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

                           WILL THERE BE AN AFRICAN
                              ECONOMIC COMMUNITY?

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

                                    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

                                 SECOND SESSION

                                   __________

                                JANUARY 9, 2014

                                   __________

                               Serial No. 113-157

                                   __________

            Printed for the use of the Committee on Foreign Affairs

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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

    Amadou Sy, Ph.D., senior fellow, Africa Growth Initiative, The
      Brookings Institution..........................................     6
    Mr. Stephen Lande, president, Manchester Trade...................    22
    Peter Quartey, Ph.D., senior research fellow, Institute of
      Statistical, Social and Economic Research, University of Ghana.    30
    Witney Schneidman, Ph.D., nonresident fellow, Africa Growth
      Initiative, The Brookings Institution..........................    37

              LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

    Amadou Sy, Ph.D.: Prepared statement.............................     8
    Mr. Stephen Lande: Prepared statement............................    26
    Peter Quartey, Ph.D.: Prepared statement.........................    32
    Witney Schneidman, Ph.D.: Prepared statement.....................    40

                                    APPENDIX

    Hearing notice...................................................    60
    Hearing minutes..................................................    61

                  WILL THERE BE AN AFRICAN ECONOMIC COMMUNITY?

                                  ----------

                           THURSDAY, JANUARY 9, 2014

                           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 2:13 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.
        The African Union, or AU, is in the midst of a long program
    to create an African economic community through the eventual
    merging of existing regional economic communities. U.S. policy
    is to support regional integration in Africa as is enhancing
    the success of U.S.-Africa trade by reducing trade barriers and
    creating larger markets. This hearing will examine the AU
    effort and its potential benefits for Africa as well as the
    United States.
        A focal point in U.S.-Africa trade policy is the
    encouragement of integrated markets in Africa. It makes trade
    with Africa more efficient and beneficial for African
    businesspeople as well as governments. It is also more
    attractive for foreign investors.
        The AU, a regional grouping of all countries except
    Morocco, was established in 2002 as the successor of the now-
    defunct Organization of African Unity, or the OAU. Its
    formation was largely motivated by OAU members' desire to more
    quickly achieve the goals of the 1991 African Economic
    Community Treaty, which was signed by some 51 heads of state.
    The treaty is intended to promote African regional economic
    integration and socioeconomic development through the planned
    creation of a common African market and shared political and
    economic institutions.
        Make no mistake about it, this is a challenging goal. The
    example of the European Community demonstrates the difficulty
    even when involving developing nations. The current African
    nations were not created to collaborate with one another.
    Varying languages, conflicting legal and commercial systems,
    and often incompatible transportation infrastructures make this
    worthy goal a major challenge, and there are other obstacles
    that make this effort even more daunting.
        Nevertheless, the eight recognized regional economic
    communities have a timetable to which they are generally
    adhering to with few exceptions. The Arab Maghreb Union, a
    trade agreement comprising Algeria, Libya, Mauritania, Morocco,
    and Tunisia, is inactive and frozen due to deep political and
    economic disagreements between Morocco and Algeria regarding,
    among other issues, the matter of Western Saharan independence.
    The Community of Sahel-Saharan States, comprising 28 countries
    across Africa's Sahel region, is finding regional integration
    difficult because of its members being part of other trade
    blocs that are more advanced in their integration.
        Meanwhile, the Common Market for Eastern and Southern
    Africa, a free-trade area with 19 member states stretching from
    Libya to Swaziland, has agreed to an expanded free-trade zone
    and is also considering a common visa scheme to boost tourism.
        The East African Community, an intergovernment organization
    comprising some five East African countries--Burundi, Kenya,
    Rwanda, Tanzania, and Uganda--signed a protocol just last year
    outlining their plans for launching a monetary union within 10
    years.
        The Economic Community of Central African States, which
    includes 10 countries across the middle of the continent,
    formed a customs union with a free-trade area between members
    and a common external tariff for imports from other countries
    as long ago as 1966.
        The Economic Community of West African States, a regional
    group of 15 West African countries, is creating a single large
    trading bloc to an economic and trading union and serves as a
    peacekeeping force in the region, all despite operating
    officially with three coequal languages: French, English, and
    Portuguese.
        The Intergovernmental Authority on Development is an eight-
    country trading bloc based in East Africa and has transformed
    from an executive group with a focus on development and
    environmental control to a larger structure as a regional
    economic community.
        The Southern African Development Community began as an
    anti-apartheid coalition fighting for majority rule in South
    Africa in the 1970s, but since majority rule came to South
    Africa in 1994, it has become a traditional regional economic
    community and, like its West African counterpart, sometimes
    engages in peacekeeping operations.
        By 2017, a free-trade union and customs union is supposed
    to be established in each regional economic community. The
    process is still stalled in North Africa and the Sahel,
    although there is progress elsewhere. This phase is now fully
    enforced in East Africa as well as West and Central Africa.
        In today's hearing, we are looking for recommendations on
    what the regional economic communities and their member
    countries must do to fulfill the AU's ambitious agenda. We also
    want to examine what the U.S. Government, other donor
    governments, and international financial institutions can do to
    enhance their efforts in this regard. Ostensibly, this
    assistance has been ongoing for some time now. We want to find
    out more about these efforts and why they have not moved
    further ahead.
        We have with us an extraordinary panel of experts who have
    observed regional integration in Africa and, in some cases,
    have worked to promote it, for more than a decade. We know what
    governments have said about the benefits of regional
    integration, and we have heard from the private sector about
    their preference for integrated markets. Today we want to hear
    from some who can provide and have provided the technical
    assistance necessary to make these goals a reality.
        We in Congress are currently working on legislation to
    extend the Africa Growth and Opportunity Act, and integrated
    regional markets will only enhance the success of this trade
    process moving forward. We hope today's contributions will
    better inform us on how we can be more effectively engaged in
    regional integration and the expansion of African markets.
        I now yield to my friend and colleague, Ms. Bass, the
    ranking member.
        Ms. Bass. Well, thank you very much, Mr. Chair. And Happy
    New Year. And I want to thank you, as always, for your
    leadership in holding today's hearing, which is raising the
    question: Will be there an African economic community?
        This is a very important question as it relates to Africa's
    economic development, and it is critical that we familiarize
    ourselves with the strategic roles played by the African Union,
    its Commission, member states, and individual regional economic
    communities regarding regional economic integration.
        As early as 1991, the African Union addressed this issue by
    identifying regional economic integration as crucial to
    Africa's socioeconomic development, self-sufficiency, and
    financial prowess. The AU Commission's prioritization of this
    issue and the commitment of AU member states and the RECs to
    support this effort was underscored at the 50th summit of the
    AU last May, which I had the honor of attending.
        Last September, in a keynote address at the Congressional
    Black Caucus' braintrust here in Washington, DC, AU chairperson
    Dr. Zuma emphasized the importance of regional economic
    integration and stressed that achieving this goal would be
    socioeconomically transformative for Africa. As a strong
    supporter of increased trade and investment between Africa and
    the U.S., a component of which is the reauthorization and
    strengthening of AGOA, I applaud the AU's objective of regional
    economic integration.
        I believe the growth in business and investment between the
    U.S. and African private sectors is a win-win scenario which
    can ultimately expand the growing service sector and contribute
    to capacity-building on the continent. It can also develop an
    increasing customer base for U.S. business comprised of a
    growing African middle class, trends which develop and secure
    jobs in Africa and the U.S.
        The U.S. Government initiatives, such as Power Africa,
    Trade Africa, AGOA, and Doing Business in Africa, help to build
    trade and investment partnerships between the U.S. and Africa
    by focusing increasingly on partnerships with the private
    sector, the involvement of civil society in Africa, as well as
    the diaspora community. Feed the Future contributes to
    developing Africa's agricultural sector and promoting food
    security. The success of the latter is particularly noteworthy
    this year, as the AU has identified 2014 as the year of
    agriculture and food security.
        These government initiatives increasingly work on a whole-
    of-government basis and contribute to growth in key sectors of
    individual African countries and regions.
        Over the past few years, we have witnessed increased AU
    member states' commitment to the greater goal of intra-African
    trade, promoted by the realization that old barriers to trade
    must be eradicated in favor of less complicated commerce-
    enhancing alternatives. We have also seen several African
    countries identified by the international financial
    institutions as having the fastest-growing economies worldwide.
    Especially given the reversal of the brain drain, record levels
    of remittances from hardworking and successful diaspora
    communities, and the expansion of middle-class consumerism,
    Africa is viewed as a good investment by several of our
    economic competitors.
        While this progress is commendable, African and American
    economists and observers stress that much more needs to be done
    to address ongoing infrastructural and capacity-building
    challenges faced by many African countries, particularly those
    dependent on the agricultural sector. Uneven income
    distribution, price subsidies, poor transportation networks and
    infrastructure, rampant unemployment and underemployment of
    young people, poor access to electrical power, and, frankly, a
    greater need for good governance has resulted in a pattern of
    uneven economic development across individual countries and
    regions.
        Against this backdrop, I welcome our witnesses here today.
    I am very interested in hearing from them about how the AU, the
    RECs, and individual countries plan to address these
    challenges. Secondly, as the U.S. seeks to strengthen trade and
    investment relations with Africa, what role should U.S.
    Embassies play in the process?
        And while AGOA has been very successful in increasing U.S.-
    Africa trade in oil and textile industries, which has limited
    job creation, frankly, there has been little success in
    exporting other AGOA-eligible products to the U.S. that could
    be produced by small to medium-size companies. Are AGOA-
    eligible countries developing strategies to increase exports of
    goods produced by SMEs?
        And, finally, in view of current situation in South Sudan,
    how does the EAC address Juba's application for EAC membership?
        As I have said in previous hearings, we learn as much from
    our success as we do from our failures. As we hear from today's
    witnesses, our focus should not only cover the broad diversity
    of success and the many challenges but the activities that
    worked well in addition to those that fail to accomplish their
    objectives.
        Thank you. I yield back.
        Mr. Smith. Thank you, Ms. Bass.
        Mr. Marino?
        Mr. Marino. I have no questions.
        Mr. Smith. Mr. Cicilline?
        Mr. Cicilline. Thank you, Mr. Chairman and Ranking Member
    Bass, for holding today's hearing on this very important issue.
        I would like to offer my gratitude to the witnesses for
    their testimony and, more importantly, for the important work
    that they are doing.
        As one of the most resource-rich regions on the planet,
    Africa has always possessed tremendous economic potential. And
    while the eight regional economic communities in Africa develop
    closer ties and foster greater cooperation, the world will be
    watching attentively. It is imperative that the United States
    remain a strong trading partner with nations on the African
    continent throughout this process and, as Congresswoman Bass
    said, learn both from the successes as well as the failures.
        As regional integration improves, the African trading
    position and economy in general will improve, and I hope that
    we will see a correlating reduction in terrorism and political
    unrest in the region.
        I again thank the witnesses for their testimony, and I look
    forward to hearing the testimony.
        And I yield back.
        Mr. Smith. Thank you very much.
        Mr. Weber?
        Mr. Weber. I am good.
        Mr. Smith. And Dr. Bera?
        I would like to now welcome our distinguished witnesses to
    the witness table, beginning, first of all, with Dr. Amadou Sy,
    who is a senior fellow at the Brookings Institution's Africa
    Growth Initiative and currently serves as a member of the
    editorial board of the Global Credit Review. He focuses on
    banking, capital markets, and macroeconomics in Africa and
    emerging markets. Dr. Sy was previously deputy division chief
    of the Financial Service Division of the International Monetary
    Fund's Monetary and Capital Markets Development. And Dr. Sy has
    also held a variety of positions at the IMF for the last 15
    years, covering more than 20 countries and all the financial
    crises since 1998. He also worked on a project to set up a
    trust fund for capacity-building in Africa.
        We then will hear from Mr. Stephen Lande. Over his 50-year
    career at the State Department, the Office of the U.S. Trade
    Representative, and in private sector, Mr. Lande has worked
    extensively to expand U.S. trade. He has worked as a Foreign
    Service Officer, 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, 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 Dr. Peter Quartey, who is an
    associate professor in development economics at the University
    of Ghana. He was formerly the deputy director of the Center for
    Migration Studies at the University of Ghana. He is also
    currently the board chairman of the University of Ghana's
    Cooperative Credit Union. He has published extensively, and his
    research interests are private-sector development, including
    small and medium enterprises, development finance migration and
    remittances, and poverty analyses. He consults for the World
    Bank, the Organization for Economic Cooperation and
    Development, the Overseas Development Institute, and many
    others.
        Finally, we will hear from Dr. Witney Schneidman of
    Covington & Burling and the Brookings Institution. He is a
    senior international advisor for Africa at Covington & Burling.
    Dr. Schneidman, a nonlawyer, has a deep understanding of many
    of the major African countries as well as uniquely valuable
    insights into the recurrent challenges and opportunities across
    the continent. He provides strategic advice on the varied
    political, economic, social, and regulatory issues that are
    critical to companies' success in Africa. Dr. Schneidman's work
    focuses on U.S.-Africa relations, trade and investment in sub-
    Saharan Africa, and issues related to economic growth and
    regional integration on the continent.
        So, Doctor, thank you, as well.
        We will begin with you, Dr. Sy.

      STATEMENT OF AMADOU SY, PH.D., SENIOR FELLOW, AFRICA GROWTH
                 INITIATIVE, THE BROOKINGS INSTITUTION

        Mr. Sy. Chairman Smith, Ranking Member Bass, and members of
    the subcommittee, thank you for convening this important
    hearing to discuss Africa's progress toward establishing an
    economic community.
        I appreciate the invitation to share my views on behalf of
    the Africa Growth Initiative at the Brookings Institution. The
    following views are my own and do not necessarily represent
    those of the Brookings Institution.
        Mr. Chairman, hoping for their countries to benefit from
    integration, 51 African leaders signed the Abuja Treaty in 1991
    and established a roadmap toward an African economic community
    to be completed by 2028. Mr. Chairman, 23 years later, regional
    integration is happening across Africa, but progress is
    happening at different speeds.
        The eight building blocks of the treaty, the regional
    economic communities, have different levels of advancement
    across the components of regional integration, such as freedom
    of movement for capital and goods, labor mobility, and
    unification of currencies. Simply put, four RECs are measurably
    progressing at regional integration and four are falling
    behind. As of 2013, the East African Community appears to have
    made the most progress overall toward the stages of the Abuja
    Treaty.
        Even within regional groupings, the progress of individual
    countries toward achieving convergence target is uneven. The
    diversity of countries within the same regional bloc is at
    times very pronounced. For instance, the Central African
    Republic is the only non-oil-exporting country in the Economic
    Community of Central States. In South Sudan, a member of the
    Intergovernmental Authority on Development, IGAD, the
    humanitarian, political, and economic situation is
    deteriorating very rapidly.
        There is also significant overlap of membership between
    RECs. This is a problem because countries belonging to more
    than one regional bloc can find it difficult to prioritize
    their policies.
        Mr. Chairman, African governments will need to address a
    number of challenges to accelerate integration. They will need
    to maintain regional peace and security, strengthen common
    institutions, and streamline regional integration policies.
        Mr. Chairman, increased African regional integration would
    create larger markets, improve economies of scale, and reduce
    transaction costs for local, regional, and global trade.
    Greater U.S. exports to Africa will create more jobs on this
    side of the Atlantic as well as on the other side.
        And, as you know, there are ongoing efforts by the United
    States to support regional integration. In order for the U.S.
    to help support regional integration in Africa, I suggest
    deepened engagement. Mr. Chairman, I would recommend the
    following three actions to support regional integration.
        Number one, broaden the Trade Africa initiative to other
    RECs. Trade Africa so far focuses only on the East African
    Community, and there is merit in expanding it quickly to other
    RECs. At a minimum, impending their inclusion in the program,
    these RECs could build capacity by adapting to the
    harmonization standards being associated to the initiative. A
    roadmap for these RECs to join the initiative could be
    established.
        Number two, expand the Power Africa initiative to include
    regional projects. Power Africa so far focuses only on six
    countries. The initiative could coordinate with regional and
    continental initiatives to address the power deficit in the
    continent. This is important since regional projects could
    benefit from economies of scale and lay the basis for a
    regional energy market.
        Finally, number three, strengthen REC secretariats and
    commissions. Building strong institutions would help lay the
    basis for faster and better-quality economic integration and
    potentially for monetary integration. The U.S. could coordinate
    with the African Union and the RECs to encourage multilateral
    institutions such as the IMF and the World Bank Group to step
    up their support to regional integration in Africa. Since
    African nations lack representation in these global governance
    institutions, support from the U.S. on the multilaterals could
    greatly increase support for RECs.
        Mr. Chairman, Ranking Member Bass, and members of the
    subcommittee, thank you very much for convening this important
    meeting.
        Mr. Smith. Dr. Sy, thank you very much for your testimony.
        [The prepared statement of Mr. Sy follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                  ----------

        Mr. Smith. And, without objection, your full statement and
    those of all of our distinguished witnesses will be made part
    of the record, and any additional documentation or statements
    you would like to have added to your text.
        Mr. Lande?

      STATEMENT OF MR. STEPHEN LANDE, PRESIDENT, MANCHESTER TRADE

        Mr. Lande. When I hear my description, sometimes I think I
    should be speaking before the History Channel as opposed to
    such an august body. But I very much appreciate that. And
    hopefully some of my experience can be useful in terms of our
    discussion.
        Many people say that Africa is moving too slowly toward
    regional integration. May I remind you that the European Union
    started their efforts at regional integration in 1951 with the
    European Coal and Steel Community, from which they developed
    additional members and groups. But it was not until 1992--
    which, the way I subtract, 41 years later--that they really
    arrived at something that could be called a customs union.
        Africa has been at the game, as pointed out by Mr. Sy,
    since 1994 when the Abuja Treaty was implemented, and it is
    hoped that they will arrive at this particular milestone of a
    customs union by 2017. Even if it slips a couple of years, that
    is less than 30 years.
        So people should remember these are complicated things.
    Europe had a lot of advantages. They had trade. They had a
    history of being countries. They had a whole group of commerce
    that went on for years and years. They had an infrastructure
    project proposal. So one should not push too quickly.
        I could not believe the timing of this hearing. It was
    almost like people were listening in Africa and saying, we had
    better show something in terms of regional integration. So
    there have been two significant developments in terms of moving
    toward free-trade agreements.
        Number one, the ECOWAS, Economic Community of West African
    States, at an October 16th extraordinary summit, reaffirmed
    their decision that their free-trade agreement and customs
    union both will become operational as of January 1st, 2015.
    This will bring together, as pointed out in your comments, the
    Francophone, the Lusophone, the Anglophone, all kinds of
    different systems, Roman systems, common law systems. I cannot
    tell you all the tsuris and problems you had in putting
    something like this together. But this is quite an achievement.
        Similarly, the tripartite group, which combines the three
    regional economic communities in Eastern and Southern Africa
    and so on, they are planning to make operational by June 2014
    their free-trade agreement. And then they have plans to further
    deepen with things in services, things in common customs
    procedures and so on.
        These are things that are moving along. You can talk about
    eight RECs, but let's be very honest, we are talking about five
    that really count in this exercise.
        Central Africa is going a little bit slower. We have to
    figure out whether they continue alone, whether they join
    ECOWAS because they are all mainly French-speaking or not. Some
    Central African countries, such as Burundi, Rwanda, the Congo,
    Angola, have already chosen to work within the tripartite
    group, so they are open. The Union of Arab States, the UMA, or
    Arab Maghreb Union, is not really moving in much a direction,
    so I don't discuss that. My focus is on sub-Saharan Africa to
    see where we are headed and so on, et cetera.
        The U.S. should be very proud of the role it has played
    because we, ahead of any other countries, even ahead of the
    Europe Union, really began pushing regional integration back in
    the 1990s. We were the original sponsors, in many ways, of
    COMESA. We were the original supporters of ECOWAS and so on.
    Today there are many things we do, whether they are the
    regional hubs, which have been very effective operating in this
    particular environment. USTR has trade and information
    framework agreements with almost each one of the regional
    economic communities in place and so on. The State Department
    has appointed Ambassadors to each of the regional communities.
    So we should have a good feeling because of this particular
    project that is going on.
        The advantages, really quickly put, are: One, you have a
    much stronger fabric for political democracy, for maintaining
    good government if you do have regional economic communities.
    You have a lot more peer pressure to get that done. American
    companies need regional economic communities because American
    companies are too big to operate within 49 or 54 countries
    within Africa. They need that scope in order to develop.
        So this is a very important--to be part of the economies of
    scale and to include Africa within its own supply chains and
    end this annoying reliance on the Far East, and you know what
    that means without mentioning any countries' names and so on.
        The African countries need them because of infrastructure,
    as Donald Kaberuka, the president of the African Development
    Bank, suggested that infrastructure projects must go beyond
    national borders. And it is pretty obvious that they really
    must. So that is the third reason.
        And the fourth was mentioned by one of the real icons of
    trade policy, Fred Bergsten, who recently retired as head of
    the Institute of International Economics, who said, listen, no
    one is going to listen to 49 countries in trade negotiations,
    54 countries. You may call them cheaters. They are not
    cheaters; they are small. But if they were unified, people
    would listen to them. So from that interest, too, it is
    important in terms of negotiation.
        So no one makes any argument, I have never heard, against
    regional integration. It is the one area everyone can agree on.
        Run through very quickly and so on--make one other point.
    No one says that trade negotiations by themselves are going to
    get economic development. They are what we call a necessary but
    not a sufficient condition for growth. You have must have
    complimentary measures.
        And, in this case, I really must compliment the chairmen
    and the ranking members of this committee as well as any other
    committee with a significant involvement in Africa in this
    Congress--Ways and Means Committee, the House Foreign Affairs
    Committee, the Senate Foreign Relations Committee, and the
    Senate Finance Committee--because you guys put together an
    unbelievable request for information to the GAO. And it goes
    beyond simple trade matters.
        So you must look at AGOA as establishing the conditions but
    not--of a trade, establishing the conditions, but not assuring
    the free flow of goods. For that, you have to have the
    infrastructure development, you have to have the capacity-
    building, you have to have the rule of law. And your letter
    begins to address that. So we very much support this
    coordinated venture, and we hope it does continue and so on.
        Let me--can I have an extra minute? Thank you.
        And I won't do that New York trick of just talking faster
    so no one knows a word you are saying. So I will take a breath
    and slow up.
        Mr. Smith. Take two then.
        Mr. Lande. Let me just run through very quickly eight
    suggestions that might be useful. Because that is why you go
    hearings, to make suggestions and so on.
        You need the seamless renewal--and let me emphasize--of a
    strengthened AGOA. Simply renewing AGOA by itself is not
    sufficient. We have a challenge. It takes time to put together
    an enhanced AGOA. We have a deadline called textiles, where
    people want that to be enacted very quickly because if you do
    not enact it in 6, 7 months before the program expires, you
    lose orders. So there seems to be work.
        I am an optimist, and I really believe that given the
    bipartisan nature of Africa, as represented here, maybe we
    could get something finished this year. I won't say we can, but
    I want to have it strengthened, enhanced, and related to other
    policies and so on, which is extremely important. We must
    address some of the agricultural issues, for example. It makes
    no sense not to have groundnuts, sugar, and so on in there.
        Number two, very quickly, let's think about empowering RECs
    in a new and unique way. Why don't we think about designating
    regional economic communities for eligibility under AGOA
    instead of individual countries? If regional economic
    communities want to take on the responsibility of assuring that
    U.S. conditions are met for democracy, let's do that.
        Number three, you have to look at conditionalities in
    general. For example, no one likes what goes on in the Congo,
    but the idea of passing a conflict-mineral law that only helps
    China and Japan, that adds $6 billion to the cost of U.S.
    companies doing business in Africa, throws people out of work
    in the very areas we are trying to get stability doesn't make
    sense. So we have to come up with a much more targeted area for
    many of the things we do, recognizing that we must work with
    African peer groups and with other donors. Unilateral U.S.
    actions should only be taken as an absolute last resort.
        The biggest threat to regional integration is our friends
    in Europe. They are pushing for preferential access by
    threatening to close the market to African goods while we
    continue AGOA. That will not only harm U.S. exports in the most
    vibrant and fastest-growing market in the world, but will
    also--but will also slow up African integration.
        Ethiopia is not in the mood at the moment to open up for
    Europe. Maybe Kenya will be forced to, but they export a lot of
    products. How do you form a customs union if your major
    supplier, Ethiopia, has MFN duties and if Kenya is giving them
    zero duty?
        We are urging that, perhaps working quietly with Congress,
    your parliamentary groups, talking to USTR, remembering that
    TTIP must be approved here, the Transatlantic Trade Investment
    Promotion agreement, we just suggest that a little bit of
    discussion, maybe, may have the Europeans slow up their
    deadline. They have an arbitrary date, July 2014. Couldn't be
    worse for AGOA, but we can deal with that.
        Number five, South Africa, a real challenge. They have a
    deal with Europe where we are being discriminated against. They
    don't have a deal with us. We are urging that we look at this
    issue very carefully. We don't think South Africa should be
    graduated. We do think U.S. exports should be protected. We
    have the best USTR in years sitting there now. I think he can
    deal with this challenge in some kind of a way. It has to be
    addressed one way or the other and so on.
        Number six, going very quickly, that we--and I agree with
    the point that was just made, that the OPIC, the MCC have to
    have regional programs. My partner, Tony Carroll, suggested
    before this body about 2 years ago that maybe we should suggest
    to MCC that 20 percent of their funding goes for regional
    projects along the way and so on.
        And, again, a similar point on Trade Africa, we think is
    very good. We know it talks about focusing first on East
    Africa, then looking at other regions. We think that it should
    really begin to look at other regions now, particularly the
    type of support that USAID can give to get these negotiations
    finished.
        So, in short, what we are saying is that, with the
    exception of a challenge in Central Africa, Africa has a
    schedule. That schedule calls for 2017 free trade, 2019 customs
    union. They may slip a few years, but they are going to make
    it. We must make sure that our policies support that, and that
    is done through a program that has foreign aid on--that has
    support of private sector, everybody on a regional level, and
    recognizes the fact that AGOA should be renewed in its current
    form, but it should aim for reciprocity, but at the time that
    Africa is unified to negotiate as a group.
        Thank you very much. I am sorry I speeded up a drop, but
    your smile indicated that it was not being wasted. Thank you,
    sir.
        Mr. Smith. Thank you so much. And after 50 years of
    experience, the few extra minutes were well worth it. Thank
    you, Mr. Lande.
        [The prepared statement of Mr. Lande follows:]

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        Mr. Smith. Dr. Quartey?

      STATEMENT OF PETER QUARTEY, PH.D., SENIOR RESEARCH FELLOW,
        INSTITUTE OF STATISTICAL, SOCIAL AND ECONOMIC RESEARCH,
                          UNIVERSITY OF GHANA

        Mr. Quartey. Chairman Chris Smith and honorable members of
    the committee, I thank you for the opportunity to share my
    views on whether there can be an African regional community,
    with a specific focus on ECOWAS. I approach this topic based on
    my 20 years professional experience. Although I work with one
    of the leading think tanks in Africa, the views expressed here
    are entirely mine.
        Mr. Chairman, in addressing the question whether there can
    be a regional economic community in Africa, I would like to
    focus on the achievements and challenges of ECOWAS, and
    hopefully this would inform the discussion on whether an
    Africa-wide community is feasible.
        ECOWAS, as some of you may know, has created a number of
    benefits to its member states, including, first, the
    maintenance of peace and security in the region, whereby the
    community serves as a peacekeeping force in the region;
    secondly, the promotion of free movement of people and goods
    between member states. And examples of this includes 90 days
    visa-free entry for members, the ECOWAS trade liberalization
    scheme and customs union. Mr. Chairman, also the integration of
    the agricultural base to promote food security is one of the
    achievements of ECOWAS, where we can make mention of the ECOWAS
    Common Agricultural Policy, which was instituted in 2005.
        We can also talk of the West African Common Industrial
    Policy. Creating a favorable business environment is also one
    of the achievements. We have what we term the ECOWAS Business
    Council, which is a regional, private-sector advisory body to
    ECOWAS policymakers. Reducing the procedures for registering a
    business, the number of days required to register a business,
    and reducing the cost of doing business dramatically have been
    the other achievements.
        Mr. Chairman, another achievement includes measures to
    improve the physical infrastructure. And some specific examples
    are the Regional Trade Facilitation Program, where member
    states improve the road network linking other member states. We
    can also talk about the West African Gas Pipeline project as
    well as the West African Power Pool Project, where power will
    be shared between energy-deficit and energy-surplus member
    states.
        Mr. Chairman, I would at this point outline some of the
    challenges facing ECOWAS. First, there are threats to regional
    peace and security due to political instability and internal
    conflicts. Secondly, the monetary integration is farfetched, as
    the six member states have been unable to meet the convergence
    criteria.
        The lack of well-structured and resourced institutions have
    also affected the operations of ECOWAS. Limited financial
    resources, as well as impediments to trade, and cases of
    harassment at the various borders continue. The high cost of
    business among member states is also reported as one of the
    challenges faced by the ECOWAS community. The ``Doing
    Business'' reports, for instance, ranked Ghana 128 out of 189
    countries.
        Lastly, Mr. Chairman, the poor cross-border infrastructure
    and weak institutional and human capacity has affected the
    operations of ECOWAS.
        So, based on the achievements and challenges outlined
    above, Mr. Chairman, I am of the conviction that achieving an
    African regional community is possible, but that is an uphill
    task.
        Promoting integration in Africa will bring enormous benefit
    to the region as well as to the region's partners. Integration,
    in short, would help Africa better police itself. The United
    States will stand to benefit from the collective fight against
    instability and terrorism if we promote regional communities in
    Africa. Also, Mr. Chairman, U.S. firms already in the region
    and potential ones who have a business environment to operate
    and secure their investments.
        The AGOA initiative as well as other initiatives of the
    USAID West Africa Trade Hub are better able to facilitate
    businesses in the subregion and access U.S. markets with
    greater integration. Mr. Chairman, integration would enhance
    the size of the African markets, and U.S. companies already
    operating in the region can expand output and employ more
    people, including Americans.
        In conclusion, Mr. Chairman,promoting regional integration
    will enhance the regional markets of African countries, would
    promote trade in the region, and facilitate peace and security.
    But this will require the support of the international
    community, especially the United States.
        Thank you very much.
        Mr. Smith. Dr. Quartey, thank you very much for your
    testimony.
        [The prepared statement of Mr. Quartey follows:]

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        Mr. Smith. Now, Dr. Schneidman.

      STATEMENT OF WITNEY SCHNEIDMAN, PH.D., NONRESIDENT FELLOW,
          AFRICA GROWTH INITIATIVE, THE BROOKINGS INSTITUTION

        Mr. Schneidman. Chairman Smith, Ranking Member Bass, and
    members of the committee, thank you for this opportunity to
    address the question, will there be an African economic
    community?
        It is not possible to know precisely when or even if the
    eight regional economic communities that are recognized by the
    African Union will fully integrate into one. After all, the
    Abuja Treaty of 1991 envisioned the establishment of an African
    economic community by 2028. More recently, in January 2012,
    African heads of state committed to the creation of a
    continental free-trade area by 2017, although the date was
    described as ``indicative.''
        The decision by the African leaders to bring forward by 11
    years the date for the continent's economic integration is
    nevertheless important. It demonstrates that regional,
    commercial, and economic integration is a priority for the
    governments across the region. The accelerated date is also a
    recognition that the emergence of regional markets is central
    to Africa's integration into the global economy and,
    ultimately, the acceleration of job creation and improvement in
    the quality of life and the eradication of poverty across the
    continent. It is also a recognition of the reality that greater
    integration will enhance efficiency and transparency and
    strengthen governance more broadly.
        In fundamental respects, therefore, an African economic
    community is both an aspiration and a tangible goal that is
    essential to work toward. Therefore, dates, such as 2017, are
    not as important as is our focus on the progress, or lack
    thereof, that is being made toward the development of regional
    markets and the free flow of goods, peoples, and services.
        So where are we in this process? It is apparent that
    progress toward regional markets is being made. However, like
    other trends on the African continent, progress is incremental,
    in many cases measurable, but it is not uniform.
        For example, the three regional organizations of North
    Africa have yet to harmonize activities and progressively
    eliminate tariff and non-tariff barriers. This was supposed to
    have been completed in 2007, according to the Abuja Treaty. In
    contrast, the East African Community is the only regional
    economic community to have achieved a free-trade area and a
    customs union among its five members, 3 years ahead of the 2017
    date provided by the Abuja Treaty. Moreover, the East African
    Community; the Common Market for East and Southern Africa,
    COMESA; and the Southern African Development Community, SADC,
    have created a tripartite free-trade area which brings together
    26 African countries with a combined population of 600 million
    and a GDP that is close to $1 trillion.
        However, further steps have to be taken to ensure that the
    FTA is a reality. For example, an American businessman recently
    told me that he would rather pay the extra duty in shipping his
    goods from one SADC country to another rather than go through
    the paperwork and other delays of applying for tariff
    exemptions for which his products qualified.
        Against this backdrop, it is unlikely that the continental
    free-trade area will be achieved by 2017. Nevertheless, there
    can be no dispute about the importance of continuing to work
    toward these objectives. For example, a recent study by the ILO
    and UNCTAD contends that if an effective continental free-trade
    area were created by 2017, the share of intra-Africa trade
    would grow by 52 percent over a 12-year period, rising from
    10.2 percent in 2012 to 15.5 percent in 2022.
        The message here is that the impact of regional integration
    on individual countries, regions, and sectors varies. Another
    message is that where progress on regional integration could be
    achieved, it should be pursued. At the same time, this does not
    mean we should give up on the goal of a continental free-trade
    area. There is no region in the world where progress is
    uniform. It does suggest that African governments should be
    held accountable to their commitment to implement trade reforms
    and regional economic integration.
        For example, 4 years ago, the Governments of Zimbabwe and
    Zambia signed an MOU to create a one-stop border post at
    Chirundu, on the border between the two countries. As a result,
    commercial vehicles now clear the border within hours instead
    of days. In fact, on the Zambia side alone, it has been
    estimated that tax collection has increased from $10 million to
    $20.3 million a month. So one has to ask, why are there not
    more one-stop border posts throughout SADC, COMESA, and EAC?
        Finally, it is important to note that in the U.S. strategy
    toward sub-Saharan Africa that the Obama administration
    released in 2012, promoting regional integration is put forward
    as a priority. In fact, through Trade Africa, an initiative
    announced during President Obama's visit to Tanzania last year,
    the administration hopes to launch negotiations on an
    investment treaty between the U.S. and the East African
    Community. This is a vital initiative that could significantly
    deepen commercial relations with East Africa and lay the
    groundwork for a deeper commercial relationship with the
    continent while also fostering more regional integration.
        In Bali last month, members of the WTO reached a very
    significant agreement on trade facilitation in which member
    states agreed to adopt reforms, especially as it concerns
    customs processes and procedures. The U.S. needs to ensure that
    enhanced trade facilitation remains a priority in its dialogue
    with its partners on the continent, be it in the context of the
    East African investment negotiations or the implementation of
    AGOA.
        My last point, if I may, reflects a spirited conversation
    that I had in late December with the leaders of our three trade
    hubs from Accra, Nairobi, and Botswana, which are sponsored by
    USAID. For the last 10 years, their role has been to help
    African companies take advantage of AGOA. Yet times are
    changing, as impressive economic growth takes hold across the
    continent and Africa's middle class continues to expand. U.S.
    exports to the region also continue to grow, last year
    exceeding $21 billion, which translates into the support for
    more than 100,000 jobs here in the United States.
        Our trade hubs increasingly are playing a critical role in
    facilitating two-way trade. This is good for American business
    in Africa, it is good for regional integration, and it is good
    for economic development on the continent. It also helps to
    transform the U.S.-African relationship from that of donor-
    recipient to one characterized by partnership and mutual
    benefit.
        Yet, like all good things, resources are required. I urge
    you, therefore, to invest in these trade hubs as you and your
    colleagues work to fund U.S. priorities on the continent and we
    all work together to deepen the U.S.-Africa commercial
    relationship and build Africa's economic community.
        Thank you.
        Mr. Smith. Dr. Schneidman, thank you very much for your
    testimony, as well.
        [The prepared statement of Mr. Schneidman follows:]

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                                  ----------

        Mr. Smith. Very useful and very timely suggestions from all
    of you, and it really will help us to be more proactive and to
    play our role, which we are very earnest to do. And thank you
    so much for taking the time to put together such outstanding
    testimony and for your service on behalf of humanity and on
    behalf of these initiatives in particular.
        Let me ask you just a few questions, and I will yield to my
    colleagues. We will expect a vote in about 45 minutes, so I
    want to make sure, since we have four, five of us here today,
    that we all get a chance to ask. So I will lay out my questions
    and then ask you to answer and then go to my friend and
    colleague, Karen Bass.
        With regards to the efforts by the United States Government
    to encourage regional integration, what programs have actually
    made a measurable difference? Are there things that we have not
    done?
        I know, Mr. Lande, you gave us a list of some eight
    specific things, and I wrote them down. And I am sure all of us
    will be looking at how we can, but are there any gaps that need
    to be filled right now to ensure the greater probability of
    success?
        The issue of transportation is always very important. It
    was Eisenhower who recognized that superhighways were one of
    the keys of very robust infrastructure, creating highways to
    get goods to market and to consumers.
        Over the many years, you, Mr. Lande, have promoted the use
    of the regional Millennium Challenge Account grants, only to be
    told that those grants require more accountability than the
    regional economic community could provide. And I wonder if you
    are seeing any kind of benign flexibility on the part of the
    Millennium Challenge Corporation to try to make this work so
    that, again, the sooner we get to the point where there is a
    very robust infrastructure, economic growth can proceed much
    more effectively.
        With regards to the rollout of the European Union, we all
    watched with some baited breath as the euro came on line and
    there was mistake after mistake. Are those lessons learned by
    what has happened on the European continent being utilized in
    this context of Africa?
        And, Mr. Schneidman, you pointed out that reaching the
    target date of 2017 is important, but we need to recognize
    progress itself; it may slip a few years.
        My question would be--a couple of things. One, you
    mentioned that the U.S. regional trade hubs in Africa managed
    by the U.S. Agency for International Development have had a
    positive impact, and you encourage Congress to continue funding
    them. The budget is almost done, and I think it is going to
    happen. But can you cite me some examples of success that these
    trade hubs have achieved so that we have something very
    tangible that we can talk about?
        Please proceed.
        Dr. Sy?
        Mr. Sy. If I may answer the questions on the lessons from
    the European crisis, I think one key lesson from the European
    crisis is that financial integration comes with costs and
    benefits.
        In most African RECs, we are not yet at that level of high
    financial integration. But the key lessons is that, once that
    step will be reached to make sure that when financial flows
    from rich countries go to poor countries, that those flows go
    to productive investments, they increase productivity, and
    that, also, fiscal discipline is observed by the members.
        So, so far, we can, in the roadmap, when we are
    strengthening the institutions for integration, keep these
    lessons in mind.
        Mr. Smith. Is there a concern, Dr. Sy, that, like in the
    European Union, like in the case of the Germans and others who
    were providing a great deal of financial assistance to places
    like Greece, that Nigeria and South Africa might be less
    forthcoming in this whole integration process if they think
    they are going to bear a burden?
        Mr. Sy. Yes, so this is a good question, because if you
    take the case of Nigeria, it is a major oil exporter; whereas,
    other members in the RECs are not oil exporters. Nigeria is
    much larger. So when there will be basically an arbitrage
    between the costs and the benefits of actions by Nigeria, there
    will be the need to have a very strong and independent common
    central bank.
        So strengthening the institutions, the regional
    institutions, will be really key. And there will be also a need
    for Nigeria to have more fiscal discipline, too.
        Thank you.
        Mr. Smith. Thank you.
        Mr. Lande?
        Mr. Lande. You asked a very full set of questions, so let
    me respond to a few of them and see if we can be helpful.
        Mr. Smith. Okay.
        Mr. Lande. First, as to what the U.S. Government can do and
    so on.
        One, it is very clear to me that there are two separate
    levels of regional integration. One is what you call the trade
    regime. We talk about a lot for tariffs; we have made the point
    that they are moving along very nicely. However, there is never
    any credit given to Africa. It is always, to quote one of the
    best USTRs we ever had, Bob Strauss, years ago, and so on, when
    he said, you can either look at the glass half-full or half-
    empty. And these particular dates, the fact that they are set
    should receive something, maybe a sense of Congress. I am not
    sure what you would do, but at least they should be recognized
    they are moving along.
        The idea that every single REC is going to be ready for
    integration by 2017 won't take place. But what I was arguing
    was, if you focus on the trade policy RECs, if you get ECCAS,
    Central Africa, somehow involved, you have a shot at making the
    deadline, maybe some kind of a derogation for the Maghreb and
    then--not the same close integration. So they are possible
    there.
        Trade involves four things: One, tariffs, trade
    facilitation. Witney is 100 percent correct, and let's focus on
    it. We now have World Bank money committed, available to
    promote trade facilitation. Africa is invited to sign those
    agreements. A quick aside, they have no role for regional
    economic communities, so they should have one. But that is
    sitting there.
        Number three is rules of origin is being addressed. And
    number four, very quickly, are non-tariff measures. They are
    impossible. You know, we even have non-tariff measures in the
    States. You try to bring some fruit into California, and I
    think Congresswoman Bass might remember that. You know, the
    Europeans, you try to bring some French wine into Italy or
    Italian wine into France, I mean, it looks like blood on the
    street.
        So non-tariff measures are slow. Do not judge regional
    integration. They have to be removed like teeth, one by one,
    with a lot of pain every time they disappear. Maybe you don't
    want the remove your teeth. But that is trade, I think, is on a
    good thing.
        Then the second thing is, how do you do the gaps? Don't
    judge African integration because they don't have a
    transportation link. They will have that. Let's get the
    structure.
        Here again, MCC has a problem, Export-Import Bank has a
    problem, because their basic rules call for assurance of
    capital support, that money will be paid back. None of our
    competitors have that when it comes to Africa. Africa will pay
    back. Africa pays 19 percent, a much higher rate, but they have
    more losses. So somebody has to begin going to Export-Import
    Bank, somebody has to begin going to MCC and say, we need
    special-purpose vehicles because we are talking about regional
    things.
        You may have to take a little more risk in Africa. That is
    why your letter is so crucial, because you asked that question,
    the eight committees. Maybe we have to get Financial Services
    in there. But if you could begin to address those problems--
    what are our competitors doing, what are we doing--we can make
    some progress along the way.
        Africans have said transportation, energy, capital markets,
    welcoming environment for investment, two or three other
    things, yes, they have to be looked at, but let's keep those
    issues separate from the trade regimes that we are really
    working on to move forward and so on.
        Let me stop there, because I can go on, but I think it is
    time and other people--thank you.
        Mr. Smith. Dr. Quartey or----
        Mr. Quartey. Thank you very much, Mr. Chairman.
        I would just want to focus on the MCA, the Millennium
    Challenge Account, and to what extent is the U.S. intervention
    making a marked difference.
        Two specific areas can be mentioned in the case of Ghana.
    One is we have the George Walker Bush Highway, one of the
    excellent road constructions that the country has benefited
    from. It has eased trade flows, it has eased traffic, and it
    has made livelihoods much better within the community.
        Then we can talk of storage out of the Millennium Challenge
    Account compact. There was a silo that was built at the airport
    to store nontraditional exports, like pineapple, paw paw, and
    many others. And it is quite important. It made a lot of
    improvements in exports to Europe and other places.
        Lastly, good governance. I mean, the condition that there
    has to be good governance for countries to benefit from the
    compact actually serves as a peer pressure to other African
    countries to try to promote good governance within the country.
    So I think this is an area that we can talk of tremendous
    improvement.
        What we want to see would be long-term commitments to some
    of these projects that is not--the compacts are more integrated
    into long-term development plans of the regional communities so
    that we will see much more development. That will also link the
    various member states of the regional countries.
        Thank you very much.
        Mr. Schneidman. Thank you, Mr. Chairman. Let me respond to
    some of these questions.
        What programs have actually made a difference? I think
    there have been a number of programs that have focused on
    computerizing border crossings, programs that I would say are
    incremental. What we haven't seen is transformational programs.
    And I think that is the critical difference.
        And, for instance, in my testimony I referred to the one-
    stop border post. And so I think the challenge in front us is
    how do we get behind one program that really will be
    transformational and how do we set goals so in 5 years we know
    that there will be 40 of these one-stop border posts throughout
    this region and we can measure the difference that it makes.
        Secondly, I am very interested in your reference to
    President Eisenhower and the development of our highway
    network. It is a very important question and analogy. But
    remember, that was within one country. I think what we are
    talking about is cross-border. And there comes the sovereignty
    issue.
        The World Bank has had a very difficult problem with this.
    You can take the example of Tanzania, which has received an
    $850 million compact. But Kenya is not an MCC country, Uganda
    is not an MCC country. So there are constraints.
        And so I think what Steve was referring to, can we be
    creative, can Congress and the administration come up with
    mechanisms and criteria that would enable these programs to
    address cross-border roads or cross-border rails or cross-
    border power and utility services, I think that really has to
    be part of our conversation.
        In terms of the lessons of the euro, I think the European
    experience is being overshadowed, frankly, by these economic
    partnership agreements which the EU is trying to jam down the
    throat of many African governments. I don't think there is any
    other way to put it than that. And I think, you know, Africa is
    really struggling to come to terms with that, and that is all
    they can see. And it is a really important issue for the U.S.
    as we go to think about the renewal of AGOA, as well. And in
    terms of citing examples of the trade hubs, with my colleague
    Zenia Lewis at Brookings, we did a study in 2012 where we have
    data on the amount of trade that has been increased. And I will
    make sure that you get a copy of that.
        Suffice it to say that these trade hubs are important. Not
    only have they increased trade, but some of them have done
    something else that is important. In West Africa, the trade hub
    is sort of a backbone for a framework of trade initiatives that
    reach out through the region. And I think they have provided a
    blueprint for the way forward--a way forward to deepen our
    knowledge of African markets, our access to African markets,
    and to start providing two-way assistance, not only for
    Africans exporting to the U.S., but for U.S. companies coming
    into the regional market.
        Ms. Bass. Thank you very much.
        Actually, I would like to continue on with the trade hubs.
    And you mentioned that more investment was needed, and I wanted
    to know what you meant by that.
        And then, also, if you could--you know, the trade hubs, to
    me, are a little bit of a mystery. In looking at some of them
    and seeing that USAID essentially has contracted with
    businesses, it is just not clear to me exactly what they do,
    what they are. And maybe you could focus on one specific
    example.
        Mr. Schneidman. So the trade hubs were created with the
    African Growth and Opportunity Act and are part of the funding
    mechanism. There are three, as you know and as I referred to.
        Part of the problem is that, up until now, you are right,
    they have contracted out to different consulting agencies. And
    the trade hubs are doing three different things, really. There
    is not a uniform--up until now, there has not been a uniform
    strategy for these hubs. I think that is changing, but it bears
    watching very closely.
        The reason I say that it deserves more investment is that,
    traditionally, investments in the economic and commercial
    programs in Africa are at the bottom of the barrel. Obviously,
    health has been a critical factor, education has been a
    critical factor. But, again, times are changing, and I think we
    need a fresh look.
        We have to ask, do we need to invest more in our capacity
    to serve American business on the continent? And I would argue
    that we do for many reasons. First off, when you look at China,
    they have some 150 commercial officers across the continent.
    How many do we have? I don't even think it is at 10 these days.
        So what is the forward point of our commercial engagement?
    It is these trade hubs. You know, Commerce has sort of receded
    from a presence in the region over the last decade, and the
    trade hubs provide a framework for serving U.S. business, for
    continuing to work with African companies as they seek to trade
    throughout the African region and export to the U.S.
        And I think the Foreign Service Nationals there who work in
    these trade hubs know these markets better than anybody else
    and, I think, are a real resource that can be tapped into. And
    that is why I emphasize it.
        Ms. Bass. So if I go to an Embassy, there is a sign there
    that says ``Trade Hub''----
        Mr. Schneidman. No.
        Ms. Bass [continuing]. And there is a person there?
        Mr. Schneidman. No. In Accra, you would go to the Trade
    Hub.
        Ms. Bass. And that is an office, and it is called U.S.
    Trade Hub.
        Mr. Schneidman. It is a dedicated office. And in Nairobi it
    is a dedicated office, and in Botswana it is a dedicated
    office.
        Ms. Bass. And there is a person in there who, if I want to
    go in and I want to start a business, I don't know,
    manufacturing houses, modular houses----
        Mr. Schneidman. No, they would not be able to help you with
    that. Because their charter, to now, has just been to help
    African companies export to the U.S. under AGOA. To understand
    how to build houses there, you would have to go to the Commerce
    Department or the Commerce official in Nairobi, South Africa--
    --
        Ms. Bass. So I don't go to that office, I go back to the
    Embassy?
        Mr. Schneidman. Yeah, you go back to the Embassy.
        Ms. Bass. Uh-huh.
        Mr. Schneidman. So what I am saying is that we need to
    harmonize this stuff.
        Ms. Bass. Right.
        Mr. Schneidman. We need a one-stop shop. We are talking
    about one-stop border posts? We need a one-stop shop for U.S.
    trade facilitation and investment facilitation in Africa.
        Ms. Bass. And so I go to this trade hub, this office, and
    who monitors the contract that I have? I am running the trade
    hub now. Who is monitoring me to make sure that I am doing what
    I am supposed to do?
        Mr. Schneidman. USAID is.
        Ms. Bass. And am I obligated to produce, what? Am I
    obligated to have, you know, 20 businesses from the U.S. do
    business on the continent? Or what is the measurement?
        Mr. Schneidman. Well, again, helping U.S. business is not
    part of the mandate of trade hubs.
        Ms. Bass. Oh, I am sorry. Okay.
        Mr. Schneidman. But, yes. I mean, I think they want to look
    at--well, for instance, in the West Africa trade hub, which
    clearly has helped African companies export to the U.S., there
    would be indicators there.
        I think the Southern Africa trade hub has really focused on
    regional integration. So I am sure they are measured against a
    set of criteria that determines whether or not that has been
    achieved.
        Ms. Bass. Do you know what the average size of a contract
    would be? If I am running a trade hub, how much money do I get
    from the U.S. Government?
        Mr. Schneidman. I am sure you get a couple million dollars
    to do that.
        Ms. Bass. Ooh.
        Mr. Schneidman. And I am sure that there are about 10 or
    20--you know, 10 to 15 people that are working under that
    contract in that trade hub to do that.
        Ms. Bass. So would you support the idea--when you were
    talking about that a better investment needs to be made, would
    you support the idea of expanding the number of trade hubs that
    we have?
        Mr. Schneidman. I would support the idea of using, sort of
    building on the West Africa model, of using those trade hubs in
    Accra, for example, to start interacting with Cote d'Ivoire, to
    start interacting with Dakar, to start interacting with
    Ouagadougou. Nigeria is a little bit of a separate issue. But I
    think we should use those trade hubs to really be catalysts for
    regional trade and investment. And I think we need to approach
    our increased commercial engagement from a regional point of
    view as opposed just to a country point of view.
        Ms. Bass. Well, it seems like a regional point of view, but
    it also seems like we need to have, like you said, Commerce
    there. I mean, if they can only do one thing, which is to help
    export to the U.S., it seems like we would want--I mean, who
    facilitates U.S. businesses doing business on the continent?
    That is Commerce.
        Mr. Schneidman. Right. So I think in these trade hubs, it
    really needs to be not only the USAID contractors but Commerce,
    as well as representatives from Ex-Im, from TDA, from OPIC, so
    all our commercial agencies are working together so you do have
    a whole-of-government approach. Because now we sort of have a
    no-government approach.
        Ms. Bass. Right.
        Mr. Schneidman. And I think that is really what we have to
    change.
        Ms. Bass. And are there reports online that I could see to
    see what the three trade hubs have done? I understand you said
    they report to USAID, but can I find out?
        Mr. Schneidman. I mean, each of the trade hubs has Web
    sites, each of the trade hubs do quarterly reports.
        Ms. Bass. I looked at the Web site.
        Mr. Schneidman. Yeah, so----
        Ms. Bass. I didn't see much there.
        Mr. Schneidman. I have not.
        Ms. Bass. Okay.
        Mr. Schneidman. I would welcome a joint investigation. And
    I think we at Brookings could help you do that, a fuller
    assessment. Because I think it is essential to do as we move
    into this AGOA review period so we can make these
    recommendations to understand what is being done successfully
    and what needs to be done better.
        Ms. Bass. And I do know that USAID is looking at----
        Mr. Schneidman. Yes.
        Ms. Bass [continuing]. These trade hubs and what to do.
    Thank you.
        Mr. Schneidman. But I think USAID needs to know that we are
    looking at them looking at that.
        Ms. Bass. Yes. Yes. We will make sure they know.
        Mr. Schneidman. Thank you.
        Ms. Bass. Dr. Lande, you talked about Ex-Im and MCC special
    purpose vehicles, and I wanted to know if you could explain
    what you meant by that.
        You also talked about a potential sense of Congress. First
    of all, I appreciate you, you know, making the comparison with
    economic integration in Europe and talking about how long that
    took. I think that is really important, that we manage our own
    expectations.
        So could you elaborate on those two points?
        Mr. Lande. I am happy to elaborate, but only within my
    knowledge more as a trade man. There are many people who really
    are experts on financing and so on. And I am thinking of Mr.
    Pittman as one name who is very active in this work. And I
    think we can get you a better answer than what I am going to
    give.
        But the basic way that I understand it is that the World
    Bank has funds, and you need to develop some kind of special
    purpose vehicle because you can't count on sovereign guarantees
    if you are building a project whose profit depends on the
    operations in more than one country. So you develop these
    special purpose vehicles with the World Bank, perhaps with U.S.
    financial institutions and so on, and perhaps now with venture
    capital funds, as you know, sovereign wealth funds.
        So without going too much over my head, the only point I
    would make is that, very often, the restrictions on Export-
    Import Bank, MCC does not allow them to go into these new
    areas, because their emphasis is always, we want to have a 1-
    percent fail rate. We don't want to go to Congress if we have a
    3-percent fail rate.
        Ms. Bass. Right. Right.
        Mr. Lande. But if you are going to be competitive in
    Africa, I think you very much have to mention that.
        With MCC, I think it is a decision that Congress has to
    make. Because people work within congressional guidelines; I
    mean, they just don't decide.
        And I have two problems with our attitude toward MCC. One
    is there is a need for U.S. involvement in infrastructure
    development in Africa, which may not only be in,
    quote, deg. ``those very good countries who can qualify.''
        Ms. Bass. Right.
        Mr. Lande. It is in the U.S. commercial interest, and it is
    in Africa's interest. We should have a very active
    infrastructure program in Angola. I am not saying they are
    going to be MCC-eligible. So there has to be some thinking
    whether we want our whole infrastructure effort to be through
    MCC.
        And then when you focus on relieving poverty, you have this
    debate, should I spend money on these local rural roads, which
    are important, feeder roads that enable farmers to get their
    products to markets, or should I be focusing on these
    transcontinental developing corridors which really----
        Ms. Bass. Uh-huh.
        Mr. Lande. Again, MCC, they have poverty. I mean, there is
    nothing wrong with fighting poverty, let me be clear, but that
    should not be our only limitation.
        And, two, of course, is this national guidelines. So they
    don't have an ability where a REC can come and say, hey, look
    at everything we have done. So maybe in drawing up and
    considering MCC, maybe you should say, okay, we will come up
    with some REC guidelines that will enable you to go across the
    border. So I would make that point.
        Ms. Bass. Another statement you made, in terms of us
    holding countries accountable to AGOA standards, good
    governance and all, I think you said that you thought that the
    RECs should be responsible as opposed to us holding individual
    governments. Did you say that?
        Mr. Lande. Yes. And let me----
        Ms. Bass. So, yeah, maybe you could give an example,
    especially considering how we have sanctioned some countries or
    pulled them out of AGOA.
        Mr. Lande. Let me take a step back, because we discussed
    this the last time I appeared before your committee, and I
    think you asked me a question. And I am not sure; I think I was
    a little remiss, not getting back.
        The idea that every time there is a problem you should
    devise a sanction to deal with it and make that sanction a
    trade sanction has a problem. Because no one is going to get
    up, no U.S. company is going to get up and say, ``I believe in
    conflict minerals,'' ``I believe in gender inequality.'' I
    mean, it is not going to happen.
        So what we were thinking at Manchester Trade--and let me
    just put this idea out on the table, and I am going to get to
    the peer pressure in a moment--that the way you deal with
    sanctions, you come up with some guidelines, maybe out of this
    committee, and you say, first, you have to say what is the
    problem, okay? Secondly, what impact does the U.S. have in
    solving this problem alone? Is it effective? What is the
    collateral damage? What effect does it have on local groups,
    particularly women?
        If we took the sanction in Madagascar, I think Madagascar
    is returning to democracy now, but for 12 years women have been
    out of work. I mean, what have we accomplished? So we have to
    look at the collateral damage, both to U.S. competitiveness--if
    China keeps on working, keeps on trading, it doesn't help
    anybody, except it harms U.S. workers who want to supply
    products there and so on, et cetera.
        So what we are basically suggesting is that one of the
    ingredients, in addition to the ones I mentioned, is let's talk
    to our African partners.
        Africa has a way of punishing people who have what they
    call ``aberrant behavior''--I think that is always a cute term,
    ``aberrant behavior''--where they say, ``I am sorry, you can't
    come to our next meeting. You can't share in our next decisions
    we are making on our development programs. You are out.'' They
    do not take economic sanctions, because their argument is that
    affects somebody who is working in the fields. I mean, that is
    not what we want to do. But they have their own program. So if
    they are willing to--COMESA isn't set up so much. SADC and
    ECOWAS has much more of a political thing, so they can be more
    effective.
        But I would say that if Congress works on good guidelines
    for these measures to be taken, and if we begin to talk to the
    regional communities and say yes--can you picture? We are going
    to designate all the COMESA members eligible. We want to do
    that. We want to have this inter-trade. ``COMESA, these are our
    problems. Can you talk to your member states and see whether
    you can deal with them?'' Let me just simply say that I think
    that that is so much more effective than the current, what I
    call the ``feel good.''
        Do you know we took Niger off of AGOA?
        Ms. Bass. Right.
        Mr. Lande. And then we put it back on? In the meantime,
    what was going on was probably worse, in terms of the
    government. We took the Congo off. I don't think the Congo even
    knew they were off, but they did know when a U.S. businessman
    came in to do business that they were mad at us and so on. And
    we know the Madagascar example because I have stated that. You
    know, it has been going on forever, and at the end of the day,
    we will put them back on.
        So the only issue which I really say is that, given the
    responsibility of your committee, I think this could be one
    particular area that you might be able to work on very nicely.
        Ms. Bass. And maybe Dr. Sy and Quartey could respond to
    that, as well.
        So, you know, our approach right now, if a country has had
    a coup or whatever, we will pull them out of AGOA. How do you
    think it should be handled? Maybe both of you could respond
    quickly.
        Mr. Sy. Well, I think it is a matter of basically who will
    bear the brunt of the sanctions.
        An alternative is, if you have the sanctions, to find a way
    to still address the needs of the most vulnerable segments of
    the society, so you could still have humanitarian aid targeted
    and have the sanctions at the same time.
        So there are a variety of ways to go. And I think it is a
    matter in any case of having in mind the cost, the burden on
    the most vulnerable segment of society.
        If I may, it is like subsidies. Right now, for example,
    there is a lot of push to remove subsidies in many countries on
    oil because they benefit mostly the rich. But that problem is
    then how to target the subsidies to the poorer segments. So the
    analogy is useful.
        Mr. Quartey. Yeah, I would want to add that when there is a
    coup, you know, you want to punish. Perhaps you use the
    regional economic communities to restore good governance. There
    could be peer pressure, which sometimes works better than trade
    sanctions, which might have serious implications on women and
    many other people.
        Thank you.
        Ms. Bass. Thank you.
        Thanks for making the copies available of the report.
        I yield.
        Mr. Smith. Mr. Marino?
        Mr. Marino. Thank you, Chairman.
        Good afternoon, gentlemen. Thank you for being here.
        I want to change the tone a little bit and change the
    direction in which we are traveling here. And I like what you
    had to say about what we need to do to increase a relationship
    with the continent of Africa, the countries within the
    continent.
        But I have some significant and severe concerns about Iran,
    China, and, to a lesser extent, Russia doing business on the
    continent of Africa. I don't think anyone has touched on that
    yet, and I would like to hear some insight from you.
        I am going to just pose some factual information that I
    have been--China and the Middle East have always been a study
    of mine. I am not an expert, by any stretch of the imagination,
    but I am aware of, through my readings over the years, what
    takes place.
        So, for example, Iran is the second-largest oil producer in
    OPEC. Even though the continent has supplies of oil, it still
    needs the byproducts from oil, it needs refineries, and it
    still needs oil, to a certain extent. What does Iran get in
    return? Well, first of all, a trading partner with no
    sanctions. Iran gets uranium, and we all know what that issue
    sets in the future for us. They want ores from Africa, and Iran
    tries very hard and continues to build that relationship with
    the countries within the continent of Africa.
        China, on a larger scale. China invests billions and
    billions of dollars in Africa. The Chinese call Africa ``the
    galloping lion.'' They know what resources are available there.
    Chinese give Africa money, in addition to very, very soft and
    low-cost loans for billions of dollars. The Chinese Government
    builds refineries, the biggest investment in--I hope I am
    pronouncing this right--Bagamoyo, a big investment there.
    Chinese need, in return, food, energy, natural resources, and
    even negotiate for some fishing rights. They build hospitals.
    They build schools. China is the largest investor in South
    Sudan by far, using billions of U.S. dollars--not using the
    yuan, using U.S. dollars.
        Now, Africa has 40 percent of the global reserves of
    natural resources--40 percent--60 percent of unused farm land,
    and a plethora of low-wage workers. China is building three oil
    refineries in Nigeria, and China will cover 80 percent of the
    cost of those.
        There is a great deal of corruption that is taking place.
    There are even investigations and accusations about high-
    ranking officials in Africa taking millions of dollars from
    China.
        So my simple question is based on these facts. And if you
    want me to cite, I will later on, if you request where I get
    these facts. What do we do about China and Iran? How do we
    persuade the countries within the continent of Africa to do
    business with us when, pretty much because of regulations
    internationally and that we have, our hands are tied and China
    walks in with virtually no debt, tons of money, and helps a
    continent that is so poverty-stricken, for the most part, at
    virtually no cost to those countries? How do you defeat that?
        And, gentlemen, if anyone is willing to make a statement on
    my little dissertation here, jump in.
        Mr. Sy. So, if I may, maybe I can look at this question
    through the angle of how regional economic communities can also
    help.
        But through our conversations with many businessmen--and we
    just had the CEO of the U.S. Chamber of Commerce on Africa just
    yesterday--it seems that the biggest advantage that China has
    over the U.S. is speed, that the Chinese companies and the
    Chinese Government can deliver very quickly what Africa is
    asking right now. And sometimes it can have long-term costs.
        Mr. Marino. Of course, because China doesn't care about its
    environment.
        Mr. Sy. Yes. For example, so if you are a minister right
    now and your country is facing severe power outages and you
    know that elections are coming up and you have people in the
    street, well, the cheapest and the quickest way to have a power
    plant is to use coal, and the Chinese can do that very quickly.
        Mr. Marino. Yeah.
        Mr. Sy. If you were to deal with a U.S. company, it will
    take you a much longer time and it is a more complicated
    process. So that is one advantage, I think, that other
    countries have to keep in mind when they look at China in
    Africa: Speed. How do you really compete with the speed that
    China has?
        But this said, coming to how regional economic communities
    can help, in the area of governance, integration again creates
    some common institutions that can help improve economic
    governance. They have convergence criteria, they have fiscal
    targets, and they have peer political governance, they have
    these peer reviews and so on. So one way would be really to
    strengthen these common regional institutions to really put
    basically the pressure on the countries to really have in mind
    the benefits of their citizens and go exactly like the EU and
    so on.
        The other one is, also, you are having lots of countries
    discovering oil, oil discoveries are increasing, but also
    regional infrastructure. And maybe that is one way also to
    approach the problem of China, is to think about regional
    infrastructure rather than these bilateral projects. They are
    needed. Like, if you are South Sudan, you need pipelines to
    sell your oil, and the pipelines go through Sudan, or there is
    a project to go through Kenya. So, again, this regional
    infrastructure, that is one way to see the problem and address
    the problems.
        Mr. Marino. Okay. My time is limited, and I just wanted to
    see if anyone else wanted to respond.
        So, please, go ahead.
        Mr. Schneidman. Let me respond, if I can, on the Chinese
    side. You know, let me start with your last question: ``What
    can we do to get U.S. business there?'' I mean, the reality is
    that the U.S. doesn't show up to do business in Africa, which
    has created a vacuum. And that is problem number one.
        But if you went to any African Government and said, who
    would you rather do business with, there is no question they
    would rather do business with a U.S. company. Why? Number one,
    we are going to hire local people, we are going to train local
    people, we are going to create jobs, we are going to invest in
    communities, we are going to have clear, transparent deals. And
    that is the big difference.
        So I think, you know, from my point of view, the big
    problem with China is not so much, you know, their presence; it
    is the nature of their presence. Chinese come, they bring their
    own workers, they don't train anybody, they stick to
    themselves. And that is a problem.
        Mr. Marino. Point well-taken.
        We have 7 minutes to get over there and vote, and if you
    can be very brief, sir.
        Mr. Lande. Very quickly, the U.S. has many advantages, in
    terms of working, and I won't go beyond that: The school, the
    reputation, U.S. goods mean a lot, and so on. We don't have the
    problems.
        However, having said that, your question is absolutely the
    correct one. But the answer isn't to say only what should China
    do. I think it behooves the Congress to sit down and to say,
    why do we take so long to approve our Export-Import Bank?
        I remember a discussion about a year ago before the
    rechartering of the bank. And they have Mr. Angevine, they have
    a very dedicated person. And working in Africa, working in
    Africa exporting, he quadrupled their loan--beautiful job. But
    during our discussion, we said, can you create some special
    facilities? ``Oh, no, we can't change the charter. Oh, no, the
    charter is in place. God forbid we touch it.'' And, in fact,
    you know, a lot of people think Export-Import Bank is a form of
    corporate welfare.
        So what I am saying to you and my response is--and I would
    love to have more time to discuss with you and so on--I can go
    through seven different things the U.S. can do if Congress
    would give more flexibility to the agencies, risking perhaps
    some problems, but will better enable us to compete against
    China.
        But our real answer is exactly what was just said by
    Witney, and that is we have to be what we are, high-quality
    people. But there are things--and I am sure the responsibility
    is with Congress, as well as with other people.
        Thank you.
        Mr. Marino. I couldn't agree with you more.
        Mr. Quartey. Thank you very much. Let me try to be very
    quick.
        I think we have two issues here, an issue of speed versus
    ensuring good economic and political governance. China comes
    with the speed in delivery, but on issues about governance,
    environment, et cetera, it is challenged.
        What we need to do is to strike a good balance by ensuring
    that the USA and the other OECD countries, bring China to the
    negotiation table. There has been some initiatives to bring
    China to the negotiation table and ensure that some of these
    issues are streamlined, and I hope we pursue that line of
    action.
        Thank you.
        Mr. Marino. Chairman, thank you. I wish we could continue
    this. We could be here for several hours on that issue.
        Mr. Smith. Thank you, Mr. Marino.
        Let me just conclude. I do have one final question, and
    perhaps we will run out of time. But, you know, in monitoring
    the AGOA, it has become clear that national labor protection
    systems are often weak or nonexistent. And I am wondering how
    you might recommend that the regional economic communities
    address the need to establish and enforce standards to protect
    the rights and health of workers.
        I would note parenthetically that a couple years ago I was
    part of an effort to cite China and its unfair trading practice
    in terms of the exploitation of its labor force, and the USTR
    never took it up. We have been trying to get them to take
    something up ever since. But when they pay 10 to 50 cents per
    hour, there are no OSHA regulations, 130,000 people-plus die
    every year on the job in China--all these egregious practices
    are engaged in, employed by so many factories in China. And
    with China's ascendancy economically in Africa, those bad
    practices, just like bad governance practices, the use of
    secret police and the like, could easily, you know, for a
    dictatorship, become very attractive.
        But how do we make sure that as this regional cooperation
    effort gets further under way that these ILO-type standards,
    OSHA-type standards, they don't have to be exactly like the
    U.S. or whatever, but something that really protects people on
    the job, health and safety? It is something I think we should
    build into it. We do to some extent, but I am wondering what
    your thoughts might be on that.
        Mr. Schneidman. Mr. Chairman, I agree completely. I think
    this really has to be part of our bilateral dialogue with AGOA
    beneficiary governments. And I think it has to be part of our
    Embassy going out and monitoring what is happening in these
    factories.
        I would like to think that there are some resources to
    invest in training and showing examples, helping business
    leaders from the region come to the U.S., perhaps, and see what
    good standards are all about and how they can be replicated at
    home.
        And I think we have to take a proactive approach to this
    and not see it as punitive, but see it as something that is
    going to enhance productivity.
        Mr. Smith. I appreciate that.
        And I also would include, because it would come under the
    rubric of health, but environmental standards. I mean, I
    remember in New Jersey when--you know, I grew up right near
    Woodbridge, in Woodbridge, Iselin--I woke up with Chevron smoke
    in my house, and that effluent, that smell. We didn't know what
    clean air was.
        And we hate to see that replicated, because we know what it
    does in terms of health, and not just the workers. My father-
    in-law worked in DuPont and died of leukemia. He was around
    resins. You know, so there are huge downsides health-wise, that
    if you get the environmental piece right, as more factories
    build up, it could be an enormous positive for the Africans.
        Yes?
        Mr. Lande. Three very quick points--well, one quick
    comment. I don't know if Woodbridge is near Exit 9 on the New
    Jersey Turnpike, but----
        Mr. Smith. Exit 11.
        Mr. Lande. Thank you. My wife knows it very well, and she
    puts a mask on when she goes there.
        But, seriously, one, the whole idea of moving away from
    unilateral sanctions--because that is what is in our bill now--
    and working with the regional economic communities, working on
    the ILO standards, fortunately Africa has not had the problems
    that we have seen in Bangladesh, has not the had the problems
    we have seen in China. A lot has to do with the fact,
    particularly in the former British colonies, that there is a
    lot already in place.
        So my view is, if you work with them, if U.S. unions would
    be willing to participate, as they have particularly in Latin
    America, to develop these standards and so on, I think it
    works. But it does not work if it is done, excuse me,
    punitively. ``We are going to save the worker by taking away
    his job.'' Well, that doesn't work. Obviously, you have to be
    cleverer than that.
        So that is kind of my very short comment, that you should
    look at modifying the conditions but really work with them in
    the context. And this could be a perfectly good job for the
    trade hubs. The administration has already committed to involve
    Commerce in trade hubs. It is already in their position. Let's
    get Labor involved, too.
        Thank you, sir.
        Mr. Smith. Thank you.
        Mr. Sy. Well, I would just maybe broaden the debate and say
    that this is also one important element of good corporate
    governance practices. And in Africa also, if you are a
    business, it is very difficult to avoid a government as a
    customer, as a partner. So the issue of corporate governance
    and public governance together is something that should be
    pursued, because at the end of the day it is good business and
    it is good for everybody.
        Mr. Smith. Thank you.
        Dr. Quartey?
        Mr. Quartey. Just a quick one. I would want to add that we
    need to harmonize labor standards and laws within the regional
    economic communities. That will ensure that some of these
    unfair practices are minimized.
        Thank you.
        Mr. Smith. Thank you.
        We are out of time because there is a vote on the floor and
    we are down to 30 seconds or so, I am told. So I thank you so
    much for your testimony, for your insights.
        And please, you know, pick up the phone, send us an email
    if there is something that you think we should be doing. You
    have made excellent recommendations, and we will act upon them.
        Thank you so much. The hearing is adjourned.
        [Whereupon, at 3:46 p.m., the subcommittee was adjourned.]

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