[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
        THE AFRICAN GROWTH AND OPPORTUNITY ACT: ENSURING SUCCESS

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

                             JOINT HEARING

                               BEFORE THE

         SUBCOMMITTEE ON TERRORISM, NONPROLIFERATION, AND TRADE

                                AND THE

                 SUBCOMMITTEE ON AFRICA, GLOBAL HEALTH,
                            AND HUMAN RIGHTS

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 20, 2012

                               __________

                           Serial No. 112-159

                               __________

        Printed for the use of the Committee on Foreign Affairs


Available via the World Wide Web: http://www.foreignaffairs.house.gov/ 
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                      COMMITTEE ON FOREIGN AFFAIRS

                 ILEANA ROS-LEHTINEN, Florida, Chairman
CHRISTOPHER H. SMITH, New Jersey     HOWARD L. BERMAN, California
DAN BURTON, Indiana                  GARY L. ACKERMAN, New York
ELTON GALLEGLY, California           ENI F.H. FALEOMAVAEGA, American 
DANA ROHRABACHER, California             Samoa
DONALD A. MANZULLO, Illinois         DONALD M. PAYNE, New Jersey--
EDWARD R. ROYCE, California              deceased 3/6/12 deg.
STEVE CHABOT, Ohio                   BRAD SHERMAN, California
RON PAUL, Texas                      ELIOT L. ENGEL, New York
MIKE PENCE, Indiana                  GREGORY W. MEEKS, New York
JOE WILSON, South Carolina           RUSS CARNAHAN, Missouri
CONNIE MACK, Florida                 ALBIO SIRES, New Jersey
JEFF FORTENBERRY, Nebraska           GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas             THEODORE E. DEUTCH, Florida
TED POE, Texas                       DENNIS CARDOZA, California
GUS M. BILIRAKIS, Florida            BEN CHANDLER, Kentucky
JEAN SCHMIDT, Ohio                   BRIAN HIGGINS, New York
BILL JOHNSON, Ohio                   ALLYSON SCHWARTZ, Pennsylvania
DAVID RIVERA, Florida                CHRISTOPHER S. MURPHY, Connecticut
MIKE KELLY, Pennsylvania             FREDERICA WILSON, Florida
TIM GRIFFIN, Arkansas                KAREN BASS, California
TOM MARINO, Pennsylvania             WILLIAM KEATING, Massachusetts
JEFF DUNCAN, South Carolina          DAVID CICILLINE, Rhode Island
ANN MARIE BUERKLE, New York
RENEE ELLMERS, North Carolina
ROBERT TURNER, New York
                   Yleem D.S. Poblete, Staff Director
             Richard J. Kessler, Democratic Staff Director
         Subcommittee on Terrorism, Nonproliferation, and Trade

                 EDWARD R. ROYCE, California, Chairman
TED POE, Texas                       BRAD SHERMAN, California
JEFF DUNCAN, South Carolina          DAVID CICILLINE, Rhode Island
BILL JOHNSON, Ohio                   GERALD E. CONNOLLY, Virginia
TIM GRIFFIN, Arkansas                ALLYSON SCHWARTZ, Pennsylvania
ANN MARIE BUERKLE, New York
RENEE ELLMERS, North Carolina
                                 ------                                

        Subcommittee on Africa, Global Health, and Human Rights

               CHRISTOPHER H. SMITH, New Jersey, Chairman
JEFF FORTENBERRY, Nebraska           KAREN BASS, California
TOM MARINO, Pennsylvania             RUSS CARNAHAN, Missouri
ANN MARIE BUERKLE, New York          THEODORE E. DEUTCH, Florida
ROBERT TURNER, New York


                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Mr. Anthony Carroll, vice president, Manchester Trade, Ltd.......    10
Mr. Paul Ryberg, president, African Coalition for Trade..........    16
Mr. Jaswinder Bedi, chairman, African Cotton and Textile 
  Industries Federation..........................................    21
Mr. Stephen Hayes, president and chief executive officer, The 
  Corporate Council on Africa (CCA)..............................    26

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Edward R. Royce, a Representative in Congress from 
  the State of California, and chairman, Subcommittee on 
  Terrorism, Nonproliferation, and Trade: Prepared statement.....     3
The Honorable Christopher H. Smith, a Representative in Congress 
  from the State of New Jersey, and chairman, Subcommittee on 
  Africa, Global Health, and Human Rights: Prepared statement....     7
Mr. Anthony Carroll: Prepared statement..........................    12
Mr. Paul Ryberg: Prepared statement..............................    18
Mr. Jaswinder Bedi: Prepared statement...........................    23
Mr. Stephen Hayes: Prepared statement............................    27

                                APPENDIX

Hearing notice...................................................    40
Hearing minutes..................................................    41
The Honorable Gerald E. Connolly, a Representative in Congress 
  from the Commonwealth of Virginia: Prepared statement..........    43
The Honorable Theodore E. Deutch, a Representative in Congress 
  from the State of Florida: Prepared statement..................    45


        THE AFRICAN GROWTH AND OPPORTUNITY ACT: ENSURING SUCCESS

                              ----------                              


                        WEDNESDAY, JUNE 20, 2012

      House of Representatives,            
                 Subcommittee on Terrorism,                
                Nonproliferation, and Trade and            
             Subcommittee on Africa, Global Health,        
                                      and Human Rights,    
                              Committee on Foreign Affairs,
                                                    Washington, DC.
    The subcommittees met, pursuant to notice, at 2:35 p.m., in 
room 2172, Rayburn House Office Building, Hon. Edward R. Royce 
(chairman of the Subcommittee on Terrorism, Nonproliferation, 
and Trade) presiding.
    Mr. Royce. This joint hearing of the Subcommittee on 
Terrorism, Nonproliferation, and Trade, as well as Africa, 
Global Health, and Human Rights will come to order. I want to 
thank Chairman Smith, Ranking Member Bass, and the staff of the 
Africa Subcommittee, as well as the Terrorism, 
Nonproliferation, and Trade Subcommittee for their good work on 
this hearing.
    And of course, Karen Bass really urged that we hold this 
hearing today. I think it is a timely hearing, given the 
intent, I think, in the Senate to move forward with this 
legislation in ensuing weeks.
    Today we are examining the African Growth and Opportunity 
Act. It was signed into law in 2000. This landmark legislation 
ended years of U.S. Government indifference to Africa's 
considerable commercial potential, and I am proud to have been 
part of the AGOA coalition with Jim McDermott and Charlie 
Rangel and some of our other colleagues on this. We were 
bipartisan. We did work very hard at it, and I think we beat 
the odds to get the job done.
    AGOA has brought major benefits to a number of African 
countries. Hundreds of thousands of Africans, many of them 
women, have been employed because of this Act. I have had the 
opportunity to visit apparel factories in many different 
countries in Africa. I have seen AGOA's contribution to 
fighting poverty in these countries. Unfortunately Africa's 
emergent apparel industry is imperiled by the impending 
expiration of a key AGOA provision dealing with the ability to 
use non-African manufactured fabric. If we do not extend this 
provision, hundreds of thousands of African apparel jobs will 
be shifted to Asia. Many already have because of this 
uncertainty. Africans are losing jobs, and we are losing the 
diplomatic goodwill won with AGOA.
    Ideally, more countries and more African industries would 
have taken advantage of AGOA by now, but we shouldn't lose 
sight of the fact that the number of countries exporting non-
energy products has increased from 13 to 22 on the subcontinent 
in the last decade. And when AGOA was passed, Africa was 
arguably irrelevant to the global economy.
    Africa still has a long road ahead, but a great deal of 
progress has been made because of many of the provisions in 
AGOA. But one particular provision, if we don't extend it, is 
going to be very injurious. One way to accelerate that progress 
and help our deficit, of course, if I can go off on a tangent 
for a minute, is eliminating our agricultural subsidies, which 
I wish we would phase out for the benefit of fairness, the 
benefit of sound economic policy, and certainly for the benefit 
of Africa.
    This committee wrote AGOA's eligibility criteria. The U.S. 
extends duty and quota-free access with AGOA countries and 
expects certain minimum commitments in return. One witness will 
tell us that these standards which go to the basis of setting 
up independent judiciary, and the rule of law, these standards 
compelled most African countries to ``embrace the rule of law, 
allow for political pluralism, respect democracy, and basic 
human rights.'' And that is not bad.
    We didn't pass AGOA for Africans only. The U.S. is better 
off if Africa is moving away from mass poverty. AGOA can be 
better utilized, which we will hear about, but we are sure 
better off with it in place. When AGOA was written, the U.S. 
Government was completely ignoring African commerce. AGOA has 
changed that, though I was struck by reading the other day that 
no Commerce Secretary has visited sub-Saharan Africa since 
2002. Nothing in 10 years. And that is not the spirit of AGOA. 
And that is something we seek to rectify here.
    Before turning to Ranking Member Sherman for an opening 
statement, I will inform members that we are also joined by a 
few non-committee members who were critical to AGOA, especially 
Representative Jim McDermott, who got the original ball rolling 
and had the concept for the first AGOA legislation.
    I will turn now to our ranking member.
    [The prepared statement of Mr. Royce follows:]

    
    
                              ----------                              

    Mr. Sherman. Not wishing to cause a heart attack or other 
problem with my chairman, I will give you fair warning. I am 
going to skip my opening statement here, and yield to my good 
friend, Karen Bass. I am anxious to hear the witnesses, and 
this one time I didn't use the 7- or 8- or 10-minute opening 
statement. I yield back.
    Mr. Royce. I thank our ranking member, Mr. Sherman, and we 
will now go to Ranking Member Bass.
    Ms. Bass. First of all, thank you very much, Chairman 
Royce, Chairman Smith, and Ranking Member Sherman. And this 
will be an unusual occasion, because I am actually going to 
yield my comments in just 1 minute. But I want to thank all of 
you; in particular, the cooperation with Member Sherman's 
staff, and also Member Royce's staff for the opportunity to 
hold this joint hearing on AGOA. And with that in mind, I would 
like to defer my opening comments to one of the original 
authors and leaders on AGOA, Congress Member Jim McDermott.
    Mr. McDermott. Thank you, Ranking Member Bass, and thank 
you Chairman Royce, and Chairman Smith, and Ranking Member 
Sherman. I, being allowed to say a few words with them giving 
up their time, is a unique experience on the House of 
Representatives. Watch it. You are watching history being made.
    I would especially thank Congresswoman Bass who pushed for 
this hearing, because the timing couldn't be better. A central 
part of AGOA, the so-called third-party fabric provision, 
expires in less than 3 months. And some of you may have heard 
that they may be making progress over in the Senate. We have 
heard the drums, and the chairman tells me that he went over 
and talked to the drummer, and it sounds like something is 
actually going to happen over there. So we are very excited 
about that welcome news.
    There is no reason we should be in this position, actually. 
I have been talking to my chairman about this over on our 
committee. We offered this legislation a year ago. In December 
the Senate was on board when they identified the same language 
in their bill--Senator Baucus and Senator Hatch--but it has 
been sitting there since.
    Now, there are two important points here. One, the 
extension is good for business. It is good for the American 
economy. It is good for Africa. It is good for foreign policy. 
It is good security policy, and it has been hung up for a year, 
and with really no substantive reason. The delay has always 
been about process and politics; no trust between the House and 
Senate. And on tax bills, and if we send a tax bill, will we 
get one back, or what will happen?
    When we passed AGOA, it was a partnership between many 
members, as Ed said, one or more of the most amazing 
partnerships between myself, and then-Speaker Gingrich. We all 
worked together to compromise and get a good thing done.
    Now, whether you are new to Congress or been here a while, 
the current era, where commonsense things don't get done 
because of lack of trust, or for someone looking for an issue 
to turn into a bargaining chip or something, well, it has 
poisoned the well. It has poisoned the international well and 
it hurts our own public. In this case, nothing has been gained, 
but jobs have been lost.
    When we had the hearing late--this late in the game, it 
tells us good and bad things. One, it is sad it had to happen 
now, but good that members have found the good sense to push it 
forward. And I hope that this hearing gives the Senate the 
encouragement to do what is needed. That is one point.
    But the second point is that a delay in trade legislation 
hurts everyone: Workers, businesses, American security, foreign 
governments we need to work with. We cannot keep letting our 
trade arrangements and provisions expire. Orders--I am a 
doctor, all right? I am not a retailer. But I learned from 
retailers very early on that when you are doing things like 
clothing buying, you are doing it at least 9 months in advance, 
and planning for a building is done 3 years in advance.
    When we didn't get AGOA 3rd country fabric renewed within 9 
months of expiration, orders from African factories have 
actually started to drop. We are now 3 months away, and orders 
have dropped by 35 percent. Orders equal jobs. If somebody in 
New York, Jones of New York or somebody, wants to buy 
something, they have to know the price that they are going to 
get it from in Africa in order to make a bid. And this means we 
have lost jobs in Kenya, and Lesotho, and a number of other 
countries, mostly women who are usually the primary bread 
winners in their families. So there is a huge multiplier effect 
to these job losses.
    It isn't just about money. It is also about the economic 
development of these countries and the infrastructure. As women 
have jobs, they teach their kids; they get education; they 
teach their children. That helps the next generation.
    The whole AGOA program expires in 3 years. And I hope, Ed, 
that we can put that in on the first day of the next session 
and get it passed right then. AGOA was meant to grow 
industries, but from the perspective of investors, AGOA is 
expiring right now. Every day from now on that renewal is not 
done, businesses lose, jobs lose, both in Africa and in the 
United States.
    Twelve years ago we got the ball rolling. We had nothing up 
until then. And AGOA and other initiatives got us in the game 
in Africa. There were 800 million people and the United States 
had no policy toward trade in Africa. And we started building 
commerce, building the 21st century relationships, but the 
Chinese and the Europeans have charged ahead of us recently and 
they are much more agile and nimble than we are.
    Today we are going to hear about AGOA and textiles from the 
panelists, and legislatively we finally are about to take 
action. I hope that we can use today to reset the clock a 
little, to help us get to work on a new job, job creating, 
mutually beneficial AGOA agreement done in 2013, and not the 
last minute in 2015.
    I want to thank the Foreign Affairs Committee for their 
energy and for their leadership on this issue, and I am deeply 
appreciative of your allowing me to come and talk here.
    I am going to leave because the Ways and Means Committee is 
right now dealing with should we extend NPTR to the Soviet 
Union, to Russia. And so we are trying to decide if we will 
improve our relationships with the Russians. So I am going to 
take your leave, but thank you.
    Mr. Royce. Thank you, Mr. McDermott.
    Now we will go to Chairman Smith of the Africa, Global 
Health, and Human Rights Subcommittee.
    Mr. Smith. I thank my good friend for yielding and thank 
you for calling this extremely important hearing. I think all 
of us would agree to that and I would ask unanimous consent 
that my opening statement be made a part of the record.
    I think Mr. McDermott really summed up all of our 
sentiments here on the panel, which I am sure will be echoed by 
our distinguished witnesses. This has to be done immediately. 
Delay is denial, especially for those who lost orders that are 
occurring every single day. We have heard it from the African 
ambassadors, and heard it from the businessmen and women. A 
drop-dead date is just that. Not so here, as my good friend and 
colleague from Washington State so clearly stated. So I do hope 
that we can get this done immediately.
    I will, Mr. Chairman, just note for the record, that I just 
got back from Bolivia. I was visiting a prison there on behalf 
of a man who has been unjustly imprisoned. I picked up a little 
bit of a fever, so I am going to take my leave, because I am 
feeling awful, but I thank you again for calling this hearing.
    Mr. Royce. I thank you very much, Chairman Smith, and thank 
you also for your leadership on not only this issue but human 
rights issues around the globe, including in Bolivia. We wish 
you a speedy recovery.
    [The prepared statement of Mr. Smith follows:]

    
    
    
    
                              ----------                              

    Mr. Royce. There are several ambassadors that I see in the 
audience that we want to recognize from sub-Saharan Africa. 
Ambassador Andjaba from Namibia is with us, if I can ask him to 
stand. We appreciate that. From Mauritius, Ambassador Soborun. 
Thank you very much, Ambassador. And from South Africa, Miss 
Cheryllyn Dudley is here from the South African Parliament.
    If I could ask you--thank you any other ambassadors--I will 
just ask you to stand if I missed anyone. Thank you. I will 
also mention that the administration has a role to play in 
working with the Senate to help build trust. And as mentioned, 
I was over on the Senate side talking to Senators this 
afternoon about AGOA. We are all making phone calls, and 
Representative Bass has talked to a number of Senators as well. 
We would like the administration to pick up the phone and be 
engaged as well as we move forward with this legislation.
    I have a couple of witnesses to introduce at this time. And 
let me begin by--Mr. Deutch, would you like to make an opening 
statement?
    Mr. Deutch. Thank you, Mr. Chairman, and I have an opening 
statement, if--that I could submit into the record, Mr. 
Chairman, and I would like to move on to our panel.
    Mr. Royce. Very good. Thank you, Mr. Deutch.
    Let me start with Tony Carroll. He is an international 
lawyer, and development expert who has been working on African 
issues since his service as a Peace Corps volunteer 35 years 
ago in Botswana. He was among the first to advocate for passage 
of AGOA before the Africa Subcommittee, and he serves as the 
vice president of Manchester Trade and is an adjunct professor 
at Johns Hopkins University School of Advanced International 
Studies.
    Paul Ryberg is the president of the African Coalition for 
Trade, a member-supported nonprofit whose members come from the 
African private sector. ACT, as it is called, has been a leader 
on behalf of the African private sector in conjunction with the 
development, implementation, and amendment of AGOA. He has 
worked closely with several African governments as they have 
worked to become AGOA eligible.
    Jas Bedi is the chairman of the African Cotton and Textile 
Industries Federation. This regional trade body was formed in 
June 2005 by the cotton, textile, and apparel sectors from 
across sub-Saharan Africa, to create a unified and recognized 
voice in both regional and global trade affairs.
    And Stephen Hayes, President and CEO of the Corporate 
Council on Africa for 12 years. The Council is an organization 
of 200 U.S. companies that represent 85 percent of U.S. private 
investment in Africa. Recognizing his work at the Council, the 
Department of Commerce presented him with the Ron Brown Award 
for International Leadership in 2008.
    All of the witnesses' complete written testimony is going 
to be entered into the record, so I will remind each witness to 
keep their oral presentation to 5 minutes.
    And we will start with Mr. Tony Carroll.

 STATEMENT OF MR. ANTHONY CARROLL, VICE PRESIDENT, MANCHESTER 
                          TRADE, LTD.

    Mr. Carroll. Mr. Chairman, thank you for affording me this 
honor to testify once again on U.S.-Africa economic relations. 
With your permission, I have submitted a more detailed written 
statement for the record. You and your colleague--late 
colleague--Don Payne provided bipartisan leadership essential 
to the passage of AGOA and its subsequent amendments. AGOA, 
PEPFAR and MCC have created unprecedented and diplomatic 
traction and popular goodwill for the U.S. and Africa.
    Thirty-six years ago I stepped off a DC-3 onto a dusty 
airfield in Gaborone, Botswana as a newly minted Peace Corps 
volunteer. In the subsequent years I saw Africa endure a 
generation of conflict, economic marginalization, and brain 
drain. However, Africa is now on the move, enjoying 
unprecedented economic growth and political stability.
    A contributing factor to this transformation has been AGOA. 
First, the legislation has had the intended consequence of 
rebooting economic development to a demand-driven formula. The 
reboot has produced a winning relationship, as witnessed by the 
fivefold increase in U.S. imports from Africa, and threefold 
increase in U.S. exports into the continent. However, the full 
measure of AGOA's success may be in its fostering trade 
facilitation measures, foreign direct investment, enterprise 
development, and business deregulation.
    Africa's new competitiveness and AGOA's impact can be also 
measured by the continent's booming trade with Asia and the 
Middle East, and the fact that both foreign direct investment 
and money remittances now exceed development assistance flows.
    This export-led growth and FDI has created a burgeoning 
middle class. According to many estimates, Africa will see 120 
million people rise from poverty to the middle class by the end 
of the decade. This new middle class will be a market for U.S. 
goods and services. History has shown that countries with 
growing economies tend to prefer trade to war in its economic 
relationships with neighboring states, and Africa is no 
exception. In a recent study cited in Foreign Affairs Magazine, 
Professor Stephen Straus, University of Wisconsin, has 
documented a 50 percent decrease in African conflict over the 
past decade. Moreover, hope is our best defense against 
terrorism rooted in economic and social despair.
    Today I join my friends and colleagues, Jas Bedi and Paul 
Ryberg, calling for the renewal of AGOA's third-country fabric 
provisions. Although I have worked extensively in Africa's 
textile industry I will leave it to them expound upon the 
deleterious impact on the African apparel industry that 
nonrenewal will cause. There is a very real chance that non-
extension will not only cause loss of jobs and closure of 
factories, but also may impede Africa's ability to expand its 
manufacturing base beyond apparel and textiles as the 
infrastructure investments and skill development in this 
industry enure to the benefit of others.
    I would like to underscore that failure to extend third-
country fabric will be a disaster for U.S. interests in Africa 
and deflate what has been a resurgence in our commercial and 
diplomatic engagement with the continent.
    I have also been asked to offer some observations on AGOA, 
how it can be improved to prevent this type of brinkmanship, 
and have detailed those in my submitted statement.
    As we know, the next Congress will have to extend the life 
of AGOA beyond 2015. It is my position that AGOA should be 
extended in its essentially unilateral preference format for 
another decade. This unilateral extension will permit the 
continuation of regional integration initiatives now fully 
underway in Africa's 48 sub-Saharan African countries and led 
by its regional economic communities and the African Union. 
Regional integration will foster infrastructure investment, 
expand the flow of cross-border inputs and expand market size 
to the U.S.--benefit of U.S. exporters. I applaud the 
administration's recent policy statement endorsing such 
extension and ask this body and the administration to pressure 
the European Union to shelve its efforts to foist Economic 
Partnership Agreements upon Africa's more developed economies, 
thereby retarding these promising experts at economic 
integration.
    Additionally, China's extension of market preferences to 
Africa has also the unintended consequence of driving a wedge 
between more and lesser developed African economies. Apart from 
the issue of unilateral extension, I would like to add two 
final recommendations on how AGOA can be improved. An enhanced 
AGOA can contribute to a diversification of agricultural 
exports to the U.S. For example, either through a legislative 
mandate or administrative decisions, AGOA exports could be 
exempt from tariff rate quotas which are denying access to the 
U.S. for a number of agricultural products, which Africa has a 
competitive advantage.
    This exemption could be designed in a way that it does not 
have a significant impact on domestic production. Instead, it 
would shift imports from more developed suppliers to poorer 
African countries.
    Last, as I have testified before this panel during AGOA's 
initial debates, I remain steadfastly opposed to the manner in 
which AGOA country eligibility is enforced. While there 
certainly should be punitive measures for mostly male leaders 
who foment war with neighbors, facilitate coups d'etat or 
restrict economic rights or individual freedoms, closing 
factories and casting thousands, mostly women, into 
unemployment is not the way to go. Unless the beneficial 
ownership of such factories is tied to such culprits, I believe 
that sanctions targeting country leaders are more effective 
tools to mete out punishment rather than punishing innocent 
businesses and their employees. Thank you.
    Mr. Royce. Thank you, Mr. Carroll.
    [The prepared statement of Mr. Carroll follows:]

    
    
    
    
    
    
    
    
                              ----------                              

    Mr. Royce. Mr. Ryberg.

STATEMENT OF MR. PAUL RYBERG, PRESIDENT, AFRICAN COALITION FOR 
                             TRADE

    Mr. Ryberg. Thank you, Chairman Royce, Ranking Members 
Sherman and Bass, and members of the subcommittees. I want to 
thank you for holding this hearing today on this important and 
extremely time-sensitive subject. I am going to focus my 
remarks on the need to renew the AGOA third-country fabric 
provision.
    I am appearing before the subcommittees today in my 
capacity as President of the African Coalition for Trade, or 
ACT, which is a nonprofit association of African private sector 
groups and individual companies trading with the United States 
under AGOA. Most of our members are engaged in manufacturing 
apparel for export to the United States.
    Increased apparel trade has been the greatest success story 
of AGOA. During its first 5 years in effect, apparel exports 
from Africa almost tripled, and more than 300,000 new direct 
jobs were created in the apparel sector in Africa.
    On top of that, more than twice that many indirect jobs 
were created to provide support services to this new, vibrant, 
African apparel industry.
    This success was challenged and almost destroyed by the 
expiration of the multifiber arrangement in 2005 which exposed 
this infant African apparel industry to unfettered competition 
from Asian superproducers, many of whom were heavily state-
subsidized. During the next 5 years, 2005 to 2010, AGOA apparel 
exports fell by 56 percent.
    The good news is that beginning last year, there was a 
comeback, and U.S. apparel imports from Africa under AGOA grew 
by 15 percent in 2011.
    Unfortunately, this recovery has been nipped in the bud by 
Congress' inability to renew the AGOA third-country fabric rule 
of origin, which accounts for more than 95 percent of the AGOA 
apparel trade. This key provision of AGOA, as has been noted, 
is scheduled to expire on September 30 of this year. Although 
identical bills have been introduced to renew the third-country 
fabric provision in both the House and the Senate, Congress has 
so far been unable to move either bill forward, and Africa is 
now paying the price for Congress' inaction.
    During May and June so far this year, apparel exports from 
Africa were down by 27 percent from the same period last year. 
And our members in Africa report that new orders received from 
U.S. buyers are running 35 percent behind where they were at 
this time last year. And the decline is accelerating with every 
single day.
    As orders are lost, layoffs must follow. Already this year, 
3,300 jobs have been lost in Lesotho alone. In Kenya, another 
2,000 workers have lost their jobs. And if the third-country 
fabric provision is not renewed immediately, there is a serious 
risk of a complete collapse of the Africa apparel industry, 
costing literally hundreds of thousands of jobs. Ironically, 
renewal of the AGOA third-country fabric provision is not 
controversial and enjoys wide bipartisan support in both 
Chambers of Congress.
    In the past, the AGOA third-country fabric provision has 
been renewed twice, both times by unanimous consent, and well 
in advance of its expiration. This time, however, renewal of 
the AGOA third-country fabric provision has become the victim 
of inter-party and inter-chamber gridlock, despite the fact 
that renewal has been endorsed by everyone in Congress and by 
the Obama administration.
    At the 2012 AGOA Forum which was held here in Washington 
last week, no topic was discussed more frequently or with more 
urgency than the need for immediate renewal of the third-
country fabric provision. As one African trade minister put it 
at the forum last week:

        ``We came to Washington with great optimism that we 
        would return with good news that the third-country 
        fabric provision has been renewed. But we are returning 
        home with empty hands. What are we to tell our people 
        whose jobs are being lost every day?''

    Another African trade minister in the same session said 
that Congress' delay in renewing the third-country fabric 
provision is undermining the credibility of the U.S./Africa 
partnership. These are very sobering words. Congress can be 
proud of its accomplishment in creating an apparel industry in 
Africa, creating more than 300,000 jobs and providing a 
livelihood for over 1 million people. But sadly, Congress' 
inaction today threatens to destroy what has been created over 
the past 12 years. Thank you.
    [The prepared statement of Mr. Ryberg follows:]

    
    
    
    
    
    
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    Mr. Royce. Mr. Bedi.

 STATEMENT OF MR. JASWINDER BEDI, CHAIRMAN, AFRICAN COTTON AND 
                 TEXTILE INDUSTRIES FEDERATION

    Mr. Bedi. Thank you, Chairman Royce, and in essence of 
time, all protocols observed. The African Growth and 
Opportunity Act enacted in the year 2000 was probably the most 
liberal trade preference program the United States has given 
any country or region which has indeed had a positive impact to 
sub-Sahara Africa, creating numerous new jobs, almost 300,000 
and positively impacted the livelihood of especially women who 
became bread winners with a second income in many households.
    The eligibility criteria for AGOA compelled most African 
countries to embrace the rule of law, allow for political 
pluralism, respect democracy, and basic human rights. AGOA 
certainly met expectations whereby bilateral trade between the 
U.S. and sub-Sahara Africa grew, benefiting for the United 
States and Africa.
    The third-country fabric provision benefited AGOA 
countries, as the continent was unable to offer competitive 
production in comparison to Asia, in respect to quantity, 
quality, and price, compromising the competitive advantage from 
sub-Sahara Africa. This provision allowed sub-Sahara Africa, to 
compete effectively and help the U.S. consumers with 
competitive pricing of apparel. The expiring of this provision 
will devastate the supply chain and destroy the numerous jobs 
created in the last several years, undermining the entire AGOA 
trade preference program.
    Through ACTIF, where I am chair, the African Cotton and 
Textile Industries Federation, we have actively advocated the 
need to have an organized regional supply chain which 
integrates the continent and creates a competitive industry to 
domestic and regional representations to individual countries 
and trading blocs.
    In this respect we have signed MOUs with the East African 
Community, the Common Market of Eastern Southern Africa, 
COMESA, and the African Union to ensure all members can easily 
operate across borders and the trade precipitates to global 
best practices toward economic freedom.
    AGOA has created a platform of African private sector to 
align mindsets and to present sub-Sahara Africa with a unified 
voice for the common objective in relations to trade. This has 
further filtered into the various governments in Africa, 
whereby a common approach and dialogue has become evident.
    The diplomatic relations between the U.S. Government and 
sub-Sahara Africa have been elevated, allowing greater cohesion 
in respect to multilateral trade negotiations, especially in 
the WTO.
    AGOA has become and annually meet with the U.S. Government 
and sub-Sahara Africa to discuss what worked, what didn't work, 
what can we do differently to benefit the people of the U.S. 
and sub-Sahara Africa? This dialogue allows exchange of ideas 
in respect to bilateral and multilateral trade negotiation, 
which in turn helps the people and livelihoods of both 
continents.
    Sub-Sahara Africa suffers major infrastructure challenges, 
hurting its competitiveness, which is an opportunity for U.S. 
exporters. AGOA as a framework can help address these 
challenges to create a win/win partnership within the U.S. and 
sub-Sahara Africa, especially in terms of value addition which 
sub-Sahara Africa desperately needs to employ its large 
population, which by 2040 will be the largest working-age 
population in the world, bigger than India and China.
    Also the combined GDPs of Africa are anticipated to grow by 
$1 trillion by 2020, with consumer spending growing by $860 
billion over the same period. Hence, AGOA can be remodeled to 
ensure U.S. exporters get a greater slice of this expanding 
economic pie.
    AGOA has, beyond economic terms, created a sense of 
belonging within sub-Sahara Africa, accelerating the regional 
integration agenda within various economic blocswith free 
movement of goods and services, lowering tariff and nontariff 
barriers for expanded trade within the region.
    The total AGOA export to the U.S. is less than 1 percent of 
the total U.S. imports, totaling about $1 billion, which in 
essence is a needle in the haystack, with no impact to the U.S. 
textile or apparel industry. In fact, both ACTIF and NCTO share 
common positions in respect to multilateral trade in the cotton 
textile value chain to help us and sustain a globally 
competitive cotton textile industry.
    The current status quo in respect to the expiring of the 
third-country fabric provision, expiring on 30 September 2012, 
has created great uncertainty in the marketplace, whereby we 
have noticed reduction of orders from the U.S. buyers who will 
only place business if the factories underwrite the import 
duties payable in the event the extension of the provision is 
not obtained immediately.
    Considering the short window which we have left with 3 
months and expiry to this date, the lead time far exceeds the 
production cycle. Renewal of AGOA's third-country fabric was 
declared a top priority between Africa and the United States 
for 2011. In Zambia it is now a full 1 year, and what was a 
priority has become a crisis. The inaction of Congress will 
definitely impact the livelihoods and accelerate job losses in 
the industry.
    Finally, we cannot ignore the fact that job losses due to 
this inaction may impact the security situation of the region, 
and if not managed well could lead to a bigger insecurity that 
could harvest terrorist cells affecting global peace.
    Mr. Royce. Thank you.
    [The prepared statement of Mr. Bedi follows:]

    
    
    
    
    
    
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    Mr. Royce. We will go to Mr. Hayes.

 STATEMENT OF MR. STEPHEN HAYES, PRESIDENT AND CHIEF EXECUTIVE 
         OFFICER, THE CORPORATE COUNCIL ON AFRICA (CCA)

    Mr. Hayes. Thank you, Mr. Chairman, Congressman Sherman, 
Congresswoman Bass.
    Mr. Royce. Microphone.
    Mr. Hayes. Thank you. There we go. Sorry.
    Thank you Mr. Chairman, Congressman Sherman, Congresswoman 
Bass, and Congressman Deutch.
    I will speak from a different point, a slightly different 
point of view. I am in total agreement with what I think is the 
accuracy and the passion of Congressman Royce's opening 
statement. It is also very good to see that the passion is 
still there after 12 years of AGOA.
    The Corporate Council on Africa is very much in favor of 
extending the third-party fabric agreement. Certainly, there 
are jobs at stake and that is very important, but I also think 
we have to address the issue of symbolism.
    It is highly symbolic that we get this done now. It is 
important to our relationships, political relationships and 
political credibility with Africa. And I think for those 
reasons alone, we need to move now.
    Our commitment to AGOA as an organization, I think, is 
beyond question. We also--I also agree with Congressman 
McDermott who said that the AGOA legislation also needs to be 
extended sooner, in the next session as opposed to waiting 
until 2015. My reasons for saying that is that I think that 
AGOA by itself is not enough for our relationships on U.S.-
Africa economic trade and our political relationships. I think 
it has been the cornerstone of our policy. I think it is an 
important cornerstone, but if we are going to be effective in 
Africa economically and if we are going to be effective--more 
effective politically, then we need a broader economic 
engagement.
    We need to look within that package to the access to 
financing for Africans. They are not going to be able to use 
AGOA if financing is not accessible, and more--I am sorry, just 
as important, we need access to financing for American 
companies to invest in AGOA.
    We also need to look at the issues of capacity building to 
make AGOA more effective, but also to make U.S.-Africa trade 
more effective. And certainly we need to look at infrastructure 
development power, IT, all of those issues. And the sooner we 
pass the extension of AGOA, the more I think we can address the 
broader economic policy that is needed toward Africa.
    In that, I would also agree that it is not simply Congress, 
that the administration needs to step up as a partner in that, 
and we need far greater public-private cooperation to make this 
work. I think our highest national security interest in the 
long term rests very much in Africa as much as, if not more, 
than other parts of the world as well. So we need a broader 
policy. AGOA is that cornerstone. We need to establish AGOA 
long term to reassure our long-term commitment, and then we 
need to move on from there. Thank you.
    Mr. Royce. Thank you, Mr. Hayes.
    [The prepared statement of Mr. Hayes follows:]

    
    
    
    
    
    
    
    
                              ----------                              

    Mr. Royce. We will go to Ms. Bass for her questions.
    Mr. Sherman. If I can just interject, I have been called to 
the Financial Services Committee. I am glad I was able to hear 
the witnesses and I may have some questions for the record. 
Thank you.
    Mr. Royce. Thank you, Mr. Sherman. Congresswoman Bass.
    Ms. Bass. Thank you again, Mr. Chair, Ranking Member, and 
our witnesses. I had a few questions I wanted to ask you. You 
know, this is about AGOA more generally. Given that it is more 
than 10 years old, what aspects do you think are most in need 
of change? And I am saying this also in light of Mr. 
McDermott's comments and yours, Mr. Hayes, in terms of we don't 
want to wait. But in anticipation of the next legislative 
session, what do you think we need to do to achieve the 
original goals of AGOA, including increasing U.S. trade and 
investments with sub-Saharan Africa?
    Mr. Hayes. I think--I am sorry. I think there are a number 
of things that need to be done. AGOA hasn't been--all of us 
know that AGOA hasn't been as effective as we would like. Its 
importance is beyond question, both politically and 
economically. It has meant jobs to thousands of people. I am in 
total agreement with Tony Carroll in saying that we ought to 
place sanctions on individuals as opposed to whole countries 
because of the damage it has done to workers and to industries.
    But I think that one of the issues that was not taken 
into--I guess fully into the planning of this when AGOA was 
formed, is the realization that the industries in Africa were 
not at the same point as the industries in Asia in 1960. 
Infrastructure was different. The fact is that infrastructure 
is lacking still in many parts of Africa. AGOA is not going to 
be effective if they can't get their products to market. So 
clearly, infrastructure needs to take place.
    You have countries like Nigeria, that have still 80 percent 
of its power needs are not met, so how can you expect them to 
really have a consistent product flow to the United States or 
anywhere else? So we have got to address those issues if we are 
expecting AGOA to work.
    Ms. Bass. Well, I know that in the forum last week, 
infrastructure was certainly raised, both physical and 
institutional, and you have mentioned a couple of things. But 
what concrete actions do you think that we could take to 
improve trade capacity? If it is helping the infrastructure, 
where, how, when?
    Mr. Hayes. I think one of the initiatives, for instance, 
that Secretary Carson took with our own organization, taking an 
energy--U.S. companies to Africa, because this is also where it 
helps the American economy. I think we--one of the issues where 
American companies can invest in Africa and speed up the 
process of development, energy and power is one of them. I 
think the mission, the energy mission to poor countries 
actually introduced 12 companies, 10 of which were being 
introduced to Africa for the first time as a business 
destination. And the fact is there are ways to help the 
American economy at the same time as helping AGOA. I think 
those are issues.
    I think the issue of financing needs to be looked at very 
carefully. I think legislatively there are--Congress can make a 
difference on this. You can't develop if you have no access to 
financing. And for a range of reasons, unrelated many times to 
anything happening here, African companies don't have access to 
financing.
    Ms. Bass. Okay. Before my time runs out, I want to raise a 
couple of other things. One is--and this is for any of the 
panelists--we are in the middle of negotiating free-trade 
agreements with several Asian Pacific Islander countries, 
including Vietnam, which is a major exporter of textiles and 
apparel to the U.S. And I am wondering if you have any thoughts 
on how that might impact U.S. trade under AGOA.
    And then I also wanted to ask, some people have suggested 
that the third-country provision may have a negative impact on 
eligible countries by incentivizing them to concentrate on low 
value-added production, and I want to know your thoughts on 
that. Have you seen any evidence of this? How can the United 
States encourage more diversification in production?
    Mr. Ryberg. I am happy to respond to both of your 
questions, Congresswoman Bass. On the question of TPP, our 
group is on record opposing extending a single transformation 
rule of origin to Vietnam, precisely because Vietnam is a 
superproducer. They are the most competitive producer of 
apparel in the world.
    When the third-country fabric provision was created for 
AGOA, it was because the AGOA apparel industry was in its 
infancy and was not competitive. It needed an extra help to 
enter the marketplace.
    The Vietnam situation is the exact opposite. They are the 
most competitive in the world, and they are the second biggest 
supplier of apparel to the United States. So giving them the 
equivalent of third-country fabric, which is the single 
transformation rule of origin, turns the policy on its head. So 
we are on record opposing that.
    The question of whether third-country fabric inhibits 
development is a legitimate one and a very serious one. And 
there is something that we think about all the time. But you 
really have a chicken and egg problem. To become long-term 
competitive, you need to be vertically integrated. You need to 
grow the cotton, and gin the cotton, spin the cotton, and make 
it into fabric, and then cut and sew that into garments.
    Only by being regionally vertically integrated can you 
really compete in today's marketplace. But textile production, 
the yarn spinning, the fabric weaving, is capital intensive and 
high tech, and you have to have a critical mass of customers, 
the downstream, the apparel manufacturers, in order to attract 
the upstream investments.
    And so the strategy that AGOA took and that we endorse, is 
you start by growing the downstream, and once that reaches 
critical mass, then you will start to attract the upstream, the 
textile manufacturing. And we can see that just starting in 
Africa today, 12 years after AGOA was enacted.
    And so we think that, yes, after a reasonable extension of 
AGOA third-country fabric, we would be in a position to wean 
ourselves off it and become globally competitive through 
vertical integration, but we are nowhere near that point right 
now.
    Mr. Royce. I think, following up on that, we are nowhere 
near the point on vertical integration. We knew it would take 
some time to reach that point. But there is another aspect of 
this as we think about textiles that enters the equation. And 
maybe, Mr. Ryberg, you or Mr. Carroll would like to comment on 
that. And that is the competition, for example, on cotton; the 
fact that the ag subsidies in the United States have an impact 
on that. Mr. Carroll, would you like to comment on those 
subsidies for a minute?
    Mr. Carroll. Certainly. I mean, one of the problems that 
Africa has is that it has historically been with some 
exceptions, an exporter of raw unprocessed cotton to the 
developed world, where it is spun and woven and produced into 
fabric. So there hasn't been, with some exceptions, a direct 
linkage between fabric production and apparel production.
    However, Mr. Chairman and Ranking Member, we are starting 
to see, as Paul mentioned, the growth of the textile industry 
in places like Ethiopia because you are now starting to see, as 
Paul said, a critical mass of demand. Also, fortunately, linked 
to that, Ethiopia is a cotton-producing country which is 
starting to show its ability of being able to produce at 
competitive prices and at higher quality that will be accepted 
by the world market.
    The U.S. textile industry is heavily subsidized. The odd 
thing about that is it provides a direct subsidy to the Chinese 
producers who buy that cotton at a lower price and make it even 
especially additionally difficult for African producers into 
that market.
    If you don't mind, Mr. Chairman, I would like to address 
one issue that Congresswoman Bass mentioned about what can be 
done legislatively in the next term. In earlier sessions I 
discussed and testified on MCC. In that testimony a couple of 
years ago, I mentioned that I thought consideration should be 
given to granting regional compacts, because much of the 
infrastructure does not end at a border and, in fact, crosses a 
border. And we need to think of creative ways, possibly through 
the regional economic communities providing sufficient 
guarantees to allow MCC money to foster regional 
infrastructure. So that is something that could be done 
legislatively, and I think that has been discussed--tabled here 
before. Anything to add on the cotton side?
    Mr. Royce. Now, let me ask Mr. Bedi another question. When 
we talk about the eligibility criteria for AGOA, which 
originally was, there was some controversy involved in that. We 
wanted to see that eligibility criteria. In your testimony, you 
said it compelled most African countries to embrace the rule of 
law, allow for political pluralism, and respect for democracy 
and basic human rights.
    There is a Brookings Report that came out last week that 
notes that the criteria put into AGOA has been instrumental, in 
their words, in compelling African governments to improve the 
climate for business. In other words, improve the rule of law.
    Let me hear more about that, if I could. And the reason I 
want to hear more about it is because I still hear that issue, 
that we shouldn't have tried to press for independent courts 
and the rule of law, and I think that might be crucial long 
term.
    Mr. Bedi. Thank you, Chairman. I think the classical 
example to give here is Madagascar. And a couple of years ago, 
when we had a President take over the country, the eligibility 
criteria fell apart, and the Madagascar factories did suffer. 
But at the same time, there was immense pressure on the 
administration at that time. And listen, we need to go back to 
having elections which are going to be free and fair, and that 
itself has actually created a sentiment in the whole continent: 
Listen, either we play by the rules or we will lose all the 
jobs which Madagascar demonstrated they lost all of AGOA jobs.
    So by and large, if you look across the continent 
everywhere, if you are going to be doing business with the U.S. 
and if you are going to be doing business under AGOA, there are 
certain fundamentals that you must observe, and those 
fundamentals are democracy, political pluralism. And we have 
seen that. You see Africa coming a long way today having--in 
Zambia a few months ago, we had a very smooth transition from 
one government to the other government, and it is no longer 
that I am here to stay and this is how it is going to be.
    Mr. Royce. One of the elements of feedback that I always 
received from those in civil society was that they felt it 
would be a force multiplier for the arguments they were making 
as to why rule of law had to proceed, and why, if it did not, 
there would be a downside risk for the government in power; and 
thus, whatever progress they made, they could ratchet up in 
terms of being able to advance the system of law and have a 
deterrent effect on those who were trying to undermine it.
    Mr. Bedi. Yes, but you see the way to look at this, Mr. 
Chairman, is that we have come from a colonial past here in the 
last 50 years, most of us. And the whole constitutions of all 
of these countries were actually designed for the fewer elite 
and the top echelon that controlled these economies. Kenya is 
probably the first country that actually changed its 
constitution in August 2010, and next year as we go into 
election, we are going to be the only country in Africa as a 
role model, whereby we have actually changed our entire 
governance style. We are going to have a devolved government. 
We are going to have a parliamentary system which is going to 
be supreme. And we have seen it in the last couple of months.
    The President appointed a chief justice, and Parliament 
said no. And this is the first time in the history of Africa 
that the Parliament said no, and the President retracted and 
ran through procedural announcements. And I am sure this will 
spread across the continent because everybody is talking about 
a new constitution. In the Zambian election the new President 
came back and said, We are going to have a new constitution. 
And we are seeing that happening every other day in the 
neighborhoods, that they are all talking about this old 
constitution that they all embraced. And I can tell you that 
the former Presidents that we have had, they have enjoyed this 
power, primarily because it was designed for Lancashire and not 
for Africa.
    Mr. Royce. Right. Mr. Deutch. Thank you.
    Mr. Deutch. Thank you, Mr. Chairman. I would like to 
capitalize on the experiences of the members of the panel and 
broaden the discussion a bit. As we know, the Chinese have put 
considerable resources into developing trade with Africa. I 
wonder if you could speak to what can be done other than--other 
than renewing AGOA, what can Congress do to promote U.S. 
competitiveness to encourage further trade and to tackle head-
on the competition that the Chinese pose, given their continued 
expansion in the continent? I throw that out to the panel.
    Mr. Hayes. All right. We also took a delegation to China to 
look at exactly those issues, some of our businesses. China, 
the relationship with China and Africa I think is more complex 
than we give it credit for being. But particularly the large 
state-owned enterprises get extensive financing. That is easily 
accessible. They can put a package together very quickly. We 
simply don't have that capability. One is that--could we reduce 
that somewhat? Yes. I think we have to find ways that the 
private sector and the public sector can work together much 
more quickly. There has got to be an openness to the private 
sector by the administration, whatever administration that is.
    On your specific question, I think financing, again, is 
key. We are looking to try to structure, you know, a strong 
positive relationship with Ex-Im. I think they need to be let 
loose a little bit more on Africa. On one hand, they are--they 
have the demand that they produce money for the U.S. Treasury, 
so they are going to be more risk averse in order to meet that 
demand.
    They also have a 2 percent limit now, I think, on--which 
also is going to make it a little--I think you can--there are 
many safe investments in Africa, but there is a risk-averse 
mentality under those two constraints. We have got to find ways 
to reduce that risk.
    American banks aren't investing, aren't making loans 
available for Africa, certainly not without Ex-Im support. What 
we are seeing, interestingly, is not a rise in American banks 
joining CCA, but African banks, Standard Bank, United Bank of 
Africa, Standard Charter, because they see if American banks 
aren't going to fill this void, perhaps we can begin to fill 
that void.
    But the number one issue that we heard at the Brookings 
Institution as part of this AGOA week, we hear from our 
members, is the access to financing. And that, I think, is one 
of the most important issues that Congress can deal with.
    Mr. Deutch. And Mr. Hayes, as long as you have got the 
microphone, you spoke earlier in response to several comments 
here about infrastructure and the need for infrastructure 
development in Africa. You spoke extensively about power. Could 
you speak as well to the issue of transportation 
infrastructure, particularly given the number of landlocked 
countries, and what your vision would be how transportation 
infrastructure can be expanded for economic development?
    Mr. Hayes. Yes, I don't know that I can speak as well on 
that issue, but the--this is where I think Mr. Carroll was 
absolutely right, that we need to look at regionalization. You 
have from one company to another where the rail gauges don't 
match. You have to take things off the train, and then take 
them essentially by hand truck over to the next train because 
the gauge is different. Also, the customs duties country by 
country, somebody trying to truck something to three or four 
countries may pay customs duties 20 times along the way.
    So there needs to be a harmonization and regionalization 
and we need to work, I think--look at regions as more viable 
entities, because if the regions are able to harmonize then, 
the countries themselves fall into that category as well. So I 
think regionalization is vital. We need to support that.
    And I think that MCC, I am in total agreement with Mr. 
Carroll that MCC should look at regional projects and not 
simply--not simply country by country, because I also think we 
can compete with China better if we are working on regions than 
country by country as well.
    Mr. Deutch. Thank you.
    Mr. Royce. Thank you, Congresswoman Jackson Lee, would you 
like to make any----
    Ms. Jackson Lee. Thank you, Mr. Chairman. Thank you for 
your courtesies, and thank you for your indulgence to the 
ranking member, to the chairperson, and to my colleagues here. 
I will make a statement and it is one singular question, if I 
might.
    I had the privilege of traveling on the inaugural trip as 
we began to finally craft--though many had been working on the 
AGOA Act for a very long time, as Congresswoman Bass so 
eloquently spoke at a meeting we were at. And we went on a 
seven-country congressional delegation to speak to the value of 
this legislative initiative. And I am proud of my colleagues, 
Republicans and Democrats, who came together to recognize, I 
think, one singular point: That the continent of Africa can be 
one of America's greatest allies, first of all, and has been in 
the past, but also one of our greatest trading partners, or 
partner. Sometimes trade gets a bad name, but at the time that 
we were traveling, we heard words such as ``trade, not aid,'' 
and we finally reconciled that we want trade and aid where it 
is necessary and usable.
    But the point that I want to make on this record is that 
AGOA has had enormous success with challenges. But we have 
seen, and we know it can be documented, that many, many jobs 
have been created because of the African Growth and Opportunity 
Act. And over the years we have listened to business persons, 
governments, and others discussing how important this 
particular initiative is, this balance of allowing the growth 
of, in this instance, the textile industry.
    So I am interested in finding out the specific impact of 
the non-extension and what it would do to jobs and what it 
would do to the progress that has been made, and I am going to 
start with Mr. Bedi.
    Mr. Bedi. Thank you. The impact of non-extension is simple, 
and I mean, we are going to have a mass exodus of the factories 
that we have got in the region at the moment. All our 
production will be shifted to Asia, and besides all that, we 
have a major problem in the neighborhood where we are seeing 
all of these terrorist cells coming up. And we are going to 
actually see joblessness, which can be harnessed to a very 
different direction because of security concerns.
    As we all know, Africa has got a large population which is 
unemployed, 70 percent of which is under the age of 40. And a 
lot of them are unemployed, and so that whole impact, if you 
look at it, we need to create the jobs to create social peace. 
And I think that is really the agenda that Africa needs to 
have, and job creation can only be done in a labor-intensive 
industry like textile enterprise.
    Ms. Jackson Lee. Would you care to give me a ballpark 
figure as to how many you think might be employed? This has 
been, I am counting 1997, 1998, when this bill was passed, I 
think, as I recall. We are in 2012. Obviously, it had to be 
implemented, but what have you seen in the growth of employment 
around these industries?
    Mr. Bedi. We saw 300,000 new jobs have been created as soon 
as AGOA was enacted after the year 2000, and which peaked up to 
about 2006. That is when we hit 300,000. And thereafter after 
that multifiber agreement, we had some exodus of factories 
leaving, because the sole purpose of those factories being 
located in Africa was to beat the quota regime and not so much 
the tariff regime, the import tariff regime.
    The import tariff regime really is that competitive 
advantage that we have today, as compared to Asia. And today, 
if you look at those jobs that we would have, it would be about 
200,000, because we have already lost about 100,000 from 2005 
to 2012.
    Ms. Jackson Lee. Well, let me, I don't know if anyone else, 
I see some thought here about negative impacts on sub-Saharan 
Africa. And would anyone want to rebut that statement of any 
negative impact or explain that statement?
    Mr. Royce. Maybe the concept, if I can interject, is the 
negative impact, that jobs are leaving now because we haven't, 
Congresswoman, been able, we haven't been effective in 
extending this AGOA provision. And as a consequence, because 
businesses are planning long range, we see them voting with 
their feet by moving their factories.
    And that is why Congresswoman Bass asked for this hearing 
today, to see if we could do anything to set in motion a focus 
on the fact that there has been a real negative impact in terms 
of businesses deciding to relocate and shipping their orders 
instead to Asia.
    Ms. Jackson Lee. Well, if the gentleman would yield, there 
is the making of a bipartisan effort, and I came specifically, 
although I was delayed in departing, so I thank you for your 
courtesies. I think you have hit the nail on the head, business 
planning, and that is why I asked, 300,000 jobs; that means we 
have an opportunity to increase or to build on 300,000 jobs and 
to bring companies back and to spread the opportunity even 
beyond sub-Sahara.
    So I just wanted to conclude my remarks, Mr. Chairman, if 
you continue to yield, and to the ranking member, that I look 
forward to working in the manner that we can. I just want to 
leave the record clear: The continent of Africa is a vital, 
important ally and friend. And that is the nation states with a 
variety of resources and the infrastructure and human resource 
component. Building of infrastructure, human resource, and 
building of the economic engine of that continent will be 
valuable to the American people, as it will be valuable to the 
world, and as it will be valuable specifically to the people of 
the continent of Africa. Thank you for holding this hearing and 
I yield back.
    Mr. Royce. Thank you, Congresswoman Jackson Lee, we thank 
you for that mission that we took to Africa in terms of trying 
to build support, and the support was there across Africa for 
AGOA.
    And we thank Congresswoman Karen Bass for asking for this 
hearing today in order to try to jump-start this legislation. I 
thank the witnesses for their testimony.
    We stand adjourned.
    [Whereupon, at 3:38 p.m., the subcommittees were 
adjourned.]
                                     

                                     

                            A P P E N D I X

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     Material Submitted for the Hearing RecordNotice deg.




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