may be too heavy a word for that.
    Mr. Jefferson. OK. Well, I want to thank you again for your 
very clear testimony and for the help it gives us in working 
with the bill. Thank you a lot.
    Chairman Crane. Gentlemen, I apologize for my absence, but 
I had an important meeting in my office. I got your written 
testimony but not your oral. But I found out from Mr. Houghton 
that Mr. Goudiaby and Mr. Fall, both of you came here directly 
from Senegal for our hearing today; and I want to express 
profound appreciation to you for that major inconvenience. And 
then I found out it wasn't so bad. That is not as bad as going 
from here to Los Angeles.
    Mr. Goudiaby. It wasn't that bad.
    Well, to follow up on that, Mr. Chairman, if I may, my 
suggestion would be that yourself and a Member of your 
Committee visit some of our African countries before the bill 
is passed. You will be greeted as heroes, and then you will 
know that this bill you are working on is the most important 
thing that has happened to Africa in a decade. So you are 
welcome, and we are waiting for you.
    Chairman Crane. Well, we look forward to that opportunity, 
too. I haven't visited the African continent--oh, it has been 
over 20 years now. I am sure there are significant changes that 
have occurred since I was there last. But we look forward to 
that and, ideally, getting our whole Trade Subcommittee over 
there.
    I want to thank you all for your testimony and your 
appearance today. I trust you brought this beautiful sunny 
weather today.
    Mr. Goudiaby. Thank you very much.
    Chairman Crane. That all came from Senegal?
    Mr. Fall. Yes, indeed.
    Mr. Goudiaby. Yes, indeed.
    Well, there is something that was not mentioned in the 
bill, talking about Senegal. I mean, trade, you cannot 
disassociate trade from tourism; and as you probably don't 
know, Senegal is probably one of the best countries you could 
visit for tourism. So I invite all Members of Congress there 
and this--I know my Ambassador is listening. That is why I am 
saying that.
    Thank you very much, indeed.
    Chairman Crane. Thank you all for your appearances today.
    Our last panel now consists of Hon. Rush Taylor, vice 
president and senior Washington representative of the Equator 
Bank, on behalf of the U.S.-South Africa Business Council; 
Willie Grace Campbell, vice chairman of the board of directors 
for the African Development Foundation; Fassil Gabremariam--I 
hope I am pronouncing it right--president of the U.S.-Africa 
Free Enterprise Education Foundation; and Gmakhan Sherman, 
program associate for the Church World Service/Lutheran World 
Relief, on behalf of the U.S.-Africa Trade Policy Working Group 
for the Washington Office on Africa.
    If you gentlemen will take your seats, we will proceed in 
the order that I introduced you.
    We will start with you, Mr. Taylor.

   STATEMENT OF HON. RUSH TAYLOR, VICE PRESIDENT AND SENIOR 
     WASHINGTON REPRESENTATIVE, EQUATOR BANK, GLASTONBURY, 
CONNECTICUT, AND FORMER U.S. AMBASSADOR, TOGO; ON BEHALF OF THE 
               U.S.-SOUTH AFRICA BUSINESS COUNCIL

    Mr. Taylor. All right.
    Mr. Chairman, Members of the Subcommittee on Trade, I am 
Rush Taylor, the vice president and senior Washington 
representative of Equator Bank. It is an honor to testify this 
afternoon on behalf of the U.S.-South Africa Business Council 
of which Equator is a member.
    The Business Council is an association of 70 U.S. companies 
engaged in trade and investment in South Africa. The Council is 
sponsored by the National Foreign Trade Council, an association 
of over 500 U.S. companies, which are active internationally.
    The Council is the only U.S.-based private sector 
organization devoted exclusively to South Africa, and it serves 
as the secretariat to the U.S.-South Africa Business 
Development Committee of the Gore-Mbeki Binational Commission. 
We at Equator are proud to be a member of this much-needed, 
highly effective organization.
    Mr. Chairman, for over 20 years Equator Bank has operated 
exclusively in Sub-Saharan Africa. Our institution was founded 
with the belief that Africa presented an underserved market 
with enormous potential for a specialized financial 
institution.
    We at Equator have worked in the majority of countries 
throughout the continent; and we presently have offices in 
Angola, Cote d'Ivoire, Ghana, Kenya, Mozambique, South Africa, 
Uganda, Zambia, as well as London, Nassau, Washington, and 
Glastonbury, Connecticut.
    Our three lines of business are merchant banking, import-
export trading and investment banking. Equator has provided 
trade financing, short- and medium-term lending and 
correspondent banking services in Africa since 1975. We have 
provided over $5 million in financing to African public and 
private clients.
    Equator's trading company supports commercial activity and 
capital investments in Africa in such sectors as transport, 
communications, power, mining and housing. Much of this 
business involves U.S. suppliers. To name a few of them: 
Motorola, General Motors, Chrysler, Mack, Caterpillar, Kohler, 
McDonnell Douglas, Beechcraft, Bluebird.
    Equator also arranges financing for existing private 
companies. We do privatizations and new ventures in Africa, as 
financial advisor and as manager of direct investment funds.
    For example, the $25 million Africa Growth Fund, the AGF, 
which we manage, was launched in 1989 as the first initiative 
of its kind by the Overseas Private Investment Corporation and 
U.S. private corporate investors.
    We are firmly convinced that the expansion of U.S. trade 
with and investment in Africa is the single greatest 
contribution our country can make to the continent's economic 
and political development. American business is finding 
profitable opportunities and economies on the continent where 
economic policies have been liberalized and where predictable 
frameworks for conducting business have emerged.
    These are economies such as Cote d'Ivoire, Ghana and Benin 
in the west, Uganda and Ethiopia in the east, Mozambique, 
Botswana and South Africa in the south.
    In all of these nations, two things have happened: Space 
has been created for private enterprise to flourish, and links 
have been created to the international economy. These can be 
magnet economies which, with appropriate public policies, can 
begin to reverse downward trends in neighboring states.
    We believe that there needs to be a closer coordination of 
U.S. Government initiatives with private sector activities. We 
would, therefore, endorse measures to increase the capacity of 
the U.S. Government to foster closer economic ties between the 
United States and Sub-Saharan Africa, while at the same time 
increasing cooperation with U.S. corporations operating there.
    The U.S.-South Africa Business Development Committee, which 
met last February in Cape Town, is an example of governments 
and private sectors collaborating to overcome impediments to 
greater commerce. Through this forum, the United States private 
sector has been able to stress to both of these governments the 
importance of a bilateral tax treaty, the protection of 
intellectual property rights and an open regional trading bloc 
in southern Africa.
    Nowhere is this concept of ties between the United States 
and Africa private sectors more vividly demonstrated than at 
the Attracting Capital to Africa Summit Conference which the 
Corporate Council on Africa sponsored just last week. The 
enterprise brought together African heads of state and dozens 
of cabinet ministers and other senior officials with 
representatives of nearly 200 American corporations for 3 full 
days of networking and discussion of how to create the 
necessary environment for foreign and domestic investment, to 
catalyze the economic development of the continent. We at 
Equator are proud to be founding members of the Corporate 
Council.
    We believe that there are four aspects of the U.S. 
commercial relationship with Africa which we urge the 
Subcommittee to take under serious consideration. These are: 
that there are significant opportunities in Africa for U.S. 
business; two, those opportunities will be expanded by a U.S. 
policy which gives priority to trade and investment with 
Africa; three, that policy should maximize coordination and 
cooperation with the U.S. private sector; and, finally, there 
are important lessons, specific lessons, to be learned from the 
experience of U.S. business in South Africa since the end of 
apartheid.
    I would like now to quickly elaborate these four basic 
points. Number one is that significant opportunities exist in 
Africa for U.S. business. Trade between the United States and 
Africa has grown rapidly over the past few years. Two-way trade 
with Sub-Saharan Africa grew 11.4 percent in 1995, 18.2 percent 
in 1996, significantly outpacing America's overall worldwide 
trade.
    Last year, U.S. exports to Africa increased by 14 percent 
and by 22 percent in 1995. This level of exports is nearly as 
much as the United States sold to the former Soviet Union and 
Eastern Europe combined.
    Furthermore, the 1995 average return on the book value of 
U.S. direct investments in Africa was nearly 33 percent, 
compared to that of about 13 percent for investments in the 
Asian Pacific region and only 11 percent worldwide.
    At the same time, the United States is Africa's leading 
foreign market, having purchased over 18 percent of the 
continent's exports. The U.S. exports about as much to South 
Africa alone as it does to Russia.
    Number two is that U.S. policy which gives priority to 
trade with and investment in Africa will expand opportunities. 
We support the concept of legislation that establishes trade 
and investment as a U.S. policy priority. Such legislation will 
send important signals about our relations with the continent. 
Perhaps the most important is to make it clear that the U.S. 
Government understands that its relationship with Africa is 
based on mutual benefits and self-interest and not solely on 
foreign assistance for which resources are, in any event, 
diminishing.
    We are not here in any way to denigrate the importance of 
official development and humanitarian assistance. Rather, we 
want to confirm that the future of the relationship lies in 
being trading partners, operating under internationally 
recognized trade and investment regimes.
    The third point is that U.S. policy should maximize 
cooperation with the private sector. For the United States 
business community, advocacy by the U.S. Government of policies 
which facilitate trade and investment is perhaps the most 
important official role in countries where there is a 
significant American business presence. A clearly defined 
policy that trade and investment are the focus of U.S. 
engagement with Africa will make it clear to the governments of 
Africa that seek an alternative to long-term dependence on 
foreign assistance.
    It will also signal that the success of their economic 
relationship with the United States, as well as the rest of the 
world, will depend on their adherence to internationally 
accepted practices in such areas as subsidies, protection of 
intellectual property, illicit payments and dispute settlement.
    The final point is that important lessons are to be learned 
from the experience of U.S. business in South Africa. U.S. 
companies returning to South Africa have developed and 
instituted progressive programs in training, education and 
human resource development that can be used as examples for 
other areas in Sub-Saharan Africa.
    The east Asian experience demonstrates that education and 
the significant enhancement of skills in the work force is a 
crucial factor to sustained economic growth. We encourage U.S. 
development assistance to work in partnership with the U.S. 
private sector to leverage available resources and technologies 
in order to promote education as the key to economic 
development.
    Thank you again, Mr. Chairman and Members of the Committee, 
for giving us the opportunity to be here today; and allow me 
personally to commend you for this historic initiative. Thank 
you very much.
    Chairman Crane. Thank you.
    Those bells indicate that we will be voting in about 15 
minutes. So if you could try and keep your presentations to 
about 5, we guarantee all of your printed presentations will be 
made a matter of the record.
    Ms. Campbell, you are next.

   STATEMENT OF WILLIE GRACE CAMPBELL, VICE CHAIR, BOARD OF 
           DIRECTORS, AFRICAN DEVELOPMENT FOUNDATION

    Ms. Campbell. Mine will be very short.
    Mr. Crane, Mr. Rangel, Mr. Jefferson, I am very pleased to 
be invited to discuss this important and timely proposal.
    My name is Willie Grace Campbell, and I am the vice chair 
of the African Development Foundation, a Federal agency 
established by the Congress in 1980 which provides economic 
assistance to African grassroots organizations and institutions 
involved in development projects at the local level. Currently, 
we fund projects in 14 countries in Africa.
    I have submitted a full statement which I ask to be 
included in the record.
    I would like to congratulate all of you, particularly Mr. 
Crane, Mr. Rangel and Mr. McDermott, for your leadership and 
your excellent analytic work and the extensive consultations 
undertaken by you and your respective staffs to shape the 
initiative and to build broad bipartisan support for it.
    As a member of the Advisory Committee to the House African 
Trade and Investment Caucus, I experienced firsthand this 
inclusive and consultative approach; and I think you can see 
the results of that today.
    As earlier panelists have noted, Africa offers excellent 
opportunities for trade and investment; it is the world's last 
large emerging market. U.S. trade with Africa is significant--
it exceeds total U.S. exports to the countries of the Soviet 
Union--and it is growing.
    Poverty, however, is pervasive and worsening: the World 
Bank estimates that, in 1993, there were 220 million Africans 
living on less than the equivalent of $1 per day. Moreover, the 
depth of poverty is much higher in Sub-Saharan Africa than any 
other region in the world. Yet there have been dramatic 
improvements in the macroeconomic and political environments 
across Africa. Africans are boldly tackling their problems and 
defining their own solutions. They are embracing democratic 
values and market-based economic principles.
    This legislation will enable the United States to pursue a 
new relationship with Africa--a more mature relationship; a 
partnership built on mutual interests to promote peace and 
prosperity. I would like to use the remaining few minutes to 
discuss the four features of the legislation which are 
particularly important to the African Development Foundation.
    First, the legislation recognizes the need for continued 
aid. Africa's problems require substantial foreign assistance: 
Specifically, Africa needs support to build indigenous 
institutions; local capacity, especially local economic 
capacity; to promote democratic governance; and improve food 
security and natural resource management.
    Unfortunately, U.S. assistance to Africa has declined 
drastically in the last few years; and it is now at its lowest 
level since the late eighties. So I am pleased that the 
architects of this legislation wisely recognize that a 
comprehensive approach to development requires assistance, 
trade, and investment.
    H.R. 1432 also highlights the need to give special 
attention to women entrepreneurs. Women are the backbone of 
Africa's predominately agrarian economy. They provide about 75 
percent of all farm labor and produce most food, and they are 
extensively involved in off-farm entrepreneurial activities. 
Unless their productive capacities are recognized and resources 
made available to maximize them, economic growth will be 
stunted.
    Additionally, ADF strongly endorses the decision to ensure 
that the private sector and nongovernmental organizations have 
maximum opportunity to contribute to the Economic Forum to 
formulate trade and investment policies and initiatives. While 
the precise mechanisms for information transfers have not been 
spelled out, the importance of ensuring a voice for those most 
affected by economic policy is clearly acknowledged in the 
bill.
    In conclusion, I would like to address the role ADF will 
have in implementing this new initiative and how ADF's programs 
will play a critical role in helping achieve the legislation's 
objectives. Already, ADF is helping form the fundamental 
economic and political building blocks required to make this 
initiative successful through developing micro and small 
enterprises to lay the foundation for broad-based and equitable 
growth; and strengthening the fabric of civil society and 
promoting democratic values.
    Micro and small enterprises are the source of dynamic, 
broad-based economic growth and provide links for expanding 
trade and investment. ADF has a unique capacity to assist micro 
and small enterprises, and it has a successful record of 
promoting vibrant enterprises.
    In Uganda, ADF supported a vanilla production project which 
now markets its produce through the American spice giant, 
McCormick.
    In Zimbabwe, we funded a carpentry cooperative spring 
cabinet. Today, they are one of the country's premier furniture 
manufacturers; and, they have been importing wood and materials 
from the United States.
    Additionally, the Foundation's efforts to promote active 
participation at the local level strengthens democracy at the 
macro level.
    In Cameroon, Committees established to manage and maintain 
ADF-water funded systems have become successful advocates for 
their communities on broader development matters, and beyond 
the local level.
    The proposed legislation directs that ADF, ``should develop 
and implement strategies promoting participation of grassroots 
and informal sector groups such as cooperatives, artisans and 
traders into the programs and initiatives established under 
this Act.'' ADF will deepen its current efforts, along the 
lines outlined. This will be a special programmatic initiative 
for the Foundation. So I hope that Members of this Committee 
and supporters of the legislation will endorse ADF's budget 
request at $14 million for fiscal year 1998. These funds will 
be critical to the Foundation's effective implementation of new 
strategies to develop micro and small enterprises and to 
strengthen civil society activities that directly support the 
trade and investment initiative.
    I believe, Mr. Chairman, that this legislation can become a 
model trade and investment policy initiative which will promote 
broad-based, sustainable and equitable development in Africa. 
Africa is ready for it, and the African Development Foundation 
is ready to help implement it.
    Thank you.
    [The prepared statement follows:]
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    Chairman Crane. Thank you, Mrs. Campbell.
    Mr. Gabremariam.

 STATEMENT OF FASSIL GABREMARIAM, PRESIDENT AND FOUNDER, U.S.-
  AFRICA FREE ENTERPRISE EDUCATION FOUNDATION, INC., AND VICE 
      PRESIDENT, FINANCE, INTERMEDIA COMMUNICATIONS, INC.

    Mr. Gabremariam. Thank you, Mr. Chairman, Congressman 
Rangel, Congressman Jefferson.
    In the interest of time, instead of reading my prepared 
text, I will just briefly go over the highlights and provide 
you some of my thoughts; and I would like your permission to 
submit this as part of the record.
    I am a native of Ethiopia. I am the vice president of 
finance and treasurer of Intermedia Communications. I am here 
testifying in front of you as president and founder of the 
U.S.-Africa Free Enterprise Education Foundation.
    I had a long recital on congratulating the Committee on 
such a historic effort, but I will skip through that one and go 
to some of the suggestions that I have, with your permission.
    I think that there are certain ideas that would underlie a 
lot of things that we do at the Foundation, that maybe you 
would find useful.
    One of them is mutual self-interest, that we don't do 
anything unless there is a mutual self-interest on the other 
side. I think it is in our self-interest that the purchasing 
power of the average African goes up, because if it doesn't 
they cannot afford to buy any of our products. So any type of 
initiative in policy that would encourage that would be 
helpful.
    Aggressive advancement--and I place emphasis on aggressive 
advancement--on market reforms and democracy. I think a lot of 
the efforts that have been done in the past in the sixties and 
thereabouts have relied heavily on government and institutional 
approaches to solving fundamental economic problems, but I 
think releasing the private sector and allowing indigenous 
cultures to rise up and to do their business will be the best 
solution for Africa. And anything you can do to support that 
will be very helpful.
    Selectivity. If there are scarce U.S. resources, instead of 
spreading it across the entire continent on the mediocrity 
performance, I think selective deployment of those capitals in 
those countries that are showing commitment to reform, and are 
definitely visibly showing progress, is much more important. It 
is better to create islands of success than several countries 
with mediocre performance.
    Sustainability and stability. What we have witnessed in 
Rwanda is not an accident. The seeds of that problem were 
planted several years ago. Ethnicity and religious diversity in 
Africa is very wide and Africa cannot afford to go down that 
journey.
    And inclusivity, I think--in the United States there is a 
recent immigrant community, as you have witnessed earlier. It 
is very well educated, very knowledgeable, has connections on 
the continent, understands the indigenous culture and can be an 
instrument of your ally.
    I would like now to just briefly read some of the things 
that I have prepared, if you don't mind, about the Foundation's 
efforts.
    One of them is, over the last 5 years the international 
trade component of our GNP as a nation has grown to over 33 
percent. The most conservative estimates place this to be 
roughly around 50 percent by the year 2000. This means that one 
of two children currently now in our educational system are 
going to be directly or indirectly dependent on this industry 
for their livelihood.
    In cooperation with the State of Florida, the business 
community, major universities, religious organizations, 
volunteers around the State, the Foundation has embarked on a 
campaign to prepare our youth for the fast-emerging global 
economy by using Africa as a model.
    The Foundation is also exploring ways to utilize and build 
content into the information superhighway by forming sister 
school programs and exchanging text and other material between 
schools in Africa and some schools in Florida.
    The second initiative that we have is the fast-growing 
component of U.S. economy in both employment and tax base, 
small- and medium-sized business and large segments of women 
and minority businesses. The emerging business segment of our 
Committee can be a very important strategy in advancing our 
strategic relationship with African countries.
    They are nimble. They are conducive to the establishment of 
relationships with the small- and medium-sized businesses on 
the continent of Africa. However, this business requires easy 
and organized access to information from the United Nations, 
the World Bank, the IMF, MIGA, Import Export, OPIC and other 
similar organizations that are designed to assist businesses in 
trade development.
    The Foundation, in cooperation with these institutions and 
African embassies, will be conducting quarterly seminars that 
we have named the ``Doing Business in Africa'' series in 
various communities around the State of Florida and 
subsequently around the Nation, to empower businesses with 
knowledge, access and support that has been previously mostly 
accessible to large corporations.
    This information will also equip them with critical tools 
and information that they can use elsewhere in their global 
trading events.
    The Foundation would also complement these services with 
trade missions, conferences, publications, resource centers, 
support global Web sites and cultural events.
    Women are the largest unpaid, unrecognized economic 
development engine on the continent of Africa. The Foundation 
is currently developing a strategy with a product that has 
already been successfully tested in Latin America to create 
microloan programs for loans and businesses for women on the 
continent.
    Several people in leadership positions believe that the 
State of Florida, with its proximity to the Caribbean, South 
and Central America and Africa, is poised to become the next 
Hong Kong. International trade has recently surpassed tourism 
as the number one industry for the State, with regular air 
services to the continent by South African Airways.
    It is the only major tropical agricultural research center 
in the mainland United States. It is strong on environmental, 
water conservation, tourism, citrus phosphate industries, 
combined with its formidable ports and airports, the state is 
committed to that continent. The economy of scale and leverage 
the State can provide for emerging north and south trade is a 
strategic arsenal for the United States in any trade initiative 
with Africa.
    Modern Africa is our root, all our root. She is our origin, 
and our commitment to her is profound. It does take a village 
to raise a child. It takes a whole lot of villages and parents 
to build a nation.
    I hope you find this sampling of my inputs useful. And I 
will prefer to submit the whole thing rather than reading it 
and I appreciate the opportunity to testify.
    [The prepared statement follows:]

Statement of Fassil Gabremariam, President and Founder, U.S.-Africa 
Free Enterprise Education Foundation, Inc., and Vice President, 
Finance, Intermedia Communications, Inc.
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    Chairman Crane. Thank you.
    Ms. Sherman.

  STATEMENT OF GMAKHAN SHERMAN, PROGRAM ASSOCIATE, OFFICE ON 
DEVELOPMENT POLICY, CHURCH WORLD SERVICE/LUTHERAN WORLD RELIEF, 
      ON BEHALF OF U.S.-AFRICA TRADE POLICY WORKING GROUP

    Ms. Sherman. Thank you, Mr. Chairman.
    Mr. Chairman, last August, a representative of the 
Washington Office testified before the Subcommittee on behalf 
of the U.S.-Africa Trade Policy Working Group. The working 
group is a coalition of faith-based, secular, nongovernment 
organizations working to promote expanded and equitable trade 
and foster broad-based and sustainable economic growth in 
Africa.
    Our last testimony emphasized the importance of aid and 
debt relief as vital elements to trade enhancement measures. 
Since then, we have followed closely the emergence of the 
African Growth and Opportunity Act. We commend its authors on 
their diligence in soliciting the comments from a broad range 
of interested parties. We hope that it will be possible to 
gather further input from Africa and nonlabor organizations, 
and we would be prepared to assist in this effort.
    We are pleased to see the incorporation of a strong 
endorsement of continuing development assistance in the African 
Growth and Opportunity Act. We congratulate the authors of this 
legislation on their acknowledgment that trade and aid are not 
mutually exclusive options. It is essential for U.S. policy to 
identify a flexible mix of policy instruments which can be 
tailored to differing national situations.
    At the same time, we must be thinking strategically, 
recognizing that certain types of liberalizations are more 
likely to create beneficial opportunities for economically poor 
households than others. Similarly, we strongly support the 
inclusion of measures to extinguish bilateral debt and to 
reduce multilateral debt. The elmination of unsustainable debt 
burdens can contribute substantially to creating an enabling 
environment for trade, investment, and broad-based economic 
growth.
    Mr. Chairman, our consultations with African 
nongovernmental organizations have reinforced our conviction 
that the basic criteria for evaluating all social and economic 
development initiatives must be the impact the action has on 
the most threatened and marginalized sectors of society. This 
includes women, rural dwellers, people with disabilities, 
economically poor and unemployed people, and the elderly. 
Consequently, we appreciate that the bill gives countries 
incentives to make poverty reduction an explicit objective of 
economic reform.
    We endorse the creation of a $500 million fund to make 
infrastructure improvements, although we question whether OPIC 
is the most appropriate administrative agent for this fund. The 
success of efforts to promote investment and trade, 
particularly regional trade, will depend in part on the 
capacity of transportation, communications, and financial 
networks.
    Equally important for sustainable human development and 
broad-based economic growth will be the development of human 
resources. We support the legislation's endorsements for the 
USAID Africa Food Security Initiative and urge that this 
funding be used in part to fulfill U.S. obligations with 
respect to the implementation of the Marrakesh decisions.
    Recognizing the need for simultaneous action on multiple 
fronts--debt reduction, aid, trade, and conflict resolution--
the members of our working group have begun to sketch an 
outline of a holistic approach. This framework is articulated 
in a statement to the June 1997 economic summit in Denver, a 
copy of which is attached to our testimony.
    Mr. Chairman, although we recognize that it may not be 
feasible for any single piece of legislation to tackle such a 
diverse agenda, the African Growth and Opportunity Act touches 
on many of our key areas of concerns.
    The brief interval between the release of the most recent 
version of the legislation and the deadline for submission of 
written testimony for this hearing has prevented us from 
offering a detailed assessment of the new bill. However, we 
support in principle the current version of the African Growth 
and Opportunity Act as a foundation on which the United States 
can begin to construct coherent and comprehensive policies with 
respect to Africa.
    Thank you, Mr. Chairman.
    [The prepared statement follows:]

Statement of Gmakhan Sherman, Program Associate, Office on Development 
Policy, Church World Service/Lutheran World Relief, on behalf of U.S.-
Africa Trade Policy Working Group
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    Chairman Crane. We thank you all for your testimony and we 
thank you for your patience. And unless we have any questions, 
since there is a vote in progress----
    Mr. Rangel. I just want to tell Mr. Gabremariam that George 
Falley has shared with us the fine work you are doing.
    Mr. Gabremariam. Thank you.
    Chairman Crane. And we appreciate you for being here on 
this important day, and we look forward to more discussions 
with all of you who have appeared as witnesses and with the 
administration to get this legislation passed. Thank you all.
    [The prepared statements and attachments of Kase Lawal and 
the American Textile Manufacturers Institute follow:]
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Statement of American Textile Manufacturers Institute
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    Chairman Crane. This concludes our hearing, and the record 
will be open until May 13. The Subcommittee stands adjourned.
    [Whereupon, at 5:05 p.m., the hearing was adjourned.]
    [Submissions for the record follow:]
    
    
    
    
    
    
    
    
    
    
    
    
      

                                


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Statement of International Mass Retail Association, Arlington, Virginia
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Statement of Rubber and Plastic Footwear Manufacturers Association


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Statement of United States Association of Importers of Textiles and 
Apparel, New York, New York


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