[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:]


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                              ----------                              

    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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