[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
       INCREASING AMERICAN JOBS THROUGH GREATER EXPORTS TO AFRICA

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



                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON AFRICA, GLOBAL HEALTH,

                        GLOBAL HUMAN RIGHTS, AND

                      INTERNATIONAL ORGANIZATIONS

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS

                        HOUSE OF REPRESENTATIVES


                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 7, 2013

                               __________

                           Serial No. 113-57

                               __________

        Printed for the use of the Committee on Foreign Affairs


Available via the World Wide Web: http://www.foreignaffairs.house.gov/ 
                                  or 
                       http://www.gpo.gov/fdsys/

                                 ______




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                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida         ENI F.H. FALEOMAVAEGA, American 
DANA ROHRABACHER, California             Samoa
STEVE CHABOT, Ohio                   BRAD SHERMAN, California
JOE WILSON, South Carolina           GREGORY W. MEEKS, New York
MICHAEL T. McCAUL, Texas             ALBIO SIRES, New Jersey
TED POE, Texas                       GERALD E. CONNOLLY, Virginia
MATT SALMON, Arizona                 THEODORE E. DEUTCH, Florida
TOM MARINO, Pennsylvania             BRIAN HIGGINS, New York
JEFF DUNCAN, South Carolina          KAREN BASS, California
ADAM KINZINGER, Illinois             WILLIAM KEATING, Massachusetts
MO BROOKS, Alabama                   DAVID CICILLINE, Rhode Island
TOM COTTON, Arkansas                 ALAN GRAYSON, Florida
PAUL COOK, California                JUAN VARGAS, California
GEORGE HOLDING, North Carolina       BRADLEY S. SCHNEIDER, Illinois
RANDY K. WEBER SR., Texas            JOSEPH P. KENNEDY III, 
SCOTT PERRY, Pennsylvania                Massachusetts
STEVE STOCKMAN, Texas                AMI BERA, California
RON DeSANTIS, Florida                ALAN S. LOWENTHAL, California
TREY RADEL, Florida                  GRACE MENG, New York
DOUG COLLINS, Georgia                LOIS FRANKEL, Florida
MARK MEADOWS, North Carolina         TULSI GABBARD, Hawaii
TED S. YOHO, Florida                 JOAQUIN CASTRO, Texas
LUKE MESSER, Indiana

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

               Jason Steinbaum, Democratic Staff Director
                                 ------                                

    Subcommittee on Africa, Global Health, Global Human Rights, and 
                      International Organizations

               CHRISTOPHER H. SMITH, New Jersey, Chairman
TOM MARINO, Pennsylvania             KAREN BASS, California
RANDY K. WEBER SR., Texas            DAVID CICILLINE, Rhode Island
STEVE STOCKMAN, Texas                AMI BERA, California
MARK MEADOWS, North Carolina
                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Mr. Stephen Lande, president, Manchester Trade...................     7
Mr. Peter C. Hansen, principal counsel, Law Offices of Peter C. 
  Hansen, LLC....................................................    18
Sharon T. Freeman, Ph.D., president and chief executive officer, 
  All American Small Business Exporters Association..............    36
Ms. Barbara Keating, president and founder, Computer Frontiers...    45

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Mr. Stephen Lande: Prepared statement............................    11
Mr. Peter C. Hansen: Prepared statement..........................    20
Sharon T. Freeman, Ph.D.: Prepared statement.....................    39
Ms. Barbara Keating: Prepared statement..........................    48

                                APPENDIX

Hearing notice...................................................    76
Hearing minutes..................................................    77


       INCREASING AMERICAN JOBS THROUGH GREATER EXPORTS TO AFRICA

                              ----------                              


                          TUESDAY, MAY 7, 2013

                       House of Representatives,

                 Subcommittee on Africa, Global Health,

         Global Human Rights, and International Organizations,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The subcommittee met, pursuant to notice, at 2 o'clock 
p.m., in room 2172, Rayburn House Office Building, Hon. 
Christopher H. Smith (chairman of the subcommittee) presiding.
    Mr. Smith. The subcommittee will come to order, and good 
afternoon to everybody. Today's hearing is intended to examine 
the issues surrounding U.S. exports to Africa, which are 
supposed to, at least, balance African exports to the United 
States. This will include existing obstacles to two-trade trade 
with Africa.
    The hearing will specifically examine the Increasing 
American Jobs Through Greater Exports to Africa Act of 2013, 
H.R. 1777. The bill was introduced, as we did previous years, 
by myself, Ranking Member Karen Bass, and my friend and 
colleague Bobby Rush, who is joining us on the panel, on April 
26th and was introduced in the Senate on April 11th as S. 718.
    The purpose of H.R. 1777 is to increase U.S. exports to 
Africa by 200 percent over the next decade. This bill does not 
replace AGOA. It complements it by providing for rebalancing 
that makes it as beneficial to Americans as it is to Africans. 
The bill intends to reach its ambitious but achievable goal by 
taking several steps, including the creation of a comprehensive 
U.S.-Africa trade strategy and a coordinator to ensure that all 
U.S. agencies involved in trade work in concert with one 
another.
    The legislation also calls for not less than 25 percent of 
available U.S. financing for trade deals to be devoted to 
facilitating U.S.-Africa trade. Furthermore, it encourages the 
descendants of Africa in this country, who largely operate 
small- and medium-sized businesses to play a greater role in 
trade with countries in Africa.
    Various studies show that every additional $1 billion in 
exports generates 6,000 to 7,000 new U.S. jobs. According to 
current data from the United States International Trade 
Administration, export-supported jobs linked to manufacturing 
account for an estimated 3.3 percent of my home State of New 
Jersey's total private sector employment. More than one-sixth 
or 17.2 percent of all manufacturing workers in New Jersey 
depend on exports for their jobs.
    But U.S. exports have suffered during the global economic 
downturn because traditional markets, such as in Europe, are 
buying fewer U.S. products. According to the U.S. ITA, we are 
the largest importer of African goods, receiving 20 percent of 
the continent's total global exports. However, U.S. exports to 
Africa fell sharply during the height of the global recession. 
From 2008 to 2009, U.S. exports to Africa dropped 45 percent, 
from $78.3 billion to $42.8 billion.
    According to statistics released by the U.S. Census Bureau, 
African exports to the U.S. since AGOA took effect in 2001 
increased from $25.4 billion to $66.9 billion in 2012, an 
increase, a huge increase of more than 163 percent. By far, 
petroleum exports from Africa led the way, with more than $28 
billion in 2012 alone.
    Meanwhile, U.S. Census Bureau statistics showed that the 
United States' exports to Africa increased from $12 billion to 
$32 billion from 2001 to 2012, an increase of 166 percent. 
Consequently, while U.S. exports to Africa showed a robust 
increase, since the inception of AGOA, the U.S. trade deficit 
with Africa increased from $13 billion in 2001 to $34 billion 
last year.
    The five most popular import sectors for African countries 
are machinery and equipment; chemicals; petroleum products, 
including lubricating oils, plastics, and synthetic fibers; 
scientific instruments; and food products. That means that 
small- and medium-sized companies across the United States have 
commercial opportunities available in exporting goods and 
services to African countries.
    The African Development Bank estimates that one in three 
Africans is considered to be in the middle class. That is 
nearly 314 million Africans who have escaped poverty and now 
buy consumer goods, including those from the U.S. In the 
supermarkets and department stores that have sprung up across 
Africa in recent years, there are some American products 
already on the shelves, but there is space for more 
contributions from U.S. producers. Companies, such as Procter & 
Gamble, have long realized the potential of African markets. 
Two years ago, Wal-Mart, the world's largest retail outlet, 
purchased South Africa's Massmart and its 288 stores in 14 
African countries.
    The Economist magazine created a significant buzz within 
the U.S.-Africa trade community 2 years ago when it announced 
that 6 of the world's 10 fastest growing economies in the first 
decade of this century were in Africa: Angola, Chad, Ethiopia, 
Mozambique, Nigeria, and Rwanda. In the following 5 years, The 
Economist projected that 7 of the 10 fastest growing economies 
in the world would be in Africa: The Democratic Republic of the 
Congo, Ethiopia, Ghana, Mozambique, Nigeria, Tanzania, and 
Zambia.
    Whether or not you agree with the popular slogan ``Africa 
is rising,'' markets on the continent are attracting foreign 
trade and investment in increasing amounts. It is not only 
China that has had its sights set on African markets. Countries 
as diverse as India, Japan, Brazil, and Turkey all see the 
potential of selling their products in Africa.
    The Anglo-Dutch consumer goods giant, Unilever, has long 
considered Africa a lucrative environment for consumer sales, 
earning a fifth of its profits in Africa until the 1970s, when 
it turned its main commercial attention to Asia. Now Unilever 
is back in Africa in force, selling $3.7 billion of everything 
from soap to soup. Frank Braeken, head of Unilever's African 
operation said African consumers are underserved and 
overcharged. To meet the continent's need for personal care 
products, Unilever developed its Motions range of products.
    At our hearing on this legislation last spring, we heard 
from Luster Products, which produces items that fit the 
description of what Unilever is selling as well. There is 
little reason why this company and other U.S. producers can't 
follow suit and meet the needs Unilever says it is now meeting 
as an unmet need.
    We will hear today from four witnesses with expertise on 
the opportunities and challenges faced by U.S. companies in 
trade with countries in Africa. We expect to learn why the U.S. 
exports to Africa have not kept pace with U.S. imports from 
Africa and find out what Congress can do better to balance 
U.S.-Africa trade.
    I would like to now yield to Mr. Cicilline for any opening 
comments he might make.
    Mr. Cicilline. Thank you, Chairman Smith.
    I also want to acknowledge and thank Ranking Member Bass 
for holding today's hearing on this very important issue and 
extend my gratitude to the witnesses for their testimony today 
and for their important work on this very critical subject. As 
has been noted in The Economist, between 2001 and 2010, 6 of 
the world's 10 fastest growing economies were located in 
Africa, and it is predicted that it will grow to 7 out of 10 by 
2015.
    In light of this growth, it is critical that the United 
States remain a strong trading partner with nations on the 
African continent in order to remain competitive in today's 
global economy. We must cultivate new and existing trade 
relations with emerging markets in the African continent, 
particularly sub-Saharan Africa, to maintain and foster a 
strong, mutually beneficial relationship to harness this 
accelerated and exciting growth.
    I look forward to hearing your thoughts and recommendations 
on the United States-African trade relationships and the future 
of this important partnership, and with the permission of the 
chair, I would like to yield the balance of my time to the 
distinguished gentleman from Illinois, Congressman Rush.
    Mr. Rush. I want to thank my friend for yielding his time 
to me.
    And I want to join in the chorus of thanksgiving to the 
chairman, Chairman Smith, to Ranking Member Bass, and to all 
the members of the subcommittee for allowing me to participate 
in this hearing, and I appreciate the opportunity to be with 
you today to address this most important issue.
    Africa as a continent and as nations as trading partners 
offer U.S. businesses and government unprecedented and 
significant economic opportunities. I am proud to work with my 
colleagues in a bipartisan and bicameral effort to remedy a 
problem that we see. As has been discussed many times, Africa 
is indeed a continent on the rise, and the African sub-Saharan 
area region is definitely one of the fastest rising parts of 
the African Continent. As has been indicated, more than half of 
the world's 10 fastest growing economies are located in sub-
Saharan Africa.
    What is even more impressive about that fact is that these 
economies are located where they are in a region that, as we 
all know, is traditionally seen as underdeveloped. H.R. 1777 is 
indeed an important step and not only is happening in cities' 
vast markets but also an important step in helping correct the 
trade imbalance that currently exists. In short, this is indeed 
a win-win move for Africa and the U.S.
    I am disheartened by the continuing projection of the image 
and the consciousness of Africa as only being in need of aid 
when I think that the most prevailing solution to the problem 
of Africa, notwithstanding the aid, is also to increase the 
level of trade. And during my tenure as a Member of this 
Congress, I have had the opportunity to travel, as many of you 
have, and when I am there, I am impressed but also disheartened 
about the amount of global investment that is happening in 
Africa, particularly Chinese investment. I am gladdened because 
China and other nations are there, but I am saddened because 
the U.S. is standing flat-footed as the other nations of the 
world are standing, are moving fleet-footedly.
    . One of the distinctive resources that the U.S. has and 
places us at a trading advantage to other nations is our 
Nation's vast diaspora. The ethnic and cultural linkages that 
have been forged with Africa throughout our own history links 
inextricably to this continent. Indeed, our economic prosperity 
was founded, has depended upon, and has grown thanks to 
Africa's vast resources and to Africa's people.
    So, in this bill, we will be able to leverage trade 
opportunities with Africa. It is an economic prescription that 
will promote our economic aims and our objectives and give the 
U.S. a leg up over our competitors.
    Once again, Mr. Chairman, I want to thank you for holding 
this hearing, and I want to thank you and the ranking member 
for allowing me to participate, and I look forward to hearing 
the testimony of these expert witnesses, and I will look 
forward to also asking a few questions of my own.
    Thank you, and I yield back the balance of my time.
    Mr. Smith. Thank you very much, Mr. Rush, and you are 
welcome anytime to join us. Thank you for being here and for 
your leadership on the bill. It is deeply, deeply appreciated.
    We do have, and I say this to our distinguished witnesses, 
a vote, a few votes on the floor right now, so we will 
temporarily take a recess and then come back. Again, I want to 
apologize. We will lead off with Ms. Bass' opening statement, 
and then go to our witnesses. Thank you for your patience.
    [Recess.]
    Mr. Smith. The subcommittee will resume its hearing, and 
the chair recognizes Ms. Bass, the ranking member.
    Ms. Bass. As always, I want to extend my appreciation to 
Chairman Smith for his leadership in this, on this issue and 
for calling this hearing and also to my colleague who has left 
us, Mr. Rush. I want to compliment both of them for moving 
swiftly to reintroduce H.R. 1777, Increasing American Jobs 
Through Greater Exports to Africa Act, and holding a hearing on 
a topic that is a key priority for me personally and for the 
more than 1 billion people living and doing business on the 
continent.
    Let me also acknowledge Senator Durbin for leading the way 
in the Senate regarding the bill's reintroduction and also the 
bill's other cosponsors, Senators Coons and Landrieu and 
Boozman.
    It has been a pleasure to work with them. I think this bill 
is an example of our bipartisan and bicameral commitment to the 
continent, and I always tell everybody we only make the news 
when we are fighting. When we are working on something together 
that is going along smoothly, that, for whatever reason, is not 
newsworthy.
    I believe that if we focus on the task at hand, 
strengthening economic opportunities for the U.S. and nations 
of Africa, we will benefit from the continent on the rise. In 
Washington, we often hear about Africa's rise and its 
reemergence. Six of the world's fastest growing economies over 
the last decade are located in Africa, and that number is 
expected to increase to seven by 2015, yet this information 
more often remains a well kept secret to U.S. businesses 
looking for new profitable markets.
    I also think that it is very positive that the legislation 
calls for the appointment of a special White House coordinator 
who would focus on an assertive whole of government approach 
promoting U.S. private sector engagement with the continent.
    As the U.S. economy strengthens, we need to seize the 
moment and recognize that the expanding markets in Africa and 
the growing middle class who increasingly attend universities 
in the U.S. present opportunities for engagement by our 
Government and by the U.S. private sector. These are 
opportunities that our competitors in China, India, the EU, and 
Brazil have been quick to exploit. These are opportunities that 
can and will prove transformative for our economy and the 
billion Africans eager to be full participants in a global 
marketplace.
    Africa is no longer interested in development aid alone. 
Africa, with a U.S.-educated middle class, wants to do business 
increasingly with the United States. We must recognize that 
Africa itself is in transition and seeks partners that want to 
provide opportunities for trade, economic growth, and 
investment. It is time for our Government and the private 
sector to see Africa through a new prism.
    Mr. Chairman, nearly a year ago, President Obama released 
the U.S. strategy toward sub-Saharan Africa. In this policy 
directive there are four interlocking pillars: Strengthening 
democratic institutions; spurring economic growth, trade and 
investment; advancing peace and security; and promoting 
opportunity and development. While this hearing may focus on 
the second pillar of economic growth and trade, our success in 
accessing African markets will rely on the strength of each of 
these pillars and their ability to develop and sustain 
environments that will support the type and quality of business 
engagement that will attract and retain American businesses.
    U.S. companies, such as General Electric, Microsoft, and 
Firestone, as well as our witnesses today, understand the 
importance of stability, good governance, and the institutions 
that encourage and welcome businesses that create jobs and help 
put an end to poverty of individuals and communities across the 
continent.
    A couple of weeks ago, in Los Angeles, where I represent, I 
invited representatives from MCC, the Ex-Im, OPIC, and the 
Department of Commerce to my district in Los Angeles to help 
educate and raise awareness on how California-based businesses 
can access U.S. Government resources intended to seek 
opportunities throughout Africa and to do so safely and with 
the sense of security that their investments will be 
safeguarded.
    And I am not the only one. I understand that Senator Coons 
has held forums in his home State of Delaware on doing business 
in Africa, and last year, Representative Ellison invited me to 
his district, where we met with the Somalian diaspora, and 
there are other members, like Chairman Royce, Rush, Isakson, 
Rangel, and McDermott, all of whom care deeply about 
strengthening our economic ties with the continent.
    To this point, I commend the President for launching Doing 
Business in Africa last year through the Department of Commerce 
and holding the Doing Business in Africa Forum earlier this 
year. This forum and the program aims to leverage the Federal 
Government's trade promotion financing and strategic 
communications capacities to help U.S. businesses identify and 
seize opportunities in Africa.
    Mr. Chairman, in closing, I want to acknowledge the 
bipartisan and bicameral support for AGOA, our lead trade 
agreement with Africa. The Foreign Affairs Committee has a long 
history of supporting this legislation, including Chairman 
Royce, who has been a staunch and ardent supporter, 
Representatives Rangel, McDermott, and also the chairman have 
been long champions. I look forward to working with you and our 
fellow colleagues as we continue to elevate U.S.-Africa policy 
as well as look for any and all opportunities to strengthen our 
own economy while also benefiting African nations.
    Thank you, and I look forward to your testimony.
    Mr. Smith. Thank you very much, Ranking Member Bass.
    Let me now introduce our distinguished panelists.
    Beginning first, over his 50-year career at the State 
Department--talk about a journeyman--the Office of the U.S. 
Trade Representative, and in private sector work, Mr. Stephen 
Lande has worked extensively to expand U.S. trade. He has 
worked as a Foreign Service Officer, a senior trade negotiator, 
and an assistant U.S. Trade Representative. He has negotiated 
trade agreements with countries around the world, and he was 
instrumental in the creation of the Generalized System of 
Preferences, or GSP, the Caribbean Basin Initiative, and NAFTA. 
Mr. Lande continues to work with African governments and 
teaches international trade at Johns Hopkins School of Advanced 
International Studies.
    We will then hear from Mr. Peter Hansen, who is an attorney 
with 15 years of legal experience and specializes in public 
international law and African investment law. He has served 
with the United Nations and World Bank and has taught, 
lectured, and published on the United States and international 
law topics. Mr. Hansen advises clients in African investment 
and the development of commercial projects involving Africa. He 
has taught, lectured, and published on international legal 
subjects.
    We will then hear from Dr. Sharon Freeman, who is the 
president and CEO of the All American Small Business Exporters 
Association. She is an entrepreneur and has undertaken major 
development assignments in over 100 countries around the world. 
Dr. Freeman has been appointed to numerous U.S. Government 
boards, including those of the Department of Commerce, the Ex-
Im Bank, the U.S. Trade Representative's Office, the SBA, and 
the Department of Energy. She has also won awards from leading 
business institutions and government agencies in recognition of 
her business and community leadership and business successes.
    We will then hear from Ms. Barbara Keating, who is the 
president and founder of Computer Frontiers, and has 25 years 
of experience working in Africa bringing technology solutions 
to the most remote parts of the continent. She has worked for 
several companies and partnered with USAID in support of 
various U.S. Government initiatives and has Peace Corps 
experience as well. She works to provide effective 
communication services in limited infrastructure environments 
and adapting technology to improve performance for government 
agencies, NGO programs, and private companies.
    Mr. Lande, if you would begin.

  STATEMENT OF MR. STEPHEN LANDE, PRESIDENT, MANCHESTER TRADE

    Mr. Lande. Good afternoon. And thank you very much for the 
opportunity to speak before you on a very current topic. When 
you have been in trade policy and investment policy as long as 
I do, I always begin by saying, This is not the History 
Channel, but hopefully we are looking forward to other policies 
that we may be able to discuss.
    We have all read the tea leaves about Africa and can almost 
smell the opportunities that will ooze from collaborating with 
a continent of over 1 billion increasingly urbanized, more 
dynamic, better educated, deeper democracy, upwardly mobile, 
and mostly young. Unfortunately, our private sector has not 
heard this message. As pointed out, some of the larger 
companies are involved, and you mentioned the names earlier, 
and we appreciate that.
    We believe that it is a possibility for the U.S. Congress, 
working together with the U.S. administration, to demonstrate 
that there is full support for U.S. investment. We are not a 
Communist society. We don't have state-operated, state-owned 
enterprises; we don't tell people where to invest. But what we 
can do as a group, we can work to make sure that there is a 
level playing field that exists for U.S. investors, U.S. 
exporters overseas.
    To do this, Manchester Trade has come up with their own 
idea, which we call a new Transatlantic South partnership. As 
you know, the U.S. is focusing on a Trans-Pacific Partnership 
involving 12 Asian and Latin American countries. We are working 
on the Transatlantic Trade and Investment Partnership, the 
TTIP, which focuses on 27 European countries. However, unlike 
the other two, which focuses on trade agreements, our 
suggestion for a Transatlantic South partnership goes well 
beyond trade agreements and will encompass investment and 
development goals. It will realize there is significant U.S. 
national security consideration and will herald the whole of 
government approach that was mentioned by Ranking Member Bass 
just before in her comments and so on.
    However, what we are talking about, an important component 
is coordination in Congress, and that is the message that I 
would like to spend a few minutes and focus on. Just for 
example, we all know that Ways and Means Committee is going to 
soon consider, hopefully renew and even more importantly 
enhance the current African Growth and Opportunity Act. We all 
know that H.R. 1777, which we are very pleased that Chairman 
Smith has reintroduced and so on again this year and with 
bipartisan support and so on, focuses on exports. We all know 
that last year, Congressman Bobby Rush introduced H.R. 656, the 
African Investment and Diaspora Act. Between them, they form a 
perfect triangle for moving into Africa as a group. They must 
proceed under congressional rules, under their own committees, 
and so on. That is how it operates. But if there could be 
coordination--and in this regard, we must recognize the efforts 
of Ranking Member Bass--to bring together a group of 
influential Members all with the commitment of Africa, this is 
the kind of thing that must happen for us to be successful with 
a coordinated approach.
    I guarantee you the Chinese coordinate everything that they 
do there and so on, and they have the advantage of being able 
to tell their SOEs and their profits where to invest. We don't 
have that, but we could certainly coordinate to assure a level 
playing field.
    Let me just use the few minutes that I have been given to 
just touch a few measures which could help illustrate where 
this kind of coordination could take place. I want to be clear, 
there is a lot of ideas out there. The Corporate Council has 
just come up with 44 suggestions in the trade investment area. 
The Wilson Center has turned out a very good paper, which we 
were very pleased to participate in, but so we are putting out 
these ideas not as exclusive but as ideas for further work and 
so on.
    We have already mentioned the fact that the Ways and Means 
Committee should focus on imports, and the act to double U.S. 
exports from this committee can work together very nicely and 
so on.
    Export-Import Bank is the largest source of funding for 
U.S. business overseas. The bank itself has been committed to 
increase resources. In fact, under the leadership of Chairman 
Hochberg and so on, Rick Angiuoni, who runs the African Bureau, 
and so on, we have seen since the beginning of the Obama 
administration an increase of Export-Import financing for 
Africa from $400 million to $1.5 billion last year, almost a 
four times increase, which is impressive.
    Your bill--even better, your bill calls for 10 percent of 
Export-Import Bank financing to go to Africa or else you should 
report to Congress why not, which is a good way to push for 
going there. That will result, if you assume that our financing 
will be in the neighborhood of $40 billion next year, $4 
billion, so that is another doubling. So we support that.
    But we have to go a little deeper than that, and that is 
where you have to work with the Financial Services Committee 
because Export-Import Bank is very proud of the fact that 
people pay back the money that it lends to them. And obviously, 
we don't want to have some recent examples where people didn't 
pay back money; we know what happens in that case.
    But, on the other hand, if you are going to work in a 
frontier economy, like an African economy, you have no choice 
but to take greater risk. So I don't know how you are going to 
work out the 2 percent; we shouldn't lose money, yet you have 
to take greater risk. One idea we have, which involves some 
work, is that maybe there could be more coordination with MCC, 
with USAID, and maybe they could help service the debt, service 
the loan, so if Export-Import Bank gives a loan and it is 
entitled to a higher interest rate, maybe they can contribute 
some money that they can use in order to do business. There are 
many ideas.
    Another idea we have been working on, a little bit separate 
than this, but it makes sense, is given the need for fiscal 
probity, Export-Import Bank, OPIC, TDA, all require all kinds 
of paperwork, it has to be done. Well, a little guy can't do 
it. An SME can't do it. A diaspora company can't do it. Maybe, 
it could well be possible that MDBA, SBA can work together with 
Export-Import Bank, with the other lending institutions, and 
try to conglomerate investments and put them together and 
provide the technical assistance. In other words, we must work 
together.
    Regional integration. There is nothing more important to 
U.S. commercial and political interests than an integrated 
Africa. We cannot live in the post-colonial era, where a 
relatively small continent compared to others were sliced into 
47, now 48, countries in sub-Saharan Africa. They must come 
together, and this is in your bill, you promote it. But, again, 
it has to be done with Ways and Means because it is a trade 
issue, so they involve both together and so on.
    But let me mention what I consider to be the biggest threat 
we face. AGOA is a good program. It should be renewed. I don't 
know how much time I have, but it still says 5, and I know you 
are not supposed to go over 5, so I don't--I will just keep 
talking.
    Mr. Smith. If you could sum up, I didn't put it on there.
    Mr. Lande. Let me make my three points and end, I didn't 
want to cut myself off either, but I didn't want to go on. But 
let me just make three very quick points and make them very 
specific and so on. Regional integration, extremely important 
for the U.S. It provides sufficient scope for U.S. 
multinationals, large U.S. companies to reach the economies of 
scale, working together with the U.N. in peacekeeping and so 
on, regional community, peer group pressure is extremely 
important and so on. U.S. provides AGOA, which basically says 
nonreciprocal, when you are together as a group, let's 
negotiate a group. The Europeans have come up with Economic 
Partnership Agreement; horrible things, from a trade point of 
view. If you don't sign, we cut off access. The U.S. free 
access, the U.S. is right; Africa isn't ready to sign until 
they are a group. What we are suggesting is that together with 
the relevant committees, we send a signal to the Europeans, 
excuse me, we are doing a Transatlantic Trade and Investment 
Partnership with you, let's make sure that extends to Africa, 
to our southern area, and so on.
    The other quick recommendation there, of course, is that 
you work with European Parliament. European Parliament was just 
pressured into agreeing to this deadline. It would be good if 
together with yourselves you could have a consultation, whether 
a regular scheduled or special, to look at this issue and so 
on.
    President Obama, when he took office, was very specific. He 
said we cannot do things alone. We have to work with other 
countries. We have too many unilateral sanctions, conditions. 
Every committee has something else. Each of the objectives are 
good, but if you are a U.S. businessman and you suddenly face a 
condition on whether you use, you know, carbon emission, even 
though Africa is unfortunately going to have to use fossil 
fuels; if you have a condition that you can't use U.S. 
agricultural--you can't promote U.S. agriculture, which 
promotes things, that you make, have an AGOA benefit, but it 
could be taken away if it turns out that the country is 
undemocratic.
    We are arguing very basically that there should be some 
committee within the Congress which would review these 
conditions and look at them two things: One are they effective 
in the way they operate. The worst thing we have done is take 
Madagascar off of AGOA because we didn't like a bunch of 
colonel thugs for seizing power. Seven years later those thugs 
are around and 200,000 Madagascan women who are trying to help 
could have lost their job, so we want this reviewed.
    A third quick focus is on agriculture, again beyond Feed 
the Future. We would want to look at, one, let's give Africa a 
chance to export the products it can export. It produces 
tobacco. It produces sugar. It produces peanuts or ground nuts. 
It sweetens cocoa. All that is not included because of domestic 
interests, even though if you let Africa ship them, they would 
have no effect on domestic industry. They would be able to 
compete against Brazil and displace them if we could give some 
attention to that.
    So, in conclusion, what we are really arguing for is there 
is a whole area which involves more than one committee that has 
to be looked upon. The contribution of Congress can be to work 
together. The time, the tea leaves are in place. For some 
reason, Mr. Froman, the only NSC adviser who ever went to 
Africa, but then he spent 2 weeks there--as I said, only went 
there on an economic mission, and he spent 2 weeks there, going 
to five, six countries and so on, is now the USTR, also 
remaining as the Special Adviser to the President, if Congress 
approves him and so on, et cetera. You have all these ideas 
coming from the private sector. Every time you read something 
it talks about Africa is on the way, every magazine article. 
You cited The Economist, Forbes, all there. I really would hope 
very much that this Congress could focus on a Transatlantic-
South partnership with Africa. Thank you so very much.
    [The prepared statement of Mr. Lande follows:]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
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    Mr. Smith. Thank you so very much.
    Mr. Hansen.

   STATEMENT OF MR. PETER C. HANSEN, PRINCIPAL COUNSEL, LAW 
                OFFICES OF PETER C. HANSEN, LLC

    Mr. Hansen. Thank you very much.
    I have been told I am a firebrand, so I hope I don't 
disappoint without alienating anyone.
    I would just like to start by saying I think the bill is an 
excellent step in the right direction. In my written testimony, 
which is fairly extensive, I made some minor suggestions as to 
wording to emphasize investment, and I would like to request at 
this time that my written testimony be put in the record.
    Mr. Smith. Without objection, your full statement will be 
made a part of the record and that of all of our distinguished 
witnesses.
    Mr. Hansen. Thank you. I would like to start off with a few 
relevant figures that could put matters into context. 
Unfortunately, they are surprising, perhaps humorous, and all 
the more horrifying for being so. First off, sub-Saharan 
Africa's entire GDP of $869 billion is 79 percent of the U.S. 
budget deficit in 2012. So it is less than our budget deficit. 
In other words, close to 900 million people in the region of 
sub-Saharan Africa, that is almost three times the U.S. 
population, live on a little under 6 percent of our GDP. So 
when we ask Africans to buy more U.S. products, it is like 
asking Americans to buy more U.S. products after losing 98 
percent of their income.
    As for trade, U.S. apparel imports, about which there has 
been a great deal of talk and legislation over the years, 
apparel imports under AGOA now roughly equal Americans' 
consumption of over-the-counter teeth whiteners, which is sad.
    U.S. food imports from rural agricultural Africa, filled 
with farmers, in 2011, were about half of what America spent on 
Twinkies, and even less than what Americans spent on Halloween 
costumes for their pets.
    As for investment, which is critical, U.S. investment in 
Africa, after decades of amassing assets there and operations 
there, is a little bit more than what Americans waste on 
gambling in a year and little more than twice what Americans 
spend on Easter.
    This is quite sad, which brings me to one of my two points, 
which is that the U.S. is losing Africa because it will not 
invest in Africa. It is a cold fact that U.S. investment must 
precede U.S. exports, as my written testimony made clear with 
examples of Taiwan and the People's Republic of China.
    As things stand, the U.S. has almost no economic 
relationship with sub-Saharan Africa beyond oil. If the U.S. 
were to level sanctions against sub-Saharan Africa in every 
non-oil sector, it could hardly be more effective than present 
U.S. indifference. The U.S. wants to sell to Africa but has not 
wanted to date to buy or to invest there. The U.S. Government 
has done almost nothing to secure treaty protections for U.S. 
investors in sub-Saharan Africa, and by that, I mean bilateral 
investment treaties, or BITs, or double tax treaties, which are 
known also as DTTs or DTAs. By contrast, the People's Republic 
of China wants to sell, wants to buy, and wants to invest in 
sub-Saharan Africa. This is why China is ascendant in Africa.
    Finally, as the stats on the rise of China show, AGOA is an 
economic irrelevance and a strategic distraction of disastrous 
proportions. This is not to say, incidentally, that AGOA should 
be set aside, but it is a major distraction. So this brings me 
to my last point, which is that the U.S. must get serious about 
investing in Africa if it wants to export to Africa and 
influence Africa, indeed to retain any kind of strategic 
position on the continent.
    The U.S. has got to quit arguing about AGOA and see it as 
but a small part of a far larger Africa strategy. The U.S. has 
to treat African countries like other countries, especially as 
we do the People's Republic of China. We have to accord African 
countries what I would call ``most favored investment partner'' 
status or to adapt a more current trade law term to have 
``normal investment relations,'' as with other countries. 
African countries should not uniquely have to earn U.S. 
economic partnership by jumping through hoops and meeting or 
passing ever-moving goalposts.
    The U.S. Government should seek to turn Africa and African 
countries into economic partners. In earlier writings 
referenced in my written testimony, I have called this the 
Mature Market Model or M3. The U.S. has to quit worrying about 
closed economic sectors, whether it is mining or hotels. The 
U.S. has closed economic sectors as well. What the U.S. 
Government has to do is engage with Africa and allow U.S. 
investors to penetrate those markets and gradually crack open 
those closed sectors by gaining trust on the continent.
    The U.S. Government has got to conclude BITs and DTTs, that 
is bilateral investment treaties and double tax treaties, 
across the continent. Arab North Africa along the Mediterranean 
rim has 60 percent coverage of both BITs and DTTs. Once you get 
down to Black Africa, sub-Saharan Africa, BIT coverage drops to 
a mere 11 percent and double tax treaty coverage to 2 percent. 
In other words, one double tax treaty with South Africa. This 
is ridiculous. We need to conclude those treaties forthwith.
    Also, if a stunning gesture is looked for, a sensible 
approach would be to have a multilateral, continent-wide, 
multilateral investment treaty and multilateral double tax 
treaty.
    And very finally, U.S. aid should reform whole industries 
and embrace private projects as well. This is in my writings 
called the Aid and Investment Model, or AIM, approach rather 
than ineffective, one-off, isolated and useless projects and 
studies. Thank you.
    [The prepared statement of Mr. Hansen follows:]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
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    Mr. Smith. Mr. Hansen, thank you very much for your 
testimony. I think this is the first testimony I have seen 
where there were 85 footnotes. So I do appreciate the 
extensiveness of your research.
    Dr. Freeman.

  STATEMENT OF SHARON T. FREEMAN, PH.D., PRESIDENT AND CHIEF 
   EXECUTIVE OFFICER, ALL AMERICAN SMALL BUSINESS EXPORTERS 
                          ASSOCIATION

    Ms. Freeman. Thank you very much, Chairman Smith, ranking 
member, and members of the subcommittee, thank you very much 
for this opportunity to speak to you today in my capacity as 
the president of the All American Small Business Exporters 
Association about increasing American jobs through greater 
exports to Africa. I have read extensively the bill, and I 
applaud it, and I certainly support it.
    First, I would like to briefly mention why it is important 
to encourage exporting to Africa by SMEs, including the African 
diaspora firms. The U.S. International Trade Commission's 2010 
report, called ``Small and Medium Sized Enterprises' 
Characteristics and Performance,'' confirmed that SMEs play a 
larger role in the export economy than is often suggested by 
traditional trade statistics. In fact, it is estimated that 
SMEs support 4 million jobs through their exports.
    While we know a lot about the role of SMEs in exporting, we 
know less about the contribution and potential of a subset of 
SMEs, which is minority and immigrant-owned firms, particularly 
African immigrant-owned firms.
    So here is what we know. We do know that according to the 
2007 census minority-owned exporting firms were larger than 
their non-exporting minority-owned counterparts. We also know 
that minority-owned exporting firms average having about 21 
employees while non-exporting minority owned firms have about 
7. Their receipts, that is the exporting minority firms, are 
greater per employee and significantly so than non-exporting 
firms. We know further that minority business export activity 
spans into at least 41 countries over six continents, and we 
know that minority firms are prime for exporting due in large 
part to their language capabilities, their cultural 
compatibility, and business agility.
    Now let's consider what we know about Africans in the U.S. 
This is important. We know that they have home country 
linkages. We also know that most of these immigrants are 
located in high-density exporting areas, such as California, 
New York, and so forth. We also know that the largest African 
sending countries, such as Nigeria and Ethiopia among them, are 
also among the countries to which we export in growing number. 
Surely that is not a coincidence.
    Given this, what we need to do and consider is what could 
be done to consider encouraging firms with home country 
linkages, in other words African-owned firms, to export more to 
their home countries. So there are about six suggestions I have 
in the time that I have been allotted. Otherwise, I would have 
a lot more.
    But the first thing we have to do, really, is understand 
that it is necessary to compete with China, and in that 
recognition, we have to know that it is not possible to have a 
one-size-fits-all strategy in how we go about that competition. 
We can say for certain that China does not pursue a one-size-
fits-all strategy. They have a very tailored commercial 
strategy for each and every country which they negotiate 
directly with the Presidents of those countries, and I must say 
the total number of African Presidents that has ever been in 
America at one time is six; whereas certainly the head of China 
has all of the African countries visit them at one time. So the 
reality is, is China is a competitor, no matter where we are 
trying to export in Africa, and so we have to have a China 
strategy.
    Now, I note that your bill mentions the Trade Promotion 
Coordinating Committee a number of times. I know it very well, 
and I have known it for many, many years. I have read all of 
the national export strategies. I have worked closely with this 
coordinating body, but here is the thing I want to say about 
the coordination. It is not just a matter of coordinating the 
unified budgets of the 19 or 20 Federal Government agencies. We 
have to be more strategic about what we are actually 
coordinating, and what I want to say in particular to draw your 
attention to is one example of the failure of strategic 
coordination is, for instance, the fact that the U.S. Agency 
for International Development has come up with new rules 
wherein they say for all the countries in which they are 
operating, that now we can, U.S. companies working there can 
procure all of the goods from those local countries, no matter 
where those goods come from. So if you look on the shelves of 
Malawi, you name a country, where do those goods come from? 
They don't come from--they are not made in Malawi. So we have 
now just eliminated just huge, billions of dollars worth of 
export opportunities for our small firms. That is not proper 
coordination.
    On the one hand we have the national export initiatives and 
on the other we are removing the export opportunities for our 
firms.
    Another issue that I want to mention is export processing 
zones. A long time ago, USAID used to actually help fund those. 
I work on them, so I know this is a total fact. They haven't 
done this for years. But I tell you who is doing it now. That 
is China. Big time. Because they know that their firms need a 
foothold in that country. And so when it becomes difficult for 
Chinese firms to work in African firms, they create a zone that 
makes it easier. When they have power, when they have, you 
know, exemption from laws and regulations, they can do their 
business, and they are doing that business not just to export 
from the zone into a foreign territory, the foreign territory 
becomes the domestic territory. That means they are exporting 
into Africa from that zone. That is a very important concept. 
And we need to get with that concept.
    So what I am saying is for all of the things that USAID is 
doing, one of the things they need to be doing is having 
another look at this, and I tell you who is looking at this 
finally again is the World Bank and the IFC. For many years, 
they considered this an economic distortion, but what they have 
come to realize is that it is an economic and competitive 
reality, and now they are sponsoring it, too.
    I am going to say three other things really quickly. One is 
mentor protege programs, and this is to help small firms 
actually link with larger firms to take advantage of some of 
the procurements that are involved in the Millennium Challenge 
Corporation and other of the TPCC institutions, so that this 
gives, helps the protege firms to develop the capacity to 
export more, and of course, we do know that if you sell 
anything right here in Washington, DC, to the World Bank or any 
of the international organizations, that is an export because 
they are a foreign entity. So we have a U.S., you know, 
executive office in the World Bank. Here is an idea. Why don't 
we get a list of, you know, those procurements and see how many 
U.S. companies are involved, and then why don't we give 
incentives to some of those companies that got some of those 
procurements to join together with smaller firms? I think that 
is very important.
    Awareness campaigns, I think it is important for the U.S. 
Trade Representative's Office and some of the other TPCC 
offices to specifically figure out where are these African 
diaspora firms located, because we know that essentially from 
the Migration Policy Institute's data hub, you can find it in 5 
minutes by zip code, and then let's reach out to them because 
we can see a pattern of a relationship between increasing 
exports to their countries where they are located. So when you 
see more Ethiopians in Prince George's County, you see more 
exports from Prince George's County to Ethiopia. So let's match 
up and connect these dots.
    Finally, in regard to export financing, what I like about 
your bill in particular is that there is a recognition that you 
need administrative funds to do the outreach. It is not just 
program funds. So I do note that and support that, and I 
support the comments of my colleagues, and I thank you for the 
honor of being here today.
    [The prepared statement of Ms. Freeman follows:]
    
    
    
    
    
    
    
    
    
    
    
    
                              ----------                              

    Mr. Smith. Dr. Freeman, thank you as well for your 
testimony, and your very specific recommendations based on 
extraordinary experience. Thank you.
    Ms. Keating.

   STATEMENT OF MS. BARBARA KEATING, PRESIDENT AND FOUNDER, 
                       COMPUTER FRONTIERS

    Ms. Keating. Chairman Smith and members of the 
subcommittee, and especially to you, Congresswoman Bass, and 
your staff, your very active role in bringing new voices like 
mine to you to hear about the issues.
    My name is Barbara Keating. I am the president and CEO of 
Computer Frontiers. We are a small, woman-owned business. I 
have been in business since 1996. I started it in a spare 
bedroom in Germantown, Maryland, and since that time, we have 
been focused on Africa. We work in 34 African countries. We are 
incorporated in nine countries, and we currently have four 
fully staffed offices on the African continent as well as my 
office in Frederick, Maryland.
    I am speaking to you today as a representative of small 
business who has worked to establish business throughout Africa 
and the continuing and growing challenges that are arising for 
companies like mine.
    There are two major points that I want to bring to your 
attention in regards to increasing U.S. exports to Africa, and 
those are to support that, one, small- and medium-sized 
businesses is the right place for you to focus your support and 
two, now is the time to act.
    Why focus on small- and medium-sized business? One reason 
is that there are 54 African countries and the majority of 
these countries have relatively small individual markets, 
making these markets less attractive to larger U.S. 
corporations. However, for small- and medium-sized businesses, 
African markets are the right size, leading to cooperative 
partnerships and long-term relationships for continuing growth 
between U.S. and African businesses.
    My oldest company is located in Uganda. It is 13 years old. 
Initially with a partner, we grew the company together from 5 
to 35 core highly qualified technical staff and hundreds of 
consultants and trainees throughout the last decade. In Uganda, 
as well as in Togo, my companies with my partners grew and 
expanded in both staff and revenue. From these bases, we then 
expanded our reach into other surrounding African country 
markets, incorporating in five other countries and hiring staff 
and providing services without having full-fledged offices 
there. The bottom line is that 90 percent of my professional 
staff based here in the United States are reliant on our work 
in Africa.
    And yet we are a small company. The challenges are many for 
small U.S. companies not only to enter and succeed in Africa, 
but then, once established, to move from the startup phase to 
the scale is further challenged by the lack of coordinated U.S. 
Government focus on Africa as well as from U.S. policies 
seemingly almost unwittingly bent on crushing small business. I 
will discuss each of these in turn.
    First, one could find that the U.S. Government is providing 
many resources, including financing, for U.S. small business to 
increase their exports to Africa. However, where to go and what 
is really available is a hit-or-miss affair, based on the 
knowledge of the staff in the government agencies you meet, and 
this amorphous resource pool does not in reality seem to be 
more than a few more inches deep. And in my experience over the 
last decade, the bureaucratic hoops that must be passed through 
to even determine if your business qualifies for a program or 
financing are almost in themselves too unlikely to succeed, too 
time consuming, and we in our own analyses have deemed them 
unrealistic to even raise the effort to apply.
    Other than minimal bank lines of credit based on 
receivables, we have had no loans or financing. It is almost 
impossible to grow, and we continue to cycle at the same level 
of activity.
    What would help is a more coordinated focus on Africa to 
include a strategic trade policy and a one-stop shop for small 
business to more quickly determine if there are any supported 
options for our programs.
    Second, in the same vein of challenges, is access to 
Africa. One of the main plusses to being a U.S. State 
Department, USAID, or other U.S. Government agency contractor 
in Africa is that contract vehicle for small businesses like 
ours gives us a reason to be in that market. Currently, as Ms. 
Freeman also testified, the USAID Forward Implementation and 
Procurement Reform process is requiring more local contracting 
and loosening the hold on the ``buy America'' act. While one 
might think that that would be an excellent move for small 
business like mine, who has established a local presence for 
more than a decade in Africa, the rule has language--I hope 
which is unintended--which rules out companies like mine. The 
new rule requires that to be considered a local company, it 
must be owned at 51 percent levels by the local nationals from 
that country, eliminating U.S.-majority-owned company, like 
mine, which have long vested in these markets. To my mind, the 
reason for a U.S. person or entity to maintain 51 percent 
controlling interest is to ensure that we comply with the U.S. 
and local laws. And it appears, in my humble opinion, to be an 
advantage for the U.S. Government. However, this is not what is 
being implemented.
    Further, as part of the USAID Forward procurement reform, 
large contracts, which large USAID government contractors will 
pursue in Africa for USAID, will be required to include 30 
percent of the contract value to go to African local companies. 
Previously, these subcontracts may have gone to small U.S. 
companies like mine. However, it is now unlikely that U.S. 
small businesses will be considered to partner and provide 
services for these large contracts as we don't meet the checked 
box requirements for being a local company. In summary, USAID 
Forward takes away both the logical vehicle for U.S. small 
business that has now used this to access and grow in African 
markets and further takes away our competitiveness in U.S. 
contract marketplace itself.
    Now is the time to act. Over the last 10 years, I have been 
part of the discussion in Washington with relevant department 
heads, Congressional Members on the Chinese entry into African 
markets and have posited the notion that U.S. companies have no 
support from the U.S. Government in Africa, while we are 
exposed in direct competition with Chinese businesses having 
full power and financing of the Chinese Government behind them. 
A common response has been that it is just sour grapes the U.S. 
private sector is experiencing from the new private sector in 
the African markets. However, today, we can clearly see how 
China's Government's efforts over the last decade have 
positioned its companies to be the largest African investors by 
far.
    We should not dwell only on the Chinese investments or 
their good sense in pursuing the African market, as other 
countries are also providing significant support to their 
companies to aggressively expand into Africa. I have, myself, 
seen it from Europe, India, Turkey, the Gulf States, Brazil, 
Malaysia, Israel, and South Africa. It is resulting in the 
reality that the U.S. investment share is shrinking, simply 
because others are doing more.
    As is stated in the U.S. Corporate Council on Africa in 
their policy recommendations to the Obama administration this 
year and where I have been a board member and a member there 
over the last 10 years, some European companies are pursuing 
commercial advantage through economic partnership agreements 
and reviving traditional relationships. Some countries are 
offering concessional financing in addition to innovative 
combinations of government assistance and private sector 
contracting that the U.S. Government has been increasingly 
unable to match. The move to create a BRICS infrastructure bank 
is an indicator of how emerging powers are shifting focus 
toward Africa. If the U.S. does not work to reverse this trend, 
long-term opportunities for U.S. business will be greatly 
limited. A substantial additional commitment of human, 
financial, and policy resources is needed to support our 
national interests in Africa. At a bare minimum, the United 
States should be matching the support provided by other 
governments to their private sector. Thank you for your 
attention to this.
    [The prepared statement of Ms. Keating follows:]
    
    
    
    
    
    
    
    
    
    
    
    
                              ----------                              

    Mr. Smith. Thank you very much for your testimony and for 
being here to share your insights and wisdom.
    Just a few opening questions, and I will yield to my 
distinguished colleagues. And again, your full statements 
really are helpful to this subcommittee because you have taken 
the time to give us a very broad look. Obviously, time didn't 
permit each of you to say everything in your paper. But I can 
assure you, I read it. I know members of the subcommittee will 
do likewise. So thank you so much for that.
    Let me just ask Dr. Freeman, you mentioned that all firms 
entering the African market now have to compete with China. I 
am wondering if--there are a number of issues and all of you 
might want to speak to this. But I have been baffled. I have 
been here for 33 years. We know that much of the content of 
what we deal with in terms of our policy--first, it was the 
Soviets and the proxies there between ourselves and the USSR, 
but now it has been the focus on PEPFAR, malaria, TB, the wars 
in Sudan, obviously the problems in the D.R. Congo. We have 
been crisis managers, if you will--how well or poorly is up to 
the judgment of history. But there has been a genuine 
compassion and concern on both sides of the aisle through 
various presidencies to try to help out and to be a real force 
for good.
    But I wonder sometimes if the branding of Africa in the 
mind's eye of the Americans becomes one of crisis after crisis 
after crisis, inhibiting and chilling investment.
    And Mr. Hansen, you talked about the need for investment. 
So I am wondering how we change that perception. It would seem 
to me that in an exporting strategy, which is why we are doing 
this bill and why we are trying to promote it and get it 
passed, will finally say it is in America's interest and the 
most robust the give and take between the African countries and 
the U.S. is, the better the rising tide will lift all those 
boats. But this idea of the branding--I have been to Africa 
many times. It is a wonderful place to visit. Even when we go 
to difficult places, they are usually like difficult places 
here or any other country in the world. There is also a number 
of oases everywhere you go where people are living their lives, 
their children are growing and opportunities, if they could get 
more, would mean that they have a greater quality of life.
    So I am wondering if you could speak to the branding issue. 
Why hasn't, Mr. Hansen, the investment actually occurred? Is it 
because of that? Is it not easy to get financing on the stock 
market or ETFs not sufficiently including African businesses? 
If you could start off with that, I would appreciate it.
    Mr. Hansen. Thank you very much, Chairman Smith.
    It is a complex question. I think, as to the branding 
issue, I have written that if Asia gets CNBC, Africa is 
relegated to the late night murder segments of the local news, 
I am afraid. I think journalists love to go out there with 
their flak jackets and go in for Pulitzers, and they don't want 
to report on Ghana's explosive growth. They don't want to 
report on the quiet places of Africa, the vast, vast tracts of 
Africa that are quiet and ready to prosper. They want Somalia, 
and they don't even talk--when they talk about Mogadishu, it is 
Black Hawk Down-type stuff. It is not that the Turks are coming 
in and investing at a tremendous clip.
    So I think what Africa simply needs is normality from the 
U.S. perspective. I think the U.S. needs to treat Africa as it 
would treat Asia, as it would treat Mexico, as it would treat 
Latin America. It should no longer be a plaything of the United 
States, and particularly of the United States Government and 
the United States aid industry. It simply needs to have 
protections put in for business and a tone, however the U.S. 
Government wants to promote that, that would be great, but a 
tone that it is simply open for business and ready to work. I 
think that is everything.
    And I believe Ms. Freeman has some other insights.
    Ms. Freeman. Well, actually, my comment will go beyond the 
branding and to the issue of strategy. You know, a long time 
ago, we used to put out in hard copy a very big book called the 
U.S. Industrial Outlook, and it used to analyze very, very 
clearly what America's standing was in respect to a whole host 
of products and industry. We used to have 17 major sectors of 
our economy, and we have actually trade committees still in 
each of these 17 areas. So the issue is, how do we actually 
understand ourselves and our economic growth and the basis for 
it industrially?
    China understands it very well. So when they look at the 
pharmaceutical industry or the automotive industry, they look 
at that from every strategic point of view--supply, demand, 
inputs, outputs, whatever it is. And then they say, okay, where 
can we get that from? Where does Africa play into this?
    So, yes, we have commercial strategies and policies. But 
are they strategic enough? Are we understanding where we are 
going economically to understand therefore the role that the 
assets that Africa has can play into that? And that is very 
much on a product and industry sector basis. We no longer 
produce these industrial outlooks.
    And I would say that we have more information right now 
that is available to us through the Internet, but we have less 
knowledge, less knowledge and less understanding. If you ask us 
where are we going in any sector--computers, pharmaceuticals, 
you name it--where is there a unified approach and 
understanding of how we grow? What are the inputs for that?
    So let's take it outside the framework of how we feel about 
Africa. China is not worried about how they feel about Africa. 
They are talking about, you know, what can we get? When we look 
at our Prius cars, where does the input for those batteries 
come from? It comes from the Congo, okay? The Chinese don't 
have any feelings about the Congo. They are saying, let me get 
that titanium or whatever you make those batteries out of. So 
we need to go back to that U.S. industrial outlook approach and 
understand now where we are going industrially or even in the 
service industries and see what plays into that. Thank you.
    Mr. Lande. Very short.
    One of the challenges you face as a committee is that you 
look at Africa. You have a budget for USAID to go up there. But 
there is a big difference between the humanitarian needs of 
Africa, which will be serious, the problems in Mali, which are 
serious, and economic growth, which is as much in the U.S. 
commercial interest as they are.
    So my only suggestion--which Manchester Trade has made a 
few times now--is to differentiate. Just say, economic growth, 
this is our interest. Let's see how much money we can put into 
it. Let's see how we can work with it, and we will get that 
back. The good things we do continue doing. And no one said, 
you shouldn't do it. PEPFAR, a great success. I mean, God. But 
having said that, I think it is this differentiation.
    One of the points, for example, we always have, as 
mentioned, that brings us closer to your committee. MCC. MCC 
has an emphasis on poverty. We understand that. But also, MCC 
is the only institution in the United States today that focuses 
on infrastructure. And infrastructure is one of the three 
requirements for regional integration. One is doing away with 
trade barriers. Two is infrastructure. And three is making the 
political decisions that you have to make to move in that 
direction. Why doesn't the MCC, as long as they have got money, 
20 percent, reasonable infrastructure could be one of their 
requirements working with, of course, the compact countries?
    So all I am saying is that part of it might be able to be 
done by differentiating the economic growth stuff with the 
other stuff because America has to do the other stuff because, 
as Sharon says, China will not do it. Thank you.
    Ms. Keating. I have just a really specific and small 
recommendation, which is, I have worked on some of the CODELs 
into Africa, and so what you see and what the pictures that 
come back are of the game parks, of the little village. I want 
to see the buildings. I want to see those kinds of things, that 
from your visits and showing that, it can go a long way.
    Mr. Smith. I do have other questions. But I will yield to 
my colleagues out of deference to them. And maybe if there is 
time, I will go back to those questions.
    Ms. Bass.
    Ms. Bass. Thank you, Mr. Chairman.
    I actually had a couple questions for each of you.
    Mr. Lande, you mentioned in your series of recommendations 
that--this is what Congress should do--a committee that would 
review the conditions and sanctions. And I wanted to know if 
you could expand on that a little bit. What is your vision of 
that? How do you see that happening within the Congress?
    Mr. Lande. Let me begin by amplifying the comment that 
Sharon Freeman made. Again, it is the History Channel. But if 
you remember when Ross Perot was running for President, he made 
a big deal about our support of export processing zones in 
Central America. And one of the results of that was that USAID 
had a prohibition against aiding export processing zones. 
Export processing zones in Africa create jobs for the U.S. They 
enable Africa to participate in supply chains and displace 
China. China participates in the supply chain and tries to grab 
the production. It is trying to grab the intellectual property 
rights and so on. I don't want to say the obvious.
    All I am just saying is that it is this need of some 
committee as part of this Transatlantic South initiative or 
maybe a group of committees--I can't tell you how to organize 
Congress itself. But just say, wait a minute, we are not the 
only power in the world. It is a multipolar world. We have a 
lot of conflicting interests. Some people worry about 
commercial. When the people come who are concerned about 
conflict diamonds--it is a horrible situation going on in the 
Congo. No one is going to sit and defend--you were just there, 
Ms. Bass. But to say that this is how you correct it, by 
ensuring that no one in the Congo can work in mining, that the 
average American company says, I don't want to be bothered with 
all this mishegas concerning about investing with conflict 
diamonds. I have to have tests. They have to make sure that 
they don't come from this--I will just go to Australia. I don't 
have that problem.
    So what I would picture very much would be these two 
requirements. One, is there a more effective way to do it? And 
two, is there some way we can reduce the collateral damage on 
innocent parties, of which innocent parties can be Africans who 
want to work in the area or could well be American investors 
who are trying to do a good job? So that is what I would 
picture. I can't tell you how to organize it congressionally. 
But the kind of work that you do talking to other Members is a 
good way to get there. Thank you.
    Ms. Bass. Thank you.
    And Dr. Freeman, Mr. Lande was mentioning export processing 
zones. Was that the same thing that you were talking about?
    Ms. Freeman. Yes.
    Ms. Bass. And you mentioned that used to be a part of 
USAID. I was wondering if you could tell me when and why it 
changed.
    Ms. Freeman. It changed because the textile forces of the 
U.S. thought that a lot of U.S. companies would go to, 
particularly at that time, the Caribbean countries and 
manufacture there and the U.S. would lose jobs. So it was first 
supported by USAID in the early 1980s as a way to promote 
economic development of those countries. But then the textiles 
unions fought against it. So it was a prohibition against USAID 
funding any more of those zones. And then, as I said, 
subsequently, it was determined by the World Bank that the 
promotion of these kinds of regimes was a macroeconomic 
distortion, and they had reversed their position on that as 
well. So, in fact, this----
    Ms. Bass. That was their position; it is not their position 
now?
    Ms. Freeman. It is not their position anymore, no. IFC has 
funded new positions to be in charge of overseeing these 
various projects that they are now funding. So whether it is an 
economic distortion or not, the reality of the world that has 
presented itself before these institutions is that you really 
need this. And so when you look at the diaspora, one of the 
problems of taking advantage of the home country linkages is 
when some of, you know, the diaspora go back home, they are 
faced with a lot of difficulties of the lack of electricity, 
the extensive costs of using the cell phone and so forth. So 
when they are able to operate in a zone that has the necessary 
provisions and also protections, let's face it, then they can 
actually do business. And that business then does involve 
importing goods into that export zone and then exporting into 
the country from the zone. So I am a huge supporter of it. I 
have actually been engaged to design these around the world. I 
have studied at least 110 of them and have done papers on this. 
And I tell you, it has changed the economic position of many 
countries in the world.
    Ms. Bass. Okay, thank you. We would like to follow up with 
you and get some of those specific examples.
    Ms. Freeman. Thank you.
    Ms. Bass. Mr. Hansen, I appreciated your examples that you 
gave in the beginning. I haven't had a chance to read your 
written testimony. I am not sure if you put those examples in 
there. But if you didn't, I would certainly like to have them. 
I wanted you to expound on part of it though because you 
painted an overall picture of our investment being minuscule. 
And so I wanted to ask you what you thought the level of 
investment should be.
    And then you also talked about embracing the idea of whole 
industries of private projects. And I wanted to know if you 
could give an example on that.
    On the issue of branding, I do think that part of the 
problem is the education that we need to do with our own 
country. I mean, when people hear about a problem in Mali, they 
say, well, then I can't go on a trip to South Africa. If there 
are riots in Greece, we would never think of not going to Paris 
because there was a riot in Greece. So I think part of it is 
education that we are all responsible for. But if you could 
expound on that, I would appreciate it.
    Mr. Hansen. Thank you very much, Ms. Bass. In my written 
testimony, I gave a figure. I thought that if we invested in 
sub-Saharan Africa at the rate we do Taiwan in terms of GDP 
alone, sub-Saharan Africa should have $2.4 billion more right 
now.
    Ms. Bass. Was that $10.4 billion or $2.4 billion?
    Mr. Hansen. If U.S. investment were distributed equally on 
the basis of GDP, sub-Saharan Africa would have $2.4 billion 
more today, and it would be shifted away from mining, where it 
is heavily placed, and put into Taiwanese-style 
industrialization. The point being, to give the sub-Saharan 
Africans income with which to buy, not only their own products 
but U.S. exports. We can't expect them to buy if we don't give 
them jobs to earn money with. And I also wrote that if we 
invested in sub-Saharan Africa the way we do in Taiwan in terms 
of population, Africa would have $761.4 billion more in U.S. 
investment. And frankly, that is not an unrealistic amount of 
money for what could be done over there. And the idea being to 
grow Africa's internal markets, not just their export markets 
to the U.S., but to grow a vast African internal market, which 
would increase consumer demand for U.S. goods. I have found 
that if Africans imported U.S. goods--just the goods--at the 
same rate that Taiwan does, they would import $988 billion 
worth of goods annually, which is a lot of goods. And I believe 
your other question was on the Aid and Investment Model which I 
had put forward.
    In a writing for the Compendium of the Working Group on 
U.S. Investment in Africa, I put in an example which is 
referenced in the written testimony. It has to do with the 
Kenyan meat industry. There have been successive USAID studies 
of the Kenyan meat industry. And one in the 1970s gave an 
apparently huge amount of recommendations. And then recently 
USAID paid for another study, which found a meat deficiency in 
Kenya. And its recommendation--paid for by U.S. taxpayers--was 
fat cows, low prices, and cleanliness, which I guess was news 
to everybody everywhere. So I use that as an example for the 
AIM model, which is what would happen is, USAID would focus on 
bringing U.S. investment to bear on African industries in order 
to reform them, expand them, and make them competitive. For 
example, in the Kenyan meat industry case, instead of sending 
out a team to make a study, you would have U.S. planners work 
with the Kenyans to identify various theaters--abattoirs, 
feedlots, transport, cold chain, you name it. And then each 
theater would have a public sector anchor. You want to build a 
cold chain warehouse, okay, fine. That is the anchor. But 
whatever the bidding companies wish to do--if they want to add 
vegetable warehouses as an extra, great. That is great. So what 
you are doing is you are seeding that theater with a public 
sector project but allowing U.S. investors to go in and build 
related projects, partly under U.S. Government cover, which 
would allow then a more gestalt approach and would allow the 
industry to function and would bring U.S. investment in.
    Ms. Bass. Thank you.
    And then, finally, Ms. Keating, I wanted to know if you 
would tell us a little bit more about your business. And then 
you talked about coordination and how it would be helpful to 
you and you also talked about the hoops that you have to jump 
through. You talked about it in general terms, and I was 
wondering if you could describe specifically your story. And 
also if there is any relationship between your company and EX-
IM, or is EX-IM a model that is much too big for it?
    Ms. Keating. Computer Frontiers, what we initially started, 
we were a government contractor, and we helped to set up the 
Internet in 21 countries. And from that process, we were able 
to be in all those countries. And so that is where I am saying 
that the link between working for the U.S. Government and also 
seeing what is available and making those relationships with 
ministers to, you know, end users is kind of under the cover of 
being there and having some protection by the U.S. Government, 
in essence. What I would say is that what I did was not 
necessarily encouraged by USAID for most companies. What 
happens is that if you are an aid contractor, they really don't 
want you entering the market because of historical trends, 
which were that if you are there, you know we don't want to be 
seen as going into the market to take the market over. I think 
those things have been overridden, and we have to change our 
programming and how we are looking at the private sector in 
these countries.
    So I did have some very good managers basically at USAID at 
that point. They knew what I was doing. They knew I was 
establishing these businesses. And they allowed me in essence 
to do it, and that has turned into a 17-year business and being 
very productive and doing real development which is providing 
real jobs.
    So that leads to the other point of it is, is that they 
can't buy our goods unless they are making money. So they have 
to be selling it to somebody. So let's create those trade 
relations with us. And that really in essence was the basis of 
my company. So after those 10 years in creating that platform 
of both the regulatory environment for telecoms as well as the 
Internet infrastructure, we have built our companies on top of 
it. I have people who do Internet programming. We do mobile 
money applications. We are on the cutting edge of those kinds 
of things in Africa. And I hate to tell you this, but Africa is 
advanced in terms of mobile money and financial systems in that 
regard. So that is where we operate.
    We are basically bringing our intellectual property into 
the mix, and we do need more protections for intellectual 
property. There are other things that we want to do that we 
cannot because we are afraid, basically, in all honesty that 
our intellectual property will go missing or become very 
available and not due to our work.
    The other thing you were mentioning was the hoops that we 
have had to go through. So I have been at this now for 17 
years. In the initial years in talking to EX-IM, physical 
exports. Obviously, I am not exporting physical things. It 
makes it very difficult for them. The initial period when we 
were trying to do deals, the deal sizes were $10 million. So 
there was just no way that that would be a deal size that we 
could do at that point. Now those things have started to 
change. I am hearing that there are different amounts. But 
still, the reality and the reality reflecting of other small 
businesses of my size that try to really make inroads into 
these groups, it is difficult. And also understanding what they 
need in order for you to make the applications for their 
assistance. I do think things are changing now, but it is just 
not very apparent.
    When I am talking about one-stop shop, the other issue is 
there are two many trade related agencies, it is just so hard 
to know where to go. And as a small business you have very 
limited funds to do those pursuits. So you might make one 
attempt a year. You pick a certain agency. You try to pursue 
and see where that goes. You gain the knowledge from that. But 
usually, it has not translated into any real money or pieces 
out of that. So what would be helpful would be to have that 
coordinated somehow so that we can just determine immediately, 
well, this is not a place where we can get assistance, or it 
is, and then we will put the money toward doing that. But those 
are the things that you run into as a small business.
    As I said, you could say that there are many pieces that 
are available to us, but in reality, there are not. So that is 
part of it. I think I covered it for the most part.
    Mr. Smith. Mr. Marino.
    Mr. Marino. Thank you, Chairman.
    Good afternoon. And thank you for being here. Dr. Freeman 
and the rest of you, it is an honor for me to be having this 
discussion with you.
    I want to ask the ladies--my father always told me to refer 
to a female as a lady. That is the quintessential compliment. 
So, ladies, can you explain to me, how are women's rights and 
child labor considered in expanding U.S. trade with Africa?
    Ms. Freeman. I will take a stab at that first. A lot of the 
ways in which U.S. companies enter Africa is through--we have 
talked about the trade promotion coordinating committee in 
these 20 Federal Government agencies. You add those together 
with the international organizations, including the United 
Nations, the World Bank, and others, and actually there are 
provisions that you have to agree to about anti-trafficking, 
anti-sexual harassment. You actually cannot engage in 
procurements with these entities without agreeing to those 
conditions.
    So I would say they are very clearly set forth. In fact, in 
contract terms, they are called standard provisions, and they 
are flowed down even to subs that you might work with. So I 
think there is a clearer foundation for the protection of those 
rights. When you work with any of these organizations, and very 
few--my colleague here may be an exception from this. Very few 
firms go alone into Africa. They are usually under the umbrella 
of some funding organization, in which case they are signing up 
for all of these provisions. And of course, firms have their 
own set of ethics and standards and their own policies and 
procedures. And from a human relations point of view, if you 
look at the manuals of--I am sure even my colleague's company 
and many other private firms, these provisions of our Title IX 
follow us overseas. We cannot be exempted from it because we 
are working overseas. So you will see this in our own 
individual handbooks as well.
    Mr. Marino. Are we adequately monitoring this?
    Ms. Freeman. Well, I can say with regard to certain 
provisions like--let's take anti-trafficking in persons as an 
example. There is a new Presidential directive for which the 
regulations are actually going to come out very soon--or if 
they are not out already--and it will be very seriously 
monitored beyond simply a firm declaring that they are 
following these precepts. They basically have to proactively 
have, number one, training programs and, number two, if they 
have any partners or subs involved in their work, they actually 
have to investigate, proactively investigate, what they are 
doing to comply with these provisions. So I think the bar has 
been raised to a higher level to require this kind of 
investigation.
    Mr. Marino. Thank you.
    Ms. Keating, what role do women play in Africa in the 
international business sector? African women?
    Ms. Keating. I want to first add a little bit to what she 
was saying.
    Mr. Marino. Go ahead, please.
    Ms. Keating. Which is our greatest export is ourselves. And 
our greatest export is how we do business in the United States 
and carrying that with us. And that is why my comments earlier 
on USAID not wanting 51 percent majority U.S. companies, but 
that brings with it our requirements to adhere to all these 
types of rules. If you don't have that, you are basically 
subcontracting to people that you have no control as the U.S.
    So, in terms of protection of women's rights and child 
labor and those kinds of things, those come with us. And that 
is what I would say is that the biggest thing that we really 
need to do is to be incorporating in these countries, not 
seeing it as just places where we are outsourcing necessarily. 
So that is in so much the difference that I would like to draw.
    Mr. Marino. Are African women playing a vital role?
    Ms. Keating. African women play a very vital role in 
business in Africa. And again, in some ways, the reason for 
doing business with women in Africa is that they are more 
inclined to do the development that you want to get done, which 
is where women are educated and are part of business and 
earning their own income, it goes back into the family and to 
the advancement of their own children. And that in itself 
becomes a development process instead of trying to develop 
externally into all these different kinds of projects. Those 
are the kinds of things, and empowering them in that way is a 
very important force.
    Ms. Freeman. Could I just add one point to that?
    Mr. Marino. Yes.
    Ms. Freeman. I was commissioned by the African Development 
Bank to do a study of the role of women entrepreneurs in 
Africa. And this was as a foundational work for them to create 
an actual lending window at the ADB for women in particular. So 
we studied the most successful women to understand how were 
they able to be successful and, conversely, what were the 
barriers to women entrepreneurs in Africa. And that book was 
published for the African Development Bank, and we will send 
you a copy.
    Mr. Hansen. Thank you, Mr. Marino.
    I just want to make a quick comment here. This kind of goes 
to the branding question Ms. Bass had as well, which is that 
concern about African women is very well merited. And gender 
inequities there are quite extreme sometimes, and inclusion is 
a necessity. Also, child labor is a horror, and it should be 
suppressed.
    But what the concern, though, is, is that we see these 
issues, which are at this point just issues, not actual 
problems. But we see it as an issue of whether we should engage 
with Africa: Shouldn't they clean their act up, and then we 
engage? But what happens is, for example, in Bangladesh 
recently, in Dhaka, a factory collapses, and they pulled 700 
bodies out of the wreckage, mostly women. Now, no one says we 
should never have gone to Bangladesh in the first place, we 
never should have made shirts there. We don't think we should 
pull out of Bangladesh. We don't even really call for a 
commission on Bangladesh. But if it were Africa, if that 
happened in Lagos, it would be all over the news. We should 
never have been there. It is immoral. We are exploiting these 
people, et cetera, because we see Africans as playthings 
ultimately, and as unable to take care of themselves. But the 
Bangladeshis, they can make shirts, and they are tough, and 
they are part of the game.
    We need to see Africans as everybody else in the world, and 
we need to engage. It doesn't mean you accept collapsing 
factories. It doesn't mean you accept child labor. But it means 
you engage. You put them down there. And when you find a child 
working there, you say, get them out of there and get them into 
school. But you have a factory there where someone else can 
take that kid's job and do it properly.
    Mr. Marino. Thank you. I yield back.
    Mr. Smith. Mr. Stockman.
    Mr. Stockman. Yes, thank you.
    I would like to preface to my questions with a statement. 
First of all, I have been to DRC. I have been to numerous 
countries--Chad and South Sudan and all over the area.
    And I think, Mr. Hansen, for me, I would appreciate it if 
when you say ``investments,'' I think we need to, in your 
numbers, delineate between private and government so that we 
know. Because I think when you talk investments, you are 
talking both, right? Correct? You are talking both government 
and private?
    Mr. Hansen. Thank you, Mr. Stockman. The investment numbers 
that I have come from USTR and CRS, which are presumably 
private investments. In another piece I have done, which is 
referenced here in the Compendium, I added all of the aid on 
top which would be, if you calculate generously, about $30 
billion on top of it, essentially nonproductive----
    Mr. Stockman. I think some of the statistics show that the 
West has given about $1 trillion in aid. But this is one of the 
things that I think is a challenge; because we are trying to 
bring medicines into--in particular into DRC, the Republic of 
Congo has changed their airport. But when I was going to DRC, 
the challenge for an individual that is not a government high-
ranking official is the bribes and the hassle you have to go 
through. And we were there as humanitarians trying to help. We 
were basically assaulted in terms of shakedowns.
    I think it is not so much a racist thing as it is as much 
of a hassle factor. Americans will go to McDonald's--they are 
not going to sit down for a four-course meal. Americans avoid 
hassle. I was even asked for money from a general there as I 
was leaving.
    And I think that is part of the problem. It is not that we 
don't care. It is that we try to avoid those situations.
    Also you keep saying--both Dr. Freeman and Mr. Hansen, you 
talk about being like China. But I know close up and personally 
that the Chinese do not have the Foreign Corrupt Practices Act. 
And I don't think you would suggest that we emulate their 
manner of giving contracts through bribes and things like that. 
I mean would you suggest that?
    Mr. Hansen. Thank you, Mr. Stockman. I would absolutely 
not--absolutely not ask to have the FCPA repealed. I think it 
is a net asset by far for U.S. investors because if you say, I 
don't want to pay a bribe, you are arguing over the price. If 
you say I am not going to U.S. Federal prison over this, that 
is a pretty clear no. So that is good.
    I differ with certain of my colleagues in the 
anticorruption field though in calling for a de minimis 
exception because at this point, if you go to Kampala and do a 
trade show and you show these officials, well, we would like to 
open a series of clinics here and, by the way, have some beer 
and here are some gifts for your kids, you are a Federal 
criminal, because there is no dollar threshold on the FCPA.
    But if a U.S. Congressman--no offense--but if a U.S. 
Congressman showed up with staff, you could probably hand them 
a large campaign check and that is fine.
    Mr. Stockman. But we can't accept anything over $25.
    Mr. Hansen. I may be wrong on this. But one could have 
someone mail it to a PAC or what have you. We are more 
sophisticated than this.
    Mr. Stockman. No, we can't take foreign money either.
    Mr. Hansen. No, no. Not foreign money. No. The U.S. 
investor. I am talking about the U.S. investor could do this, 
yes. So the point is, is that a de minimis exception should be 
put in there.
    As for the larger question of corruption, I think it is 
actually rather overblown in Africa. It does happen very much. 
One thing, it is actually a function of our lack of investment 
there because what people often fail to realize is that Africa, 
coming from a very agricultural background, is basically, you 
have two choices if you want real money, a middle class 
lifestyle. Well, cassava farming is not going to do it, so you 
have to join the only real industry, which is government. And 
if you succeed in rising in that industry, your real income 
oftentimes, unfortunately, comes from getting it from the 
capital flows that come in. Humanitarian aid is a capital flow. 
People wonder why Africans will get mosquito nets and then go 
sell them. It is because that is the only capital coming in. 
They are a capital deprived environment. It is like an anoxic 
environment. They do not have financial oxygen.
    What we need to do is--we should not worry about them 
cleaning up their act and the public sector becoming like 
Switzerland before we go in. What we need to do is get the 
legal protections. We have the savvy investors by the thousands 
who could go in there, make their way in and provide 
alternatives for the Africans to make money.
    Mr. Stockman. I think you are missing my point. My point 
is, I know firsthand--because I was there--the Chinese operate 
in a very different manner than we do. And it does constitute 
oftentimes--let's be up front--large sums of money. I was 
there. So I am suggesting to you that it would be helpful if we 
could somehow address that issue, too, because we are playing 
on an uneven playing field.
    Go ahead.
    Mr. Lande. I think your question is really the nub of this 
conversation, and it is right on the mark. I don't know the 
answer. The reason I say this is as follows: The Foreign 
Corrupt Practice Act, they had a meeting--oh, God, it was just 
the other day. And Symbion Power, GE were there. And they both 
were saying, thank God we have this act. We are able to tell 
people, ``No, we will go to jail''; people don't even ask us 
for bribes anymore.
    The negative side. People don't come to the Hill and give 
you the negative side because it sounds like you like 
corruption. Negative side: More people come into my office and 
say, you know, I was trying to do some business in Africa and I 
had this deal, and I went to this U.S. corporate executive. I 
said, Let's do it together. They said, oh, but FCPA. I said, 
What do you mean? Well, you have to understand. It is 
administered by the Justice Department. Justice is pretty 
straightforward. They want to find something and so on. They 
don't look at necessarily what is going on. They say that if 
there is corruption, well, I am a CEO. And some local guy does 
something and so on and it falls under the act, I am 
responsible. I have to exercise due diligence. Well, due 
diligence for a small company may not be possible. You would 
have to get a whole legal group in there to prove--the CEO 
hasn't touched any of this money. He is not even part of it. He 
doesn't know what is going on. You have that.
    The British have now decided that you want to cover 
everything that happens, even what you call the doing business 
bribes, you know, just to get something out of customs quickly. 
Maybe your point but on a much lower level and so on. If you 
are guilty of being involved with that, the British say, you 
can't list on our stock market, which also means you can't list 
on the U.S. stock market. So what we are recommending in 
Manchester Trade--not that you get rid of FCPA because 
obviously it does something. But that we sit and we see, how is 
it administered? Can it be administered in ways as more people 
are scared to go into Africa, people who really want to do the 
honest thing and want to work on it and so on.
    I grew up in the Rockaway, which has recently been in the 
news for the hurricane. But when I grew up, my neighbor was 
Carmine DeSapio. You may remember him. He was the last Tammany 
Hall boss. We got rid of Tammany Hall. It doesn't exist 
anymore. We didn't do it because the British came and told us 
to get rid of it. We did it because we reached that level of 
economic development where it didn't make sense. We got rid of 
the corruption in the--I am looking at Congressman Smith--with 
the longshoremen. Remember, that was a horrible thing in the 
ports.
    So I think what Peter and I are trying to say is, yes, 
there are problems. We need some rules. But we also have to 
accept the fact that you make progress through economic growth. 
And if what we do is because we are so concerned about the 
current situation, we prevent U.S. investment, two things 
happen: One, we don't have economic growth. And who comes and 
builds this stuff? The Chinese. And they are going to do it 
worse than we are going to do, and you are going to have the 
factories falling down in Bangladesh. You are going to have the 
roads not working right and so on. So all we are trying to 
say--at least Manchester Trade is trying to say is, I would 
like to go through all our conditions. Have somebody take a 
step back and say, there is nothing wrong with the conditions. 
They are highly moral. In a multipolar world, where you have to 
work with the Chinese, where we have to work with other 
countries and so on, how do we establish something that is 
effective, but we don't shoot ourselves in the foot, how we 
don't shoot those Africans who we don't want to work with in 
the feet and that is kind of the balancing we are trying to put 
on the table.
    Mr. Stockman. I have to agree with you. I think there needs 
to be a little bit of leeway. Our Government, I know from our 
standpoint, anything we do--when Chris and I go out or 
whatever, we are so paranoid to act. I know for a fact that in 
Africa, people are paranoid to act, because it is safer to do 
nothing than to do something. And if we could modify that law 
to where we are not so paranoid to act.
    If you understand, I am very sympathetic to what you guys 
are doing, but I also know on the ground what is really 
happening. And I think that the act and the way it is 
implemented is hindering Americans from saying, ``Why take a 
chance?'' I can make a buck here the United States. Why go over 
there and risk a buck over there, because I could go to jail?
    Mr. Lande. Let me give one last quick example because this 
has been mentioned at other congressional hearings and it is 
correct. Normally when a person wants to do business, he 
invites a foreign person to come over to the country and look 
at the factory and how it operates. Normally, when that 
happens, you say, okay, bring your family with you. If you are 
going to come, let's spend the day in Disney World. It is only 
about 20 minutes away from where we are located.
    Under the Department of Justice interpretation is, that 
could be a bribe. It could just be an incidental normal bit of 
entertainment. So I think we are in absolute agreement that I 
just want somebody or some group who cares about Africa, cares 
about our values, to look at these things and say, are we doing 
it the best way possible? We cannot have eight different 
committees deciding how we are going to operate in Africa, all 
setting up norms, because there is one investor, and when he 
looks at what the eight different committees have done, he is 
discouraged. And I would say I agree 100 percent with your 
point as to--that we have to figure out a way to do it that 
makes sense.
    Mr. Stockman. Dr. Freeman, I know you wanted to say 
something. I apologize.
    Ms. Freeman. Yes. I am just going to say quickly, you asked 
what example should we take from China? Certainly, being 
corrupt is not one of them.
    But here is what I do want to say that is very important 
and is an example we should take from them. When they want to 
learn how to do something, okay, because they have gone from 
like zero to 110 percent in 20 years, okay, how did they do 
that? Well, they learn. They seriously look at every example 
that is the penultimate example of the thing that they are 
looking at. So if we are good in financing, they will call 
over--they will find out. They have teams of researchers who 
know exactly who is the best finance person in America. And 
they bring over that person, and they understand. They have 
whole committees of people who will sit that person down, and 
they say, what can we learn from you? They are a learning 
institution.
    And so in support of the points my colleagues are making, 
we also need to learn better how to implement and modify, as 
appropriate, whatever we want to achieve from this act. So that 
is what I was saying earlier, too, about being strategic and 
looking at our industries. We have to take this example from 
them and say, how do we do everything smarter?
    So one little small example on corruption, for instance, 
let's say this price of water is $1. What they have is a 
structure in tenths. They say, do you want quality one of the 
water? Because that is 10 cents. If you want quality two of the 
water, it is 20 cents. So is it corrupt when they say that the 
water is $1, they negotiate downward with everybody 
individually on what it is that you can agree on from a supply 
and a demand point of view.
    That is an interesting example. So we need to learn what we 
can learn that is good from them, just like they learn from us 
what is good in us. But we are not the only examples of 
ourselves. We can learn from Saudi Arabia. We can learn from 
Turkey. We have to be a learning institution.
    Mr. Hansen. Excuse me, Mr. Stockman. I know you want to 
move on, but I just would like to point out, I think apart from 
a de minimis threshold on the FCPA, where like buying a cup of 
coffee is not a big deal, I would recommend that the FCPA not 
be loosened, not be watered down, because it would declare open 
season on U.S. investors, because they would say: Oh, now the 
FCPA doesn't apply, so now you have got to pay me some money. 
So we have the solution in place. I think removing it would be 
more harm than the disease.
    Also, I just want to point out that U.S. investors are 
extremely law abiding, on the whole. I mean, there are corrupt 
people. But most want to play by the rules. So if we just 
provided them legal protections, that would be something 
because what we have done now--we are in a situation where, 
let's say we send someone to Nigeria or Kenya, we don't provide 
a bilateral investment treaty, so they are at the mercy of the 
local government. We don't provide them a double tax treaty, so 
they are at the mercy of the local tax authority. We send them 
out there with no hope of escape. It is basically a Black Hawk 
Down situation for investors out there. You can maybe ask the 
U.S. Embassy to help you if they care.
    But if you are out there and you get caught and some 
official says, okay, now you have to pay me something, and you 
are unprotected, exposed and isolated and you make a payment, 
you are a federal criminal. And they will put you in jail.
    So we are telling U.S. investors, go over if you want but 
don't put a foot wrong. We are not going to help you. But if 
you put a foot wrong, you are going to prison. Who wants to 
invest in that kind of environment?
    Mr. Stockman. I couldn't leave the country, though, until I 
paid passport fees that were repeated throughout the chain. I 
am just telling you on a firsthand basis, too. As you know, 
there is a mountain of copper out there. And what the Chinese 
have done, they didn't even hire the indigenous folks. They 
moved the Chinese folks from China to that area. It doesn't 
benefit the local government or the local people to do that.
    I, for one, would like to see more American participation. 
But on the other hand, I think we need to understand the 
investors and the people that go over there, they have got 
challenges, too. They want to help out, but they can't always 
do that. I yield back what time I don't have back to the 
chairman.
    Mr. Smith. Thank you very much.
    Mr. Rush.
    Mr. Rush. I want to thank you, Mr. Chairman.
    I have been quite interested. This is my first opportunity, 
I believe, to--not be in a hearing of the Foreign Affairs in 
this subcommittee--but it is my first opportunity to be in a 
hearing on this particular type nature.
    And I would preface my remarks by saying that the biggest 
obstacle that I see to a robust U.S.-African trade policy is 
the question of the meeting of the minds. America, U.S. 
investors and indeed this Congress have really not made up its 
mind about what it wants to do or needs to do in Africa, I 
think. And once we make up our mind, then it is in our national 
interest to be vigorously engaged and helping to develop the 
economy of Africa. And I think that we will be better off, and 
we will see more results, more positive results.
    I don't see Africa as a continent any more corrupt than I 
see China and I am--I have been made aware of some of that 
corruption among government officials in China. And I know that 
the citizenry of different nations in Africa, some of those 
citizens are very, very upset with the corrupt officials and 
the corrupt government there. And I feel as though one of the 
things that we are lacking in this conversation and most 
conversations that I am involved in is that we don't hear from 
the Africans. And one of the things that I have noted being 
reinforced around the issue of immigration is that the African 
immigrants are the most educated immigrant group of all of the 
immigrant groups in this Nation. And so the diaspora, as far as 
I am concerned, represents an enormous reservoir of 
intellectual capital and brain power that could be harnessed in 
a serious way in some discussions about how do we move our 
Nation and the nations of Africa together in some kind of 
harmonious way that would be beneficial to both.
    Mr. Hansen, I was very interested in some of the things 
that you said. And in your testimony, your written testimony, 
you say, Africa is poorer because the U.S. gives it no way to 
earn serious money in the way the U.S. did for Taiwan. You are 
using the Taiwanese model. Could you be more explicit in terms 
of the industrialization of Taiwan? And it might not be fair to 
look at this entire sub-Saharan region, but maybe you could 
take one nation and compare it.
    Mr. Hansen. Thank you very much, Mr. Rush.
    Well, perhaps looking at the Taiwanese example, Taiwan is 
very much like Japan, South Korea, and the People's Republic of 
China in that they became, they are known as the Asian tigers 
because they became export-driven economies, and we imported a 
great deal from them to spur their development.
    Now, one way where I see a difference between sub-Saharan 
Africa and the Asian model is that the U.S. does not care 
really about rights or what have you in these Asian markets and 
just sent over much of our industrial base to Japan, to Korea, 
and more recently to Shanghai, Guangzhou. We did not ask 
whether they respect women or children or care about human 
rights or abortion or corruption. We didn't ask any of that. We 
just sent it over. And with results that in my written 
testimony show, especially for what is now a rather fearsome 
regional and now increasingly global rival, the People's 
Republic of China, they now have almost twice our U.S. 
investment that we have across the whole of sub-Saharan Africa. 
They are importing a hundred, I believe $104 billion in U.S. 
products, which is--in fact, all U.S.-Africa trade now is one-
third of our trade deficit with the People's Republic of China.
    The reason the PRC can do that and the reason Taiwan can do 
it is that we industrialized them, which allowed them to rise 
up the economic chain and to earn real money. It is like asking 
like a CEO of a Fortune 500 company now to buy stuff; whereas 
with Africa it is like treating the 18-year-old intern and 
asking them to buy stuff. It is not the same scale.
    Where we went wrong and where AGOA is a misdirection--I 
mean, it should be continued, but it is a misdirection 
strategically--is that we applied the Asian model to sub-
Saharan Africa without an Asian-style export economy. We said, 
okay, export stuff. But who was there to export? There was no 
export industry waiting to happen. AGOA, as I point out in my 
written testimony, it is very unclear whether there is an 
intention to help U.S. investors go over to start AGOA 
businesses, and in fact anecdotal evidence around town here, 
when you talk to people, they sometimes say, oh, U.S. 
businesses can't benefit from AGOA. So it is very unclear even 
what our purpose is with that.
    We basically said, okay, be South Korea. Oh, you are not 
South Korea? Oh, well. I mean, we did not take any step to turn 
them into South Korea. We just said be South Korea, and that 
was foolish.
    Mr. Rush. Are there any legislative remedies that you 
suggest in order to correct the non-industrialization policy 
that relates to Africa? Is there some specific, and how do you 
see an industrialization policy that emanates from the U.S. to 
Africa, how do you see that in terms of the forms, shapes, and 
mechanisms?
    Mr. Hansen. Thank you, Mr. Rush.
    I know Mr. Lande wants to make a point on this, so I will 
be brief. In my written testimony, I suggest various wording 
changes to the bill to emphasize investment, which is actually 
to make it fully comport with the existing section 4 of the 
bill calling for investment, and in fact naming investment 
first.
    As for legislative means, what has to be done is pressure, 
great pressure has to be put on the U.S. executive branch to 
conclude bilateral investment treaties and double tax treaties 
across the continent. Preferably they would be in a simplified 
form or in one multilateral form for all of Africa. That would 
be a way to do it. What absolutely has to happen is whatever 
gets U.S. private capital to Africa and in the hands of private 
people, not through a Byzantine aid industry, which basically 
ends up enriching folks in Arlington, Virginia. I am talking 
about getting money into the hands, into the pockets of every 
day Africans who are able to do their own business and make 
their own way and create their own economies and their own 
markets. That whatever gets that U.S. capital there to create 
businesses must be done. That will have the effect of creating 
not only profitable U.S. businesses that are involved in Africa 
but also markets for U.S. exports. You can't sell to a market 
that doesn't exist. We have to build that market. So I would 
like to--oh, I am sorry.
    Mr. Rush. If I might, just before Mr. Lande steps in here, 
I have one final question for you. I am intrigued by the, 
again, by the diaspora. Those who are Africans who are here, 
who are quite capable, who started small businesses, those who 
have been trained in the best Western colleges and 
universities, those who have a keen mind and keen abilities and 
character, that really, you know, want to see, be successful, 
not only here in America but also want to be successful in 
Africa, would love to be successful in Africa, how do you see 
engaging those individuals, that asset? And do you--how 
powerful an asset is it in your opinion?
    Anybody, Dr. Freeman, Mr. Lande, Ms. Keating, anybody 
should respond to this.
    Mr. Hansen. Well, Mr. Rush, I would just very quickly say 
that the diaspora is an amazing asset and absolutely has to be 
used, but Dr. Freeman is a much better authority to speak on 
that.
    Ms. Freeman. Actually, one thing I do want to say about the 
example of Taiwan's growth, not just our role in it, but also 
China and its growth is that policies and even institutions did 
not cause that growth. You know what caused that growth? Money. 
And where did that money come from? Their diaspora. The Chinese 
has the biggest diaspora in the entire universe, and they 
poured in more money--we talked about export processing zones, 
for instance. Well, they put in more money in Tianjin in one 
export processing zone in 1 year than all of the investment in 
Asia combined in that year. That means in one little zip code, 
okay?
    So we were talking about learning, okay? The Indians and 
the Chinese have learned how to harness very strategically the 
remittances and the intellectual capital of their diaspora. So 
what we can do to help the African diaspora here is to learn 
from these examples, support these examples, and help to 
transport these examples and transplant them, both here among 
our diaspora and among the leadership there.
    Mr. Lande. Let me go back to your first question, which was 
right on the mark, Taiwan, and why did it succeed in Africa. 
Two reasons. One, it is something called the East African--the 
East Asian growth model where, and again, I don't want to go 
debating free trade and liberal trade, but the Japanese first, 
followed by the Koreans and the Taiwanese built up very 
protective barriers, was able to first produce for the domestic 
market, at the same time produce for export but keep U.S. 
products out. And we saw the loss of the U.S. television 
industry. We saw the loss of the U.S. footwear industry while 
these countries operate. Good or bad, I don't think now we can 
use an East African--East Asian development model for Africa.
    Having said that, it is interesting to me--and there is no 
debate; that is what annoys me a little bit. The Africans have 
something they call localization, where they say we want to 
give some preferences for our own people to give them a chance 
to participate in the economy, and so on. So maybe we will have 
some local requirements. Well, as a free trader, teach at Johns 
Hopkins, that is bad, oh, no, no, you have to have the free 
market determine it. I would rather have a discussion, because 
everybody has protectionism. We had protectionism in the years 
1900-1912, the McKinley and so on kind of tariff bills. So all 
I am saying is that there are models that Africa can follow.
    Now, what can we do to help Africa, because, again, your 
question focuses exactly correctly. What can we do to get the 
establishment of supply chains that operate in Africa that is 
in our interest because that is the modern form of where you 
get your manufacturing. You become part of a manufacturing 
process. And that is where there is a whole group of ideas. The 
export processing zone was one that we mentioned. Let's get rid 
of U.S. aid limitations, that they can't help develop them 
along the way and so on.
    Let us begin to, I don't know how to put it, I will be very 
blunt. Bangladesh has always been a problem in terms of exports 
to the U.S. of textiles. They have no respect for labor rights 
at all. That is why in these export processing zones that they 
have, unions aren't allowed to operate, and that is why there 
is all these complaints that show up about Bangladesh, the fire 
safety discussions we are having now.
    Africa basically comes out of an English tradition, at 
least a lot of the exporters are English, where they have a lot 
of respect for labor rights. In fact, sometimes people say they 
don't want to go to Africa because labor is too strong. Others 
will say it is more productive that way.
    But, again, if we would begin to play to Africa's 
strengths, and I don't care if Bangladesh doesn't have a 
preference; they are running around town saying Africa has a 
preference, we want to have a preference. Not my interest and 
so on. So I would say let's figure out what Africa's strengths 
are. Maybe they can't be as protectionist as East Africa, but 
at least accept this idea.
    Let me just make one last quick point, and again to go back 
to the really good question that Ranking Member Bass asked and 
so on, and that is, the way that you should apply sanctions is 
the way that we have applied them in the Middle East and in 
North Africa during the recent problem. They should be 
targeted. You decide who are the bad guys and let's do it. If 
somebody grabs power, Assad, let's just punish his family; they 
can't travel, or we will bring different cases against them. 
And then let's try to take them collectively. It shouldn't be 
the U.S. alone anymore. It should be a whole group of people 
doing it along. And then the collateral damage should be let's 
agree that we are going to do nothing or at least do a study on 
the impact that is going to minimize Africa's possibility for 
industrialization. So if this is going to have an effect on 
industrialization, let's come up with a different tool. The 
idea of taking away from a country because a dictator is a 
horrible guy but of punishing people by taking away MCC 
programs, by taking away USAID economic development programs, 
by taking away AGOA preferences, taking away trade preferences, 
which is the only way available for them to develop, with all 
due respect, coming from New York, it is cockeyed, it just 
doesn't make sense, and that is what we do sometimes.
    Mr. Smith. Thank you, Mr. Rush.
    Let me just ask one final question, and perhaps Ms. Bass 
might want to say something as well.
    Mr. Hansen, you earlier mentioned in passing at least that 
when it came to China and human rights and trade and the like 
that, and you are right, there was a lack of concern about 
workers' rights, whether it be the Clinton administration, the 
Bush administration or the Obama administration, there are no 
linkages to Most Favored Nation status or now PNTR with China. 
There should have been, and unfortunately, that was squandered 
on May 26, 1994, when Bill Clinton shredded his own Executive 
order that had laid out very fine, and I think very important, 
benchmarks on the achievement of human rights. ``Significant 
progress'' was the language he used in his Executive order, and 
then he just tore it all up, which said to the Chinese 
Government all these clowns think about is profits. And I love 
profits, but profits, human rights, trade, and the non-
exploitation of workers ought to go hand in hand.
    So I would raise a question because, again, Dr. Freeman, 
you said all firms entering the African market now have to 
compete with China. Had we stuck to our guns about reforming 
China, the good model that they might be projecting to the 
world would have at least been more favorable toward human 
rights and intellectual property rights and the like.
    Thank you for your very specific recommendation of how we 
can improve the bill. I think, you know, as we go to markup, 
that will be extraordinarily helpful. But how do we deal with 
the exploitation of Chinese workers? I filed with the AFL-CIO 
some years back, and it still went nowhere, an unfair trading 
practice complaint because of the exploitation of their 
workforce, 10 to 50 cents per hour in China. I mean, no OSHA 
regulations, an increasing problem with arrearages, with not 
even paying their workers. There is just one problem 
compounding after another, which makes it hard for the U.S. 
manufacturers, small, medium, or large, to compete with that 
kind of cost. The cost of the product is reduced substantially. 
As I think you kind of referenced, or at least hinted at, Ms. 
Keating, the intellectual property issue is very real, and we 
had a hearing in this committee, and I chaired it, on that 
problem in China, once a company markets its product and starts 
to get a foothold in a market, in comes the Chinese Government, 
and its friends in business, and they produce that same 
product. They rip off the intellectual property rights, and we 
had Luster Products here. They talked about this in Nigeria. 
They held up their product and they held up the Chinese fake, 
and they said, you tell the difference because they have been 
ripped off, and I am wondering how we protect against that. You 
know, so if you could speak to those issues, if you would like, 
I would appreciate it.
    I do have some other questions, but because it is late, I 
won't get to those, but please.
    Ms. Keating. In terms of the intellectual property rights, 
the biggest issue that we have is just that, and it is even 
more difficult, not even a physical product, in software and 
things that we are developing. So if we develop a mobile money 
application, it is very quick and very easy for them to 
duplicate it very easily.
    How do we defend against that? Really that is the biggest 
issue that we have, which is that there are no relations 
between the U.S. Government and the African governments in any 
kind of trade practices that would allow them to enforce it or 
allow the U.S. Government to assist them in enforcing those 
things because there is nothing to enforce. So we are just in 
the open. We are--and that is the problem with bringing any 
intellectual property from the United States into Africa almost 
everywhere outside of South Africa.
    And that is a huge issue that unless you have these things, 
you have the trade agreements that are going between the 
different countries or Africa as a whole that they sign on to, 
and in that signing, they agree to protect our intellectual 
property, we are not going to get there, and so that is just a 
major hindrance. And so we need those kinds of things in order 
to even go forward, and that is what America has to sell in 
many ways and what our advantage is. So I will leave it at 
that.
    Ms. Freeman. I will just say quickly when I was a little 
girl hiding under the chairs when we used to have those drills 
when we were afraid of the Russians, well, if we remember what 
we were afraid of, that the Soviet Union might take charge, and 
they would what? Well, what in fact has happened is, it wasn't 
the Soviet Union; it was China. And we weren't paying 
attention. We were hiding under the desk, you know, worrying 
about that eventuality, and so now we have arrived at this 
point in history and in this situation where, quite frankly, in 
my view, what you have asked, it is actually not solvable at 
this time, period.
    Mr. Lande. Very short and to the point. One, Africa is 
making progress on intellectual property rights. The Nigerians 
have one of the top intellectual property rights offices, and 
they have come to the States and they have visited with us. The 
Ghanaians have done a lot. There is a lot of work going on in 
Africa over the particular issues. It was our company that 
brought that famous textile example of the printed fabric, 
which you couldn't--they even copied the name of the company 
that did that and so on, et cetera. But it was an issue, you 
know, which is a Chinese issue. It was their product that was 
coming in, and so on. We could have done more.
    But Africa, one, is aware of this and they are making 
steps. But what makes it very hard is the fact that the U.S. 
goes equally against all intellectual property rights 
violations. And that brings us up to some really tough issues 
where the populous are there. Textbooks, I am not in favor of 
anybody copying a textbook, but let me be very careful. If I 
have a choice between going after somebody maybe stealing my 
software and putting it in the government and somebody putting 
out a textbook that is spreading the word I want them to 
spread, I am not sure.
    The most sensitive of all issues is pharmaceuticals, New 
Jersey a tough issue. But how the hell do you deal with that 
issue? The U.S. pharmaceutical companies correctly say, I put 
in millions of dollars, I developed these things, and then they 
rip them off in Africa, cheap medicine. And the next thing I 
know, this cheap medicine is now coming in to my developed 
country markets. The Africans say, ``Excuse me, guys, we need 
this stuff. We can't afford it.''
    So, again, I would always come back to the same thing. The 
general rule doesn't apply. Yes, we should help the Africans 
develop better IPR standards and so on. The U.S., we should use 
a little intelligence and maybe not go after every single 
intellectual property right because somebody is yelling, but 
focus on those which are important to us but also on those 
which are ``deleterious to the Africans.'' That would be my 
only little additional comment.
    Mr. Hansen. Thank you, Mr. Smith, for the question.
    A bit of historical perspective is in order just simply to 
say that after the Revolution, the U.S. was decried by Great 
Britain for being a thief of intellectual property and having 
protected markets, and we seem to have done okay as a result.
    Another thing, I think a certain humility has to be applied 
in the face of historical trends. Yes, there are horrendous 
abuses of labor in China, but what will ultimately correct that 
is not U.S. legislation or U.S. investment trends or whatever, 
except, you know, on the margins. What really is going to do it 
is the fact that China is developing. And now on the coast of 
China, wages are going through the roof, and their workers are 
going to become scarcer, more demanding, and have better 
rights. So, in a way, history unfortunately will--well, it will 
correct itself--but unfortunately, there is only so much that 
can be done.
    I think that in terms of Africa, we should not be--we 
should not let concern for these inevitable tragedies prevent 
us from engaging with Africa because that is the greater 
tragedy. If we don't do anything with Africa, they will have no 
economy, and they will be poor and dying in huts with malaria 
in the countryside. If we industrialize, if we invest, yes, 
there will be factory collapses; yes, there will be corruption; 
yes, there will be all that, but it will develop. And it will 
progress to a higher stage inevitably if we keep going.
    I would just simply point out, Upton Sinclair, you know, he 
wrote ``The Jungle'' about Chicago. Chicago was awful. I mean, 
there were like carcasses of pigs in the river and everything. 
It was a nightmare, but now look at Chicago today; it is a 
glory, because if you keep it going, eventually things will 
develop. That is the way it is. We need to engage and we need 
to develop with Africa, together with Africa. Thank you.
    Ms. Keating. I just want to add one point. One of the 
mitigating factors that we have is because we are in Africa, we 
are producing the software in Africa. Some of it is U.S.; some 
of it is African. Because we have African people also producing 
that, there is--the theft of it goes into, I hate to say it, 
the local networks, which is they aren't going to allow that to 
happen, they start to talk to their own people about this joint 
product that we have created. So, again, it goes back to that 
joint activity with Africa, and that is the only way we can 
mitigate at this point, and so that works for us.
    And then what we would really appreciate is those trade 
agreements because what happens for us is if they want to try 
to bring stuff into the U.S. market, which they all do, they 
won't be able to if they are stealing intellectual property. 
But anyway, that is just a mitigating factor.
    Mr. Smith. Thank you.
    Ms. Bass.
    Ms. Bass. Well, I just want to also thank you. This was a 
great panel. I thought it was very helpful, all of your input 
in the discussion today, and I would just like to ask if--today 
we were talking about this specific piece of legislation. But 
you all know that AGOA is on the table as well, and perhaps you 
could give us in writing your recommendations, how this 
discussion today might be applicable to the discussion that we 
are having on AGOA would be very helpful. Thank you very much.
    Mr. Smith. Thank you.
    Thank you very much for your testimony and insights, 
wisdom, and very, very fine recommendations. It has been a 
great panel. We deeply appreciate it, and again, I am sorry for 
the votes that pushed this back about 45 minutes. The hearing 
is adjourned.
    [Whereupon, at 5:03 p.m., the subcommittee was adjourned.]
                                     

                                     

                            A P P E N D I X

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     Material Submitted for the Hearing RecordNotice deg.




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